Auditor's Audit Report on Financial Statements(FY 2020)_SOHGO SECURITY SEVICESCO. LTD

Auditor's Audit Report on Financial Statements for the 56(Fiscal Year 2020) From April 1, 2020 to March 31, 2021 < Consolidated Financial Statements > Consolidated Balance Sheets Consolidated Profit and Loss Statement Consolidated Statements of Changes in Net Assets <Non-Consolidated Financial Statements> Balance Sheet Profit and Loss Statement Statement of Changes in Net Assets ＜Report＞ Certified Copy of the Accounting Auditor’s Audit Report on the Consolidated Financial Statements Certified Copy of the Accounting Auditor’s Audit Report Certified Copy of Audit Report of Board of Corporate Auditors SOHGO SECURITY SERVICES CO., LTD. <Consolidated> Balance Sheets (March 31, 2021) (Unit: million JPY) Assets Liabilities Ⅰ Current asset 227,617 Ⅰ Current liabilities 103,793 1 Cash and deposit 60,833 1 Accounts and notes payable-trade 24,084 2 Cash for the security transport bussiness 82,819 2 Short-term loans payable 20,950 3 Accounts and notes receivable-trade 54,283 3 Current portion of long-term loans payable 2,929 4 Lease receivable and investments 5,311 4 Account payable 20,393 5 Securities 598 5 Lease payable 5,260 6 Raw materials and supplies 7,551 6 Income tax payable 6,585 7 Expence for incompleted work 348 7 Accrued consumption taxes 6,137 8 Advances paid 5,670 8 Provision for bonuses 2,419 9 Others 10,380 9 Provision for directors’ bonuses 96 10 Allowance for doubtful accounts △180 10 Others 14,935 Ⅱ Non-current asset 253,847 Ⅱ Non-current liabilities 73,243 1 Tangible assets 103,383 1 Long-term loans 4,528 (1) Buildings and structure 22,792 2 Lease payable 36,313 (2) Machinery and equipment 19,132 3 Deferred tax liabilities 748 (3) Land 21,728 4 Deferred tax liabilities for land revaluation 128 (4) Leased assets 31,387 5 Net defined benefit liability 26,974 (5) Construction in progress 2,782 6 Provision for directors’ retirement benefits 1,673 (6) Others 5,559 7 Asset retirement obligations 480 2 Intangible assets 43,247 8 Provision for loss on litigations 57 (1) Software 4,469 9 Others 2,339 (2) Goodwill 29,678 　 Total Liabilities 177,037 (3) Others 9,099 Net asset 3 Investment and other assets 107,217 Ⅰ Shareholder's equity 272,094 (1) Investment securities 55,639 1 Capital stock 18,675 (2) Long-term loans receivable 327 2 Capital surplus 34,026 (3) Lease deposits 8,254 3 Retained earnings 220,464 (4) Insurance funds 1,549 4 Treasury shares △1,071 (5) Net defined benefit asset 19,938 Ⅱ Accumulated other comprehensive income 5,417 (6) Deferred tax assets 8,449 1 Valuation difference on available-for-sale securities 7,026 (7) Others 13,506 2 Revaluation reserve for land △3,494 (8) Allowance for doubtful accounts △447 3 Foreign currency translation adjustment △29 　 　 　 4 Remeasurements of defined benefit plans 1,915 　 　 　 Ⅲ Non-controling interest 26,915 　 　 　 　 Total net asset 304,427 　 Total assets 481,465 　 Total liabilities and net asset 481,465 <Consolidated> Profit and Loss Statement (from April 1,2020 to March 31, 2021) 　 (Unit: million JPY) Net Sales 　 469,920 Cost of sale 　 352,811 Gross profit 　 117,108 Selling, general and administrative expense 　 79,926 Operating income 　 37,182 Non-operating income 　 Interest income, devidend income 874 Equity in earnings of Affiliates 1,399 Other non-operating income 2,909 5,184 Non-operating expense 　 Interest expense 2,036 Other non-operating expense 1,117 3,154 Ordinary income 　 39,212 Special income 　 Gain on sale of investment secuirities 24 Gain on sale of property, plant and equipment and intangible assets 99 Gain on liquidation of shares of subsidiary and affiliates 4 Compensation income 50 178 Special expense 　 Loss on devaluation of investment securities 39 Loss on sale of investment securities 0 Loss on impairment 344 Loss on sale of property, plant and equipment and intangible assets 8 Loss on disposal of property, plant and equipment and intangible assets 79 Provision for loss on litigation 57 529 Income before income taxes and others 　 38,862 Corporate income, inhavitant and business taxes 12,848 Income taxes-deffered △ 842 12,006 NET income 　 26,855 Profit attributable to non-controlloing interest 　 1,841 Profit attributable to owners of parent 　 25,014 <Consolidated> Statement of Changes in Net Assets (from April 1,2020 to March 31, 2021) (Unit: million JPY) 　 Shareholder's Equity Capital stock Capital surplus Retained　earnings Treasury shares Total shareholders’ equity Balances at the beginning of the period 18,675 32,243 203,375 △1,070 255,222 Changes of items during the period 　 　 　 　 　 Dividends from surplus 　 　 △7,138 　 △7,138 Net income attributable to owners of parent 　 　 25,014 　 25,014　 Changes in the Parent Company's Equity in Transactions with Non-Controlling Shareholders 　 △216 　 　 △216 Aquisition of treasury stock 　 　 　 △0 △0 Reverse of revaluation reserve for land 　 　△786 　 △786 Net changes of items other than shareholders’ 　 　 　 　 　 Total net changes of items - △216 17,089 △0 16,872 Balance at the end of the period 18,675 34,026 220,464 △1,071 272,094 　 Accumulated other comprehensive income Non-controlling interest Total net assets Valuation difference on available-for-sale securities Revaluation reserve for land Foreign currency translation adjustment Remeasurements of defined benefit plans Total Accumulated comprehensive income Balances at the beginning of the period 4,609 △4,281 △167 △9,886 △9,725 24,935 270,432 Changes of items during the period 　 　 　 　 　 　 　 Dividends from surplus 　 　 　 　 　 　 △7,138 Net income attributable to owners of parent 　 　 　 　 　 　 25,014 Changes in the Parent Company's Equity in Transactions with Non-Controlling Shareholders 　 　 　 　 　 　 △216 Acquisition of treasury stock 　 　 　 　 　 　 △0 Reverse of revaluation reserve for land 　 　 　 　 　 　 △786 Net changes of items other than shareholders’ 2,416 786 137 11,802 15,143 1,980 17,123 Total net changes of items 2,416 786 137 11,802 15,143 1,980 33,995 Balance at the end of the period 7,026 △3,494 △29 1,915 5,417 26,915 304,427 <Non-Consolidated> Balance sheet (March 31, 2021) (Unit: million JPY) Assets Liabilities Ⅰ Current asset 137,596 Ⅰ Current liabilities 74,277 1 Cash and deposit 10,527 1 Accounts payable 13,164 2 Cash for the security transport bussiness 79,980 2 Short-term loans payable 33,841 3 Notes receivable-trade 126 3 Current portion of long-term loans payable 1,714 4 Accounts receivable-trade 24,805 4 Lease payable 807 5 Supplies 5,701 5 Accounts payable 4,707 6 Advance payments-trade 830 6 Accrued expenses 3,198 7 Prepaid expences 1,804 7 Income tax payable 2,925 8 Advances paid 5,394 8 Accrued consumption taxes 3,039 9 Others 8,466 9 Advance received 8,382 10 Allowance for doubtful accounts △42 10 Withholdings 747 Ⅱ Non-current asset 181,995 11 Others 1,749 1 Tangible assets 43,639 Ⅱ Non-current liabilities 21,002 (1) Buildings 12,642 1 Long-term loans 1,716 (2) Structures 393 2 Lease payable 1,695 (3) Machinery and equipment 15,047 3 Deferred tax liabilities for land revaluation 128 (4) Vehicle 7 4 Employees’ pension and retirement benefits 15,439 (5) Tools, furniture & fixtures 2,318 5 Guarantee deposits received 1,520 (6) Land 9,750 6 Long-term accounts payable-other  82 (7) Leased assets 2,336 7 Asset retirement obligations 420 (8) Construction in progress 1,142 　 　 2 Intangible assets 9,826 　 Total Liabilities 95,280 (1) Software 3,599 Net asset (2) Temporary account for software 6,225 Ⅰ Shareholder's equity 221,828 (3) Right of using telecommunication facilities 0 1 Capital stock 18,675 (4) Others 1 2 Capital surplus 32,742 3 Investment and other assets 128,529 　 (1) Legal capital surplus 29,320 (1) Investment securities 14,824 　 (2) Other capital surplus 3,422 (2) Stocks of affiliated company 83,042 3 Retained earnings 171,439 (3) Long-term loans receivable 468 　 (1) Legal retained earnings 792 (4) Long-term prepaid expences 161 　 (2) Other retained earnings 170,647 (5) Lease deposits 5,456 　 　　　General reserve 14,000 (6) Insurance deposit 289 　 　　　Retained earnings brought　forward 156,647 (7) Prepaid pension cost 9,479 4 Treasury shares △ 1,029 (8) Deferred tax assets 3,564 Ⅱ Accumulated other comprehensive income 2,483 (9) Others 11,512 1 Valuation difference on available-for-sale securities 5,983 (10) Allowance for doubtful accounts △ 270 2 Revaluation reserve for land △ 3,500 　 　 　 　 Total net asset 224,311 　 Total assets 319,591 　 Total liabilities and net asset 319,591 <Non-Consolidated>Profit and Loss Statement (from April 1,2020 to March 31, 2021) 　 (Unit: million JPY) Net Sales 　 244,367 Cost of sale 　 176,900 Gross profit 　 67,467 Selling, general and administrative expense 　 48,759 Operating income 　 18,707 Non-operating income 　 Interest income, devidend income 9,228 Other non-operating income 2,479 11,707 Non-operating expense 　 Interest expense 558 Other non-operating expense 687 1,246 Ordinary income 　 29,169 Special income 　 Gain on sale of investment secuirities 24 Gain on sale of shares of subsidiary and affiliates 510 Gain on sale of property, plant and equipment and intangible assets 99 Gain on liquidation of shares of subsidiary and affiliates 4 639 Special expense 　 　 Loss on evaluation of investment securities 37 Loss on evaluation of subsidiaries stock 29 Loss on sale of investment securities 0 Impairment loss 49 116 Income before income taxes and others 　 29,691 Corporate income, inhavitant and business taxes 6,409 Income taxes-deffered 195 6,605 NET income 　 23,086 <Non-Consolidated> Statement of Changes in Net Assets (from April 1,2020 to March 31, 2021) (Unit: million JPY) 　 Shareholder's Equity Capital stock Capital surplus Retained earnings Legal reserve of retained earnings Other retained earnings Total retained earnings Capital reserve Other capital surplus Total capital surplus Other reserve retained earnings carried forward Balances at the beginning of the period 18,675 29,320 3,422 32,742 792 14,000 141,485 156,278 Changes of items during the period 　 　 　 　 　 　 　 　 Dividends from surplus 　 　 　 　 　 　 △ 7,138 △ 7,138 Net income 　 　 　 　 　 　 23,086 23,086 Aquisition of treasury stock 　 　 　 　 　 　 　 　 Reverse of revaluation reserve for land 　 　 　 　 　 　 △ 786 △ 786 Net changes of items other than shareholders’ 　 　 　 　 　 　 　 　 Total net changes of items - - - - - - 15,161 15,161 Balance at the end of the period 18,675 29,320 3,422 32,742 792 14,000 156,647 171,439 　 Shareholder's Equity Valuation, translation adjustments and others Total net assets Treasury stock Total shareholder's Equity Valuation difference on available-for-sale securities Revaluation reserve for land Total valuation, translation adjustments and others Balances at the beginning of the period △ 1,028 206,667 4,178 △ 4,287 △ 108 206,558 Changes of items during the period 　 　 　 　 　 　 Dividends from surplus 　 △ 7,138 　 　 　 △ 7,138 Net income 　 23,086 　 　 　 23,086 Aquisition of treasury stock △ 0 △ 0 　 　 　 △ 0 Reverse of revaluation reserve for land 　 △ 786 　 　 　 △ 786 Net changes of items other than shareholders’ 　 　 1,805 786 2,591 2,591 Total net changes of items △ 0 15,161 1,805 786 2,591 17,752 Balance at the end of the period △ 1,029 221,828 5,983 △ 3,500 2,483 224,311 Certified Copy of the accounting auditor's audit report on the consolidated financial statements Independent Auditor's Report May 7,2021 Sohgo Security Co., Ltd. Board of Directors Grant Thornton Taiyo LLC Tokyo Office Designated Limited Liability Partner Executive member Certified public accountant　Tetsuro Shibatani Designated Limited Liability Partner Executive member Certified public accountant Tsuoshi Iwasaki Designated Limited Liability Partner Executive member Certified public accountant Takayuki Ueishi Audit Opinion We have audited the consolidated financial statements, namely, the consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in net assets, and the notes to consolidated financial statements of Sohgo Security Co., Ltd. We have audited the consolidated financial statements, namely, the consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in net assets, and the notes to the consolidated financial statements of the Company for the fiscal year from April 1, 2020 to March 31, 2021. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2021, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in Japan. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position and results of operations of the Sohgo Security Co., Ltd. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position and results of operations of the Sohgo Security Co., Ltd. Basis of our audit opinion We conducted our audits in accordance with auditing standards generally accepted in Japan. Our responsibility for auditing standards is set forth in "Auditor Responsibility in Auditing the Consolidated Financial Statements". We are independent of the Company and its consolidated subsidiaries and fulfill our other ethical responsibilities as an auditor in accordance with the provisions concerning professional ethics in Japan. We believe that we have obtained sufficient and appropriate audit evidence to support our opinion. Responsibility of Management, Corporate Auditors and Board of Corporate Auditors for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in conformity with accounting principles generally accepted in Japan. This includes the development and operation of internal controls deemed necessary by management to prepare and present consolidated financial statements that are free from material misstatement due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing whether it is appropriate to prepare the consolidated financial statements based on the going concern assumption and for disclosing matters related to the going concern when it is necessary to disclose such matters in accordance with accounting principles generally accepted in Japan. The responsibility of corporate auditors and the Board of Corporate Auditors is to monitor the execution of duties by directors in the development and operation of the financial reporting process Auditors' Responsibilities in Auditing the Consolidated Financial Statements The auditor's responsibility is to express an opinion on the consolidated financial statements from an independent standpoint in the audit report, based on an audit conducted by the auditor, with reasonable assurance as to whether the consolidated financial statements as a whole contain material misstatement due to fraud or error. Fictitious representations are deemed to be material if they are likely to arise from fraud or error and if they are reasonably expected to affect the decision-making of users of the consolidated financial statements either individually or in aggregate. In accordance with auditing standards generally accepted in Japan, the auditor shall, throughout the audit process, make professional judgments and maintain professional skepticism:. ・Identify and assess the material misstatement risk of fraud or error. We also plan and implement audit procedures to address material misstatement risks. The selection and application of audit procedures shall be at the discretion of the auditor. In addition, sufficient and appropriate audit evidence should be obtained to form the basis for the opinion. ・Although the purpose of audits of the Consolidated Financial Statements is not to express an opinion on the effectiveness of internal controls, in conducting risk assessments, the auditor shall consider internal controls related to audits in order to design audit procedures that are appropriate in the circumstances. ・The appropriateness of the accounting policies and the method of application adopted by management, the reasonableness of accounting estimates made by management, and the appropriateness of related notes shall be assessed. ・Conclude whether it is appropriate for management to prepare the consolidated financial statements on the going concern assumption and whether, based on the audit evidence obtained, there are significant uncertainties regarding events or circumstances that could raise significant doubts about the going concern assumption. In cases where significant uncertainty is found with respect to the going concern assumption, the audit report is required to call attention to the notes to the consolidated financial statements, or to express an opinion with an exception to the consolidated financial statements if the notes to the consolidated financial statements with respect to significant uncertainty are inappropriate. The auditor's conclusions are based on audit evidence obtained by the date of the audit report, but future events and circumstances may prevent the entity from continuing as a going concern. ・Assess whether the presentation and notes in the consolidated financial statements conform to business accounting standards generally accepted in Japan and whether the presentation, structure and content of the consolidated financial statements, including related notes, and the transactions and accounting events on which the consolidated financial statements are based are presented appropriately. ・Obtain adequate and appropriate audit evidence of the financial information of the Company and its consolidated subsidiaries to express an opinion on the consolidated financial statements. Auditors are responsible for the direction, supervision and implementation of audits of the Consolidated Financial Statements. The auditor is solely responsible for the audit opinion. Auditor shall report to Audit & Supervisory Board Members and the Audit & Supervisory Board on the scope and timing of the planned audit, important findings in the audit including material deficiencies in internal control identified in the audit implementation process, and other matters required by the audit standards. The auditors shall report to the auditors and the board of auditors on compliance with the provisions on professional ethics in Japan with respect to independence and on matters reasonably believed to affect the independence of the auditors and, where safeguards are in place to eliminate or mitigate impediments, the nature of the safeguards. Interest party There are no interests that should be stated pursuant to the provisions of the Certified Public Accountants Act between the audit corporation or the managing partners and the interested companies or consolidated subsidiaries. Certified copy of the accounting auditor's audit report Independent Auditor's Report May 7,2021 Sohgo Security Services Co., Ltd. Board of Directors Grant Thornton Taiyo LLC Tokyo Office Designated Limited Liability Partner Executive member Certified public accountant　Tetsuro Shibatani Designated Limited Liability Partner Executive member Certified public accountant Tsuoshi Iwasaki Designated Limited Liability Partner Executive member Certified public accountant Takayuki Ueishi Audit Opinion Pursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the financial statements, namely the balance sheet, profit and loss statement, statement of changes in net assets and notes to non-consolidated financial statements, and their supplementary schedules (hereinafter referred to as "Financial Statements, etc.".) of Sohgo Security Services Co., Ltd. for the fiscal year from April 1, 2020 to March 31, 2021. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position and results of operations for the period as set forth above, in accordance with accounting principles generally accepted in Japan. Basis of our audit opinion We conducted our audits in accordance with auditing standards generally accepted in Japan. Our responsibility for auditing standards is set forth in "Auditor Responsibility in Auditing Financial Statements, etc.". We are independent of the Company and fulfill our other ethical responsibilities as an auditor in accordance with the provisions regarding professional ethics in Japan. We believe that we have obtained sufficient and appropriate audit evidence to support our opinion. Responsibilities of the Management, Corporate Auditors and Board of Corporate Auditors to the Financial Statements, etc. Management is responsible for the preparation and fair presentation of the financial statements in conformity with accounting principles generally accepted in Japan. This includes the development and operation of internal controls that management deems necessary for the preparation and fair presentation of financial statements, etc. that are free from material misstatement due to fraud or error. In preparing the financial statements, management is responsible for assessing whether it is appropriate to prepare the financial statements based on the Going Concern Assumption and for disclosing matters related to the Going Concern if it is necessary to disclose such matters in accordance with business accounting standards generally accepted in Japan. The responsibilities of auditors and the board of auditors are to monitor the performance of directors' duties in the development and operation of financial reporting processes. Auditors' Responsibilities in Auditing the Financial Statements The auditor's responsibility is to express an opinion on the financial statements, etc. from an independent standpoint in the audit report by obtaining reasonable assurance as to whether the financial statements, etc. as a whole contain any material misstatement due to fraud or error based on the audit conducted by the auditor. Fictitious representations are judged to be material when they may arise from fraud or error and when individually or tabulated, they are reasonably expected to affect the decision making of users of financial statements, etc. In accordance with auditing standards generally accepted in Japan, the auditor shall, throughout the audit process, make professional judgments and maintain professional skepticism:. ・Identify and assess the material misstatement risk of fraud or error. We also plan and implement audit procedures to address material misstatement risks. The selection and application of audit procedures shall be at the discretion of the auditor. In addition, sufficient and appropriate audit evidence should be obtained to form the basis for the opinion. ・The purpose of the audit of the Financial Statements, etc. is not to express an opinion on the effectiveness of internal control. In carrying out the risk assessment, the Audit Committee shall consider internal controls related to audits in order to design audit procedures appropriate to the circumstances. ・The appropriateness of the accounting policies and the method of application adopted by management, the reasonableness of accounting estimates made by management, and the appropriateness of related notes shall be assessed. ・Conclude whether it is appropriate for management to prepare financial statements, etc. assuming the going concern, and whether, based on the audit evidence obtained, there are significant uncertainties regarding events or circumstances that may raise significant doubts about the going concern assumption. In cases where significant uncertainty is found with respect to the going concern assumption, the audit report is required to call attention to the matters to be noted in the financial statements, etc., or, in cases where the matters to be noted in the financial statements, etc. with respect to significant uncertainty are inappropriate, to express an opinion with an exception in the financial statements, etc. The auditor's conclusions are based on audit evidence obtained by the date of the audit report, but future events and circumstances may prevent the entity from continuing as a going concern. ・Assess whether the presentation and notes in the financial statements, etc. comply with business accounting standards generally accepted in Japan, and whether the presentation, structure and content of the financial statements, etc. including related notes, and the transactions and accounting events on which the financial statements, etc. are based are presented appropriately. Auditors shall report to Audit & Supervisory Board Members and the Audit & Supervisory Board on the scope and timing of the planned audit, important findings in the audit, including material deficiencies in internal control identified in the audit process, and other matters required by the audit standards. The auditor shall report to the Audit & Supervisory Board Members and the Audit & Supervisory Board on compliance with the provisions on professional ethics in Japan with respect to independence and on matters that are reasonably believed to affect the auditor's independence and, if safeguards are in place to eliminate or mitigate impediments, the details thereof. Interest party There are no interests that should be stated pursuant to the provisions of the Certified Public Accountants Act between the audit corporation or the managing partners and the company. Certified Copy of audit report of Board of Corporate Auditors Audit report With respect to the execution of duties by Directors for the 56th fiscal year from April 1, 2020 to March 31, 2021, the Audit and Supervisory Board will prepare this report after deliberation based on the audit reports prepared by each Audit & Supervisory Board Member, and report as follows Method and content of audits by company auditors and the board of company auditors. (1) The Board of Corporate Auditors established audit policies, audit plans, etc. for the fiscal year under review, received reports on the status and results of audits from each Corporate Auditor, received reports on the status of execution of duties from Directors, etc. and the Accounting Auditor, and requested explanations as necessary. (2) In accordance with the auditing standards for Corporate Auditors established by the Board of Corporate Auditors, and in accordance with the auditing policies and auditing plans for the fiscal year under review, each Corporate Auditor communicated with Directors, the Internal Auditing Division and other employees, and endeavored to improve the environment for information gathering and auditing, and conducted audits in the following manner. The Company attended meetings of the Board of Directors and other important meetings, received reports on the status of the execution of duties from Directors and employees, requested explanations as necessary, inspected important approval documents, and investigated the status of operations and assets at the Head Office and major business locations. In addition, the Company requested subsidiaries to report on their business and investigated the status of their business and assets. With regard to the contents of the resolution of the Board of Directors concerning the development of a system to ensure that the execution of duties by the Directors described in the Business Report complies with laws and regulations and the Articles of Incorporation and other systems stipulated in Article 100, Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act as necessary to ensure the appropriateness of the business of the corporate group consisting of a stock company and its subsidiaries, and the status of the construction and operation of a system (internal control system) developed based on said resolution, the Company periodically received reports from Directors and employees, etc. and requested explanations as necessary, and expressed its opinions. In addition to monitoring and verifying whether the Accounting Auditor maintains an independent position and conducts appropriate audits, the Company received reports from the Accounting Auditor on the status of the execution of duties and requested explanations as necessary. In addition, the Company was notified by the Accounting Auditor that the “system to ensure the proper execution of duties” (matters listed in each item of Article 131 of the Corporate Accounting Regulations) has been developed in accordance with the “ Quality Control Standards for Audits ” (Business Accounting Council, October 28, 2005), and requested explanations as necessary. Based on the above methods, we reviewed the business report and supplementary schedules thereof, financial statements (Balance sheet, income statement, statement of changes in net assets and notes to non-consolidated financial statements) and supplementary schedules thereof, and consolidated financial statements (Consolidated Balance Sheet, Consolidated Statements of Income, Consolidated Statements of Changes in Net Assets, and Notes to Consolidated Financial Statements) for the current fiscal year. Results of Audit Results of audits of business reports, etc. We believe that the business report and the supplementary schedules present the Company's situation correctly in accordance with laws and regulations and the Articles of Incorporation. No misconduct or material facts in violation of laws and regulations or the Articles of Incorporation regarding the execution of duties by Directors are found. The content of the resolution of the Board of Directors concerning the internal control system is appropriate. In addition, there are no matters to be pointed out regarding the content of the business report concerning the internal control system and the execution of duties by directors. Results of the audit of the non-consolidated financial statements and the supplementary schedules The method and results of the audit by Grant Thornton Taiyo LLC are deemed reasonable. Results of Audit of Consolidated Financial Statements The method and results of the audit by Grant Thornton Taiyo LLC are deemed reasonable. May 7,2021 Sohgo Security Services Co., Ltd. Board of Corporate Auditors Full-time Corporate Auditor Akira Takano Full-time Corporate Auditor (External Auditor) Shinichiro Nakano Audit & Supervisory Board Member (External Auditor) Makoto Uenoyma Audit & Supervisory Board Member (External Auditor) Michiko Ngasawa