■ Growth Strategy of Lear <176A>

1. Business Environment and Past Two Periods Initiatives

The company is aware of the business environment that not only generation but also adjustment on the demand side is necessary to efficiently utilize the electricity generated towards achieving japan's goal of carbon neutrality by 2050. Therefore, the company believes that by constructing a decentralized energy platform to control unstable renewable energy on the demand side and providing it at low cost, it can contribute to the stabilization of energy in japan as a whole and decarbonization. To achieve this, a major transformation of organizational structure such as rebuilding the business model and stabilizing the revenue structure was carried out in two periods of June 2023 and June 2024.

As a result, the company progressed in the recovery of the number of new business arrangements that had dropped due to the spread of the novel coronavirus infection, leading to the recovery of the number of installations of the lump-sum power reception service to about 3,000 units per year. In addition, the company secured orders for the condominium disaster prevention service released in 2023, and the expansion of the area from existing condominiums to rental and new condominiums began. The company made efforts to stabilize and strengthen the revenue structure, and based on the depth of the relationship with customer condominiums built through service introduction processes such as board and general meeting resolutions and unanimous consent from all units, it was able to quickly pass on the soaring electricity prices to the prices. Additionally, against the background of stable demand due to the synthesis of daytime and nighttime electricity, it was able to elicit relatively inexpensive procurement, improving both revenue and continuity simultaneously, leading the overall performance. In the organizational structure reform, by fundamentally reforming the work environment and developing the company's unique personnel evaluation system, it was able to secure 58 personnel, approximately 30% more than the previous period by June 2024. Furthermore, it also received the Best Award in the Career Ownership Awards, which maximizes the power of individuals. Because of the smooth progress of the major transformation of the organizational structure over two periods, the company aims to boost growth for the future. Starting with positioning the June 2025 period as the first step towards achieving high growth in the future, the company plans to advance the stabilization of the business portfolio and the establishment of new revenue streams by leveraging the rebuilt business foundation and management resources such as customers, services, facilities, and electricity volume that the company possesses.

However, as challenges, it is necessary to improve profitability per person due to insufficient installation space for rechargeable batteries in condominiums, unstable electricity prices, and increased staff. The company aims to address these challenges by utilizing electric vehicles (EVs) as substitutes for storage batteries in condominiums, considering network expansion of small household rechargeable batteries, and entering new condominiums that are easy to incorporate from the design stage. To address the unstable electricity prices, the company plans to stabilize procurement by utilizing markets such as electricity futures and resolve the issue through the installation of storage batteries for photovoltaic electricity generation after the feed-in tariff (FIT) ends. As for profitability per person, the company aims to enhance it through the introduction and operation of a new personnel evaluation system (unique evaluation system "PLACES system") and improving sales closing speed through alliances.

※ Graduation from FIT: A system where the government guarantees the purchase of electricity generated from renewable energy at a fixed price for a certain period has ended (FIT). In the graduation from FIT period, there is no guarantee of purchase price by the country, and it may result in a reverse yield gap.

(Author: FISCO guest analyst Nobumitsu Miyata)