Manabu Miyasaka - President and Chief Executive Officer Toshiki Oya - Senior Executive Vice President Corporate Officer and Chief Financial Officer Yusuke Tanaka - Executive Vice President and President of Personal Services Company

Yoshitaka Nagao - Nomura Securities Saburo Araki - Mitsubishi UFJ Masaru Sugiyama - Goldman Sachs Taro Ishihara - Daiwa Securities Shinsuke Iwasa - Mizuho Securities Hiroshi Naya - Ichiyoshi Securities Haruka Mori - JPMorgan

[Interpreted] Now, I would like to give you the full-year 2015 financial results and also Q4 business results. Firstly, let’s look at the highlights: revenue-wise, ¥652.3 billion, increase of 52.2%; operating income, ¥224.9 billion, increase of 14.1%; and in terms of advertisement-related revenue, it was ¥266.9 billion, up 6.8%; and also the total domestic e-commerce was ¥1.5 trillion, up 26.5%.

We have ASKUL contribution and we had a one-time expenditure as well. So as a result of those activities in terms of the full-year 2015, we were able to do very well.

What are the highlights? So Yahoo!

access is conducted via phone instead of PC. And can we actually have revenue of advertisement since we were centered around display?

And sometime around this year, people were quite concerned about that. But in May we changed the Yahoo!

top page and this is first in kind since the beginning of our company. And so, we have introduced the timeline format, so personalized information will be provided to the targeted customer.

And so this is quite different from the past. And we were worried that maybe timeline format would not be accepted by the consumers, but after a year, timeline format is well accepted, and Yahoo’s!

top page access is increasing. And also there is a positive ripple effect in other services and we might introduce timeline format in other services as well.

And also, we were able to be successful in the advertisement domain as well. I will give you the details later.

But by changing to timeline format, we were able to accommodate infeed advertisement. And so, the combination of timeline and infeed worked well and centered around the top page.

We were able to increase the advertisement revenue from infeed, mainly speaking. And I think that is the highlight that we can be proud of.

And another point is related to e-commerce. There was much advancement in this area as well.

Firstly, ASKUL is consolidated and we were able to increase revenue as well as profit. So there were some adjustments to be made, but we did very well.

And also in the past year, we tried different pilots and some of the promotions were actually successful. And because of that we were able to increase the transaction value.

Another point to note in relationship to transaction value is that we were able to increase the advertisement revenue along with the increase of transaction value and we were able to prove this point in 2015. Another point is related to credit card business, we started this about a year ago.

With the hindsight we can say that we have about 2 million cardholders altogether. So advertisement, e-commerce and credit card, all these three pillars were able to make a big leap forward in FY2015.

And this is the revenue, and for 19 consecutive years we were able to increase revenue. And this is the first in time to have ¥600 billion.

And with the contribution of ASKUL, we surpassed ¥500 billion and went all the way up to ¥600 billion. And this is the breakdown.

Up until now 50% of revenue was from advertisement, but we have an increase of e-commerce as well as ASKUL. Therefore, we can say that e-commerce was the major contributor of our revenue in FY2015.

This is full year operating income and for 19 consecutive years we were able to record an increase, and we are in the range of ¥200 billion. I mentioned to you that consolidation of other companies as well as one-time expense might be difficult to understand the real situation.

And so, at the bottom you see operating income of ¥224.9 billion. And on the top you see the operating income of 2014 being ¥197.2 billion.

And out of ¥224.9 billion, ¥59.6 billion is the gain from re-measurement relating to ASKUL’s business. And on top of this, we have the upfront investment, which is about ¥28.2 billion.

And also we are relocating our head office and starting from May, i.e., Golden Week, some of our departments will be relocated and there is a one-time expenditure. And so by adding and subtracting all these numbers, our adjusted FY2015 operating income is ¥198 billion.

We invested in sales and promotion activities and this is the breakdown; and shopping-wise 50%, and application promotion 30%, and auction 10%, and financial and payment, e-card, 10%. So this is the breakdown of sales promotional investment we have made so far.

So this is a full-year net income, which is ¥171.6 billion and it is an increase of 29% year-on-year. This is a full year consolidated cash flows.

At the beginning of 2015, we had ¥503.9 billion cash and cash equivalents. And in the end of 2015 we have the operating activities of a positive of ¥105.4 billion.

And in investing activities, including Ikyu, we had investment of ¥110.5 billion. And also we had financing activities including the dividend payment.

And so at the beginning of the year our cash and cash equivalents was ¥503.9 billion, but in the end of FY2015 it was ¥449.1 billion. Now, let’s go to the details of the fourth quarter.

Firstly, this slide shows the highlights. Revenue was ¥207 billion, up 76%.

Operating income was ¥29.9 billion, a negative 42.9%. Revenue was ¥71.7 billion, plus 3.5%.

And e-commerce was ¥432.1 billion, up 41.6%. And you see the breakdown of revenue by business.

So by consolidating ASKUL in terms of the consumer business, it was ¥121.2 billion and there was an increase of 3.7 fold as compared to the previous year. From here on, I would like to elaborate on the usage trends of services.

The Internet will be more or less mobile oriented, so whether Yahoo! will be used in smartphone will be very important.

And this shows our daily unique browsers number. So if we use an application browser, we double count.

So in total, the dark one is smartphone and the pink is PC access. As you can see, PC-wise it is decreasing slightly, but smartphone is increasing and the access by smartphone is more than 50%, and there has been an increase of 25.6% year on year.

And so, right now we have about 51.43 million accesses. So this shows the validity of smartphone access.

So at this onward there is smartphone, tablet or PCs. A lot of devices will be used by users.

So at this onward - and they like to then check out the number of log-in IDs, the number of log-ins. So that like to get them separated with the log-in users and the other users.

So that we would like to focus on that the log-in users as the key for the strategy, so I’ll pass the - this way we can improve them, for example, a lot of that counts as improvement. So this log-in numbers is the key measurement, so that now we can exceed this 30 million and so that about 33,900,000 users and IDs are used by the log-in based use.

And also when you look at the - now, that many people are still saying that now that the Yahoo! service can be also be used by smartphone, but now, we have done our utmost and last year we became number one by the access by smartphone.

So then now we can say that now we are the smartphone-platform-based business company. So, now, as a matter, of course, that’s how services used by the smartphone, so that now we would like to next target is that we like to become the company that’s application based service provider.

So now in country in total the downloaded application is in two years in a row, we become the number one and among all these publishers like this, and about 380 million downloads have been achieved. So now, they are moving - migrating more to that smartphone platforms.

And what has happened with that advertisement business? So, now, after we introduced the timeline and feed advertising and it had been very favorable.

So that first of all - and we have the timeline feed is inserted in the first page. So number of clicks has become 2.2 times as many clicks we have achieved.

So, now, we’ve been successful in this timeline and infeed advertising. So, that’s all for the media.

After this onward, let me talk about the e-commerce service. When it comes to this, the domestic transaction value of e-commerce have for the first time exceeded ¥1.5 trillion and has grown by 26% year on year and ¥860 billion for the year for auctions for that and then also for the shopping have exceeded - that’s just like this, ¥400 billion to ¥522 billion, and these are the shopping business.

When I look at the shopping business and it been growing just like this and 23% and starting from the growth in this Q1, and eventually 61.8% year-on-year growth was achieved in the Q4. And in the same time the last year, we had become the number one in the sellers and now we have the number one in items to be sold.

But now, after one year has passed, now we have about 5 times of many of the premium members now we have obtained. And then, also we have a lot of that new and unique promotions have been implemented, so that now - and already shopping site again all the more attractive for the buyers too in the past year.

And after this onward, let me talk about that a - let me talk about this - both of these and core business and then also for the upfront investment business. So now, still and a lot of the core business and that have been producing that’s then ODC [ph] and profits.

But now and also with the other lines of businesses, so the business for the future, and now we’re making upfront investments for the future growth. So first of all, let me talk about this and the core business.

Advertising, when it comes to advertising, in full year in 2015 about ¥266.9 billion, it happened to grow by about 6% and minus 7.7% for that - this search and the sponsored search. And when it comes to display ad, it had been very favorable and grown by 29% and ¥126.4 billion, so when you look at this, the breakdown between that sponsored search and display advertising and with before that just 50% for each like this.

And when you focus on that revenue from the smartphone-based advertising, for the first time it exceeded 40%. This is for the first time and that quarter basis in Q4.

So let me talk about the other core business, the auction business. And also, before that, the EC revolutions and auctions, then just slowed down in the growth and have a negative growth.

But after the revolutions and efforts, it had to pick it again. And also this year, we have about middle of the single percentage of growth had been achieved in this auction business.

And when you look at this dotted line and vertically here in the middle of the charts, and this represents that, now we raised faster the charge for - that’s the bidding charge raised. But what happens after this raising that the bidding fee and we just knew a little bit out of the concern about what happens after that, but even after raising that, the bidding fee, there was not so much change had been observed.

So that had been successful in raising the bidding charge. And also at the same time, when they used that, the easy settlement services - and we have eliminated the fees for this, the settlement service.

And so, far about this one - about this easy-pay systems. And the many of that now the users are using, these of - the payment for the easy pay system, so this time many of them just skipped that to the Yahoo!

the settlement system, but now this pay had been used by the more users and it exceeded, that more than 50% of the users use this service. So at this onward, also, this is will be a bit effective and a very important KPI for - when we try to expand that business of the e-money.

We have made announcement the other day. The next business, our core business is that premium membership services.

And this membership services starting from that Yahoo! Auction, YAHUOKU!

Members and so that they become the members for joining that bidding in many markets. But now, for example, we’re providing five times much points for - when they become the premium members, when they do some shopping there.

So that’s why. And for all the members and they’re thinking about they’d like to become the premium members.

If they join that and also by something under the shopping sites, so that have pushed up and that’s all the transaction values. And all these members, premium members become very, very important loyal users.

So that’s why how we can - how much we can increase those premium members is the key for our future business. So that’s why we had been doing a lot utmost.

So what we would like to start this year is the premium GyaO! service.

This is about the fixed fee and a video content of services. And there had been already offered by the other players like cable TVs or other content providers.

So it’s not that - we already have existing markets. We don’t have to create our own new markets, so that we can break into this existing market with this, the premium GyaO!

We have just started. But I like to expand that the services on the left, there were more premium members that are going to join this premium GyaO!

And the premium GyaO! can have the revenues, but at the same time, the premium members can take advantage of the services, so that we’d like to have this organic cycle in this service.

And when it comes - also there are a lot of the other members and other than the premium members, so they’ve also have been steadily increasing. And now we have about just like this - now, we have - 33 million is the monthly ID.

So just about half of these new members are now a paying that monthly fees as the members. So this is that, the dotted line - now, you can compare this, that before raising the fee and pre [ph] and the post [ph] is rising.

But there was no any major impact even after we raising the fees. So this is the raised amounts of the fee, where they’re used for the investments for acquiring new members including the premium the GyaO!

Okay, after this - and, well, I like to just talk about this upfront investment business, and this is about the shopping and the credit card business. First of all, Yahoo!

Shopping business, there are lot of e-commerce sites are there in the market. So each users and the customers are going to choose the products in each ones favorite site.

But then what is the reason? Why they’re going to choose the Yahoo!

Shopping sites? So this is the - we have to tried to create the very unique reason and that attracts the users to the Yahoo!

Shopping sites. And we have confidence that they are different.

And competitive advantage of the Yahoo! Shopping site is that e-commerce site we would offer that the - that’s the highest number of items to be offered.

And this is number one. The number two is that, for the premiums it will be very, very - there’s a lot benefits we would offer to the premium members.

They can have a lot of points and all that. So that’s why.

And we will keep providing that, all the uniqueness that we have with shopping sites and so far that have been successful. And on top of that, we have many items and we have a free listing.

And there might be some concerned sellers, because there might be fraudulent cases. So we do have the guarantee mechanism so that everybody can be protected.

And, of course, we try to detect in advance by leveraging on big data, so that there will be no fraudulent cases. We want to have the referral from Yahoo Japan’s media service because there are media service users, but then they do not shop.

So we would like to solicit the traffic to shopping sites. Anybody can sell anything free of charge at our site.

So we are number one in terms of the number of stores. And in the end of FY 2015 - this is Yahoo’s survey result, but we are the site with the largest number of items and we have more than 200 million altogether.

And of that 200 million items we do not have YAHUOKU! Items, so if we aggregate YAHUOKU!

I believe that we are dominating number one. And so from new to reuse items, we have magnitude of diversities and range and so we are indeed number one.

In the fourth quarter, in terms of the shopping transaction value, for the first time in the fourth quarter we were able to do above ¥100 billion in particular and more specifically speaking ¥112.8 billion. About two years ago there was a special demand before tax hike, but even compared with the fourth quarter of 2015 we did superb in the fourth quarter in 2015.

What is the success factor? We conducted point campaigns and, of course, we cannot negate the fact that that was one of the contributing factors.

But all-in-all in the past four years, after conducting EC revolution for the past three years, the teamwork to make enhancements, improvements and increase the number of items and made it easy to search for the items you want, and we made settlement easy. And so, we were able to have a very robust platform.

And on top of that robust platform, we were able to launch our point campaign and that is leading to the next success. And in the end of February, we had - everybody gets 5% point campaign privilege.

But actually we stopped that. But as you can see on this chart, there is no plummeting of the number even after the end of the campaign.

And so, I believe that the platform of shopping became very robust so that people will come and shop at our sites. For the premium members, our shopping site is very easy to understand and maneuver through.

And as a result, the number of our premium members’ transaction value within our shopping was about 40%. But in the fourth quarter in 2015, we were able to have - 57% of premium members registering the total transaction value within our shopping site.

And I’m sure that there is more leeway for growth. And this shows the use of Yahoo!

Shopping by Yahoo! premium members.

I cannot disclose you the number, but this is a ballpark image of the entire pie breakdown. You might be a Yahoo!

premium member, but the grey portion, non-buyers of Yahoo! premium members they don’t shop at our site.

And so, I guess, we have to try to emphasize the merit of shopping at our site. So we would like to discover the potential and tap into the potential of Yahoo!

premium members. And I hope that this year we can increase the red portion of this pie more.

So centering around the premium members in shopping, transaction value is increasing. But even though our transaction value increases, our loyalty scheme does not exist.

So some people are worried about the profitability on monetization. And this shows our shopping related advertisement revenue.

In the fourth quarter 2014, it was ¥1.5 billion. But in Q4 2015, it was ¥2.6 billion.

And so all-in-all, it is more than ¥10 billion evenly out between the four quarters. And so when we conducted the campaign, we actually were able to have the advertisement revenue of about ¥10 billion and we have the most number of stores and also most number of items.

And in terms of the transaction value, at one point in time we were in the negative range, but now, we are grown in more than double-fold. So I am very happy that we were able to go through the revolutionary stage.

Next, I would like to talk about the upfront investment stage businesses, credit card. Credit card did very well.

As compared to a year ago, we had only 590,000 card holders, but now we have 2.21 million. So we were able to grow by 3.7 fold.

So in terms of the growth as compared to e-commerce growth, we believe that there is more leeway for credit card holders to increase. Even though the credit card holders might increase, we have to make them active.

So issuance is not the end of the story, but we have to activate the cardholders. And the number of card is 3.7 fold.

And in terms of credit card transaction value it is 5.7 fold. And so, the transaction value increased more than the cardholders’ number.

So in terms of Yahoo Japan card, the transaction value was ¥84.7 billion, and last year it was ¥14.7 billion. And so, there has been an increase of 5.7 fold.

So these are the upfront business summary. Lastly, I would like to talk about our mid-term plan and what is the plan that we have mid-term-wise.

In 2016, what do we want to do? And so, people use smartphone for Yahoo!

And next in 2016 we want to prove that application will be Yahoo! And as you can see on the left hand side, we had many applications there, about 100 altogether.

And those 100 applications have been downloaded and we are number one as the publisher of applications. But I believe that we should have to consolidate some application so that we can be strong in some mainstream application.

So instead of being jack of all trade and providing high-quality applications of diverse kinds, we want to consolidate them so that mainstream applications will stand out as a flagship. And therefore, we refer to those consolidated mainstream applications as flagship applications.

And this fiscal year, we want to create flagship applications, so when people want to download application people will think Yahoo! Next, I would like to talk about financial and payment business.

We made an announcement about launch of e-money business. And firstly, in terms of e-commerce transaction value, we have shopping and auction, and we have Ikyu.

We acquired Ikyu and increasing travel. We want to increase the transaction value of e-commerce.

And in line with that, we want to increase the ratio of payment services offered by Yahoo Japan, such as Yahoo! Kantan Kessai or Yahoo!

Wallet. And on top of that, cards are linked to Yahoo!

Wallet. So we want Yahoo!

Card and also Net Bank and T Point and our e-money should be used as the in-house payment mode. So the in-house and also the users of Wallet should be increased, so that in the end of the day Japan Net Bank and Yahoo!

e-money and YJ Card usage will increase. So it’s a three-tier approach that we are taking.

Last fiscal year, we conducted major sales promotion activities and we have superb products. And if the product is not good, we cannot conduct promotion.

But since the product itself is of high-quality, we can conduct sales promotion activities and we have about ¥40 billion in some promotion activities. And this fiscal year, we will decelerate slightly as compared to FY2015.

Why? Because last year we were able to prove the validity of sale promotion activities and tried to categorize which works and which does not work, and so there was a learning curve.

And also last year in Shopping we wanted to open door for the newcomer who has never tried shopping on our site. And this was a very investment intensive and we succeeded in that.

So even though we might tone-down investment-wise, I believe that we can be successful. But still and having said and still shopping, auction and also the financial payment service and applications, for all these services we needed to be more aggressive and expanding the business within all these business domains.

So then, we can just slow down the pace of investment, but compared to two years ago we’re still going to make that investment when it double the two years ago level. And now, also this business and the market have been getting all the more competitive, so that in the shopping and application service and for the media service and what happens and what kind of strategy will be taken by the other competitors.

We are looking at all this competitive environment and make the decision in investments. And result of that - this is that, the measurements and for the shopping and this is that result of the measurements.

And the shopping, we like to achieve the same level of growth this year and also for the credit card business. And about ¥218.9 billion, and this is the transaction values for this credit.

But this is just an image, but we would like to have the growth of this level. And as long as we make the investments, we like to have the sure results and fruits to be delivered by the investments.

Okay, that’s all my presentation. Thank you very much.

Thank you.

[Interpreted] Okay, thank you very much. From now, we would like to open the floor to question.

If you have any question, would you please raise your hands and our staff will bring the microphone to you. And would you please make your name and the name of your company before making question.

And now if you have a couple of questions, would you please make the question one by one, please. And we’d like to change the format of the Q&A, that we like to limit that the question - only two questions for one questioner.

And if you have then - more than three questions you have and we’d like to please make the first two questions and like to give the microphone in the last parts of that the Q&A session if there’s any time. Okay.

Okay, those - and those who are sitting in the front side of the right hand side of the front row, please.

[Interpreted] Thank you very much. I’m Nagao from Nomura Securities.

I have two questions. My first question is the advertising revenues of the Q4 as a whole, a plus 3.5% of the growth.

So compared to the previous quarter, it seems like they slowed down the momentum, so that based on the actual result of the Q4 and what is the prospect for the advertising business growth this specific year and for each category, please, hopefully?

[Interpreted] Okay. First of all, as far as the Q4 is concerned and we think that’s a category-wise and for sponsored search a minus 12%, minus 12% for sponsored search.

And it was at the double-digit decline for the sponsored search, yes. And it was in the positive growth in the previous year.

So there was some reaction from the favorable year last year. But, now, when it comes to basic trend, it will be the same.

We traced the same trend. And also for - now, there’s no connection to the partner sites from the smartphone.

We pushed down by about 4%. And when it comes to YDN format based on basically on the infeed advertising and the result is as we had expected and we have a very good result here.

And when it comes to premium advertising, also for the premium advertising, the brand panel for the smartphone had been steady. And also for the peer [ph] option for the shopping also had been very steady.

On the other hand, the traditional format and the PC had been decline at more than 10% and this also had been under the declining trend. And, when you - a focus in FY2016 and about the middle of the single-digits or high of the single-digits growth will be expected.

And, for example, in the case of sponsored search, and for the overall trend will be that still will be on the general trend so far. And also impact from the smartphones will - that’s also the negative effect so from - that’s the smartphone platform will - that’s a little bit diminished, so that it will be just lower with 10%.

And for the YDN, we’re leading this in the advertising business. And May last year, we have launched the timeline infeed advertising and it had - now, we will run its course for that stay, the initial launching effects.

And also we’re having a more of that base number. So that’s why we can expect about still a double-digit growth - so premium advertising.

Now, PR option is very favorable, so all-in-all we think that’s the - we can have a middle of single-digits, the positive growth can be expected. On top of that - and if we can launch the video advertising, video format or - that we plan to do that, but still it’s unclear when we are going to launch it.

So we don’t factor in that’s specific additional effects of this video advertising still now.

[Interpreted] So let me make some follow-up question. In double-digit growth of the YDN is - you mentioned about it and this year about the - it’s growing about 50%.

Now, you’re simply saying the double-digit and the very - the broader meaning so that - would you be more specific about the forecast of the growth?

[Interpreted] Yes. When I look at the Q1 about - it had grown by positive 30% growth in Q1 and - but I think that’s a gradual decline and when it comes to margin of growth.

[Interpreted] Okay. Thank you very much.

My second question is that, now in the Q4, I thought you had a ¥2.6 billion of the revenue of the e-commerce advertising. But that depends on the statistics.

But if you think that the basis would be that domestic transaction value it will about a 1% or 2.5%, so how we can push up that margin. So just combining my first question, what will be your basic strategy to push up that the monetization of this advertising and e-commerce?

[Interpreted] Okay. First of all, I’d like to answer and those are - also, Oya, would you please supplement.

And first of all - and PR option is very favorable and in a shopping based advertising. It happens - it keep - have kept growing, so that if we can have the more transaction value, there’s also this revenue and this is just about the revenue of advertising, but also with the direct link to this.

So that the - but if they can have the margin, have the more revenues and they are more encouraged to spend more on the PR option. So we expect that still a lot of potential to grow this PR option further.

Oya, do you have anything to add for my comments?

[Interpreted] Okay, thank you very much. And there isn’t so much about to supplement.

But what will be the basis, and so this is that the key for the statistics. But in order to be as accurate as possible that the transaction value of that Yahoo!

Shopping site should be the basis. And basically that’s coming out from all these transaction values for - in the case of LOHACO, that with revenues - direct revenues will be recognized and in the case of B2B business of ASKUL.

And the profits will directly come out from the revenue. So that the business model is quite different from the LOHACO and ASKUL and the Yahoo!

Shopping. So in the case Yahoo!

Shopping would you please think that Yahoo! Shopping transaction value as the basis.

And the growth of the Yahoo! Shopping is that compared to that struggling time sometime ago, it is getting order more steady.

And so that’s why - and these are the PR option, this is that advertising product that can be closely linked to that’s the growing revenues and the transaction values. So it’s not that we set up some fixed loyalty ratio, but this is just the sort of competitive type of the products.

So this is now - but the seller will determine that how much percentage of that the feed they are going to - they may pay based on the revenue. So that it will be promising.

So let me just supplement the number. So now if we take that shopping - the transaction value as a number and take rates, it would be middle of 2%.

So this is our current perspective, the take rates. And one year-ago, it was about 1 point a couple of percentage - those were the take rates.

So that’s now a - in the past year that’s the - now, we have that and the more transaction values and also that would pushed up the take rates. So then the more that’s the - a lot of businesses there on the shopping site, we can have more the revenue, so we’re advertising.

So that we would like to increase further of the take rate from this 2.5%.

[Interpreted] Thank you.

[Interpreted] Any other question?

[Interpreted] So the person sitting at the edge, second row from the front.

[Interpreted] I’m Araki of Mitsubishi and I want to get a clear answer. So October to December it was 2.5%.

And in January to March, were you able to increase the number or did the number decrease? So please confirm that.

[Interpreted] Image wise it was flat. If I may elaborate, in terms of October to December, it is end of the year shopping season, so this is the season in which advertisement sells well.

So in terms of the take rate of October-December, it tends to be high. And when I say that it was flat in January to March, we can say that the take rate did not drop in January to March.

So we can say that take rate trended favorably.

[Interpreted] Yes, I agree with you. Second question, you said that you have more than 200 million items and you want to increase that in the future as well and that is the strategy I believe.

And how many items do you want to have in the end of the day, because I feel that there might be risk of having too many items because there might be fraudulent stores or maybe the shoppers might have difficulty finding what they want? So what is the optimal number of items you want to carry?

[Interpreted] Thank you very much for your question. So we want to be jack of all trade market, so to speak.

So we want to encompass service EC as well. And so it’s very difficult to give you any number in terms of the ideal number of items.

But as we have rightfully mentioned, we have to have a check and balance mechanism so that any items that should not appear on the store should not be there. So this is the search algorithm that is playing an important role.

Let’s say, maybe one person out of 100 million people might want it, and we will list that. But then for people who do not want it, we do not show that one item to the majority.

So in terms of the search algorithm as well as the logic, this is the key, because by having the right algorithm, we can provide the right information to the right shopper. And so we have to increase the number of items, but at the same time, we have to personalize the result of the search.

And we need to gather data to conduct analysis so that based on that big data analysis, including the filtering mechanism, we can provide the targeted item to the right person. So I cannot give you any definitive number of items, which we deem to be optimal.

But please understand that it is the philosophy behind our business model. I think it is similar to the initial web search, because we have a limited category registration and we celebrated 20th anniversary and at the very beginning we wanted to have many registrations.

But then - and there were so many results, so people did not understand what they were able to get the result for their search. So with the advent of Google, we tried to list the items in an easily understandable manner.

But in terms of the item and also search results, we have to have the easy and simple listing mechanism, because if we bombard the people with so many items which they are not interested in, then they will be not happy with us.

[Interpreted] Next question?

[Interpreted] So middle row, second row from the front?

[Interpreted] Thank you very much. I’m Sugiyama from Goldman Sachs.

Let me ask you about the promotion. And ¥40 billion you spent for the promotion this year and on a quarter basis, and from ¥8 billion reduced it from the March and for the half year.

But would you be more specific about the plan? In which specific promotion are you going to reduce the spending or - now, which portion you can offset with that raising that’s the point charges to the merchants?

Or would you be more specific about the promotions, the spending structure, please?

[Interpreted] As we have mentioned in the presentation this year, in the web promotion or TV commercial or promotion by using the shopping points, in all these areas and we implement the broader range of promotions, and in which we try to choose that which promotion is the more effective and we will try to focus on that the more effective promotions. So it’s not that we are so specific about the - we spent here and what and - now, but anyway, we tried to focus on the promotion which has the very cost effective.

So when it comes shopping, for example - now, we have understand from the merchants and the changes that’s - and charging for the points to the merchants and so now we can charge more so that we can reduce and offset that - our own burden.

[Interpreted] Okay. My next question is about the - and I like to ask you about the PR option, first of all.

So with introducing PR option what are the impact on the result of the search services and what is the specific reaction from the advertisers about this PR option? These are the two questions about the PR options, please.

[Interpreted] Okay, thank you very much. First of all, the impacts of the PR option on that that’s the search services - and currently when you look at convergent rate from the search, it had been increasing - the convergent rate is increasing, so that’s why we think that’s - if we’ve been detailing it - that means in case the convergent rate has started to decline that means that there’s a - we just - features, that nature of the advertising too much.

That’s why that’s the result of the search we give the image and also feeling to the users that’s now - they could not find out that’s the necessary information. So that now about the - they are growing about 120% or so.

So that the convergent rate is very good. So now the - it does not make any negative impacts on the transaction values, so - because now this is based on technologies, based on the sponsored search of the Yahoo!

Japan. So then which advertising would be that the most profitable or the most good for the revenues?

And so that’s - we have that kind of an information. So this is still our own skills and technologies and based on the sponsors search.

And responding to your second question is that this reaction from that advertiser, this is that structure. The system is that they are going to pay that’s the charge once that the product actually be sold.

So that is not the simple advertising. That is just simply one of the advertising and what happens after that we don’t care.

But now - although there’s someone that click and unless the product is sold they don’t have to pay. So that this is that - the basic business model, so this is very favorable.

And we don’t have any complaints from the advertisers. And now - still we don’t cover all that - the merchants now because that - because we like to check out the credibility of the merchants.

So then if in the case they pay and a lot of the percentage and a lot of the fees and the low quality merchants will - then the products sold by the low quality merchant would come out on top of the search and we like to avoid that. So that’s why we don’t cover all the merchants.

So that’s why, first, we have sort of our - in the sales - conversations with them and would you please show this amount of product, we would like to pay this in.

[Interpreted] Okay. My additional question is that - you mean that this is just a buy - is that the sales?

[Interpreted] Yes. So although - that how much of the sales do they have at the - if their evaluation of the merchants and store is low and it will be very negative.

Then also, for example, the bad delivery service and that will also be considered. So do not make any dissatisfaction to that users is - and we have just very fine tunings, so that the sales is one of the big factors, but is not that all the factors.

But we - that buy is not the published and then they make public.

[Interpreted] Okay, thank you very much. Do you have any other question?

[Interpreted] There was one person behind the previous questioner.

[Interpreted] I’m Ishihara of Daiwa Securities. I have two questions.

The first question is about infeed advertisement. You launched it in May, last year, and you went through one cycle of growth and do you think it will decelerate in the future in terms of the growth rate?

You have a top page and you provide infeed to top page, but do you have any plan to provide infeed in other advertisement form or do you think there will be increase in video or there might be increase in the brand advertisement? At this point in time what is your take of the advertisement of FY2016?

[Interpreted] Regarding infeed advertisement, we want to make the format video-enabled that is our plan in 2016, so there is room for growth. And there is an area that is not timeline-enabled yet, so we are going to make it timeline oriented as well.

And it will not double fold our advertisement, but it will be about 1.X fold in terms of the area that can be time-lined. In terms of the unit price, I don’t know whether we can maintain the price because the more volume we have the price will go down.

So we want to balance the volume and the price.

[Interpreted] Do you have any plan to introduce more timeline?

[Interpreted] No, not yet. We want to launch timeline in other areas as soon as possible, particular video.

But video is very data intensive. So for the users, I don’t know whether they will be a happy to see many videos.

So we are going to test pilot it and find out the right timing.

[Interpreted] Second question, in terms of operating income what is your plan for FY2016? Last year you have ¥59 billion, and you had the sales promotion of ¥10 billion, so there will be plus and minus of these areas.

But is there any increase in cost in 2016 or is there any new revenue source, so that you can enjoy higher operating income? So what is your breakdown?

So there will be increase of more than ¥198 billion. Are you going to increase by two-digit or one single-digit, say, lower half of single-digit?

So can you tell me the ballpark figure of your plan of how you plan to grow your operating income and the breakdown?

[Interpreted] In terms of the range of operating income increase, say, our reference point is ¥190 billion, ¥180 billion, of course, we want to outdo this figure. And looking at the progress of our business, we have shopping and credit card businesses and also we are increasing the number of members and we have new businesses and services available.

Related to the sales promotional expenses, as compared to FY2015, we plan to decrease the budget in 2016. But in terms of the magnitude of decrease, we are going to look at the progress of the development of new businesses.

So internally we do have some ballpark figure, but we want to be flexible in terms of how we are going to budgetize the expense. We will look at the progress of the business and try to communicate with the pertinent departments to decide on the right allocation of the budget.

[Interpreted] I want to go back and talk about infeed, as mentioned by Mr. Miyazawa.

I believe that all the related businesses must be linked together and grow. So we try to increase the inventory and increase the unit price.

And as mentioned by him, we want to introduce video and maybe further expand the format that we can provide. And I believe that ID will be a contributor to our unit price because by logging in, we can accumulate the big data.

And login ID inventory is higher in volume and we know that for sure based on the statistical figures that we have. So we want to increase the log in inventory.

And also flagship applications will be very important. By creating flagship applications the numbers will grow.

And if you look at the same information on smartphone or smartphone application or web browser, the application is the most growing engine. And because - even though we have smartphone browser, if they actually move on to the application, we will be able to increase the traffic, because - especially if they are login.

And at the same time the smartphone application users, we will be able to increase infeed. And we cannot give you any definitive figure as to how we can grow in terms of numbers, but I believe that these, i.e., smartphone and application users will be the driver.

[Interpreted] Any other question?

[Interpreted] Okay, so those sitting in the third row from the front in the spot, please. Okay.

[Interpreted] Iwasa from Mizuho Securities. First of all, let me check out that the numbers of your business performance and - in two areas.

And the first one is that an office relocations and a ¥4.4 billion including the office relocation expenditures, but this is only for this specific quarter or temporarily or - we think that’s an office - the more in office relocation a cost will be - should be recognized. Then what will be the overall cost of it?

And also ¥28.2 billion of upfront investment cost you mentioned, but it doesn’t much - with that some promotion expenditures so that for each quarter, for one through the Q4. What will be the recognized amount of promotions and upfront investment for each quarter and what will be the number?

And then also is there any ideas about upfront investments that will be made throughout the year, this year and I would like to know about it?

[Interpreted] First of all, responding to your first questions, this is - there’s the one-off cost. And when it comes to one-time cost is that we have some expenditure in this the one to three - Q1 to Q3.

But major of that will be spent in the Q4. And this is mainly for restorations of - that’s the real estates or upfront investments for buying some fixtures or the office supplies.

So with this relocation, and in FY2016 we will need some expenditure about ¥2 billion to ¥3 billion of the total relocation relevant cost. Now we expect - responding to your second question - would you please make your question again please?

I’m sorry.

[Interpreted] Yes. And also - and upfront investment cost is ¥28.2 billion as specified and this is for the upfront investment for the last year.

But would you please breakdown for each quarter and specifically how did you spend for that? And then also for the upfront investment for this year, if there’s any information you can disclose?

We would like to know about it. And…

[Interpreted] Okay. First of all, would you please look at the Page 11 of the presentation, please?

Okay, look at that. Mainly this is about, we define about the [about it] [ph] primarily - and also upfront investment is that compared to last year some extra promotion.

And on top of that last year, we define this is just primarily. So this mean that for each, I mean when I look at each quarter - if you make comparison and the difference between FY2014 and FY2015, we have ¥5 billion in Q2 and ¥23 billion in the second half.

So in total of these two are the ¥28.2 billion. So this is just a nominal classification.

So as for this year when it comes to - we’re going to - would you please analyze and how much of expenditure will be spent for that promotion as a whole.

[Interpreted] Okay, thank you very much. And the last of all, so this is other segments and Q4 we have some slightly - they have some of the loss.

So everything that’s equated - core businesses have been favorable so that they - one would be that any expenditures are there in the credit card business and also are there any - what would be the future prospects for this and expenditure and the cost for this business?

[Interpreted] Okay. In this other segment you mention, this is about a payment and financial business company and also combined with data solution or the other - our CapEx for the system will also be included in this others.

So now SG&A increased because of - for one thing that for the credit card we need to spend for the acquisition of the card holders. And not only for acquiring the card holders, but once we have acquire card holders and we also - we need to spend for the relevant operations.

So that this is for that - this is - so still we have some loss concerning this YJ card business that’s included in the part of this other segment. And also part of this one-time expenses is also will be included in the part of this others.

But mainly this is the impact of this - the credit card business, yes.

[Interpreted] So when I look at this full-year trend and it seems like that the spending on the Q1 is - it just seems to be excessive, so including this one-time cost. So if anyone looks it on average for each quarters and level off and what would be the level of this expenses and the cost?

[Interpreted] Well, if it’s the case - so just a ballpark, but ¥2 billion to ¥3 billion.

[Interpreted] Was that some extra and additional cost, I think. So when I look at the other segments about the SG&A of this other segments I mean.

[Interpreted] There will be about ¥2 billion to ¥ 3 billion was the extra.

[Interpreted] You mean that - after this Q2 and onward this ¥2 billion to ¥3 billion would not be needed - won’t be needed, right?

[Interpreted] Yes - partially, yes.

[Interpreted] Okay, thank you very much.

[Interpreted] Any other question?

[Interpreted] The person sitting at the very front at the center.

[Interpreted] I’m Nagao of Nomura Securities once again. I have one more additional question about Google search advertisement.

And it is only for north and - for east and the north you do still have the position in that. And so from the user’s point of view, maybe there might be some degradation.

But what kind of measures do you plan to take?

[Interpreted] In terms of Google’s change, we do understand what kind of modifications they made and in line with that we are trying to find out what we should do and the discussion is underway internally. If users experience degradation, that will not be good for us, so share is important in the revenue of search.

So we are looking at the KPI of users and looking at those KPIs we try to identify what kind of advertisement display we need, and if we need to tweak, then we will.

[Interpreted] So in terms of the changes, did you factor that in the forecast for FY2016, can I confirm that?

[Interpreted] No, I do not think that we have factored that in, because in terms of the right hand side - it does not contribute much to our bottom figure. So even though we did make some changes, I don’t think that there will be any major impact.

[Interpreted] Any other question?

[Interpreted] Okay. And the - the third row from the front, please.

Okay.

[Interpreted] Naya from Ichiyoshi Securities. I have two questions.

And you mentioned about in the - you explained about the cost of other segments in the PL, but in adjustments on the SG&A, would you be more specific about the adjustment in SG&A?

[Interpreted] Yes, this also - when I talk about that major item - so this year - now, our progress of business have been very steady and favorable, and so return to employees have been made - were paid back to the employees. It amounted to ¥1 billion - so return to the employees for the compensations.

And also for this year, we have EQ [ph] - ASKUL that became the consolidated subsidiary, so that when they are consolidated we have some - providing the reserves and provisions rather conservatively so that they all amounts to another ¥1 billion and also for the other location relevance to the locations and the fixtures and all that we have ¥800 million. So these are the major items of this SG&A and all the one-time cost.

So it’s not any structural and recurring cost.

[Interpreted] Okay, thank you very much. And my second question is, in these days Cyber [ph] started member [ph] TV, then a lot of the other competitors are starting the services on the - some - the video contents of a service based on Internet platform.

So when I look at that - all those competitions and what do you think about it? So particularly when it comes to your - the service by the GyaO!, what is your competitive advantage when it comes to GyaO!

and what will be the challenges and what are the future prospect of this - is this domain a business of…

[Interpreted] Okay, when - Mr. Tanaka is going to reply about the GyaO!

business.

[Interpreted] Okay. I’m Tanaka and so I’m going to explain about when it comes to GyaO!

It’s a - what’s an offer that’s the video contents and free of charge and initially. So then we have the YouTube and just like that’s a - it’s free of charge contents, video contents, daily service and all the copyrighted contents.

So then when it comes to the smartphone market, now also that the video content is delivery is - now they are paying attention just like the gaming for some payable services. So that GyaO!

have an ability to large and big customer base is based under the free of the charge services. And then now we have started this payable services.

And then also some VOD on the transaction based services. So that’s the free of charge, a subscription and a market place.

And so these - all these business model are combined together as a hybrid. So attracting the traffics and also - and procuring the contents.

And also we would like to have the synergy of this mixture of the different business model so that we can make it competitive.

[Interpreted] Okay, Thank you very much.

[Interpreted] Any other question?

[Interpreted] At the center, second row from the front. Microphone goes to that lady.

[Interpreted] I’m Mori of JPMorgan. I have one question about shopping transaction value and what is your forecast for FY2016.

And in Q4, it increased by 69% and I believe that you have to keep that momentum in order to keep your number one position. And you want to use sales promotional expenses most effectively.

So what is the level that you want to reach in terms of the transaction value this F2016? Another question about take rate, it will grow gradually, that is what you said.

But in this fiscal year and in Q4, it was 2.5 and is it correct to understand that you plan to increase that gradually this fiscal year as well?

[Interpreted] In terms of shopping transaction value, FY2015 increased by more than 40% year-on-year and in FY2016 we have an objective and that objective is the similar growth rate as that of FY2015. So that is what we aspire.

April has not ended yet, but we were able to grow by 40% year-on-year. For premium members, last year we conducted a campaign and this year we’re having the same campaign, so we can have an apple-to-apple comparison.

And so the number that we are seeing right now is the tangible figure and we want to keep this range. And in the end of the fiscal year, I believe that we need to have different measures, say, two or three different measures so that we will be able to increase by 40% year on year by the end of FY2016.

Talking about take rate, we want to gradually increase it. Right now it is 2.2%.

And it’s not that we can dramatically increase take rate, but steadily and gradually we want to increase our take rate.

[Interpreted] Okay. Any other question?

[Interpreted] Okay, so there’s no - that’s the session and the briefing meeting. Thank you very much.

Thank you.