Recording of extraordinary losses, differences between the full-year consolidated earnings forecast and actual results, and differences between non-consolidated results and the previous fiscal year’s results
Nextware Ltd.
Investment securities, fixed assets and loans to consolidated subsidiaries held by the Company
A substantial decline in the fair value of investment securities compared with their acquisition cost, continued operating losses from fixed assets, and a revision of the outlook for future earnings. The differences in earnings resulted from lower demand for conventional systems development, a decrease in the number of profitable self-produced performances, the duration and number of nationwide touring performances, and higher costs associated with strategic investments in recruiting and training personnel in the next-generation AI field and research and development expenses.
On a consolidated basis, the Company recorded a ¥124 million loss on valuation of investment securities and a ¥62 million impairment loss as extraordinary losses. On a non-consolidated basis, the Company recorded a ¥116 million loss on valuation of investment securities, a ¥7 million loss on valuation of shares of affiliated companies, a ¥62 million impairment loss and a ¥106 million provision for allowance for doubtful accounts as extraordinary losses. The non-consolidated provision for allowance for doubtful accounts is eliminated in the consolidated accounts and has no impact on consolidated results.
Fiscal year ending March 2026
Differences arose between the full-year consolidated earnings forecast and actual results for the fiscal year ending March 2026. Actual results were net sales of ¥2,875 million, an operating loss of ¥282 million, an ordinary loss of ¥268 million and a net loss attributable to owners of the parent of ¥462 million. The details are reflected in the earnings report for the fiscal year ending March 2026 released today. No non-consolidated earnings forecast was disclosed.
¥106 million (provision for allowance for doubtful accounts relating to loans to a consolidated subsidiary. The counterparty’s name is Not disclosed)
The Company will review its existing businesses from the perspectives of profitability, growth potential and capital efficiency, proceed with the streamlining and reorganization of areas dependent on legacy business processes, and seek to improve profitability and return to profitability at an early stage by transitioning to a business structure centered on the use of next-generation AI. The extraordinary losses do not involve any new cash outflow and have no direct impact on future cash management. The equity ratio is 72.6%.
| Item | Details |
|---|---|
| Event name | Recording of extraordinary losses, differences between the full-year consolidated earnings forecast and actual results, and differences between non-consolidated results and the previous fiscal year’s results |
| Subject Entity | Nextware Ltd. |
| Target Locations / Products | Investment securities, fixed assets and loans to consolidated subsidiaries held by the Company |
| Cause | A substantial decline in the fair value of investment securities compared with their acquisition cost, continued operating losses from fixed assets, and a revision of the outlook for future earnings. The differences in earnings resulted from lower demand for conventional systems development, a decrease in the number of profitable self-produced performances, the duration and number of nationwide touring performances, and higher costs associated with strategic investments in recruiting and training personnel in the next-generation AI field and research and development expenses. |
| Amount of Impact on Business Performance | On a consolidated basis, the Company recorded a ¥124 million loss on valuation of investment securities and a ¥62 million impairment loss as extraordinary losses. On a non-consolidated basis, the Company recorded a ¥116 million loss on valuation of investment securities, a ¥7 million loss on valuation of shares of affiliated companies, a ¥62 million impairment loss and a ¥106 million provision for allowance for doubtful accounts as extraordinary losses. The non-consolidated provision for allowance for doubtful accounts is eliminated in the consolidated accounts and has no impact on consolidated results. |
| Accounting period in which recognized | Fiscal year ending March 2026 |
| Impact on Earnings Forecast | Differences arose between the full-year consolidated earnings forecast and actual results for the fiscal year ending March 2026. Actual results were net sales of ¥2,875 million, an operating loss of ¥282 million, an ordinary loss of ¥268 million and a net loss attributable to owners of the parent of ¥462 million. The details are reflected in the earnings report for the fiscal year ending March 2026 released today. No non-consolidated earnings forecast was disclosed. |
| Amount of receivables at risk of non-collection or delayed collection | ¥106 million (provision for allowance for doubtful accounts relating to loans to a consolidated subsidiary. The counterparty’s name is Not disclosed) |
| Outlook | The Company will review its existing businesses from the perspectives of profitability, growth potential and capital efficiency, proceed with the streamlining and reorganization of areas dependent on legacy business processes, and seek to improve profitability and return to profitability at an early stage by transitioning to a business structure centered on the use of next-generation AI. The extraordinary losses do not involve any new cash outflow and have no direct impact on future cash management. The equity ratio is 72.6%. |
Items this document does not state (16)
These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.
The reasons the company gives
The company's own explanation, not something inferred from the numbers.In the Solutions Business, corporate IT investment shifted toward cloud services and next-generation AI, reducing demand for conventional systems development. In the Entertainment Business, the number of profitable self-produced performances and ticket sales declined due to the appearance schedule at events related to Expo 2025 Osaka, Kansai, as well as the duration and number of nationwide touring performances. Results were also affected by higher costs from strategic investments in recruiting and training personnel in the next-generation AI field, recruitment activities and research and development expenses, as well as declines in the fair value of investment securities and revisions to the outlook for future earnings from fixed assets.