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Greetings from the President

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We aim to address social issues and advance
environmental measures through the digital
transformation (DX) of Japanese society by
promoting the penetration of Data-to-Data systems. President and CEO:
Ken Nakajima

We aim to address social issues and advance environmental measures through the digital transformation (DX) of Japanese society by promoting the penetration of Data-to-Data systems. President and CEO:
Ken Nakajima

Thank you very much for your continued support of the Company. I am Ken Nakajima, President and CEO. Two years have passed since I took office in January 2022.

After joining Sanwa Bank (now MUFG Bank) as a new graduate, I had the opportunity to meet the late founder of Infomart, Katsuteru Murakami, in 2000 as part of the business development activities we were running in partnership with IT venture companies. While I still had things I hope to achieve as a banker, the Company’s innovative business model and Mr. Murakami's philosophy of "seriously changing the world" resonated with me. This inspired me to change careers in pursuit of the sense of accomplishment promised with opportunity to change the world together.

After joining the Company, I took on the role of executive in charge and was involved in the launch and expansion of the ASP billing system (now, "BtoB Platform Invoicing"). Since then, I have been dedicated to promoting Japan's digital transformation (DX) to a world-class level.

Infomart's BtoB Platform Directly Addresses ESG Initiatives

Our Company engages in CO2 reduction initiatives by digitalizing a vast amount of paper invoices, contracts, and other documents.

Another key feature of our business is the DtoD (Data to Data*1) system. Many electronic billing systems use the AtoD (Analog to Data*2) approach, where trading partners send paper invoices to be converted into digital data and accepted by the system operator. In contrast, our system requires both the system operator and its trading partners to convert the data into digital format, requiring a consensus among business partners, while promoting DX across Japan as a whole. Although Japan is often referred to as an IT laggard, we believe that the development of our business contributes to the advancement and sustainability of Japanese society.

*1

Data to Data: A system for exchanging digital data between companies, such as orders, invoices, and quotations.

*2

Analog to Data: Sending of documents via email or cloud tools. Emails and PDFs received are digitalized using AIOCR and stored electronically.

Positive Turnaround from the COVID-19 Pandemic to 2023 Results

The food business made two significant achievements in 2023. The first is the expansion of system adopters through the discovery of new markets. Since our founding in 1998, we have provided BtoB platforms for the foodservice industry, particularly our "BtoB Platform Ordering", which has been adopted by about half of the nationwide restaurant chains since before the COVID-19 pandemic. Therefore, we viewed this FOOD business as a mature sector. However, the unexpected circumstances of the COVID-19 pandemic over the past two years have provided a tailwind, allowing us to explore new markets. The impact of the COVID-19 pandemic on the food industry was significant, and around 2021, it had an adverse effect on the Company performance. However, we expanded our sales channels beyond restaurants to include hotels, inns, and catering services, while also reaching out to regional areas beyond the Tokyo metropolitan center. Undertaking this challenge led us to discover a significant market, resulting in an increase in companies adopting our services.

The second achievement is our "BtoB Platform," which includes the "BtoB Platform Ordering Light" designed to digitalize orders for wholesalers. However, this was an area that had still not seen as much widespread adoption. However, due to the widespread adoption of remote work during the pandemic, there has been a surge in the momentum for digitalization among wholesalers, resulting in a dramatic increase in the number of adopters.

Service Adoption Across Industries Exceeds One Million

At the same time, our "BtoB Platform Invoicing" service, launched in 2015, has continued to grow as a new pillar for our Company that transcends industry boundaries, surpassing the milestone of one million adopting companies in 2023. The invoice system introduced in October 2023 has acted as a tailwind, significantly increasing the demand for invoice digitalization and leading to a substantial rise in adopting companies.

Furthermore, as companies experience the convenience of invoice digitalization, more are adopting our comprehensive order and delivery system, "BtoB Platform TRADE", to digitalize their entire business flow, including purchase orders, estimates, and delivery slips. Fully digitalizing the entire business flow requires a Data to Data (DtoD) approach rather than an Analog to Data (AtoD) one. We believe this is where our strengths can be most effectively leveraged, and we anticipate a bright future for further development in this area.

Business Expansion Serves as a Breeding Ground for New Development

There are three new topics for 2023.
The first is the establishment of the Digital Government Division, marking the beginning of our focus on municipal business. As part of this initiative, we launched a proof of concept using the "BtoB Platform" in Nishinomiya City, Hyogo Prefecture, which has driven progress in platform adoption among companies related to local governments. This has also led to increased trust from local businesses in our Company, providing a significant positive impact.

The second topic is the launch of the new service "Credit Sales Payment" (credit settlement) in collaboration with Money Forward Kessai, a Money Forward group company. As an option for "BtoB Platform Invoicing" users, this service has been well received, and covers everything from credit checks on trading partners to payment collection, payment reconciliation, reminder notifications, and accounts receivable guarantees.
And third, the "BtoB Platform Invoicing" has led the domestic invoice cloud service sector now for three consecutive years.

This versatility has driven adoption at many companies across various industries and business types, regardless of the scope of sales. As of the end of December 2023, the number of companies using the service has surpassed the million mark, with an approximately 96%* usage rate among companies listed on the Tokyo Stock Exchange's Prime Market. * According to a survey by TOKYO SHOKO RESEARCH, LTD.

Human Capital and Governance
Human Capital and Governance

Human Capital and Governance

With increased attention being directed to the mandatory disclosure of information related to human capital in securities reports, the Company is actively addressing human capital from both quantitative and qualitative perspectives.

In terms of quantifiable metrics, we are enhancing diversity and increasing the ratio of women in the workplace. Additionally, the uptake of maternity and paternity leave has improved, with women achieving a 100% uptake and an average of 1.5 years, while over 60% of men take an average of 2 months. Moreover, we are committed to creating an environment where both men and women can pursue their careers without setbacks or interruptions. We are working to establish a system that facilitates employees taking leave and returning to work.
We believe that enhancing employee motivation and engagement is crucial, even for aspects that cannot be quantified. In 2023, I utilized tools to gather employee evaluations and candid feedback as my "report card". As a result, the overall evaluation was fairly positive, but I also received some critical feedback. I shared these results with employees, and made a commitment to address the negative aspects, and am actively working on implementing improvements based on their input.

At the same time, we are actively working to enhance corporate governance, namely the effectiveness of the Board of Directors, Executive Committee, and the Nomination and Compensation Committee.

Efforts to Curtail Negative Environmental Impacts

In terms of information disclosure in line with TCFD recommendations, the latest data from 2022 shows that our supply chain emits approximately 10,000 tons of carbon dioxide under Scope 3. This is primarily due to server operations for processing large amounts of data. On the other hand, the carbon dioxide reduced through the paperless initiatives at client companies is approximately 4,000 tons, meaning that our emissions currently stand at around double the amount reduced.
Starting in 2024, we plan to gradually transition from our current on-premises data center model to a cloud-based system, which is expected to reverse the relationship between emissions and reductions in the future. Previously, we maintained multiple servers, including backups, for disaster recovery and other downtime. However, advancements in technology now allow us to transition to the cloud without compromising safety, enabling us to reduce our environmental impact moving forward.

Contribution to Japanese Social Issues

I believe we can offer solutions for issues Japan faces, such as food loss and food mileage problems. Currently, we have started providing an automatic ordering system in partnership with AI companies, which helps reduce food waste by improving order accuracy. Regarding food mileage, we anticipate that we will be able to identify inefficiencies in the future by comprehensively analyzing our ordering data.

Additionally, in celebration of our 25th anniversary, we invited employees to submit business ideas, and we received various solution proposals addressing social issues. We plan to evaluate these ideas as appropriate in the future.

Progress of Medium-term Management Plan, New Vision, and Future Development

The Company is on track to achieve the 2026 goals of the Medium-term Management Plan set forth at the time of my inauguration: 20 billion yen in net sales, 5 billion yen in operating income, and 25% operating income margin on net sales. Results for 2023 are trending ahead of initial targets. Steady progress is being made on implementing our policy to advance system integration with other companies. On the other hand, profits have continued to decline due to the adoption of aggressive investment measures to achieve significant future sales growth taken through to 2022.

Therefore, from 2023 through to 2026, we will shift our focus for the latter half of the Medium-term Management Plan to prioritize profits and aim at maintaining a trend of increased earnings.

Furthermore, in consideration of the changes brought about over the past two years due to the COVID-19 pandemic, we have established a new direction for our business looking forward. This involves "rapidly spreading DtoD in an industry-specific manner, aiming to achieve DX at a level seen in the food business across as many industries as possible".

In the food industry, we not only sell systems but also provide a platform for information exchange and matching among client companies, accumulating know-how across companies and sharing it with other adopting companies, all while offering this support at no cost.

Although this will not yield immediate revenue, it fosters the overall development of the industry and will lead to future profits. Expanding this beyond the food industry not only enhances efficiency across sectors, but also contributes significantly to Japanese society as a whole.

Challenges and Approaches to Business Expansion

There are two challenges to be addressed in the future. The first is to strengthen customer success. We believe in the need to further enhance customer satisfaction across all sectors, including the food industry. The second challenge is that of knowledge management. We aim to organize and build a system for sharing know-how with the companies that have adopted our solutions, striving to become a company that lasts for 100 years.

Message to Stakeholders

Promoting the DtoD system in society can be cumbersome and challenging for companies that rely on analog methods, as it requires them to change established practices. However, it is essential for Japan to break free from being an IT laggard and to achieve sustainable growth.

This is something only a company with a clear DtoD strategy can achieve, and I always encourage our employees to take pride in the work they do, emphasizing their contribution to society.

The number of companies using our platform has surpassed one million, with transaction flows exceeding 40 trillion yen. In addition, we anticipate that the demand for DX across Japan's entire commerce flow will continue to rise, and this marks just the beginning of this journey. Looking forward, we will continue to strive to maximize corporate value. We kindly ask for the ongoing support and encouragement of all our stakeholders.