Assess recovery capacity in the second half after the full-year forecast was revised downward.

FY2026-H1 results were revenue of ¥6,358 million, operating income of ¥243 million, ordinary income of ¥320 million and interim net income attributable to owners of the parent of ¥279 million. Year on year, revenue increased 12.6%, operating income 32.8%, ordinary income 47.4% and net income 100.4%, indicating a clear recovery in the business when the first half is viewed on its own. However, the 1 September revision to the earnings forecast lowered the outlook to revenue of ¥14,403 million, operating income of ¥956 million and net income of ¥467 million, so the full-year outcome cannot be assessed based solely on the strong first-half results.

A simple calculation based on the revised forecast indicates that the second half needs to generate revenue of ¥8,045 million, operating income of ¥713 million and net income of ¥188 million. For revenue, the nine-month benchmark corresponding to 75% of the full-year forecast is ¥10,802 million, while the benchmark for operating income is ¥717 million, but these are mechanical benchmarks that do not take seasonality into account. In Q3, we will look for disclosure not only of the cumulative results for the first three quarters, but also of standalone Q3 revenue and operating income and the remaining amounts under the second-half plan.

The reasons given for the downward revision were the occurrence of MBO-related costs and declines in revenue and profit resulting from changes in customers’ development policies in the embedded software business. However, based on the information available at present, the amount and timing of the MBO-related costs, their accounting classification, and the declines in revenue and profit in the embedded software business attributable to changes in customers’ development policies have not been broken down. In Q3, it will be necessary to determine whether these are one-time costs or structural factors that will alter the revenue structure going forward.

The MBO was reported to have been completed at a purchase price of ¥10.463 billion, with BCJ-110 holding 78.05%. The progress of the privatization accompanying completion of the transaction could affect the company’s future IR policy, capital policy and treatment of its listing, making any update to the company’s explanation of its position in the Q3 materials an issue to monitor. In particular, it will be important to see whether the company can clearly present the difference between operating income excluding MBO-related costs and profit attributable to owners of the parent including those costs.

In shareholder returns, the annual dividend forecast was revised from ¥5.5 to ¥1.5, and news reports also indicated a policy of forgoing the year-end dividend. Since an interim dividend of ¥1.5 was approved in FY2026-H1, an annual dividend of ¥1.5 would effectively mean no year-end dividend. In Q3, we will track whether the annual dividend of ¥1.5, the zero year-end dividend, the outlook for the payout ratio and the shareholder-return policy after the MBO are formally confirmed.