Risk of New Business Plans Falling Short and Withdrawal

「We are reviewing unprofitable initiatives and reducing outsourcing expenses in the Data and Technology Business, while promoting operational efficiency through the use of generative AI and developing a structure to improve profitability.」

「For the new business, 美肌ナビ, the timing of monetisation had diverged from the original plan because the launch was delayed. Taking into account the Company's current financial position and resource allocation, the Company decided to temporarily slow the pace of development in pursuit of higher returns, recognized an impairment loss of ¥114 million on software, and recorded an extraordinary loss.」

「As a result, from the third quarter onward, the Company decided to withdraw from the two entertainment matching service businesses, OneRoof and CarryGo!, and the Korean food e-commerce business, and to recognize impairment losses on the fixed assets of each business. It recognized extraordinary losses totaling ¥106 million, consisting of an impairment loss on fixed assets of ¥89 million and a loss on business withdrawal of ¥17 million.」

「As a result, after reviewing its existing businesses and individual services and systems, the Company decided to withdraw from the two entertainment matching service businesses, OneRoof and CarryGo!, and the Korean food e-commerce business, and to recognize impairment losses on the systems used in each business in order to achieve substantial future growth. During the nine months ended the third quarter of the fiscal year under review, it recognized extraordinary losses totaling ¥93 million, consisting of an impairment loss on fixed assets of ¥74 million and an addition to the provision for losses on business withdrawal of ¥19 million.」

「The Company recognized an impairment loss on the B2B social platform during the fiscal year under review because its profitability differed substantially from the original plan, and recognized an extraordinary loss of ¥31 million. The Company plans to discontinue the provision and operation of the B2B social platform in the future.」

「The Company recognized an impairment loss on software provided as a B2B social platform service because its profitability differed substantially from the original plan. As a result, it recognized an extraordinary loss of ¥31 million.」

「As the timing of a recovery in the business environment for the inbound and outbound businesses, centered on cross-border e-commerce and medical tourism, could not be determined, the Company decided that it had no choice but to withdraw from these businesses at the end of the fiscal year under review. It recognized an impairment loss of ¥4 million on the cross-border e-commerce system as an extraordinary loss.」

「In the medical tourism and cross-border e-commerce businesses built around China, measures taken by countries to prevent the spread of COVID-19, including travel restrictions, affected the overall business activities and customer acquisition of the local entities.」

「In the medical tourism and cross-border e-commerce businesses built around China, the global COVID-19 pandemic had a significant impact, particularly on customer acquisition. However, the Group worked to concentrate its management resources and improve management efficiency by consolidating its local entities in Hong Kong and liquidating its Shanghai entity.」

「In the medical tourism and cross-border e-commerce businesses, which use China as their base for development, the global COVID-19 pandemic affected progress to some extent. However, anticipating growing interest in medical care, hygiene and health, the Company actively sought to develop customers and partners.」

「The delayed establishment of the Hong Kong joint venture and partial revisions to various plans increased upfront development investment and delayed monetisation, resulting in a larger operating loss year on year.」

「During the first three-quarter cumulative consolidated accounting period, the delayed establishment of the Hong Kong joint venture and partial revisions to the MR technology development plan increased upfront development investment and delayed monetisation, resulting in a larger operating loss year on year.」

「Although some business plans were delayed due to the delayed establishment of the Hong Kong joint venture, monetisation is still expected from the third-quarter consolidated accounting period onward.」

「Although revenue increased due to sales of VR devices and the acquisition of orders, delays in developing products for sale, an increase in personnel to expand the business, and various upfront investments caused upfront investment to swell during the consolidated fiscal year, resulting in higher revenue but lower earnings.」

「When launching a new business, market analysis and service development may take time, and acquiring the necessary resources may cost more than expected. The Company therefore anticipates that plans may not always proceed smoothly.」