We advocate “Continuous Transformational Growth” as we consider M&A in the entertainment industry to be a pillar of our growth strategy. Therefore, we consider “companies that grow discontinuously through repeated M&A in a specific industry” to be our comparable companies.

Companies that engaged specifically in the “M&A” industry have long existed in Europe and the U.S., engaging in dozens to hundreds of M&A transactions per year, and are generally classified as “Serial Acquiror”.

However, as shown on page 25 of the “M&A Progress and Earnings Forecasts from December 2023 onward” disclosed on January 22, 2024, GENDA expects net sales to exceed 53.0 billion yen, EBITDA to exceed 7.8 billion yen, and operating income to be 5 billion yen in the fiscal year ending January 31, 2024. As shown on page 25 of the “M&A Progress and Earnings Forecast after December 2023” disclosed on January 22, 2024, we expect net sales to exceed 90 billion yen, EBITDA to exceed 12.0 billion yen, and operating income to exceed 6.5 billion yen in thefiscal year ending January 31, 2024, as a result of the contribution to earnings of companies acquired through M&A during fiscal year of January 31, 2024.

https://ssl4.eir-parts.net/doc/9166/ir_material_for_fiscal_ym5/148590/00.pdf#page=25

This is significantly different from the organic growth rates in the amusement arcade industry, which accounts for a large portion of our sales, which is centered on new store openings and existing store sales growth, and from the organic growth rates in the general entertainment industry. This is significantly different from organic growth in the arcade industry, which accounts for a large portion of our sales, and from organic annual growth in the entertainment industry in general.

This simply translates to YoY growth of +70% in sales, +54% in EBITDA, and +30% in operating income. This is significantly different from the organic growth rate in the amusement arcade industry, which is driven mainly by new store openings and existing store sales growth. This is also significantly different from the organic annual growth rate in the entertainment industry in general.

As stated above, we assume that we will continue to accumulate Continuous Transformational Growth through M&A in the entertainment industry, and therefore, the industry in which we are engaged is “companies that grow through repeated M&A in a particular industry” as a comparative company. We believe that the industry in which we are engaged is “M&A”.