Working together as a company to achieve a V-shaped recovery.

Tell us about the company’s performance last year.

Our figures for last year showed a year on year increase in sales but a fall in profits. The main reason why our net profit slipped into a net loss in spite of increased sales was that we posted extraordinary losses as a result of implementing structural reform in the video-related sector. We went ahead with the structural reform of our video-related operations in order to remedy a number of issues brought to light as part of the process of establishing and maintaining internal controls. Last year was effectively the year in which we cleansed our video-related business of all negative aspects.

In the toy sector meanwhile, we managed to maintain the same level of sales as the previous year in spite of a continuing hostile environment and the absence of any market-leading hit products. This was mainly due to a sustained strong showing from character merchandise and the establishment of new sales channels. We will continue to focus on strengthening relationships with as many of our customers as possible and expanding business with individual manufacturers through the establishment of Happinet Marketing Corporation.

In the video game sector, strong sales of new games consoles enabled us to achieve healthy figures in terms of both sales and profits.

In the amusement sector, sale significantly exceeded figures for fiscal 2006 thanks to the incorporation of results from Sunlink Co. Ltd. and the Apple Corporation, both of which became subsidiaries last year. Profits on the other hand were affected by increased operating expenses due to stock clearances and other costs.

Tell us about initiatives planned for fiscal 2008

In the toys sector, we are aiming to increase our share of the toy market. We intend to actively implement a range of initiatives revolving around our strategic specialized structure as a company, including strengthening relationships with camera and consumer electronics retail channels, securing exclusive distribution through leading convenience stores, increasing business with affiliated manufacturers and developing new sales channels.

In the video-related sector, we plan to focus on securing products with an emphasis on profits rather than sales. As I mentioned a moment ago, we have been implementing a program of radical structural reform in an effort to reestablish underlying profitability as a manufacturer. We are also aiming to secure high quality content, clarify investment criteria in the interests of optimum investment and management and reinforce marketing capabilities based on the specialized structure of our planning departments. We have made a strong start so far this year, already shipping more than 200,000 copies of core title Crows Zero (as of May 2008). Given the recent surge in the popularity of online shopping sites, we plan to actively expand business as an online company in the future, build up our own unique database and put other aspects of our differentiation strategy into action in an effort to secure the number one share of the market.

With forecasts for the video game sector indicating that the market is likely to continue to be reinvigorated, we intend to fully capitalize on the stability of our business as the only domestic company stocking all video game platforms in an effort to further increase sales.

In the amusement sector, we plan to switch over to a new framework based on increased collaboration between individual Group companies as soon as possible. With amusement operations positioned as our fourth core line of business, we are aiming to implement our growth strategy through initiatives such as streamlining unprofitable locations, restructuring sales bases and establishing a nationwide operating structure.