Investment burden and failure to recover investments in new services and businesses

「Total extraordinary losses 512,015" "Loss on valuation of investment securities 416,317" "Loss on liquidation of affiliated companies 86,898」

「Losses arising from the transfer of shares in the consolidated subsidiary ちゅらっぷす are presented as losses on liquidation of affiliated companies." "Losses on liquidation of affiliated companies ¥82.214 million」

「With respect to software under development, an impairment loss has been recognized by setting the recoverable amount at zero, after considering the outlook for future earnings and recoverability, because the timing of the product release for the metaverse business under development at the consolidated subsidiary 株式会社Conecti is uncertain.」

「With respect to software under development, an impairment loss has been recognized by setting the recoverable amount at zero, after considering the outlook for future earnings and recoverability, because the timing of the product release for the metaverse business under development at the consolidated subsidiary 株式会社Conecti has become uncertain.」

「Goodwill was recognized upon the acquisition of shares in the consolidated subsidiary 麥菲爾股份有限公司 based on its excess earning power. However, after considering the outlook for future earnings and recoverability, an impairment loss has been recognized by setting the recoverable amount at zero.」

「Due to declines in the underlying value of shares in investees, special losses included a loss on valuation of investments of 49,751 thousand yen, a loss on valuation of shares in affiliated companies of 40,111 thousand yen, and prior-period consumption taxes and other items of 37,291 thousand yen.」

「The loss on valuation of shares in affiliated companies represents valuation losses on shares of 株式会社アマダナ総合研究所 and 株式会社DLEキャピタル, which are unconsolidated subsidiaries.」

「If the rollout of new services and businesses fails to progress as planned, the investments may not be recovered, which could affect our group's business and performance.」

「During the cumulative second quarter of the current consolidated fiscal year, there were no new business or other risks, nor any material changes to the business and other risks described in the annual securities report for the previous fiscal year.」

「As the decline in the profitability of the investments made it unlikely that the investment amounts would be recovered, we recognized impairment losses.」

「As the decline in the profitability of the investments made it unlikely that the investment amounts would be recovered, we recognized impairment losses.」

「This will result in additional expenditures and could reduce profit margins. In addition, if the rollout of new services and businesses fails to progress as planned due to circumstances differing from forecasts or other factors, the investments may not be recovered, which could affect our group's business and performance.」

「During the cumulative third quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that could materially affect investors’ decisions, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the cumulative second quarter under review, there were no significant changes in the matters described in this quarterly report regarding the business and accounting conditions that could materially affect investors’ decisions, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the first three months of the consolidated fiscal year, there were no material changes concerning matters described in the quarterly securities report that could materially affect investors' decisions, or to the business and other risks described in the securities report for the previous fiscal year.」

「Meanwhile, revenue declined due to the cancellation of negotiations for a major project in China, the decision not to accept some orders because an adequate supply structure had not been established for domestic projects generally, and the deferral of certain delivery dates to the following period. In addition, due to the tight labor market in the video production industry in recent years, we were unable to establish the production and production-management structure initially envisioned, resulting in the dispersion of resources. As the development of new IP and growth of existing IP consequently failed to progress as initially planned, fixed costs, including personnel expenses and the amortization of investments, exceeded the revenue generated, resulting in an operating loss and an ordinary loss.」

「Meanwhile, revenue and profit recognition was deferred due to changes to delivery dates for certain projects from the originally expected schedule and delays in the release of an app. In addition, temporary declines in earnings resulting from the burden of integration costs and other expenses related to the acquisition of W media led to the recognition of an operating loss and an ordinary loss.」

「During the first three months of the consolidated fiscal year, there were no material changes concerning matters described in the quarterly securities report that could materially affect investors' decisions, or to the business and other risks described in the securities report for the previous fiscal year.」

「This will result in additional expenditures and could reduce profit margins. In addition, if the rollout of new services and businesses fails to progress as planned due to circumstances differing from forecasts or other factors, the investments may not be recovered, which could affect our business and performance.」