Konica Minolta : Notice on Establishment of a Joint Venture with CHANGE Inc. through a Company Split (Simplified Incorporation-type Company Split), Assignment of Shares of the New Subsidiary and Capital Increase by Third Party Allotment

December 24, 2021

To whom it may concern,

Company name: Konica Minolta, Inc.
Representative: Shoei Yamana, President and CEO
Stock Exchange Listing: Tokyo (First Section)
Local Securities Code Number: 4902
Contact: Mami Iwamoto, General Manager, Corporate Communications Division
Tel: [phone]

Konica Minolta, Inc. (hereinafter referred to as "the Company") today determined, effective from April 1, 2022 (planned), as follows:

■ The Company will establish a new wholly-owned subsidiary ("New Subsidiary," name yet to be decided) by means of an incorporation-type company split ("Incorporation-type Company Split") to take over the Local Government DX Support Project ("Project") currently being undertaken by the Company's Local Government DX Promotion Division using business process re-engineering (BPR).
■ Simultaneously, the Company will assign the shares of the New Subsidiary to the Company's wholly-owned subsidiary, Konica Minolta Publitech, Inc. ("Konica Minolta Publitech") ("Share Assignment") and transfer Project to Konica Minolta Publitech.
■ In addition, the Company concludes a joint venture agreement with CHANGE Inc. ("CHANGE") dated December 24, 2021. Under this agreement, while issuing new shares of the New Subsidiary through allotment of its shares to CHANGE ("Third Party Allotment"), the New Subsidiary will engage in accelerating DX support for local governments.

"Incorporation-type Company Split," "Share Transfer" and "Third Party Share Allotment" are collectively referred to as "Transactions."

As a result of the Transactions process, the New Subsidiary will not be treated as a consolidated subsidiary of the Company. As the Incorporation-type Company Split will be implemented through a simplified process involving the Company only, some of the disclosure items and contents are omitted in this notice.

Today, demands are growing for digital transformation as a means to drastically enhance operational efficiency among Japanese local governments, which are required to standardize 17 government jobs by the end of fiscal 2025 (March 31, 2026). Against this backdrop, the Company has conducted workload surveys in more than 120 local governments covering all their departments across Japan to help them streamline and standardize government jobs.

The Company had already started collaborating with CHANGE, a company with know-how in AI development and a track record of providing services to more than 1,600 local governments, in promoting the Local Government DX Support Project. Specifically, the two companies jointly developed AI to assist local governments in solving operational problems and standardizing operations (GAIA) and launched it in July 2021.

To accelerate the collaboration with CHANGE, the Company has determined to conclude a joint venture agreement with CHANGE, under which the Company will have its New Subsidiary take over the Project by means of an Incorporation-type Company Split and assign the shares of the New Subsidiary to Konica Minolta Publitech, a wholly-owned subsidiary of the Company engaged in offering DX services to local governments, while issuing new shares of the New Subsidiary through Third Party Allotment to CHANGE. In doing so, the Company aims to combine the assets of both companies to build a stronger position in the BPR market for local governments to help them facilitate DX through the Project in cooperation with partner companies more than ever, while expanding its business operations.

Splitting Company (As of March 31, 2021)	Company to be Incorporated (Planned for April 1, 2022)
(1) Company name	Konica Minolta, Inc.	TBD
(2) Location	2-7-2 Marunouchi, Chiyoda-ku, Tokyo	2-7-2 Marunouchi, Chiyoda-ku, Tokyo
(3) Representative	President and CEO Shoei Yamana	President Mikio Beppu
(4) Business overview	■Digital Workplace Business Development, manufacturing, and sales of multi-functional peripherals (MFPs) and related consumables; provision of related services and solutions; provision of IT solution services; ■Professional Print Business Development, manufacturing, and sales of digital printing systems and related consumables; provision of various printing services and solutions ■Healthcare Business Development, manufacturing, and sales of, and provision of services for diagnostic imaging systems (digital X ray diagnostic imaging, diagnostic ultrasound systems, and others); provision of digitalization, networking, solutions, and services in the medical field Genetic testing; provision of services related to primary care; provision of drug discovery support services ■Industry Business Development, manufacturing, and sales of measuring instruments Development, manufacturing, and sales of products, such as functional film used in displays, industrial inkjet printheads, and lenses for industrial and professional use Development, manufacturing, and sales of instruments related to imaging IoT and visual solutions; provision of related solution services	■Support for local governments' DX through BPR ■Software development business to support the local government DX ■Other business incidental to each of the above items
(5) Share capital	37,519 million yen	100 million yen
(6) Date of establishment	December 22, 1936	April 1, 2022 (planned)
(7) Number of issued shares	502,664,337 shares	200 shares
(8) Fiscal year-end	March 31	March 31
(9) Major shareholders and shareholding ratio	The Master Trust Bank of Japan, Ltd.　　 10.47% Custody Bank of Japan, Ltd. 　　　　　　　6.60% MUFG Bank, Ltd. 　　　　　　　　　　　　 2.42% SMBC Trust Bank Ltd. (Sumitomo Mitsui Banking Corporation Pension Trust Account) 　　　2.39%	Konica Minolta, Inc. 100%

(Millions of yen, excluding notable items; IFRS)

Fiscal Year-end	FYE March 31, 2019	FYE March 31, 2020	FYE March 31, 2021
Total equity	565,983	533,766	550,703
Total assets	1,218,986	1,276,768	1,299,752
Equity per share attributable to owners of the parent (yen)	1,123.39	1,058.29	1,093.98
Revenue	1,059,120	996,101	863,381
Operating profit (loss)	62,444	8,211	(16,266)
Profit (loss) attributable to owners of the parent	41,705	(3,073)	(15,211)
Basic earnings (loss) per share (yen)	84.33	(6.21)	(30.75)
Dividend per share (yen)	30.00	25.00	25.00

DX support for local governments through BPR

Revenue 434,484 thousand yen
(Note) Revenue figures are forecasted figures for the fiscal year ending March 31, 2022.

(Thousands of yen)

Assets		Liabilities
Item	Book value	Item	Book value
Current assets	37	Current liabilities	-
Non-current assets	180,749	Non-current liabilities	-
Total assets	180,786	Total liabilities	-

(Note) Assets and liabilities are forecasted figures for the fiscal year ending in March 31, 2022.

There will be no changes to the Company's name, location, representative, businesses, share capital or fiscal year-end due to the Company Split.

(1) Payment date	April 1, 2022 (planned)
(2) Number of new shares to be issued	300 shares
(3) Issue price	1 million yen per share
(4) Total issuance	300 million yen
(5) Allottee	CHANGE Inc.

(1) Company name	CHANGE Inc.
(2) Location	TOKYU REIT Toranomon Building 6F, 17-1 Toranomon 3-chome, Minato-ku, Tokyo
(3) Representative	Representative Director Yoshihisa Jimbo Hiroshi Fukudome
(4) Business overview	Training for services and IT human resource development utilizing libraries and basic technologies of various algorithms such as AI, voice Internet, mobility, IoT big data, cloud, security, etc.
(5) Share capital	1,000 million yen
(6) Date of establishment	April 10, 2003
(7) Major shareholders and shareholding ratio	Yoshihisa Jimbo　 13.17% Hiroshi Fukudome 7.37% Akira Itoh 　　　 　6.52% Kenji Kaneda 　　 5.79% Tetsuya Ishihara 　5.46% (As of September 30, 2021)
(8) Relationship with the Company	Capital relationship	Not applicable.
	Personnel relationship	Not applicable.
	Business relationship	Joint development of operational standardization support AI for local government DX is underway.
	Related party	Not applicable.

(Note) Major shareholders and shareholding ratio are calculated after deducting 623,235 shares of treasury stock.

(1) Number of shares held and ratio of voting rights held before the capital increase	200 shares (Ratio of voting rights held: 100%)
(2) Number of shares held and ratio of voting rights held after the capital increase	200 shares (Ratio of voting rights held: 40%)

December 24, 2021 Date of decision by the Company's President and CEO
December 24, 2021 Date of resolution by CHANGE's Board of Directors
December 24, 2021 Date of execution of the Joint Venture Agreement
April 1, 2022 　　　　Effective date of the Transactions (planned)
April 1, 2022 　　　　Date of establishment of the joint venture (planned)
April 1, 2022 　　　　Date of start of operations by the joint venture (planned)

The impact of the Transactions on the Company's business performance will be limited. If matters arise in the future that need to be announced, such information will be disclosed promptly.