Resource Allocation to Highly Profitable Businesses and Restructuring of the Business Portfolio

「The business portfolio transformation begun in 2020 will move from the investment phase to the stable recovery and growth phase with the full-scale opening of the Smart Venue business, and we intend to accelerate it further.」

「The business portfolio transformation begun in 2020 will move from the investment phase to the stable recovery and growth phase with the full-scale opening of the Smart Venue business, and we intend to accelerate it further.」

「In July 2024, we transferred the merchandise sales business for leased vehicles in the Car Solutions business, which traces its roots to the Company's founding business, and in June 2025, we transferred part of the Digital Government business.」

「As a Group, we determined that concentrating management resources in the Car Solutions business on strengthening the existing IoT business and merchandise sales business for commercial vehicles, as well as building services that help solve issues in the logistics industry identified through the merchandise sales business for commercial vehicles, would contribute to increasing corporate value over the medium to long term. Accordingly, in a mature market environment characterized by an uncertain outlook, we decided to transfer this business to Koshida Tech Co., Ltd.」

「At a meeting of the Board of Directors held on 20 June 2024, we resolved to transfer to Koshida Tech Co., Ltd., effective 31 July 2024, the merchandise sales business for leased vehicles within the car solutions business of the Mobility and Services segment. We entered into the business transfer agreement on the same date and completed the transfer on 31 July 2024.」

「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.」

「We have been reconfiguring the business portfolio since 2019. This has involved a need for a certain level of investment and four consecutive fiscal years of consolidated operating losses. We believe it is necessary to steadily complete the portfolio reconfiguration, including achieving the medium-term management plan for the next 3 years, and establish a stable earnings base as soon as possible.」

「During the cumulative third quarter of the current consolidated fiscal year, investment has preceded earnings, but we have continued initiatives for Smart Venue based on the partnership agreement with Kobe City and activities aimed at securing new sponsors, with a view to generating earnings over the medium to long term,」

「During the cumulative second quarter of the current consolidated fiscal year, investment has preceded earnings, although significant earnings are expected over the medium to long term.」

「<Smart Venue segment> The Smart Venue segment aims to create content that generates excitement, empathy and vibrancy through sports and entertainment, centered on venues such as stadiums and arenas that become iconic presences in their communities. It is also working on the social implementation of smart cities, in which data flows into communities through fully digitalized customer experiences.」

「We will continue to minimize the impact of COVID-19, restore performance by increasing monthly fixed revenue in the Cloud Solutions business, and build an optimal structure for the group as a whole based on company-wide organizational restructuring, streamlining and efficiency improvements, thereby strengthening our earnings base.」

「As content for this business, we acquired shares in Storks, the operator of the Nishinomiya Storks, a member of the Japan Professional Basketball League (B.League), a public interest incorporated association, and will promote the creation of vibrancy in conjunction with a multipurpose arena.」

「While the impact of COVID-19 on business performance remains significant, we are working to strengthen our earnings base by further promoting efficiency, concentrating on businesses that need to be strengthened and reviewing the cross-company organizational structure in order to restore performance.」

「To minimize the adverse impact of COVID-19 on business performance and restore performance promptly once the situation has settled, we will carry out a cross-company organizational reorganization, selectively allocate and concentrate management resources, establish an optimal production structure across the Group and work to expand our earnings base.」

「The transfer of the sales agency business for mobile telecommunications equipment on 31 March 2020 will temporarily cause performance to fall below the previous fiscal year's results. We will pursue selective concentration, establish an optimal production structure for the group as a whole, strengthen business areas expected to grow, and create new businesses that could become a new core.」

「We believe that selective allocation and concentration of management resources are important for increasing corporate value. To promote a shift to the cloud solutions business and expand that business, we transferred the sales agency business for mobile information and communications equipment operated by us on 31 March 2020 and recorded a gain on transfer of business of ¥1,482.122 million as extraordinary income.」

「During the cumulative third quarter of the current consolidated fiscal year, we transferred the sales agency business for mobile information and communications equipment in order to further concentrate management resources on the strategically prioritized cloud solutions business. Accordingly, our management strategy changed from one based on the two businesses of cloud solutions and mobile to one based solely on the cloud solutions business.」

「To transition to a sustainable growth model by leveraging the foundation built to date, we are working to secure stable earnings while actively investing in the creation of new areas and pursuing the creation of highly profitable businesses.」

「To shift to a sustainable growth model that leverages the foundations we have built, we are investing actively in creating new fields in addition to securing stable revenue, and are working to create highly profitable businesses.」

「Meanwhile, we made North Detail Co., Ltd. a consolidated subsidiary to strengthen the development structure for regional information cloud and Mobility and Services, accelerate expansion into growth fields and the development of new services that will become pillars of the business over the medium to long term, and strengthen existing services and develop new services capable of responding quickly to diversifying needs.」

「In anticipation of business expansion and diversification, we made upfront investments, including quality improvements to stabilize services, investment in human resources to secure personnel and develop engineers, and development investment in new businesses. As a result, the associated expenses increased, but progress remains in line with the plan.」

「To respond appropriately to increasingly broad and complex demand for cloud-based services, we are allocating management resources to highly profitable businesses while actively pursuing business reviews, reorganizations and entry into new businesses.」