Additional Spending and Uncertainty Associated with New Business Expansion

「One Bright KOBE, the consolidated subsidiary operating the business, achieved profitability on a standalone basis in the fourth quarter, and we believe that, within its first year, it had progressed to the point of establishing a foundation for stable revenue generation.」

「During the interim consolidated accounting period, revenue and earnings increased as a result of newly securing venue-rental and partnership contracts and generating ticket revenue from self-promoted events. As a result, segment revenue was ¥2,218.506 million, up 265.9% year on year, and the segment loss was ¥12.911 million, compared with a loss of ¥136.049 million in the same period of the previous year.」

「During the consolidated fiscal year, the company promoted preparations aimed at generating revenue over the medium to long term and secured major sponsorships from the beginning of the year, resulting in a substantial increase in revenue. Ultimately, however, increased operating costs and opening expenses when the arena opened, as well as cancellations in part of the venue-rental business, among other factors, resulted in lower earnings.」

「During the interim consolidated accounting period, the company promoted preparations for opening in spring 2025 with a view to generating revenue over the medium to long term, securing major sponsorships from the beginning of the period and achieving a substantial increase in revenue. Although investment continues to precede returns, the company substantially improved its results despite recording an operating loss by focusing on containing costs such as the cost of sales and selling, general and administrative expenses.」

「During the current consolidated fiscal year, we steadily advanced preparations for the opening in 2025 with a view to generating medium- to long-term revenue. Although revenue increased substantially after securing major sponsorships, including naming rights for the arena from 株式会社ジーライオン, and sponsorships from multiple companies, revenue rose while profit declined because investment was front-loaded and the performance of consolidated subsidiary 株式会社ストークス was weak.」

「During the nine-month period ended the third quarter of the current consolidated fiscal year, we steadily advanced preparations for the opening in 2025 with a view to generating medium- to long-term revenue. Although revenue increased substantially after securing major sponsorships, including naming rights for the arena from 株式会社ジーライオン, and sponsorships from multiple companies, revenue rose while profit declined because investment was front-loaded and the performance of consolidated subsidiary 株式会社ストークス was weak.」

「During the six-month period ended the second quarter of the current consolidated fiscal year, we steadily advanced preparations for the opening in 2025 with a view to generating medium- to long-term revenue. Although revenue increased substantially after securing major sponsorships and other support, revenue rose while profit declined because investment was front-loaded. As a result, segment revenue was ¥180.561 million, up 44.9% year on year, and the segment loss was ¥224.882 million, compared with a loss of ¥183.958 million in the same period of the previous year.」

「Sales in bidding projects for which local governments and public institutions are the delivery destinations remained strong as the government's initiatives for administrative digitalization progressed. However, revenue and profit declined because of higher personnel and travel expenses and front-loaded investment in the new well-being business at Grand Green Osaka.」

「During the current consolidated fiscal year, we steadily advanced preparations for the opening in 2025 with a view to generating medium- to long-term revenue. However, delays in securing sponsorships and other factors resulted in lower revenue and profit while investment was front-loaded.」

「During the nine-month period of the current consolidated fiscal year, there were no occurrences of the principal risks that management recognised as potentially having a material impact on the financial condition, operating results or cash flows of the consolidated group, and no material changes to the “Business and Other Risks” described in the annual securities report for the previous fiscal year, among the matters relating to the business, accounting conditions, financial statements and other matters described in the quarterly report.」

「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 management recognizes could materially affect the financial position, operating results and cash flows of the consolidated companies, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the three-month period ended 30 June, there were no new risks that management recognizes as having the potential to materially affect the financial position, operating results or cash flows of the consolidated companies, and no material changes to the business risks described in the annual securities report for the previous fiscal year.」

「Although we are implementing measures to prevent infection and its spread, it is difficult to predict how the situation will develop or when it will subside. If the impact of infectious diseases on business activities continues for an extended period, the Group's corporate activities may be restricted by production adjustments by business partners, event restrictions at multipurpose arenas and similar measures, potentially adversely affecting operating performance through lower sales and profits.」

「During the nine-month period of the current consolidated fiscal year, there were no occurrences of the principal risks that management recognised as potentially having a material impact on the financial condition, operating results or cash flows of the consolidated companies, and no material changes to the “Business and Other Risks” described in the annual securities report for the previous fiscal year, among the matters relating to the business and accounting conditions described in the quarterly report.」

「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 management recognizes could materially affect the financial position, operating results and cash flows of the consolidated companies, or in the “Business and Other Risks” described in the securities report for the previous fiscal year.」

「During the three-month period ended 30 June, there were no new risks that management recognizes as having the potential to materially affect the financial position, operating results or cash flows of the consolidated companies, and no material changes to the business risks described in the annual securities report for the previous fiscal year.」

「We also launched Kuruma Base, a platform supporting the conversion of cars into services such as car sharing, but excess software development hours associated with the launch put pressure on profit.」

「Because the establishment of an efficient system development structure at the subsidiary has been delayed, progress under the original business plan has also fallen behind schedule.」

「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 quarter of the current consolidated cumulative period, there were no occurrences of matters that could materially affect investors’ investment decisions among the matters relating to the business and financial position described in this quarterly report, nor were there any material changes to the “Business and Other Risks” described in the annual securities report for the previous fiscal year.」

「During these initiatives, progress in the healthcare support business fell significantly below the original business plan. Following a review based on the future earnings outlook, impairment indicators were identified for goodwill and business assets recognized upon the acquisition of the business, and an impairment loss of ¥19.643 million was recorded as an extraordinary loss.」

「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.」

「Although some unprofitable projects arose as the number of new projects increased, the company continued to concentrate management resources in line with its sustainable growth strategy and made growth investments to expand services. As a result, revenue in the cloud solutions business was ¥1,860.627 million, up 36.0% year on year, while segment profit was ¥84.494 million, down 32.5%.」

「These new business initiatives may require additional expenditures for securing new personnel, system investment, advertising and promotion, and may give rise to new risks not previously anticipated by the company. As a result, business development may not progress as planned, potentially affecting the company's financial condition and operating results.」

「We intend to conduct sufficient reviews when expanding existing businesses or entering new businesses. However, if changes in the market environment or customer needs prevent us from achieving the initial plan and we cannot generate returns commensurate with our investments and cost burden, our operating results and financial condition may be affected.」

「We are also working to expand the business through new businesses using emerging technologies such as blockchain, while recognizing that these businesses carry higher risks than our existing businesses.」

「During the cumulative third-quarter period, no new business or other risks arose. In addition, there were no significant changes to the business and other risks described in the securities report for the previous fiscal year.」

「These new business initiatives may require additional expenditures for securing new personnel, system investment, advertising and promotion, and may give rise to new risks not previously anticipated by the company. As a result, business development may not progress as planned, potentially affecting the company's financial condition and operating results.」