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Further to our release titled “Investigation regarding improper invoicing in relation to advertising production work” dated October 20, 2023, we have now identified that in a matter concerning Suntory Spirits Ltd. and Suntory Beverage & Food Limited (collectively “Suntory”), improper invoicing that deviated from agreed transaction rules took place in the form of excessive invoices.

We deeply apologize to Suntory and other concerned parties for the great inconvenience we have caused them.

Hakuhodo’s advertising production transactions are conducted in accordance with rules agreed individually with each of our clients. For invoices issued to Suntory, the transaction rule is actual cost plus fee. The improper invoices identified had been manipulated through means such as overwriting the billed amounts of documents from production companies, etc., that were submitted as evidence of the invoiced amount at the time of settlement of costs. This was done in a manner undetectable to Suntory. It was a misuse of our client’s trust in us and should never have happened. We deeply regret that this occurred due not only to low compliance awareness within the company, but also because an attitude of boosting profits by prioritizing the expansion of earnings had regrettably cemented itself in the relevant teams.

While we are currently having details of the matter and calculation of amounts scrupulously investigated by an investigative committee comprised of external experts and through other means, the main facts have been brought to light so we are releasing them today in advance.

Discussions with Suntory concerning the return of the amounts overcharged in the improper invoices are underway, and the amounts will be retuned promptly.

Hakuhodo views the occurrence of an incident such as this as a serious matter that shakes the relationships of trust we have with our clients. While there are no other incidents we can report at this time, the investigative committee will continue to thoroughly scrutinize whether any other similar matters exist.

Further, upon receiving the investigative committee’s investigation results and cause analysis report, we intend to draw up preventative measures, and ensure company-wide compliance awareness and advance measures for this purpose.

Reference information (as announced on October 20, 2023)

□Committee Composition

• Chairperson: Mr. Hideki Matsui (Partner, Mori Hamada & Matsumoto)

　Member: Mr. Shinichiro Yokota (Partner, Mori Hamada & Matsumoto)

　Member: Ms. Yumi Kanamaru (Counsel, Certified Public Accountant, Mori Hamada & Matsumoto)

□Date established: October 20, 2023

□Content of investigation and reporting

• Investigation into improper invoicing, etc., in Hakuhodo’s advertising production transactions
• Cause analysis and identification of problems in accordance with investigation findings
• Proposals for preventing a future recurrence