Gree Annual Report

Annual Report 2011For the year ended June 30, 2011

GREE, Inc.

Corporate Profile

Forward-Looking StatementsThis Annual Report contains forward-looking statements that are based on judgments made by the GREE Group with reference to information available as of February 2012. These statements are subject to risks and uncertainties. As a consequence, actual results may differ materially from those expressed in these statements, for a variety of factors.

The important factors that may impact on actual results include the economic environment within which the GREE Group conducts business, market trends and exchange rate fluctuations.

ContentsCorporate Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01Milestones in GREE History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04Business Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05To Our Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06Our Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Our Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Strategies & Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Our Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Corporate Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Corporate Social Responsibilities (CSR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Management’s Discussion and Analysis of Financial Conditions and Results of Operations . . . . . . . . . . 28 Business Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Consolidated Statement of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Consolidated Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Quarterly Financial Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Share Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Company Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

“Making the world a better place through the power of the Internet.”

GREE, Inc.’s business started in 2004 with the launch of social networking service (SNS) GREE, created from an idea by Yoshikazu Tanaka, the Company’s founder and CEO.

Since then, business initiatives emerging from our strong desire to create new services and have them used by even more people have resulted in SNS GREE growing to 27.7 million registered users in Japan and over 150 million worldwide, including the U.S. and Europe, by September 30, 2011.

The Internet still has the potential to change the face of our world. We at GREE aim to tap some of this potential and enable SNS GREE to spread its wings and reach even more users around the world.

Looking ahead, GREE will use the new business model of social gaming to provide innovative products that transcend cultural barriers and win acceptance throughout the world, whether in Asia, North America or Europe. GREE continues to take up the challenge of creating services that will be enjoyed by one billion users worldwide.

Corporate MessageGREE ANNUAL REPORT 2011

01

Making the world a better place through the power of the Internet.“We can make the world a better place through the power of the Internet.” GREE began from this one passion and principle.

Since the day we started, we have been exploring the new potential of the Internet and working to provide such innovation as soon as possible, to as many people as possible.

New challenges don’t always end in success. There are times when we cannot achieve our highest aims. But as long as there is a slight possibility, we will cease-lessly continue our efforts.

The changes the Internet will have on the world have only just begun. There is infinite potential that remains to be discovered.

To bring this potential into the world, GREE will continue to put our passion and prin-ciple into action, in order to provide enjoyment and happiness to our users’ lives and make our society more open and convenient.

Through the power of the Internet, we can make the world a better place.

2007.62006.62005.62004.6*Consolidated

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

46183

GREE ANNUAL REPORT 2011

02

Milestones in GREE History

FEBRUARYLaunch of social networking service GREE.

JUNEStarted services for mobile phones ahead of competitors.

JULYA capital partnership with KDDI.

MAYLaunch of “Tsuri-Suta (Fishing Star),” the world-first mobile social game.

DECEMBEREstablishment of GREE, Inc.

JULYMoved its office along with business expansion.

JULYLaunch of EZ GREE.

2004 2005 2006 2007

(Millions of yen)

■■ Net sales[left scale]

■■ Number of employees (people)■■ Number of GREE users

[right scale]

2010.6 2011.6*2009.62008.60

20,000

40,000

60,000

80,000

100,000

120,000

140,000

592

174

10274


03

APRILAired the first TV commercial.

DECEMBERThe growth rate for the past three years was No. 1 among Japanese companies for the second consecutive year.

JUNEListed on the First Section of the Tokyo Stock Exchange.

AUGUSTGREE for smart-phones was released.

DECEMBERListed on Mothers of the Tokyo Stock Exchange.

JUNEReleased the first social application developed through the GREE Platform.

2008 2009 2010 2011

(Thousands of people)

FEBRUARYEstablishment of GREE International, Inc., the first office in North America.

APRILAcquired OpenFeint, Inc. and signed business partnership agreements with Tencent (January) and Project Goth, Inc.

APRILThe number of GREE users exceeded 100 million.

Millions of yenThousands of U.S. dollars*2

2007.6 2008.6 2009.6 2010.6 2011.6 2011.6Non-

consolidatedNon-

consolidatedNon-

consolidatedNon-

consolidatedNon-

consolidated Consolidated Consolidated

FOR THE YEAR:

Net sales ¥ 323 ¥2,937 ¥13,945 ¥ 35,231 ¥64,169 ¥64,178 $794,971

Operating income (loss) (104) 1,050 8,361 19,578 31,205 31,135 385,668

Net income (loss) (100) 582 4,467 11,505 18,368 18,240 225,938

Net cash provided by (used in) operating activities (73) 1,061 5,721 11,630 – 15,679 194,215

Net cash used in investing activities (49) (94) (85) (10,793) – (3,273) (40,543)

Free cash flow (122) 967 5,636 837 – 12,406 153,672

Net cash provided by (used in) financing activities 362 – 3,665 (76) – (1,090) (13,502)

Capital expenditures 18 47 55 113 980 982 12,164

AT YEAR-END:

Total assets 510 2,582 15,619 32,170 62,707 62,856 778,595

Cash and cash equivalents 324 1,292 10,594 11,354 – 22,254 275,660

Total net assets 370 952 9,122 20,552 37,928 37,463 464,053

Yen U.S. dollars

PER SHARE DATA*1:

Basic net income (loss) ¥(10,128.65) ¥58,607.22 ¥207.66 ¥255.77 ¥ 80.49 ¥ 79.92 $0.99

Diluted net income – – 188.37 236.89 75.64 75.11 0.93

Net assets 37,227.75 95,834.97 407.64 452.47 165.41 163.10 2.02

Cash dividends – – 5.00 25.00 9.00 9.00 0.11

FINANCIAL MEASURES (%):

Operating income (loss) margin (32.2) 35.7 60.0 55.6 48.6 48.5 –

ROE (Return on equity) (42.0) 88.1 88.7 77.5 62.8 – –

ROA (Return on assets) (31.9) 37.6 49.1 48.1 38.7 – –

Equity ratio 72.5 36.9 58.4 63.9 60.5 59.5 –

*1. GREE, Inc. conducted a 2,000-for-1 stock split on August 22, 2008, a 2-for-1 stock split on October 1, 2009, and a 5-for-1 stock split on October 1, 2010. The above per-share figures have been retroactively adjusted to incorporate the effects of these stock splits.

*2. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥80.73 to U.S. $1, the rate prevailing at June 30, 2011.


04

Financial Highlights

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

07.6 10.6 11.609.608.6–5,000

0

5,000

10,000

15,000

20,000

07.6 10.6 11.609.608.60

10,000

20,000

30,000

40,000

50,000

60,000

70,000

07.6 10.6 11.609.608.6

NET SALES(Millions of yen)

NET INCOME (LOSS)(Millions of yen)

TOTAL ASSETS(Millions of yen)

■■ Non-consolidated■■ Consolidated




05

BY AREA

USER DEMOGRAPHICS IN JAPAN

Business Highlights

OCT. NOV. DEC. JAN. FEB. MAR. APR. MAY JUN. JUL. AUG. SEP. OCT. NOV. DEC.

20112010

0

50

100

150

200

9%

5%

34%

11%

11%16%7%

7%

Hokkaido

Tohoku

Tokyo Metropolitan Area

Koshin-etsu/ Hokuriku

Tokai

KinkiChugoku/Shikoku

Kyushu/Okinawa

REGISTERED USERS

(Millions of people)

The number of users for the entire group has reached 190 million, of which users in Japan accounted for 14.8%.* GREE Group’s user base is a total of GREE and OpenFeint

15.3%

84.7%

Europe, U.S., Asia, etc.

Japan

DEC.2011

BY GENDER

BY AGE

* As of Dec. 31, 2011* Percentages are rounded to the

nearest whole number.

47% 53%

27% 34%

12%

6%21%

DEC.2011

DEC.2011

Share of the 30- and 40-year-old demographic, who have a relatively high ARPU, continues to maintain high levels.

Female Male

Under 1840 and above

18, 19

20 to 2930 to 39

Thoughts on GREESince this is our first annual report I wanted to share with you some personal thoughts on GREE the company.

In the 1990s, when I was in middle school and high school, a significant period of growth had ended in Japan and the country was between treading water and sinking. Another world away in Silicon Valley, U.S.A., scores of young people entranced by the great potential of the Internet were gleefully going about trying to create new businesses.

They talked passionately of creating a society in which everyone used the Internet, of changing how we communicate and disseminate information just as the invention of the printing press and telephone did, of creating a turning point in human history and changing society and the world, of working because of people’s real need for their products. I had always thought of work as an obligation that isn’t fun, that the business world was completely greedy and that corporations were bad. But these young people in Silicon Valley had shockingly different values and an entirely different take on things.

I was completely taken with the values and philosophy of Silicon Valley. The idea was you yourself could create society’s future by building new businesses, and to do this you had to be willing to work hard and take on a mountain of challenges. I remember having an overwhelming desire to live my life like these young entrepreneurs.

A direction in life was not the only thing I picked up from Silicon Valley. Through the example of companies like Netscape, Yahoo!, Amazon, eBay and others, I learned that the technologies and services that came out of Silicon Valley could make the world a better place. I also learned the importance of teams of people taking on new challenges, persisting and not giving up.


06

To Our Stakeholders

Making the World a Better Place Through the Power of the Internet

YOSHIKAZU TANAKA

Founder and Chief Executive Officer

The social networking service (SNS) GREE was born in 2003 of a small idea I had. It all started when I began doing volunteer work in my free time out of a desire to make the world a better place through new forms of communication and community. I really wanted to help make the world a better place, if only a little, and change the world through the power of the Internet, so I launched SNS GREE.

I put SNS GREE online in February 2004 and in just one month it had over 10,000 users. It became exceedingly difficult for me to operate the service on my own, so in December 2004 I established GREE, Inc. Full-fledged operation by the company got underway and continues to this day.

SNS GREE, which I started as a one-man operation, now provides services to its many, many members all over the world, but its growth has not always been smooth sailing. At the time, many people thought GREE was destined to fail and that it had no future. Many thought we wouldn’t be around very long.

When you take on new challenges, you end up failing many times more than people who don’t. And every time you fail, there is a feeling of emptiness, like all your efforts have gone to waste. Sometimes you may even find yourself blaming other people or disliking those you’ve worked with. It is only the people who continue on despite it all who are able to create something new. I suspect my Silicon Valley prede-cessors who inspired me so much persisted in this way and ended up changing the world and creating the society and lifestyle we know today.

The Internet changes everything: this is our starting point. We do not simply look at the changes taking place as an innocent bystander and pass right on by like a spectator; we think for ourselves about the way the future should be and take action to make it happen. This is the type of person I want to be. My engagement in GREE’s management has constantly been guided by this commitment.

Review of Fiscal 2011

billion yen %

GREE Group members

123.59Consolidated operating income

31.1Consolidated operating income margin

48.5million

In the fiscal year ended June 2011, the seventh term since the company’s founding, we worked to expand our mainstay Internet media business by increasing user num-bers and further developing our earnings base for SNS GREE for mobile and PC, the core of the business. To increase users, we continued to focus on forming alliances with major communications providers and generating publicity with television commer-cials and other media. As a result, on a combined mobile and PC basis, SNS GREE users totaled 26.41 million as of June 30, 2011. The number of GREE Group mem-bers, including overseas subsidiaries, grew to 123.59 million. Thanks to a strong per-formance for the term, on a consolidated basis, net sales totaled 64.1 billion yen, operating income was 31.1 billion yen, and our operating income margin was 48.5%. Net income came in at 18.2 billion yen.


07

Our international expansion made significant progress in fiscal 2011. With smart-phones becoming increasingly popular throughout the world, in January 2011 we established a North American subsidiary, GREE International, Inc., and in April 2011 we made OpenFeint, Inc. a subsidiary. OpenFeint is developing a global social gaming platform for smartphones for North America, Europe, Asia and other regions.

And, in January and April 2011, respectively, we formed business alliances with Tencent*1 in China, and Project Goth, Inc.*2, which does business in Southeast Asia, India, South Africa and other emerging markets, to standardize specifications for smartphone platforms.

Responding to the Great East Japan Earthquake of March 2011, we helped sup-port relief and recovery efforts in a way that utilized Internet services, providing fund-raising through the purchase of avatar-items and disaster-related news and information through SNS GREE.

All of Japan needs to work persistently to solve the problems that are now occur-ring in connection with the recovery. As a business executive, I intend to actively sup-port economic growth through the power of innovation and contribute to the recovery while remaining focused on Japan’s future.

*1. Tencent aims to enrich the interactive online experience of Internet users in China by providing high value-added Internet services for computers, tablets and mobile devices. The company offers a wide range of Internet services for communication, information, entertainment and e-commerce, including the QQ instant messaging service, QQ.com web portal, QQ game portal, Qzone social networking service, and portal sites for tablets and mobile devices. It is China’s largest online community.

*2. Project Goth, Inc. provides the “mig33” social networking service for mobile devices, which boasts 47 million users, primarily in emerging markets like Southeast Asia, India and South Africa.

Initiatives in Fiscal 2012With further development of Internet infrastructure expected to make the online experi-ence cheaper and more pleasant on both PCs and mobile devices around the world, we believe that the SNS user base will continue to expand and that the social gaming market will enter another growth phase as smartphones continue to gain in popularity worldwide in the year ending June 2012.

In response, GREE will work to maximize the media value of SNS GREE, which comprises the core of our Internet media business, increase user numbers in each country and further develop our earnings base by continuing to allocate management resources to the business on a priority basis. Plans also call for aggressive measures to reinforce our operating base through capital expenditures, additional hiring and further establishment of global offices.

In the April–June 2012 quarter, we will roll out the GREE Platform on a global basis. The new platform, which integrates all the OpenFeint brands, user bases, social media and social platforms we acquired, will be a single platform for 189 million users worldwide. As a gaming platform, it will be one of the world’s largest*3.

To increase users, we will actively form alliances with major communications pro-viders in countries around the world and aggressively carry out advertising using a range of promotional strategies. At the same time, to further develop our earnings base, we will work to increase and stabilize revenue from paid services by launching new social games and promoting policies to increase content use.

GREE Group members

300Release of

One

million

Global Platform


08

In addition, we are anticipating greater user activity and corresponding sales growth as a diverse range of content is provided by a wide variety of developers worldwide through partnerships with prominent platforms, communications carriers and game developers in countries around the globe. Going forward, we intend to pro-vide varied content and expanded functions to increase user activity while keeping a close watch on user trends.

Regarding revenue from advertising media, we will work to identify and acquire new advertisers as the advertising media value of our services increases alongside steady growth in scale. We will also seek to increase ad media revenue from smart-phone ads, where growth is expected, by developing new advertising products.

*3. GREE estimate based on Nintendo DS unit sales of 146.42 million (from Nintendo Co., Ltd.’s 2011 English Annual Report) and other sources.

Making the World a Better Place Through the Power of the InternetThe growing smartphone market is buoying the expectation that social gaming will further develop into a major industry. GREE Group members, including the U.S., Europe and other regions, reached 189 million as of December 2011, but our goal is to increase this number to 300 million by the end of the fiscal year ending June 2012. To do this we will further strengthen global operations by releasing a single global plat-form, and by leveraging partnerships with prominent platforms, communications carri-ers and game developers around the world, as discussed above.

I believe the Internet still has the potential to change the world. Our ongoing chal-lenge is to create a global online community of 1 billion users by providing innovative borderless products used everywhere, whether in Asia, North America or Europe, through this new business model called social gaming.

February 2012

YOSHIKAZU TANAKAFounder and Chief Executive Officer


09


Our Services

Social Media Business

SOCIAL NETWORKING SERVICE

Since our Chief Executive Officer Yoshikazu Tanaka released social networking service

(SNS) GREE to the public in February 2004, GREE has grown into a major Japanese SNS

with 29.6 million users and over 189 million users* globally (as of the end of December

2011). GREE has maintained consistent growth as a social media platform supporting

social applications.

* This figure includes the number of users of OpenFeint and GREE, following the acquisition of OpenFeint.

Social Application Business

SOCIAL GAMES

GREE, Inc. provides in-house social games, combining games and social functions on SNS

GREE. As of December 2011, GREE provides 13 titles, including “Tsuri-Sta,” which was the

world’s first mobile social game released in May 2007.

“Hacöniwa”

Simulated gardening on your mobile made simple and easy

“Tsuri-Sta”

Feel refreshed! Play an invigorating fishing game on your mobile!

“Odoriko Clinoppe”

A one-of-a-kind pet you can keep in your mobile

“Pirate Kingdom Columbus”

A battle game among great pirates!

“Decobito”

Simulate a strange and wondrous life with animals

“Tanken Doliland”

A new card game of explo-ration and adventure

“Sengoku Kingdom”

Wage major battles with this Sengoku card game!

“Monster Planet”

A blockbuster monster adven-ture game!

“Cerberus Crusade”

A social strategy RPG

“Dragon Master”

Hunt the dragons! The king of RPG is here!

“Majin Kingdom”

A battle game summoning legendary heroes!

“Bakumatsu Kingdom”

Let’s conquer Japan with Bakumatsu patriots!

“Sangokushi Kingdom”

A full-scale game adap-tation of The Chronicle of the Three Kingdoms


11

GREE Platform Business

GREE, Inc. runs “GREE Platform,” a business platform where third parties are providing

applications linking up with the information of SNS GREE. On “GREE Platform,” not only

gaming applications but also a wide range of social applications, including entertainment,

lifestyle, commerce, and communication are provided for feature phones and smartphones.

Advertisement/Ad Network Business

INTERNET ADVERTISING

In addition to banner ads and text ads utilizing SNS GREE’s massive number of page views,

GREE, Inc. provides advertising services made possible through SNS functionality, including

tie-up advertisement and advertisement applications utilizing social games.

AD NETWORK

GREE is advancing its ad network business with the acquisition of the largest smartphone-

based ad network business, AdLantis. Business development capability will be strengthened

by optimizing traffic to the GREE Platform and by further expansion of the service lineup.

Venture Capital Business (GREE Ventures)

At GREE Ventures, we use our successful experiences with Japan’s fastest growing enter-

prises and the resulting industry know-how in addition to our exclusive network to invest in

and support start-ups in the field of Internet and mobile services.


12


Our Business Model

GREE, Inc. operates the social networking service (SNS) GREE for mobile devices and computers. Registered users can use the overall GREE service free of charge, although some services and digital content are fee based. These sales constitute GREE’s revenues. Moreover, we have positioned the SNS GREE as an advertising media, and we derive revenues from selling advertising space on the SNS GREE to advertisers.

About GREESNSs are community-type services on the Internet that

can be used by registered users. These users create a

profile page and can enjoy exchanging information and

communicating with friends and trusted members. The

SNS GREE operated by GREE offers various features

that support proactive information sharing by users such

as profiles, diaries, communities, photos, and email ser-

vices. It functions as a platform that encourages mutual

understanding and active communication among users.

The SNS GREE was originally designed for PCs, but

utilizing the opportunity created out of the business part-

nership formed with KDDI CORPORATION in November

2006, it now focuses on developing mobile services. In

the mobile version of GREE, various content customized

for the mobile environment has been developed, such as

social gaming, Flash games, horoscopes, dictionaries,

FAQs, and news. We offered these features in addition to

the basic SNS functions of profiles, diaries/short com-

ments, and communities. This varied content all links

closely with the SNS and is characterized by having vari-

ous entertainment components that function around

communication between users.

Since the opening of the GREE Platform to develop-

ers outside the Company in June 2010, we have been

offering over 1,100 diverse titles from more than 500

developers (as of June 30, 2011). This has led to a vast

increase in user activity and contributed to revenues.

OpenFeint, operated by consolidated subsidiary

OpenFeint, Inc., is a social gaming platform that provides

community functionality like rankings, achievements,

head-to-head battles with friends, forums, and chat, to

Android and iOS games. The OpenFeint platform is being

developed in Asia, North America, Europe and other

parts of the world. Between April and June 2012, we

Advertising fee payments

Advertising fee payments (including affiliates)

Payment of collection agency fees

Providing of paid services

Payment of usage fees

AdvertisersDevelopers

Advertising firms & media reps

Mobile telecommunication operatorSettlement agents

Users

SNS“GREE”

Corporate Group

Advertising space sales

Advertising agent media reps

Providing of games and applications

Earnings distribution

Providing of free servicesUse of free services

Ad network“AdLantis”

Social gaming platform“OpenFeint”


14

plan to release a global unified platform for the GREE

and OpenFeint brands, our user base, social media and

social platforms.

Business StructureGREE users are able to obtain points (coins), which can

be used within GREE, either by purchasing coins, regis-

tering with paid-advertising affiliate programs, or by invit-

ing friends to join GREE. Users are able to trade coins

for various paid-for items in social games and avatars.

Accordingly, the business structure is built around

increasing the number of users as well as increasing

sales of fee-based services and advertising to affiliates

by encouraging the use of coins through the expansion

of the lineup of social games and avatars.

Revenue StructureSales of GREE’s Internet media business are composed

of 1) revenues from paid services and 2) revenues from

advertising sales.

1) Revenues From Paid Services

In principle, we offer GREE as a free service, but in order

to enable users who demand more originality or conve-

nience from the service to fully enjoy GREE, certain func-

tions are offered as paid services. In more detail, our

revenue from paid services includes the following items.

Revenues from paid items in our social games

and avatars:

In order to increase our paid services revenues, we must

expand the lineup in our paid services menu in response

to users’ needs and introduce new services that use paid

items. Users can exchange their “coins” for various items

in social games. GREE will continuously launch games

that are even more appealing to users, and as the

number of users increase so will the amount of “coin”

purchases. In turn, this will lead to increased paid

services revenues.

An avatar is a character that a user can use to stand

in for themselves on SNS GREE webpages. Users can

freely change their face, hairstyle or clothes, and an

avatar can also be used as the photo in a user profile.

Avatar items can be purchased from the “Avatar shop”

within the SNS GREE, and they can be exchanged

between users. We will be able to increase our paid ser-

vices revenues by introducing attractive avatar items and

associated items, and by increasing the number of users.

Platform revenues:

We have opened the GREE Platform to software devel-

opers outside the Company. As a result, these outside

developers offer social games on the GREE Platform,

and the developers generates revenues from paid items

in these social games. GREE generates revenues from

the use of our platform.

2) Revenues From Advertising Sales

We have positioned GREE as an advertising media and

sell Internet advertising space mainly through advertising

agencies and media reps (Note 1). In addition to banner

advertisement space in which advertisers can place links

to websites, GREE also generates advertising revenues

from each advertiser by running affiliate advertisements,

and running and producing GREE-planned advertise-

ments (Note 2) that link advertising content with SNS

functions. Additionally, revenues are also generated by

planning and running communities under contract.

(Notes) 1. These media reps are primary agents that sell Internet advertising space to advertising agencies.

2. An advertising product that appeals to users with a more effective advertising message by linking the products and corporate brands of advertisers with GREE functions and content.

* Note that because OpenFeint, Inc. is only consolidated in the balance sheet of the consolidated fiscal year under review, no revenues of OpenFeint have been included.


15

Strategies & Operations

“Hacöniwa”A game of growing plants and flowers to develop a unique miniature garden. User can enjoy self-expression and collecting rare plants

“Odoriko Clinoppe”The user can develop their original pet “Clinoppe” by “looking after” it and “changing its clothes”

“Decobito”The user can assume the role of little dwarfs (Kobito), who live in a small village with animals. The user can enjoy decorating their own home with furniture received from animals and small scaled dwarf’s slow life

“Tanken Doliland”RPG game exploring dungeons to battle monsters and collect treasure items with hunters

“Sengoku Kingdom”The user can collect cards of Sengoku generals, and use them to battle other users or participate in collaborative battles through joint states with other users

“Mon-Pla”The user can enjoy an adventure with monsters, encountering new monsters, evolving their monsters, coordinating the outfit of their avatar, collecting and training their monsters

In this section, we discuss GREE’s growth strategy going forward and introduce initiatives from the fiscal year ended June 2011.

In the fiscal year ended June 2011, we focused on

expanding the number of proprietary social games in

order to stabilize and secure our revenues from paid

items. We have already been offering social games with

high entertainment value that include some paid items

and which contribute to our revenues, such as the fish-

ing game “Tsuri-Sta,” the pet-raising game “Odoriko

Clinoppe,” the adventure game “Tanken Doliland,” the

gardening game “Hacöniwa,” and the monster battle

game “Mon-Pla.” We moved forward in the fiscal year

under review and introduced new games, comprised of a

pirate battle game “Pirate Kingdom Columbus,” a feudal

card battle game “Sengoku Kingdom,” a social strategy

RPG “Cerberus Crusade,” and “ Decobito,” a game in

which you live with mysterious animals.

GREE intends to further increase the number of

releases of its proprietary social games by building and

reinforcing a global development framework. We will also

actively make use of the vast intellectual property owned

by GREE.

Expanding Proprietary Social Games

h l f li l d f

“Sangokushi Kingdom”A full-scale Three Kingdom Saga game meeting fans’ expectations. You can belong to any of Wei, Wu, and Shu, organize your original troops, and enjoy the Three Kingdom Saga

”Bakumatsu Kingdom”In this game, your mission is to conquer Japan along with patriotic samurai heroes from the last days of the Tokugawa era by developing and expanding your own territory through battle. “Majin Kingdom”

Become a student of Shokan Gakuen (Summons Academy), to collect God, Devil and Hero cards and use them in battle. Players can have fun forming groups for extracurricular activities and entering them in various league competitions.

“Dragon Master”GREE’s first full-scale RPG game.You can collect materials to produce powerful weapons with alchemy, and hunt monsters with comrades, to defeat a dragon and save the kingdom

“Cerberus Crusade”Fantasy simulation RPG game with a high-quality motif and strategy. Users lead their own countries to prosper-ity through communications with war comrades

“Tsuri-Sta”User can collect fishing goods, introduce their fish prints in their diary, organize a team, and participate in a fishing competition, etc.

“Pirate Kingdom Columbus”A game of establishing a dreamlike pirates’ kingdom. The user can complete some quests on various islands, fight with other pirates acquiring treasure, and build their kingdom

m”


16

Open Code for the GREE Platform for

Smartphones

The GREE Platform for smartphones was released in

December 2010. Our development partners will now be

able to provide the following three services for social

networking service (SNS) GREE through the GREE

Platform for smartphones: 1) Web applications for iPhone

and Android devices, 2) iOS applications (for iPhone,

iPod touch and iPad), and 3) Android applications.

Services for Smartphones Overview of GREE Ad Program

Attract Customers

The service allows GREE partners to place advertise-

ments on an advertising network to effectively attract

customers. In addition to the ad network currently pro-

vided by Atlantis Co., Ltd., in the future we will gradually

increase the advertising space established by GREE

partners to make it possible to place advertisements on

an even broader network.

Generate Revenues

GREE partners can put advertising space on their appli-

cations as a type of media and generate advertisement

revenue on top of revenue from paid services.

Comprehensive Partnership with Unity

Technologies, Provider of the “Unity” Game

Development Tool

GREE has entered into a comprehensive business part-

nership with Unity Technologies to promote diverse

game content as the company’s exclusive partner in

Japan. Unity Technologies is a U.S. company that devel-

ops and markets “Unity,” an all-in-one game develop-

ment tool that simplifies development of full-fledged

interactive 3D content.

With this comprehensive partnership, GREE obtains

exclusive rights in Japan related to free secondary distri-

bution of professional licenses for Android and iOS,

which are currently distributed for a fee. This will signifi-

cantly reduce initial development costs for Android and

iOS applications for developers who provide social appli-

cations for SNS GREE.

Supporting GREE Partners“GREE Ad Program” Network Service for

Development Partners

In February 2011, we launched an advertising network

service for GREE partners, the GREE Ad Program, to

assist development partners in attracting customers and

generating revenues.


17

OpenFeint Becomes Subsidiary; Building a

Single Global Platform

In April 2011, we acquired a 100% ownership of OpenFeint,

Inc. through our U.S. subsidiary GREE International, Inc.

and concluded an agreement to make the company a sub-

sidiary. OpenFeint operates a social game platform for

smartphones that is one of the world’s largest with some

75 million users around the globe at the time of acquisition.

In the April-June 2012 quarter, we are planning a

global roll-out of the GREE Platform, which integrates

Accelerating International ExpansionJapan

Overseas

brands, user bases, social media and social platforms

provided by GREE and OpenFeint in Japan.

➠

➠

World-Class Gaming Platform

The new GREE Platform is a single platform encom-

passing 189 million global users, and as a gaming

platform it is one of the world’s largest*. GREE’s

social platform for mobile devices is growing at a

pace of some 10 million users per month on a group

basis, and given the expected growth in the smart-

phone market, GREE Platform has the potential to

become the largest gaming platform.

Rapid growth is anticipated in the smartphone

market, and given the market’s promising future,

GREE opened the GREE Platform for smartphone

specifications to developers in December 2010. This

is helping accelerate the development process.

In Japan, social games for mobile devices

have become the mainstream and boast

world-class average revenue per user (ARPU).

They have been drawing worldwide attention in

light of the recent sharp growth in the smart-

phone market. Social games for smartphones

provided on SNS GREE enjoy strong sales,

with monthly ARPU around the same as for

feature phones.

Against this backdrop, GREE will provide a

platform that integrates functions on the GREE

Platform—this is necessary for developing

social applications that are highly engaging and

profitable—with the world’s largest user base for

smartphone social gaming platforms, which is pos-

sessed by OpenFeint. The platform will make it pos-

sible for GREE partners in Japan to develop an

application and then seamlessly deliver it to 189 million

users around the world. Moreover, for GREE partners

outside of Japan, the platform provides the necessary

functions for developing highly profitable social applica-

tions along with related expertise, and makes it pos-

sible to provide applications to high-ARPU users in

Japan who are accustomed to paying for content.

* Based on Nintendo DS worldwide unit sales of 146.42 million. From Nintendo Co., Ltd.’s 2011 Annual Report.


18

2015.62014.62013.62012.62011.62010.62009.62008.6

4,7004.7 billion units

3,600

2,600

1,700

300(plan)

1,1001.1 billion units

150

550

2130013

15060

1,000

2,000

3,000

4,000

5,000

Smartphone shipment (Source: gartner) Number of GREE users

GREE PLATFORM’S GREAT GROWTH POTENTIAL(Millions of units)

The GREE Platform has great potential for growth in the booming smartphone market

Advantages of the New GREE Platform

Having a single platform is appealing to both users

and developers around the world

San Francisco

São Paulo

BeijingTokyo

Seoul

Amsterdam

Singapore

Dubai

London

Opening Overseas OfficesWith fast and inexpensive Internet infrastructure for com-

puters and mobile devices being put in place around the

world and with smartphones booming in popularity,

GREE sees global expansion as an opportunity for fur-

ther growth and is proceeding with the strategy at an

accelerated pace.

Starting with the establishment of GREE Interna-

tional, Inc. in January 2011, we are moving at full speed

to expand our operations into regions outside of Japan.

GREE’s Global Network

On a GREE Group basis, membership has increased to

approximately 189 million users.

We are also steadily establishing overseas offices,

which will serve as the foundation of our global expan-

sion. Beyond the U.S., offices have already been opened

in China, South Korea, Singapore and the U.K. Progress

is also being made in establishing subsidiaries in the

Netherlands, Brazil and Dubai. We will continue aggres-

sively developing the global market going forward.

Advantages of the New GREE Platform

Global: Makes it easy to distribute apps to 189 million users

Cost: Minimizes development costs for apps for the global market

Expertise: Provides GREE technologies and expertise to developers worldwide

ARPU: Content deliverable to the high-ARPU Japanese market from all around the world


19


20

Partnering With Prominent Industry Players Worldwide

Investment in Project Goth, Inc.

In November 2010, GREE accepted a third-party allotment of shares from Project

Goth, Inc., provider of the “mig33” social networking service for mobile device

users in emerging countries. Through its investment in the company, GREE will

seek to promote overseas development through multi-device support and become

the top community service used by people all over the world.

Business Alliance With Tencent, a Major Chinese Internet

Services Firm

In January 2011 GREE entered into a business alliance with China’s Tencent, one

of the country’s largest Internet services companies. Through the partnership, Ten-

cent will use the specifications for the GREE Platform for smartphones, which have

already been openly released, for its QQ Wireless Game Center. For GREE’s part-

ners in Japan, this will facilitate localization and other business development on the

QQ Wireless Game Center platform.

Comprehensive Partnership with Major South Korean Carrier

SK Telecom

In August 2011, GREE formed a comprehensive business partnership in Japan and

South Korea with SK Telecom, South Korea’s largest communications carrier,

related to providing and promoting applications.

Going forward, we will continue striving to provide the top community service used

by people around the world by continuing to partner with prominent industry firms.

Commencing Investment Focusing on Southeast Asia and

East Asia

In November 2011, GREE made the official decision to move into the venture cap-

ital business by focusing on startup firms involved in Internet businesses. Going

forward, we will move beyond Japan and support the growth of promising,

unlisted startups that are developing business in Internet markets in Southeast

Asia and East Asia, where further growth is expected, to provide a boost to

Internet markets globally.


21

Other contentbusiness, etc.

AdvertisingBusiness

PartnerGames

In-houseSocial games

SNSPlatform

Offices

Japan North America APAC EMEA Latin America

Tokyo

GREE

GREE

Currently offered

GREE

To be offered(Planned)

San Francisco

GREE



BeijingSeoul

Singapore

GREE Specification

Alignment



AmsterdamDubai

London

GREE

São Paulo

GREE

Business Area Expansion

Geographic Expansion

Growth StrategyLooking ahead, GREE plans to actively pursue the future

growth potential of its business activities. Specifically, we

will gradually expand our domain by developing various

businesses on the SNS platform. Moreover, with the

rapid growth in smartphones worldwide, we will engage

in full-fledged international expansion. GREE intends to

further accelerate growth through a good balance of

domain extension and regional expansion.

1. Corporate Governance Framework1) Basic Approach

To maximize corporate value and shareholders value, GREE

aims to strengthen competitiveness by strictly controlling

risks. It positions corporate governance as one of its most

important management issues in this context. Based on

this approach, directors, corporate auditors and employees

work to understand their respective roles, and strive to

raise their awareness about related laws, regulations, social

norms and ethics, so that they can steadily practice appro-

priate and effective corporate activities.

2) Corporate Governance Framework

The Company has adopted the executive officer system.

Under this system, executive officers from each division

execute business operations decided by the Board of

Directors under a chain of command headed by the repre-

sentative director. They are entrusted with responsibilities

and authority to carry out their duties.

a. Board of Directors

The Board of Directors comprises six directors, two of

whom are outside directors. The Board of Directors meets

regularly once a month to facilitate effective management

and speed up decision-making, and meets at other times

if necessary.

The Board of Directors decides management policies,

strategies, business plans and other important manage-

ment issues, and oversees business execution.

b. Board of Corporate Auditors

The Company has adopted the Board of Corporate Auditors

system. The Board of Corporate Auditors is made up of

three outside corporate auditors, one of whom is a stand-

ing corporate auditor. The Board of Corporate Auditors

meets once a month to exchange wide-ranging opinions

on, and deliberate and check the appropriateness and

effectiveness of management, and compliance. Corporate

auditors also advise and state opinions about legal matters

concerning and the appropriateness of management as

necessary. Corporate auditors attend both the meetings of

the Board of Directors and other important meetings, and

strictly oversee business execution by directors. In addition,

corporate auditors cooperate closely with the accounting

auditors and the Internal Audit Office, which is responsible

for internal audits, in order to strengthen auditing functions.

c. Management Meeting

The Management Meeting, which comprises in-house

directors, executive officers and senior vice presidents,

formulates business strategies, and reports on and

decides important matters. To do this, the Management

Meeting convenes once a month, in principle, and holds

Corporate Governance

General Meeting of Shareholders

Accounting Auditors

CORPORATE GOVERNANCE FRAMEWORK

Board of Corporate AuditorsCorporate Auditors (3)

Board of DirectorsDirectors (6)

Representative Director

Internal Audit Office (3)

Executive Officers

Departments

Management Meeting

Appoint/dismiss

Audit

Appoint/dismiss

AuditCooperate

Corporate Lawyer

Appoint/dismiss

Direct/supervise

Report/deliberate

Report/deliberate

Cooperate Appoint/dismiss

Consult/advise

Cooperate

Direct/report

Audit

Our ManagementGREE ANNUAL REPORT 2011

22

extra meetings if necessary. The Management Meeting

receives reports about operational progress and business

results from the departments, and holds discussions con-

cerning actual and forecast results together with formulat-

ing plans. This system enables the representative director

and other members of the senior management team to

understand business circumstances in a timely manner

and facilitates discussions and decision-making regarding

future business developments.

3) Internal Control and Risk Management

Frameworks

The Board of Directors has formulated the “Basic Policy on

Internal Control Systems,” and based on this policy, the

Company has established an internal control system and a

risk management framework.

4) Outline of Limitation of Liability

Agreements With Outside Directors

GREE has signed agreements with two outside directors,

Messrs. Toshitake Amamiya and Takeshi Natsuno, limiting

their liability for damages in terms of Article 427-1 of the

Companies Act. Based on these agreements, liability for

damages is limited to the minimum amount prescribed by

law based on Article 423-1 of the Companies Act. This

limitation on liability is restricted to the cases where an

outside director has executed his/her duties in good faith

and without gross negligence.

2. Status of Internal Audits and Audits by Corporate Auditors

1) Internal Audit System

At GREE, the Internal Audit Office (three people), which

reports directly to the President, conducts internal audits.

The Internal Audit Office formulates internal audit plans for

each business year and conducts internal audits after the

plan has been approved by the President. Audit results are

reported to the President and the audited departments.

The Internal Audit Office points out matters for improve-

ment and receives reports about improvement progress in

order to ensure highly effective audits.

2) Cooperation Among Internal Audit Office,

Corporate Auditors (including Outside

Corporate Auditors) and Accounting

Auditors, and Relationships With Internal

Control Divisions

The corporate auditors and the accounting auditors

exchange opinions about accounting audit processes,

accounting matters important to the audit process, system

and the operating status of internal controls about four

times a year. In addition, the standing corporate auditor

attends accounting audits conducted by the accounting

auditors, and exchanges opinions and information with the

accounting auditors.

Corporate auditors and the Internal Audit Office always

cooperate when conducting audits. The standing corporate

auditor and the Internal Audit Office exchange information

about auditing activities and status of the Company

approximately every two weeks. The Internal Audit Office

shares the auditing results of internal audits with corporate

auditors, and attends Board of Corporate Auditors meet-

ings to report information about the status of the Company.

In addition, the standing corporate auditor attends internal

audits as necessary, and promotes internal control by

cooperating with the Internal Audit Office.

Outside corporate auditor Mr. Kiyohito Hamada is a

certified public accountant and from the perspective of a

professional accountant offer opinions and advice regarding

the Company’s finances, tax and accounting matters and the

execution of duties executed by the Company’s directors.

3. Outside Directors and Outside Corporate Auditors

1) Relationships With Outside Directors and

Their Roles and Duties Regarding

Corporate Governance

The Board of Directors has two outside directors. Messrs.

Toshitake Amamiya and Takeshi Natsuno have extensive

knowledge and experience regarding the communications

and Internet industries. The Company has appointed them

both as outside directors as it judges they can contribute to


23

Company management. Outside directors attend the Board

of Directors meetings, which are held every month, oversee

business execution and actively offer their opinions and

advice from objective and neutral viewpoints.

2) Relationships With Outside Corporate

Auditors and Their Roles and Duties

Regarding Corporate Governance

There are three outside corporate auditors. Mr. Zenichiro

Tanaka offers his opinions and advice regarding the Com-

pany’s business strategies and service development, and

regarding business execution by the Company’s directors,

based on his extensive knowledge and experience regard-

ing the media industry. Mr. Kiyohito Hamada is a certified

public accountant and offers his opinions and advice

regarding the Company’s finances, tax and accounting

matters, and the execution of duties by the Company’s

directors, from his professional accounting viewpoint. Mr.

Toru Nagasawa is a qualified lawyer and offers his opinions

and advice regarding legal matters, compliance, corporate

governance and business execution by the Company’s

directors, from his professional viewpoint as a lawyer.

All members of the Board of Corporate Auditors are

outside corporate auditors to ensure independence from

operating divisions. Outside corporate auditors conduct audits

by attending the Board of Directors meetings and other

important meetings, and by reading important documents.

3) Personal, Capital, Transactional and

Other Relationships

Outside director Toshitake Amamiya is an employee of

KDDI CORPORATION. Moreover, KDDI holds 6.97% of

GREE’s voting rights. However, the Company has no rela-

tionships as regards capital and other transactions with Mr.

Amamiya as an individual. The Company has no significant

relationship with outside director Takeshi Natsuno. As of

September 28, 2011, the Company has the following capi-

tal relationships with the two outside corporate auditors.

Outside Corporate Auditor Zenichiro Tanaka

4 Stock Acquisition Rights

Outside Corporate Auditor Kiyohito Hamada

1 Stock Acquisition Right

Outside Corporate Auditor Toru Nagasawa

2 Stock Acquisition Rights

4. Directors’ Remuneration1) Total Amount of Remuneration by

Classification, Remuneration Type and

Number of Eligible People

Classification

Total remuneration

(Millions of yen)

Basic remuneration

(Millions of yen)

Eligible persons

(No. of people)

In-house directors 72 72 4

Outside directors 11 11 1

Outside corporate auditors 15 15 3

Total 99 99 8

(Note) There were 2 outside directors as of June 30, 2011. This differs from the number of directors above because there is 1 director who does not receive remuneration.

2) Total Remuneration Amount for Each

Director and Corporate Auditor

This is not stated because no director or corporate auditor

receives remuneration of 100 million yen or more.

3) Policy for Setting Remuneration for

Directors and Corporate Auditors

The Company decides the amount of directors’ remunera-

tion after considering the remuneration levels in other com-

panies in the same industry, business performance, and

employees’ salaries. The amount is determined by a resolu-

tion of the Board of Directors, within the limits decided by

the General Meeting of Shareholders. Corporate auditors’

remuneration is decided based on discussions with the

corporate auditors.


24

Board of Directors

Yoshikazu Tanaka founded GREE in December 2004, and serves as the company’s founder and chief executive officer. Before founding GREE, he previously worked at So-net Entertainment Corporation and Rakuten, Inc. While at Rakuten, Inc., he started developing SNS GREE in his spare time. This project became GREE.Tanaka earned a bachelor’s degree in law from Nihon University in 1999.

Masaki Fujimoto joined GREE in June 2005, and serves as the company’s chief technical officer. Prior to joining GREE, he worked at Astra the Studio, Inc. and Tunebiz Co., Ltd. Earlier in his career, Fujimoto was a member of the consulting staff of a PHP open source project.Fujimoto graduated in 2001 with a bachelor’s degree in literature from Sophia University.

Toshitake Amamiya joined GREE in September 2009 and serves as a director, while working as an Executive Director and Chief Operating Officer in Advanced Business Development at KDDI. Amamiya joined KDDI (previous DDI Corporation) in June 1984.

Yoshikazu Tanaka FOUNDER AND CHIEF EXECUTIVE OFFICER

Masaki Fujimoto SENIOR VICE PRESIDENT AND CHIEF TECHNOLOGY OFFICER

Toshitake Amamiya

Kotaro Yamagishi joined GREE in December 2004, and serves as the company’s co-founder and executive vice president. Prior to joining GREE, he was editor-in-chief of CNET Networks Japan. Prior to joining CNET Networks Japan, he worked at Nikkei Business Publications.Yamagishi received a bachelor’s degree in economics from Keio University in 1999.

Naoki Aoyagi is the Chief Financial Officer of GREE, Inc. and Chief Executive Officer of Gree International, Inc. He joined GREE, Inc. in March 2006 and since then has overseen the alliance with KDDI, Gree’s IPO, and the estab-lishment of the GREE Platform Business. Overall, he has 10 years of experi-ence in finance and management including his prior career at Deutsche Bank.Aoyagi earned a bachelor’s degree in policy management from Keio University in 2002.

Takeshi Natsuno joined GREE in September 2009 and serves as a direc-tor, while working as a Professor of the Graduate School of Media and Governance at Keio University since May 2008. Prior to joining GREE, Natsuno was promoted to SVP, Managing Director of Multimedia Services, after having worked at NTT DOCOMO for eight years. Prior to joining NTT Corporation, Natsuno worked at Tokyo Gas Corporation.

Kotaro YamagishiCO-FOUNDER AND EXECUTIVE VICE PRESIDENT, BUSINESS STRATEGY

Naoki AoyagiSENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

Takeshi Natsuno

Zenichiro Tanaka Zenichiro Tanaka joined GREE in July 2006, and serves as an auditor. In addition to his responsibilities at GREE, Tanaka writes a blog called “Media Pub”, where he personally forecasts and publishes the industry trends. Prior to joining GREE, Tanaka was the chief editor of Nikkei Com-munication and Nikkei Baito, and a journalist for Nikkei Electronics in Nikkei Business Publications since 1974, after having worked as a system engineer. He graduated with a bachelor’s degree in technology and engi-neering from the University of Osaka.

Kiyohito Hamada Kiyohito Hamada joined GREE in July 2006, and serves as a part-time auditor. Hamada established Yotsuba Sogo Accounting & Consulting Firm in 1998, after having worked in Deloitte Touche Tohmatsu Japan. He is a licensed Certified Public Accountant.

Toru Nagasawa Toru Nagasawa joined GREE in September 2007, and serves as a part-time auditor. Nagasawa passed the bar exam while in law school at the University of Tokyo in 1981, and joined Kajitani Law Offices 3 years later. In 1995, he established his own accounting & consulting firm, Nagasawa Law Offices, and is currently working as a representative lawyer.

Corporate Auditors


25

Corporate Social Responsibilities (CSR)

1. Operational Policy of GREEThe social networking service (SNS) called GREE and oper-

ated by GREE, Inc. is utilized by a wide range of users.

In tandem with the expansion of our websites, GREE

has been strengthening its measures to ensure secure and

safe use of our services. These measures include doing our

utmost to improve the well-being within our websites and

to protect and foster the sound development of youth. We

have also enhanced our patrol system and imposed restric-

tions on functions by age, and carry out educational activi-

ties inside and outside of the websites.

GREE continues to consider the improvement of its

social well-being as an important management issue, while

also further strengthening a rigorous site operational

system. Moreover, we will continue to actively promote

educational activities to contribute to the improvement of

Internet literacy among youth in order to fulfill the responsi-

bilities we possess as a social networking service operator

active in the community.

2. For the Safe Use of SNSAiming to provide a service environment that people can

comfortably use, GREE, Inc. has established the “Online

Policy Compliance Committee” headed by the CEO to pay

careful attention to the improvement of the soundness of

our websites and the healthy development and protection

of youth.

Moreover, GREE is actively promoting educational

activities to enable people to better enjoy the safe use of

the Internet.

1) Initiatives to Ensure Children Use the Internet

Securely and Safely

Our social networking services can provide children with

opportunities to freely express themselves and communi-

cate with each other, thereby contributing to the healthy

development of our youth.

However, as the numbers of PC and mobile phone

users grow, children without adequate knowledge about

the Internet are becoming victims of criminal activity and

getting into other kinds of trouble. GREE places a priority

on remedying this situation.

To ensure that children can safely and comfortably use

the Internet, we have established an operational policy and

have been carrying out various measures.

2) Authentication of Users

Particularly from the viewpoint of the protection of youth,

GREE is engaged together with mobile phone carriers in

various activities to improve the authentication of the age

of users.

3) Functions Restricted by Age

For people to better enjoy the safe use of the Internet,

GREE restricts email functions and search functions by age.

For example:

• Restriction of email exchange between users under 18

years old and users 18 years old or older.

• Exclusion of users under 18 years old from the results of

a Friend search made by a user over 18 years old.

CEO (Committee chairperson)

Director in charge of patrol Auditor Legal Affairs Public Relations


26

• Restriction of communication when a user wishes to send

a Friend request to a user under 18 years old, whereby

the former is only allowed to use message templates.

4) Strengthening of Our Patrol System

In November 2006, GREE started a 24-hour, 365-day patrol

system, and has been strengthening its auditing system as

needed in tandem with the expansion of our websites.

5) Educational Activities to Ensure Internet is

Used Securely and Safely

Through cooperation with external organizations, GREE has

been implementing various measures for the sound devel-

opment of youth and the realization of a safe and secure

Internet society.

6) Cooperation With External Organizations

Through cooperation with external organizations, GREE is

actively working for the provision of a more enjoyable and

safe service environment and the sound education and

development of our youth.

“GREE and Our Six Promises,” an Application

for Educating Youth About the Internet

According to a survey of guardians published in

October 2011 by the Cabinet Office, 50.5% of children

have their own mobile phone. If we look by school level,

we see that the higher the level, the higher the percent-

age of students who own mobile phones. The figures

are 16.7% for elementary school students, 44.1% for

middle school students, and 94.6% for high school

students. Thus, nearly all high school students have a

mobile phone. This high diffusion rate among youth

means that it is increasingly necessary to raise the

levels of Internet literacy among them.

In light of these circumstances, GREE has

revamped “GREE and Our Six Promises,” a software

application for youth aimed at educating them in the

secure and safe use of their phones. On December

20, 2011, the SNS GREE service started providing

content tailored to each age group. Looking ahead,

GREE will adopt an even more active stance and par-

ticipate in regional educational activities that make

use of this application.

Three types of explanations of “GREE and Our

Six Promises”

GREE Patrol Center—GREE has been operating a 24-hour, 365-day patrol system, paying considerable attention to improving the soundness of websites for the healthy development and protection of youth.

For elementary school students and younger

For middle school students and older For general users


27

1. GREE GroupThe GREE Group is made up of a total of four companies,

the parent company, GREE, Inc., and its three subsidiaries

(Atlantis Co., Ltd., GREE International, Inc. and

OpenFeint, Inc.).

We made Atlantis Co., Ltd. our subsidiary in January

2011, and through this company now conduct our ad

network business targeting mobile phones. We estab-

lished GREE International, Inc. as a North American sub-

sidiary in January 2011. In April 2011, through GREE

International, Inc., we made OpenFeint, Inc. into a subsid-

iary. OpenFeint operates a social game platform for

smartphones, which are being adopted worldwide.

The GREE Group mainly develops Internet media

businesses and operates social networking service (SNS)

GREE and the social gaming platform OpenFeint.

Also, since this was the first year that the GREE

Group prepared consolidated financial statements, there

are no comparisons with the previous year.

2. Business EnvironmentIn the fiscal year under review, Japan’s Internet environ-

ment, both fixed and mobile, was in the process of devel-

opment, moving toward higher network access capacity

and lower prices. There were 94,620,000 Internet users

as of December 2010, with 72,850,000 broadband users

and 77% of total users able to use fiber-optic or DSL con-

nections (source: “Communications Usage Trend Survey

in 2010,” Ministry of Internal Affairs and Communications).

Mobile Internet also grew rapidly, with 121,240,000

mobile phone contracts as of the end of June 2011, with

120,150,000 being for 3G phones; 99% of all mobile

phones were able to use high-speed data transfer

(source: Telecommunications Carriers Association). Addi-

tionally, the number of smartphones increased rapidly,

with 8,550,000 smartphones shipped in the fiscal year

ended June 2011, 3.7 times the number of smartphones

shipped in the previous fiscal year, and accounting for

22.7% of all mobile phones shipped that year (source: MM

Research Institute estimate).

3. Overview of the Fiscal YearThe GREE Group worked on expanding its core Internet

media business by increasing the number of users and

establishing a stronger foundation for profit in its SNS

GREE for mobile devices and computers. To increase the

number of users, we have conducted promotions via TV

commercials and partnerships with major communications

businesses. As a result, the number of GREE users for

mobile devices and computers reached 26,410,000 as of

the end of June 2011.

To establish a profitable business model, we

launched multiple new titles for highly entertaining social

games with items which are partly fee-based.


28

Financial InformationManagement’s Discussion and Analysis of Financial Conditions and Results of Operations

–20,000

0

20,000

40,000

60,000

80,000

07.6 10.6 11.609.608.6

(32.2)

35.7

60.0 55.6 48.648.5

NET SALES, OPERATING INCOME (LOSS), OPERATING INCOME MARGIN(Millions of yen, %)

■■ Net sales (Non-consolidated) ■■ Net sales (Consolidated)■■ Operating income (Non-consolidated) ■■ Operating income (Consolidated)■■ Operating income margin

Subsequent to the opening of the GREE Platform to

all developers in June 2010, we were offering over 1,100

diverse titles from approximately 500 developers as of the

end of June 2011. This has contributed to increased user

activity and to increased profits through titles which

include items which are partly fee-based.

Also, in response to the growing smartphone market,

we released iPhone and Android versions of GREE, and

started to provide original social games for these devices.

Furthermore, we have opened up the GREE Platform for

smartphones to all developers. As of the end of June

2011, content for around 250 titles was offered by

approximately 150 developers.

As a result of the above, consolidated net sales for

the year under review were 64,178 million yen. Cost of

sales amounted to 5,513 million yen, mainly due to higher

rental fees resulting from an increase in server numbers

and higher labor costs resulting from increasing develop-

ment personnel. Selling, general and administrative

expenses amounted to 27,530 million yen, mainly due to

increased advertising costs, higher personnel expenses

arising from increasing employees, higher recruitment

expenses due to aggressive recruiting activities, increased

paid-charge commissions paid to communications carri-

ers in line with higher net sales, and increased outsourcing

costs due to business expansion. As a result of these

factors, operating income was 31,135 million yen, and the

operating income margin was 48.5%. Net income was

18,240 million yen and the net income margin was 28.4%.

4. Financial PositionTotal assets at the end of June 2011 were 62,856 million

yen, which comprised current assets of 47,607 million

yen, net property and equipment of 960 million yen and

investments and other assets of 14,289 million yen.

Current assets consisted mainly of cash and cash

equivalents of 22,254 million yen and accounts

receivable—trade of 16,945 million yen.

Buildings, and tools, furniture and fixtures together

amounted to 1,235 million yen. After accumulated depre-

ciation of 275 million yen, net property and equipment

was 960 million yen.


29

1,092

2,694

1,725

5,080

13,584

7,055

1,810

EXPENSES BREAKDOWN (2011.6)(Millions of yen)

COST OF SALES5,513

SELLING, GENERAL AND

ADMINISTRATIVE EXPENSES27,530

Rental fees Advertisingcosts

Other Other

Labor costs

Personnel expenses

Paid-charge commissions

Goodwill at June 30, 2011 includes goodwill from

acquiring OpenFeint of 8,543 million yen. Our policy is to

begin amortizing this goodwill in the fiscal year ending

June 2012.

Total liabilities at the end of the fiscal year under

review were 25,393 million yen, which comprised current

liabilities of 25,202 million yen and long-term liabilities of

191 million yen. Total net assets at the end of the fiscal

year under review were 37,463 million.

Current liabilities consisted mainly of accounts

payable—other of 13,758 million yen and income taxes

payable of 9,967 million yen.

Net assets mainly comprised retained earnings of

33,434 million yen.

Equity ratio, a sign of financial stability, was 59.5% at

the end of the fiscal year under review. Meanwhile, the

current ratio, a sign of solvency, was 188.9% at the end of

the fiscal year under review.

ROA, a sign of asset efficiency, was 38.7% on a non-

consolidated basis for the fiscal year under review, and

ROE was 62.8% on a non-consolidated basis.

5. Analysis of Cash Flows<Cash flow from operating activities>During the fiscal year under review, operating activities

generated net cash of 15,679 million yen. The major con-

tributor was income before income taxes and minority

interests of 30,935 million yen, although trade accounts

receivable increased by 9,201 million yen, and income

taxes paid was 10,861 million yen.

<Cash flow from investing activities>During the fiscal year under review, investing activities

used net cash of 3,273 million yen. The main cash inflow

was 10,000 million yen in proceeds from withdrawal of

time deposits. The main outflows were 10,029 million yen

to purchase subsidiary’s stock associated with a change

in the scope of consolidation, and 2,179 million yen for

purchases of investment securities.

<Cash flow from financing activities>During the fiscal year under review, financing activities

used net cash of 1,090 million yen. The major use was

cash dividends paid of 1,129 million yen.

–10,000

0

10,000

20,000

30,000

40,000

07.6 10.6 11.6*09.608.6

–42.0

88.1 88.7 77.5 62.8

07.6 10.6 11.6*09.608.6

–31.9

37.6

49.1 48.1 38.7

–60,000

–40,000

–20,000

0

20,000

40,000

60,000

80,000

NET ASSETS AND ROE (NON-CONSOLIDATED)(Millions of yen, %)

TOTAL ASSETS AND ROA (NON-CONSOLIDATED)(Millions of yen, %)

■■ Net assets■■ ROE

* Consolidated

■■ Total assets■■ ROA

* Consolidated


30

As a result of the above factors, cash and cash

equivalents at the end of the fiscal year under review

amounted to 22,254 million yen.

The GREE Group recognizes that returning profits to

shareholders is an important aspect of operations. The

Group’s basic policy is to provide appropriate returns

matching the Company’s operating results, financial situa-

tion and related forecasts, while giving consideration to

bolstering the internal reserves necessary to expand and

streamline businesses.

As regards the payment of dividends of retained

earnings, GREE’s basic policy is to pay dividends twice a

year: an interim dividend and a year-end dividend. The

year-end dividend is determined by the General Meeting

of Shareholders, and the interim dividend is determined by

the Board of Directors.

GREE decided to pay an ordinary dividend of 9 yen

per share for the year ended June 30, 2011 to provide

stable returns to shareholders while continuing to bolster

retained earnings in order to invest in future business

expansion and other areas, and allow greater flexibility

with expenditures, since GREE is prioritizing further

growth in the year ending June 2012.

Dividends applicable to the year ending June 2012

are yet to be determined. However, appropriate share-

holder returns will be considered based on the abovemen-

tioned policy.

GREE’s Articles of Incorporation stipulate that the

Board of Directors can pass a resolution determining an

interim dividend with a record date of December 31

each year.

–15,000

–10,000

–5,000

0

5,000

10,000

15,000

20,000

25,000

07.6 10.6 11.6*09.608.6

1,292

10,594

11,354

22,254

324

59.5

0

20,000

40,000

60,000

80,000

07.6 10.6 11.609.608.6

36.9

58.4

63.9

60.5

72.5

CASH FLOWS(Millions of yen)

TOTAL ASSETS AND EQUITY RATIO(Millions of yen, %)

■■ Cash flow from operating activities■■ Cash flow from investing activities■■ Cash flow from financing activities■■ Cash and cash equivalents (Year-end)

* Consolidated

■■ Total assets (Non-consolidated) ■■ Total assets (Consolidated)■■ Equity ratio


31

Of the items included in this annual report, items concerning business conditions, accounting and other matters that may have a material impact on investor decisions are included in this report. Also, items that do not necessarily include risk factors, but may be material to investment decisions are indi-cated below as part of an active effort to disclose information to investors. The GREE group, while being fully aware of the possibility of these risks, has a basic policy of working towards avoiding risks and dealing with them should they occur. How-ever, we believe that the following items, along with other items included in this annual report, should be carefully considered when deciding to invest in the company’s stock. Furthermore, this annual report contains forward-looking statements based on determinations made by the group on the date this report was issued. These forward-looking statements do not cover all potential future risks.

1) Business Environment RisksI Internet-related MarketThe primary business area of the group is the Internet media business, and a basic condition for future business expansion is that the Internet-related market will continue to expand in the future, due to the spread of broadband and adoption of 3G mobile phones and flat-fee data packages.

There were 94,620,000 Internet users in Japan as of December 2010, with 72,850,000 broadband users. Of the total number of Internet users, approximately 77% have access to fiber-optic or DSL connections (source: “Communi-cations Usage Trend Survey in 2010,” Ministry of Internal Affairs and Communications). Mobile Internet is also growing quickly, with 121,240,000 mobile phone contracts as of the end of June 2011, with 120,150,000 of those being for 3G phones. Of the total number of mobile phones, approximately 99% have access to high-speed data transfer (source: Tele-communications Carriers Association).

Additionally, the number of smartphones has increased rapidly with 6,750,000 smartphones shipped in 2010, 2.9 times the number of smartphones shipped in 2009 and accounting for an 18.1% share of all mobile phones shipped that year (source: MM Research Institute estimate). Based on these statistics, the group anticipates that the Internet usage environment for both PCs and mobile phones will become less expensive and more convenient, and the Internet-related market including information, communication and commercial uses will continue to expand. However, business expansion and the business results of the group could be affected in the event that unforeseen factors impede growth in the Internet market, such as the introduction of new laws and regulations, a slowing of technological innovation, or telecommunications company trends such as changing fee structures.

II Technological InnovationOne of the unique characteristics of the Internet industry is that the cycle for technological innovation and changes in customer needs is extremely fast, leading to a constant introduction of new services using new technologies. Technological innovation also continues for Internet devices, such as with the introduc-tion and adoption of smartphones as high-performance mobile Internet devices. In order to respond flexibly to this rapidly changing environment, the group’s policy is to actively recruit skilled engineers to increase our knowledge and know-how of cutting-edge technologies, including those that are open source. However, in the event that it becomes difficult to accu-mulate the necessary knowledge or acquire engineers with the appropriate skills, the group may be unable to properly address technological innovation, or may be completely unable to do so. Furthermore, responding to this technological innova-tion may require an increase in expenditures such as personnel costs and system investment.

This could lead to a decrease in the group’s technological superiority and competitiveness of service, which could affect business expansion and the business results of the group.

2) GREE ServiceI Presence of CompetitorsSince GREE began a serious effort to expand services in the mobile sector, the Company has released several social games, and worked to expand and improve the content line-up to respond to user needs. Additionally, through advertising activi-ties such as collaborations with major telecommunications com-panies and television commercials, the member base has steadily grown. However, competitors have also worked to expand and improve their content line-ups, and engaged in advertising through TV commercials, so there is no guarantee that the group will be able to retain industry superiority through these methods. There is a need to adapt to trends and develop services considering factors that could affect GREE’s position in the Internet industry, such as the presence of existing domestic and foreign competitors with an advantage in customer aware-ness, financial resources, marketing strength, customer base, systems or content, or the appearance of innovative new Inter-net services. In the event that the GREE group is unable to carry out an appropriate and effective response to these domestic and foreign competitors, the group’s business expansion and business results could be affected.

II Internet Advertising Market TrendsThe advertising media revenue model of GREE increases its value as an advertising medium by increasing its ability to draw customers, and has the unique characteristic that sales can be increased through using tie-up advertising campaigns that take advantage of SNS features and pure advertising. However, the Company recognizes that the current revenue model could be impaired by the following:


32

Business Risks

i) Factors leading to certain changes in market conditions, such as slower growth in the Internet advertising market, expan-sion of competing media, and a decrease in advertising fees

ii) The companies that provide advertisements reduce their mar-keting and advertising budgets due to economic trends

iii) Changes are made to the marketing strategies or marketing strength of the advertising agencies and media reps used for advertising sales

iv) The GREE brand is damaged due to problems with the safety or soundness of the service

If any of the above occur, the group’s business expansion and business results could be affected.

III GREE PlatformIn order to have users continue to use GREE, the group works to expand and strengthen a content line-up focused on enter-tainment, such as games. As part of this effort, some of the technical specifications for GREE as regards the GREE Platform are disclosed, allowing developers to provide applications for the GREE service. By encouraging developers to create and maintain content via the GREE service, a wide variety of content is provided on GREE, which helps to increase user activity.

However, in the event that expansion of the content line-up does not proceed according to plan, the group’s business results could be affected. Also, major problems or technical issues with content made by developers could damage the group’s brand and trustworthiness, making it difficult to provide stable service.

Furthermore, disclosure of part of the technical specifica-tions entails the risk of a malicious third party illegally access-ing or leaking information in criminal acts that damage the group. The group is taking rigorous measures to avoid these problems before they occur, but in the unlikely case they do occur, the group’s business activities could be affected.

IV Risks in Expanding the ServiceThe group primarily carries out service planning and develop-ment in-house, and has accumulated unique development know-how and created a flexible development structure that can respond promptly to changes in user trends.

However, if it becomes difficult for some reason to quickly and accurately grasp customer needs, there may be problems in providing appropriate services and content. In this case, the merits of the originally planned service and content may not be fully realized, creating less appeal to users and possibly affect-ing business expansion and business results of the group.

V Maintaining Site Safety and AppropriatenessAlong with the increasing popularity of the Internet, public demand for maintaining the safety and soundness of services has also continued to increase. Since SNS provide a variety of

communication functions while also allowing large numbers of anonymous users to register, there is the risk of various prob-lems occurring. To deal with these problems, the group is taking the following measures:

(i) Respond to intellectual property infringement, intrusion of privacy, the submission of obscene material, slander, commercial use, or other usage with a high degree of criminal propensity in light of the law.

(a) Clarify prohibited acts in user agreementsIn the user agreements, details of acts (antisocial activities, obscene or violent expressions, seeking dates, commercial activities, and posting of personal information, etc.) that users are prohibited from engaging in during the use of GREE are clearly specified. In the event that the acts of a user are deter-mined to be one of the aforementioned prohibited activities, the group will respond strictly with the deletion of submis-sions, suspension of usage of the GREE service, and termina-tion of membership.

(b) Strengthen the submission oversight system and user train-ing and awareness activitiesA two-layer system made up of a full-time team within the company and external specialist operators is in place and oversight is conducted 24 hours a day, 365 days a year, and oversight operations (Note 1) are structured around a uniform standard in accordance with a manual prepared indepen-dently by the company. Additionally, besides increasing awareness of autonomous content oversight by users through the placement of a reporting function on major webpages on the site, the group is working to maximize the site’s ability to regulate itself by enriching awareness and user etiquette educational content.

(c) Certification by third party organizationsThe “Community Operations Management Certification System” certification has been received (Note 2) from the Con-tent Evaluation and Monitoring Association, hereinafter referred to as EMA, and while this shows that the group’s operations system is objectively above a certain standard, the operations system is also working on activities to improve user literacy through the implementation of EMA’s awareness and training program.

(d) Establishment of the “Security and Safety Improvement Committee”The group has set up a “Security and Safety Improvement Committee,” which is headed by the president of the com-pany, and through this committee, management and the workers who patrol the site periodically exchange information and work to improve and maintain the integrity of the site.(Notes) 1. As a rule, submission checks are implemented through visual

inspection and systems in real time. 2. In order to receive the certification, 23 items, which fall under

the four categories of “Basic Policy,” “Oversight Systems,” “User Interaction,” and “Awareness and Training,” must all meet required standards, and the site must pass an inspection of its operations management system.


33

(ii) Measures for the sound education and protection of young people

In addition to the standard efforts aimed at maintaining the safety and integrity of the site that were mentioned in (i) above, particular efforts are being carried out which are aimed at the sound education and protection of young people. The group is increasing the reliability of user age confirmation by introducing a zoning system that makes use of blacklist mobile phone filtering, and it has also set up age-specific usage limits on areas such as search and email exchange since August 2009. Additionally, since July 2010 the content of messages, such as mini-mails sent between users using the GREE site’s functions, were added to the scope of site patrols, in addition to the previously monitored diary entries and submissions to communities. Additionally, since January 2011 efforts have been made to make user age confirmation stricter by implementing age confirmation based on age infor-mation retained by KDDI Corporation.

The group believes that through measures listed in (i) and (ii) above, safety and well-being are currently being maintained for the services the group provides. Also, we will continue to increase the number of patrol staff and improve functionality of related systems, as well as continuing user awareness and education programs. However, in the unlikely event that a problem occurs related to the services the group provides, the group may be faced with legal responsibility as well as having trust in the group and brand damaged, and it may be difficult to provide stable service. As a result of the foregoing, the group’s business expansion and business results could be affected. In addition, if the number of patrol staff is increased to improve measures taken, costs will increase, which could affect the group’s business expansion and business results.

VI Risks from MisconductAs part of the group’s services, the group issues “coins,” which are available within the site and can be used to trade for items such as avatars. In similar services provided by other compa-nies, there have been incidences of misconduct where some dishonest users acquire items through illicit means and use or trade them in what is known as a Real Money Trade (RMT), and preventing this is an issue that the entire industry has to deal with. The existence of this kind of misconduct is not in line with the group’s intentions. Therefore, the group is putting systems in place to prevent these trades, as well as prohibiting these acts in user agreements and carrying out user aware-ness programs. Also, the group invokes serious penalties for violators of this policy, including suspensions or account bans.

In the unlikely event that this kind of misconduct occurs using the group’s service, trust in the group and its brand could be impaired. This in turn could affect the group’s busi-ness expansion and business results.

VII Reliance on Specific Businesses for Paid ServicesIn the group’s Internet media business, the group employs a revenue model where fees are charged directly to users. For paid services such as monthly membership service and sale of digital content provided in the mobile version of GREE, accounts are settled using the collection services of NTT Docomo, KDDI, and SoftBank Mobile.

Therefore, if certain changes were to occur in the group’s business relationships with them, including cancellation, or if there were problems with the settling of accounts for paid services due to worsening business situations of counterpar-ties or system malfunctions, etc., the group’s business expansion and business results could be affected.

VIII Risk in Collecting FeesThe paid services for the mobile version of GREE provided to i-mode users is provided based on the “Contract for Collection by Agent of Fees for i-mode Services” signed with NTT Docomo. According to this contract, in cases where NTT Docomo is unable to collect fees due to circumstances beyond their control, NTT Docomo will inform the group that collection is not possible, and at that point, is relieved of its responsibility to the group to collect data fees as a proxy. In this case, the group bills users directly based on the information supplied by NTT Docomo about the user who has not paid. If the number of users who have not paid and unpaid fees increase in the future, the group’s business results could be affected.

IX Company Business StructureGREE users are able to obtain points (coins), which can be used within GREE, by inviting friends to join GREE, purchasing coins, or registering with affiliate programs. Users are able to trade coins for items in social games and avatars. Accordingly, the business structure is such that encouraging the use of coins is the primary driver of increased sales from pay services and affiliate programs and expansion in the number of users.

Therefore, the group’s policy is to appropriately encour-age users to acquire coins, through providing content and functions that increase user activity and providing a paid ser-vice menu line-up and introduction of paid item services that meet customer needs. However, when these kinds of content and functions are not expanded appropriately and delays occur in providing paid service menu line-ups and new ser-vices that meet customer needs, the acquisition and use of coins by customers could slow, and this could affect business expansion and business results of the group.

X Number of UsersThe number of users for GREE and OpenFeint has grown steadily, and as of the end of June 2011 had reached a total of 123,590,000 worldwide. For group business, increasing the number of users not only means an increase in income from


34

paid service fees due to increased usage of paid services, but also increased value of GREE as an advertising medium and thus increased advertising media income. Therefore, the group recognizes that increasing the number of users and strength-ening its member base are both important tasks for improving business results. However, if the increase in the number of users should slow, due to competition with other companies, failure to provide appealing content, a lack of safety or sound-ness in the service, loss of trust in the group’s services or brand, or due to some other factor, the group’s business expansion and business results could be affected.

XI Global ExpansionIn order to further develop the business, the group is proceed-ing with global expansion of businesses.

If it becomes difficult to carry out business in the course of global expansion due to problems dealing with potential risks associated with such factors as laws, regulations, political and social conditions, or exchange rates in various countries, the group’s business and operating results could be affected. Also, if businesses do not proceed as planned in various coun-tries, business results could be affected.

3) SystemsI Burden of Capital Investment in Systems, etc.In order to operate a stable service and improve user satisfac-tion, the group recognizes there is a need for up-front invest-ment in systems and infrastructure in line with the growth of the service. Continual capital investment in equipment is planned considering predicted increases in the number of users and traffic, as well as improving security and introducing new ser-vices. However, if the number of users or traffic significantly exceeds initial estimates, there will be a need to invest earlier or more than initially planned, creating a large investment burden, and this could affect business expansion and business results of the group.

II Service and System Problems, Internet Connection Issues

The group recognizes that stable operation of services, sys-tems that support services and Internet connection environ-ments are prerequisites for business operations. The group has made efforts to create a stable system operating structure by distributing the system across multiple data centers in addition to constant data back-ups and security improvements. How-ever, in the event of unpredictable natural disasters or acci-dents, sudden increases in the number of users and traffic, software issues, illegal access via network or infection by com-puter virus, stable operation of the service may be difficult, and this could affect business expansion and business results of the group.

4) Influences from Trends in Legal Systems and Regulations

I Legal Regulations for the InternetThe group recognizes that compliance with legal regulations related to the Internet is an important management priority, as a business providing services using the Internet.

Of the main legal regulations related to the group, first there is the Telecommunications Business Act. Since the group has filed as a telecommunications carrier according to the Tele-communications Business Act, there is an obligation to pre-serve the privacy of communications.

Next, there is the Act on the Limitation of Liability for Dam-ages of Specified Telecommunications Service Providers and the Right to Demand Disclosure of Identification Information of the Senders (referred to as the below). Since the group is a Speci-fied Telecommunications Service Provider according to the Provider Liability Limitation Act, in the case that a third party’s rights are infringed upon by information spread through telecom-munications, the group has a responsibility to disclose informa-tion on the person that sent the rights-infringing information as well as a responsibility for damages to the person whose rights were infringed.

Also, there is the Act on the Prohibition of Unauthorized Computer Access. The Act states that users are prohibited from using a third party’s ID or password without their permis-sion. The group is an Administrator according to this Act, and has an obligation to take measures to prevent any unauthor-ized access.

On April 1, 2009 the Act on Development of an Environment that Provides Safe and Secure Internet Use for Young People came into effect. The group is a Business Related to Internet Use by Young People according to this Act, and is obligated to take measures to minimize the opportunities for minors to encounter harmful information while using the Internet, as well as a responsi-bility to educate minors on how to use the Internet appropriately.

In the future, if interpretations of these laws change due to societal shifts, or if new laws are established, restrictions may be placed on the business of the group, or there may be costs necessary to adhere to these laws.

II Legal Regulations for SNSGREE is operated by the group on the basis that communica-tion between users will be appropriate, and therefore is not an Internet Dating Business as defined in the Act on Regulation on Soliciting Children by Using Opposite Sex Introducing Ser-vice on Internet. Also, part of the user agreement for GREE forbids using the service to attempt to meet members of the opposite sex for dating, and blog and message posts are mon-itored, with suspensions and banishment used to punish those users who violate these rules. However, in the case that new laws are established in the future, it is possible the businesses of the group may be severely restricted.


35

III Legal Regulations for Protection of Personal Information

The group handles personal information through the provision of Internet services. Accordingly, the group bears the obligations of a Business Operator Handling Personal Information according to the Act on the Protection of Personal Information. In order to avoid external leaks or manipulation of personal information, the group considers managing personal information to be an impor-tant aspect of business operations, with a clear work flow and structure of responsibility when personal information is being handled, internal regulations and standards made for handling personal information including protecting personal information, and working to increase awareness of protection of personal information in order to adhere to the legal regulations set out in this and other acts. Also, technological measures are taken including storing all personal information in a server that is physi-cally separate from that used for providing and developing ser-vices. Access to this server is severely limited and, for example, is only allowed when employees who require access for their duties access it via a specialized server.

However, in the event that personal information should be leaked or misused by an employee of the group, a business partner or contractor either intentionally or accidentally, this could damage the trustworthiness and brand power of the group and its services. In addition, the group could be held accountable for claims for damages and other legal responsi-bilities. As a result, the group’s business expansion and business results could be affected.

5) Intellectual PropertyI Policy on Protection of Intellectual PropertyGiven the importance of legal compliance and corporate social responsibility, the group considers the protection of intellectual property to be an important issue. Therefore, the group works to prevent any infringement of intellectual property rights or the equivalent of a third party by any employees during the process of developing group services or while using software for work duties, by setting internal company regulations and training all employees about intellectual property rights. However, in the case that an employee or executive of the group infringes on the intellectual property rights of a third party intentionally or acci-dentally, this could damage the trustworthiness and brand power of the group and its services. In addition, the group could be held accountable for claims for damages and other legal responsibilities. As a result, the group’s business expansion and business results could be affected. Also, the group works to prevent the infringement of its own intellectual property rights by third parties. If the group incurs large costs as a result, or if the group is unable to maintain competitiveness due to the inability to protect intellectual property rights against infringement by a third party, the group’s business expansion and business results could be affected.

II Developments Concerning PatentsThe group recognizes that there are no current problems or issues with patents and other intellectual property that could affect the group’s business or services. However, in recent years there have been several incidents both domestically and abroad arising regarding the acquisition of SNS patents, and there is a need to keep an eye on future developments in these cases. For Internet technology, the scope of patent rights is unclear, and so extremely large costs related to patent admin-istration could be incurred in order to avoid patent conflicts. As a result, the group’s business results could be affected.

III Content Available on GREEGREE consists of content provided by the group (avatars, dress-up profiles, games, fortune telling, etc.), content pro-vided by developers using the GREE Platform, and content posted by users (blogs, pictures, videos, etc.).

For content provided by the group, the group has a double-checking system in place whereby the relevant operat-ing department and the legal department verify that there is no infringement of third-party intellectual property. Also, when the creation of content is commissioned to an external business or individual, the contract guarantees that there shall be no infringement of third-party intellectual property as a rule. How-ever, in the case that content provided by the group acciden-tally infringes on the intellectual property of a third party, the group may be held accountable for claims for damages or have limitations placed on providing part of the service, which could affect business expansion and business results of the group.

For content provided by developers using the GREE Plat-form, in addition to each developer guaranteeing to the group in the contract that there shall be no infringement of third-party intellectual property, in the unlikely event of any infringement, the developer shall be responsible for all measures necessary to address the issue.

However, in the case that infringement occurs, regardless of the stipulations of contract and other agreements between the group and the developer, the group may still be held accountable for claims for damages and other legal responsibili-ties by the third party whose intellectual property rights were infringed. Even when no liability is pursued, the damage to the trustworthiness and brand of GREE could affect business expansion and business results of the group.

For user-generated content, in the case that this content infringes on the intellectual property of a third party, the group may be held liable for aiding and abetting the infringement of copyright. In order to prevent this, not only is infringing on third-party intellectual property rights prohibited by the user agreement, but the group also promptly addresses reports of infringements through measures such as deleting said content. Additionally, working together with copyright holders such as television stations and music labels, a system is in place to


36

respond rapidly to notifications of content including copyright infringement. With these measures, the group believes that its liability is limited to the scope described in the Provider Liability Limitation Act, with the likelihood of successful claims for dam-ages and injunctions by copyright holders due to copyright infringement being low. However, if legal responsibility of the group was pursued, and the dispute escalates into litigation, this could affect business expansion and business results of the group.

6) Business StructureI Reliance on Specific PersonsThe CEO of the group, Yoshikazu Tanaka, not only founded the group but has fulfilled a vital role in business operations since the beginning. Developing and announcing GREE as an indi-vidual in February 2004, he has a wide array of experience and knowledge in areas ranging from planning to development and operation of Internet services. Since the founding of the group, he has fulfilled an important role in deciding management policy and business strategy, as well as carrying them out. The group has worked to strengthen its organizational structure by sharing information and delegating authority to executives and employees through meetings of the board of directors and management meetings, to create an operating structure that does not overly rely on Mr. Tanaka.

However, if he should become unable to continue manag-ing the execution of the group’s business operations for some reason, this could affect business expansion and business results of the group.

II Recruitment and Training of Human ResourcesIn order to develop businesses expected to grow rapidly going forward and address the company’s expansion, the group recognizes that it is vital to continue recruiting a wide variety of talented personnel. To provide a high-quality, stable service and increase competitiveness, there is a need for individuals with extremely advanced technical skills and planning in the development department in particular. Therefore, in addition to continuing to recruit talented personnel above a certain stan-dard, there is also an awareness of the necessity of recruiting individuals with future potential and working to retain and train current personnel. However, in the event that the group is unable to recruit and train talented personnel to its standards as planned, the group’s business expansion and business results could be affected.

III Compliance StructureThe group believes that in order to increase corporate value in the future it is important to have an effectively functioning com-pliance structure. To this end, internal company guidelines for compliance have been formulated, with periodic training to ensure all executives and personnel are fully aware of them.

Additionally, a Compliance Committee has been established with the CEO as chairperson, and is working to improve the compliance structure.

However, even with these measures it is difficult to completely eliminate risks related to compliance, and in the case that the group violates laws during business operations, this could affect the corporate value and operating results of the group.

7) InvestmentsAs part of the group’s growth strategy, the group plans to form capital alliances and other strategic alliances with other com-panies, as well as carry out related investments.

The GREE Fund has been created as a means of provid-ing financial support to developers who develop and provide applications using the aforementioned GREE Platform. The goal is to capture business synergies with developers while offering financial assistance to them. In other business areas as well, the group may invest in other companies where it deter-mines that investment would speed growth and help to expand business. When investing, sufficient preliminary research will be performed, and the decision will only be made after a process of inspections and discussions following company guidelines to carefully analyze the risk. However, if the business of the investee does not perform according to plan and the antici-pated business synergy cannot be achieved or the investment cannot be recovered, or if accounting for impairment or allow-ance for bad debts is required due to the investee’s business performance, this could affect the operating results and finan-cial position of the group. Also, in the event that the investee performs illegal or unauthorized activities, this could have a negative impact on trust in the group.

8) Dilution of Share Value due to the Exercise of New Share Subscription Rights

As an incentive for executives and employees of the group, new share subscription rights (stock options) are provided. In the case that these stock options are exercised, the issuance of new company shares may dilute the share value and voting rights of existing shareholders. As of the end of June 2011, there were 13,820,000 dilutive shares associated with these stock options, equivalent to 6.03% of the total number of out-standing shares, which was 229,300,000.


37

2011

ASSETS Millions of yenThousands of U.S.

dollars (note)

CURRENT ASSETS:

Cash and cash equivalents ¥22,254 $275,660

Accounts receivable:

Trade 16,945 209,897

Other 5,985 74,136

Allowance for doubtful receivables (406) (5,029)

Deferred tax assets 2,325 28,800

Prepaid expenses and other current assets 504 6,242

Total current assets 47,607 589,706

PROPERTY AND EQUIPMENT:

Buildings 719 8,906

Tools, furniture and fixtures 516 6,392

Total 1,235 15,298

Accumulated depreciation (275) (3,406)

Net property and equipment 960 11,892

INVESTMENTS AND OTHER ASSETS:

Investment securities 2,342 29,010

Investments in an associated company 160 1,982

Goodwill 9,894 122,557

Other assets 1,893 23,448

Total investments and other assets 14,289 176,997

TOTAL ¥62,856 $778,595

Note: These consolidated financial statements are stated in Japanese yen. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥80.73 to U.S. $1, the rate prevailing at June 30, 2011. Such translation should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.


38

Consolidated Balance SheetGREE, Inc. and Consolidated SubsidiariesJune 30, 2011—Unaudited

2011

LIABILITIES AND NET ASSETS Millions of yenThousands of U.S.

dollars (note)

CURRENT LIABILITIES:

Accounts payable—other ¥13,758 $170,420

Income taxes payable 9,967 123,461

Other current liabilities 1,477 18,295

Total current liabilities 25,202 312,176

LONG-TERM LIABILITIES:

Other long-term liabilities 191 2,366

Total long-term liabilities 191 2,366

NET ASSETS:

Common stock—authorized, 640,000,000 shares;

issued, 229,300,000 shares 2,136 26,458

Capital surplus 2,134 26,434

Retained earnings 33,434 414,146

Treasury stock 2,110 shares (2) (25)

Accumulated other comprehensive income

Unrealized gain on available-for-sale securities 98 1,214

Foreign currency translation adjustments (401) (4,967)

Total 37,399 463,260

Minority interests 64 793

Total net assets 37,463 464,053

TOTAL ¥62,856 $778,595


39

2011

Millions of yenThousands of U.S.

dollars (note)

NET SALES ¥64,178 $794,971

COST OF SALES 5,513 68,289

Gross profit 58,665 726,682

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 27,530 341,014

Operating income 31,135 385,668

OTHER INCOME (EXPENSES):

Interest income 11 136

Contribution (297) (3,679)

Gain on sales of investment securities 99 1,226

Other—net (13) (160)

Other expenses—net (200) (2,477)

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 30,935 383,191

INCOME TAXES:

Current 14,179 175,635

Deferred (1,522) (18,853)

Total income taxes 12,657 156,782

NET INCOME BEFORE MINORITY INTERESTS 18,278 226,409

MINORITY INTERESTS (38) (471)

NET INCOME ¥18,240 $225,938

2011

Yen U.S. dollars (note)

PER SHARE OF COMMON STOCK:

Basic net income ¥79.92 $0.99

Diluted net income 75.11 0.93

Cash dividends 9.00 0.11


40

Consolidated Statement of IncomeGREE, Inc. and Consolidated SubsidiariesYear Ended June 30, 2011—Unaudited

Millions of yen

Accumulated Other Comprehensive Income

Number of Shares of Common

Stock IssuedCommon

StockCapital Surplus

Retained Earnings

Treasury Stock

Unrealized Gain on

Available-for-Sale

Securities

Foreign Currency

Translation Adjustments Total

Minority Interests

Total Net Assets

BALANCE, JULY 1, 2010 45,424,000 ¥2,113 ¥2,111 ¥16,330 ¥(2) ¥20,552 ¥20,552

Stock split, five shares for each one share 181,952,000

Issuance of new shares 1,924,000 23 23 46 46

Net income 18,240 18,240 18,240

Cash dividends, ¥25.00 per share (1,136) (1,136) (1,136)

Purchase of treasury stock (0) (0) (0)

Net change in the year ¥98 ¥(401) (303) ¥64 (239)

BALANCE, JUNE 30, 2011 229,300,000 ¥2,136 ¥2,134 ¥33,434 ¥(2) ¥98 ¥(401) ¥37,399 ¥64 ¥37,463

Thousands of U.S. dollars (note)

Accumulated Other Comprehensive Income

Common Stock

Capital Surplus

Retained Earnings

Treasury Stock

Unrealized Gain on

Available-for-Sale

Securities

Foreign Currency

Translation Adjustments Total

Minority Interests

Total Net Assets

BALANCE, JULY 1, 2010 $26,173 $26,149 $202,280 $(25) $254,577 $254,577

Issuance of new shares 285 285 570 570

Net income 225,938 225,938 225,938

Cash dividends, $0.31 per share (14,072) (14,072) (14,072)

Purchase of treasury stock (0) (0) (0)

Net change in the year $1,214 $(4,967) (3,753) $793 (2,960)

BALANCE, JUNE 30, 2011 $26,458 $26,434 $414,146 $(25) $1,214 $(4,967) $463,260 $793 $464,053

2011


dollars (note)

NET INCOME BEFORE MINORITY INTERESTS ¥18,278 $226,409

OTHER COMPREHENSIVE INCOME (LOSS):Unrealized gain on available-for-sale securities 98 1,214Foreign currency translation adjustments (401) (4,967)

Total other comprehensive loss (303) (3,753)

COMPREHENSIVE INCOME ¥17,975 $222,656

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:Owners of the parent ¥17,937 $222,185Minority interests 38 471


41

Consolidated Statement of Changes in Net AssetsGREE, Inc. and Consolidated SubsidiariesYear Ended June 30, 2011—Unaudited

Consolidated Statement of Comprehensive IncomeGREE, Inc. and Consolidated SubsidiariesYear Ended June 30, 2011—Unaudited

2011


dollars (note)

OPERATING ACTIVITIES:Income before income taxes and minority interests ¥ 30,935 $ 383,191Adjustments for:

Income taxes paid (10,861) (134,535)Depreciation 180 2,230Amortization of goodwill 169 2,093Increase in allowance for doubtful receivables 154 1,908Decrease in allowance for head office transfer costs (148) (1,833)Changes in assets and liabilities:

Increase in trade accounts receivable (9,201) (113,973)Increase in other accounts receivable (5,163) (63,954)Increase in other accounts payable 9,236 114,406

Other—net 378 4,682 Total adjustments (15,256) (188,976)Net cash provided by operating activities 15,679 194,215

INVESTING ACTIVITIES:Proceeds from withdrawal of time deposits 10,000 123,870Purchases of property and equipment (539) (6,677)Purchases of intangible assets (191) (2,366)Payments for lease deposits (599) (7,420)Purchases of investment securities (2,179) (26,991)Cash decrease due to acquisitions of newly consolidated subsidiaries (10,029) (124,229)Other—net 264 3,270

Net cash used in investing activities (3,273) (40,543)

FINANCING ACTIVITIES:Proceeds from stock issuance 46 570Dividends paid (1,129) (13,985)Other—net (7) (87)

Net cash used in financing activities (1,090) (13,502)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS (416) (5,152)NET INCREASE IN CASH AND CASH EQUIVALENTS 10,900 135,018CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 11,354 140,642CASH AND CASH EQUIVALENTS, END OF YEAR ¥ 22,254 $ 275,660

ADDITIONAL CASH FLOW INFORMATION:Cash decrease due to acquisitions of newly consolidated subsidiaries:

Current assets ¥ 2,066 $ 25,591Non-current assets 59 731Goodwill 10,062 124,638Current liabilities (140) (1,734)Minority interests (26) (322)Acquisition cost 12,021 148,904Cash and cash equivalents included in the above current assets (1,992) (24,675)

Cash decrease due to acquisitions of newly consolidated subsidiaries ¥ 10,029 $ 124,229


42

Consolidated Statement of Cash FlowsGREE, Inc. and Consolidated SubsidiariesYear Ended June 30, 2011—Unaudited

Note: Up to the 2nd quarter of the fiscal year ended June 2011, figures are non-consolidated. Figures are consolidated from the 3rd quarter.


43

Quarterly Financial Results

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

TOTAL ASSETS(Millions of yen)

NET SALES(Millions of yen)

OPERATING INCOME(Millions of yen)

NET INCOME(Millions of yen)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0

5,000

10,000

15,000

20,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1Q 2Q 3Q 4Q

■■ 2010.6 6,837 15,017 24,291 35,231

■■ 2011.6 12,410 26,712 43,085 64,178

1Q 2Q 3Q 4Q

■■ 2010.6 3,939 9,013 14,283 19,578

■■ 2011.6 6,221 13,146 21,345 31,135

1Q 2Q 3Q 4Q

■■ 2010.6 2,129 5,345 8,391 11,505

■■ 2011.6 3,695 7,856 12,551 18,240

1Q 2Q 3Q 4Q

■■ 2010.6 32,170 32,170 24,952 32,170

■■ 2011.6 30,645 40,392 46,418 62,856

* Accumulated basis.

* Accumulated basis. * Accumulated basis.


44

Share data (as of June 30, 2011)

Authorized share capital: 640,000,000 shares

Number of shares issued: 229,300,000 shares

Unit of shares: 100 shares

Number of shareholders: 21,569

Principal shareholders (as of June 30, 2011)

NameNumber of shares

held (shares)Shareholding

(%)

Yoshikazu Tanaka 112,195,000 48.92

KDDI CORPORATION 16,000,000 6.97

State Street Bank and Trust Company (Standing proxy: The Hongkong and Shanghai Banking Corporation Limited Tokyo Branch) 9,661,750 4.21

Kotaro Yamagishi 7,870,000 3.43

Japan Trustee Services Bank, Ltd. (Trust Account) 7,152,700 3.11

Composition of shareholders (as of June 30, 2011)

Share Information

Stock price range

■■ GREE ■■ TOPIX ■■ Trading Volume (thousand shares)

Individuals and others59.86%

Other companies7.11%

Securities companies1.87%

Foreign investors22.29%

Financial institutions8.87%

0

20,000

40,000

60,000

80,000

–1

0

1

2

3

4

5

11.1210.1209.1208.12

Company Information

Company Name: GREE, Inc.

Business Domain: Social Media Business

Social Application Business

GREE Platform Business

Advertisement/Ad Network Business

Venture Capital Business

Founded: December 7, 2004

Founder and CEO: Yoshikazu Tanaka

Headquarters: Roppongi Hills Mori Tower, 6-10-1 Roppongi, Minato-ku, Tokyo, Japan

Employees: 934 (Consolidated, as of December 31, 2011)

Independent Auditors: Ernst & Young ShinNihon LLC

Stock Listing: Tokyo Stock Exchange First Section

Account Management Institution: The Chuo Mitsui Trust and Banking Company, Limited*

3-33-1 Shiba, Minato-ku, Tokyo, Japan * The Chuo Mitsui Trust and Banking Company, Limited will become the Sumitomo Mitsui Trust Bank,

Limited on April 1, 2012 following a merger between the Sumitomo Trust and Banking Company, Ltd. and the Chuo Mitsui Asset Trust and Banking Company, Limited.

Location of head office after merger:

1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan

Contact: IR, GREE, Inc.

e-mail: [email protected]

Telephone: +81-3-5770-9500

Website: Corporate information about GREE, Inc., including the Annual Report, business

results and news releases, may be viewed on the Company’s website.

URL: http://www.gree.co.jp/en/


45

Printed in Japan

Gree Annual Report

Documents

elementary

chief executive

certified

speed data

middle school

telecommunications

nikkei business

chuo mitsui