Crypto asset valuation losses to drive first-half earnings

In Q1 of FY2027, consolidated revenue was ¥6,035 million, operating loss was ¥1,717 million, ordinary loss was ¥1,775 million, and net loss attributable to owners of the parent was ¥1,774 million. The main factor was a ¥1,945 million valuation loss on crypto assets held, and both revenue and operating income for the Digital Asset Management segment were negative ¥1,890 million. By contrast, the Energy business recorded operating income of ¥611 million and the Energy Storage Solutions business recorded income of ¥13 million, meaning that the impact of crypto asset valuation movements continues to substantially exceed business earnings.

For the full year as well, the Digital Asset Management segment recorded a crypto asset valuation loss of ¥5,893 million in FY2026, resulting in a segment loss of ¥5,887 million. In the previous interim period, a valuation gain of ¥3,747 million produced operating income of ¥3,739 million, but the result reversed to a valuation loss for the full year, showing the wide fluctuation in periodic earnings caused by market movements. For FY2027-H1, it will be necessary to determine, together with the amount of the valuation gain or loss, whether the Q1 valuation loss of ¥1,945 million expanded in Q2 or partially recovered.

The consolidated balance sheet at 31 March 2026 disclosed company-held crypto assets of ¥771 million and crypto assets lent to third parties of ¥14,970 million, for a total of ¥15,741 million. The company has identified risks including borrowers' inability to repay, the inability to sell assets if prices fall during the lending period, and hacking at borrowers. Based on media reports, the loan principal reportedly increased from approximately 1,411 BTC to approximately 1,503 BTC between 24 February 2026 and 31 August, while lending fees were approximately 14.92 BTC. Disclosure of the results as a source of income separate from valuation gains and losses will therefore be closely watched.

At the next earnings announcement, it will be important to disclose separately the period-end market value of crypto assets, valuation gains and losses, gains on sales, lending income, and income from staking and other operations. The company did not prepare a cash flow statement for Q1, and the relationship between changes in operating assets and earnings was only partially visible. In the first half, it will be necessary to review changes in balances, lenders and repayment terms, and the realizability of operating income, using ¥771 million of company-held assets and ¥14,970 million of assets on loan as reference points.