Notification of Reporting of Extraordinary Loss in Consolidated Financial Statement and Establishment of External Investigating Committee by KDDI

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May 12,2015

KDDI Corporation

As notified by KDDI Corporation ("KDDI") on March 25, 2015, DMX Technologies Group Limited ("DMX", located in Hong Kong and listed on the main board of the Singapore Exchange, or the "SGX"), a KDDI overseas consolidated subsidiary, has provided notice to the SGX regarding irregular accounting practices conducted by its subsidiaries in 2008 and 2009.

Currently within DMX, the following are being conducted: (i) an investigation by its internal investigating committee formed under the new management team led by the new CEO; (ii) a financial audit by DMX's accounting auditor; and (iii) investigations by external attorneys including investigations regarding its previous transactions, the financial impact and where responsibility lies. During those processes, in addition to the above-mentioned irregular accounting practices regarding the transactions in 2008 and 2009, new questions have arisen regarding the collectability and soundness of accounts receivable and other assets related to some of the transactions.
Considering those incidents, KDDI has posted loss on business of overseas subsidiaries (extraordinary loss), as much as 33,798 million yen, in its consolidated financial statements announced today, as a possible future loss attributed to the incidents.

KDDI has also launched its own investigation into this matter. Additionally, as of today KDDI has established an investigating committee composed of external experts ("External Investigating Committee") aiming (i) to investigate and analyze KDDI's capital participation in DMX and KDDI's governance on DMX and its subsidiaries since its capital participation in DMX, and (ii) to investigate the causes of the incidents and to develop preventive measures for the future.

<Composition of the External Investigating Committee>

Chairman Yukio Machida Attorney (former Deputy Prosecutor-General, Supreme Public Prosecutors' Office)
Member Mikio Yamaguchi Attorney (former Deputy Chief Prosecutor, the Hiroshima District Public Prosecutors Office)
Member Toshifumi Takaoka Certified Public Accountant
  • None of the committee members has special interests in the KDDI Group.

KDDI will issue a report promptly after the outcome of the investigation by the External Investigating Committee is known.

We wish to express our sincerest apologies to our shareholders and investors for the enormous inconvenience and concerns that this incident may cause.

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