TOSNET CORPORATION

Business Details

This segment is centered on three core operations: Traffic Control Security (for general contractors and construction projects), Facility Security (office buildings, factories, etc.), and Train Lookout Security (JR and private railway operating lines). The Company itself and its consolidated subsidiaries operate this business across regions, and it is the core segment accounting for approximately 89% of Group sales. In the interim period of FY2026 (ending September 2026), sales were ¥5,017 million, accounting for approximately 89% of the total, but the segment loss widened to ¥145 million due to soaring labor costs and other factors.

Recent Overview

While sales declined slightly, the segment loss expanded to more than six times the prior-year level

Sales in the Security Services segment for the interim period of FY2026 (ending September 2026) (October 2025 to March 2026) were ¥5,017 million (down 1.1% year on year), a slight decline, but the segment loss widened substantially to ¥145 million (compared with a loss of ¥24 million in the same period of the prior year). While Facility Security (up 4.5% year on year) and Train Lookout Security (up 8.6% year on year) achieved sales growth, the core Traffic Control Security business (down 3.3% year on year) saw a decline in sales. The widening loss is believed to reflect the impact of soaring labor costs due to wage increases. Note that the Mailing Services business, which was included in the reportable segments through the previous fiscal year, has been excluded from this fiscal year onward following the transfer of the subsidiary's shares in July 2025.

Key Products

Growth Drivers

• Sales growth in Facility Security driven by aggressive sales expansion primarily in the Tokyo metropolitan area (up 4.5% year on year in the interim period of FY2026 ending September 2026)
• Expansion of qualified personnel and aggressive sales activities in Train Lookout Security (up 8.6% year on year in the interim period of FY2026 ending September 2026)
• Aggressive sales expansion in Traffic Control Security targeting general contractors and construction project companies
• Expansion of the group of companies and expansion of locations into vacant regions through M&A (area strategy)
• Improved operational efficiency and productivity through DX promotion (full operation of new systems for security operations, HR/payroll, and accounting)

Risks

• Deterioration of segment profit/loss due to soaring labor costs from wage increases (segment loss of ¥145 million in the interim period of FY2026 ending September 2026, a substantial widening compared with the same period of the prior year)
• Risk of lost order opportunities due to the aging of security personnel (approximately half of all security guards are aged 60 or older) and labor shortages
• Downward pressure on order unit prices due to excessive competition among security companies
• Increased costs associated with the mandatory deployment of certified personnel in Traffic Control Security and crowd control security
• Demand volatility risk in the core Traffic Control Security business (down 3.3% year on year in the interim period of FY2026 ending September 2026)