Notice Regarding Change in a Consolidated Subsidiary
(Transfer of Share)

1. Reason for Transfer of Share

In the Medium-term Business Plan (Fiscal 2023-2025), the Company established three policies: strengthening business profitability; implementing structural reforms to reinforce profit foundation; and reinforcing business management system. Based on the policies, the Company is implementing business selection and concentration to strengthen business profitability. All businesses are strategically divided into four categories: strengthening business, maintaining profit business, non-focused business, and direction-changing business, and the expectations and roles of each business have been clarified. As the Imaging-IoT Solutions business is defined as direction-changing business, the strategic direction to improve profitability was refined.
In 2016, the Company acquired approximately 65% of MOBOTIX's shares with the aim of acquiring and jointly developing decentralized processing IP cameras, image data compression technology, and image data analysis technology. Through synergies with the then “Imaging Solutions Business” of the Company, new businesses were created by leveraging strengths in weather resistance and stability to contribute to value provision to customers in areas such as occupational safety and natural disaster risk reduction.
MOBOTIX was in a business environment that was harder than initially expected due to the impact of a decline in the market during the Covid-19 pandemic, supply constraints of semiconductor components, and geopolitical risks in Europe, among others. However, MOBOTIX’s performance has been improving recently, partly due to the recovery in market conditions and the results of new products.
The Company has also been considering the use of third-party capitals, intending to further accelerate MOBOTIX’s growth in the video surveillance market, which has high social value in terms of security and safety, and is expected to grow. Finally, the Company determined that the best option is to transfer all of the shares it owns in, and loans-receivable held against, MOBOTIX to Certina.
After this transaction, the Company’s Imaging-IoT Solutions business will continue to provide highly value-added video solution services centered on security and safety.

2. Overview of the Consolidated Subsidiary

Note: Impairment losses for the goodwill related to MOBOTIX were recorded for the fiscal year ended September 30, 2022 and the fiscal year ended September 30, 2023. However, because the impairment losses for the goodwill were recorded as consolidation adjustment, they are not recorded in the above financial statements of the invested company.

3. Summary of the Transferee

4. Shares to Be Transferred and Shares before and after Transfer

Transfer price is not disclosed due to confidentiality obligations between the parties.

5. Timeline (Central European Time)

Note: Closing of the share transfer is subject to certain closing conditions and required regulatory approvals, the satisfaction of which could have an effect on the timeline noted.

6. Financial Outlook

An operating loss, caused by the conclusion of the share purchase agreement, of approximately 10 billion yen is expected to be recorded in the fourth quarter of the fiscal year ending March 31, 2025. However, due to changes in exchange rates and other reasons, the final operating loss caused by the conclusion of the share purchase agreement may fluctuate. Though this transaction was not included in the consolidated forecasts for the fiscal year ending March 31, 2025 (disclosed on February 6, 2025), the impact on the consolidated financial results for the fiscal year ending March 31, 2025, is currently being examined, including other variable factors such as gains and losses caused by other business transfer. The Company will promptly announce any matters that require disclosure in the future.

Note: The exchange rate used in these materials is based on an exchange rate of €1=¥155. (assumed rate for the consolidated forecast)

Reference: The Company’s consolidated forecasts for the fiscal year ending March 31, 2025 (as disclosed on February 6, 2025) and consolidated financial results for the fiscal year ended March 31, 2024 (in billions of yen)

*1 `Business contribution profit’ is a profit index, calculated by deducting cost of sales and selling, general and administrative expenses from revenue.

*2 The Precision Medicine business is classified as a discontinued operation for the fiscal year ending March 31, 2025. Consequently, revenue, business contribution profit and operating profit in the forecasts for consolidated financial results for fiscal year ending March 31, 2025, are from continuing operations, and profits attributable to owners of the Company is the sum of continuing operations and discontinued operation. Further, the corresponding figures for consolidated financial results for fiscal year ended March 31, 2024, are respectively shown as “before” and “after” retroactive adjustment because of the classification for discontinued operation.