Resource Strategy - Financial Capital

1. Drive Growth in our Core Services

Our revenue has grown by approximately 15% due to strategic investments in our core businesses:

• LIFULL HOME'S: We have been actively developing new features and services for our users and clients. Congruently, we have been scaling back on advertising expenses and reduced these two the same level as two years prior without dropping the number of inquiries via LIFULL HOME'S.
• LIFULL CONNECT: We acquired Lamudi Mexico making it a subsidiary in March 2023 thus strengthening our position of our real estate portals in Latin America. Additionally, we also acquired FazWaz – a tech enabled brokerage in Thailand. With this acquisition, we have expanded our services across all levels of the moving funnel: from search to supporting the transaction itself.

2. Boost Cash Generation

We implemented a strategy of mergers and acquisitions to supplement and enhance growth in our core businesses.

Additionally, we are looking at the bigger scope of our businesses to better allocate our management resources by, for example, taking steps such as scaling down our ancillary services.

• We continuously review our business operations and monitor current performance in order to focus our investments on our core businesses and areas where we see the most potential for growth. For example, we have sold several businesses which we deem to have limited synergy with our core services, since we do not see them making large contributions to our key growth areas in the mid to long term. Over the last years, we have transferred the following businesses: LIFULL Marketing Partners Co., Ltd. (an real estate-based advertising agency in Japan), Kleding B.V. (operator of the fashion aggregation site Fashiola) and Rakuten LIFULL STAY Limited (operator of vacation rental facilities.) During FY 2023/9, we also resolved to transfer all shares of LIFULL SPACE (operator of a storage space website in Japan.)

Initiatives Geared to Making our Employees More Productive

• We believe that creating a highly productive organization is a crucial step for sustainable growth in our earnings, and we have made a number of proactive investments in improving employee productivity over the last years.
  • For LIFULL Co., Ltd. in Japan, we have implemented a system of KPI Management as well as company-wide projects to streamline various processes, such as our internal daily productivity monitoring system to reach our mid to long-term goals.
  • Additionally, we have also established a specialized department to research and promote better usage of artificial intelligence (AI) and generative AI within the company and in our services.

3. Strengthen our Investment Management

Investments in our Core Businesses and Group Companies

• Investment decision are made and executed according to our internal standards which depend on the content and the amount of the investment.
• Generally, management meetings are held twice a month to give updates and review the progress of each business, subsidiary or affiliated company. This allows us to make quick decisions on how to react to changes in the businesses or external environments.

Decisions on New Businesses or Investments

• New businesses must meet a specific set of criteria for investments. Guidelines for withdrawal are also set at the time of the initial investment with most businesses required to achieve profitability within three years.
• We generally invest in fields that have proven synergy with our other businesses and expect all of our businesses to grow together. In regular management meetings, we receive updates on progress to ensure that the system allows for swift decisions on withdrawal or additional investments.

Basic Policy and Considerations for Temporary Fluctuations

• We believe that our investments for future growth and internal reserves are central to our overall growth strategy. Our investments to enhance our business ensure that we are able to continue to produce value and profit while our internal reserves help us to strengthen our financial foundations. At the same time, we believe that sharing our profits with our shareholders is an important management policy. Our dividend policy allows us to flexibly allocate results according to our performance each year. This means, that we take our mid to long-term business plans into consideration in our calculations. For FY 2023/9, we set the payout ratio at 25% of our consolidated net profit.
• In cases where profit attributable to owners of the parent significantly fluctuates due to extraordinary factors, we adjust the total dividend amount to reflect these causes. During the FY 2023/9, the actual dividend payout ratio amounted to 53.1% due to the reversal of carryforward losses from reorganization of overseas subsidiaries and costs accounted for as future payments for M&A (earn-out.)

Initiatives to Enhance Shareholder Returns

• Based on the above basic policy and considering the current performance progress, we are constantly looking to enhance shareholder returns. In November of the current fiscal year, we acquired 3,786,700 shares of our common stock for a total acquisition price of ¥999,998,800.（Release from November 18, 2022）