Interim report
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Consolidated Financial Results for the fiscal year ended June 30 , 2026 ( Japanese GAAP ) FASF Company name : Code number : Representative : AVANT GROUP CORPORATION 3836 Stock exchange listing : URL : August 5 , 2026 Tokyo https://www.avantgroup.com/ ( Title ) Group CEO & Founder ( Name ) Tetsuji Morikawa For inquiry : ( Title ) Director , Finance ( Name ) Naoyoshi Kasuga ( Tel ) 03-6388-6739 Scheduled date of Annual General Meeting of Shareholders : September 25 , 2026 Scheduled dividend payment date : September 28 , 2026 Scheduled filing date of Annual Securities Report : Supplementary information for financial statements : September 18 , 2026 : Available Explanatory meeting to be held : Yes ( for analysts ) ( Millions of yen , rounded down to the nearest unit ) 1. Consolidated financial results for the fiscal year ended June 30 , 2026 ( July 1 , 2025 to June 30 , 2026 ) ( 1 ) Consolidated operating results ( Percentages indicate year - on - year changes ) Profit attributable to Net sales EBITDA * Operating profit Ordinary profit owners of parent Fiscal year ended June 30 , 2026 June 30 , 2025 Millions of yen 30,481 28,227 % Millions of yen 8.0 15.6 5,114 5,110 % 0.1 10.1 Millions of yen 4,697 4,604 12.3 % Millions of yen 2.0 4,573 % Millions of yen % ( 0.9 ) 2,985 ( 13.1 ) 4,613 11.9 3,434 20.5 ( Note ) Comprehensive income : Fiscal year ended June 30 , 2026 3,021 million yen ( -4.0 % ) Fiscal year ended June 30 , 2025 3,146 million yen ( 7.5 % ) Earnings per share Diluted earnings per share Return on equity Fiscal year ended Yen Yen June 30 , 2026 83.41 94.15 Ratio of ordinary Ratio of operating profit to total assets profit to net sales % % % 19.8 18.9 15.4 19.9 16.3 June 30 , 2025 23.8 ( Reference ) Equity in earnings of affiliates : Fiscal year ended June 30 , 2026 ( 23 ) million yen Fiscal year ended June 30 , 2025 - million yen * EBITDA is operating profit + depreciation + amortization of goodwill ( 2 ) Consolidated financial position As of June 30 , 2026 June 30 , 2025 Total assets Net assets Equity ratio Net assets per share Millions of yen 24,147 24,373 Millions of yen 14,570 15,597 % 60.3 Yen 422.90 63.9 426.96 ( Reference ) Shareholders ' equity As of June 30 , 2026 : 14,570 millions of yen As of June 30 , 2025 : 15,582 millions of yen ( 3 ) Consolidated cash flows Cash flows from operating activities Fiscal year ended June 30 , 2026 Millions of yen 3,790 June 30 , 2025 4,469 Cash flows from investing activities Millions of yen ( 1,338 ) ( 201 ) Cash flows from financing activities Millions of yen ( 4,257 ) ( 1,036 ) Cash and cash equivalents at end of period Millions of yen 13,382 15,162
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2. Dividends Dividend per share Total dividends Dividend payout ratio (consolidated) Dividend on net assets ratio (consolidated) First quarter-end Second quarter-end Third quarter-end Fiscal year-end Total Fiscal year ended Yen Yen Yen Yen Yen Millions of yen % % June 30, 2025 - 0.00 - 25.00 25.00 930 26.6 6.3 June 30, 2026 - 0.00 - 32.00 32.00 1,123 38.4 7.5 June 30, 2027 (forecast) - 0.00 - 34.00 34.00 34.0 3. Consolidated earnings forecast for the fiscal year ending June 30, 2027 (July 1, 2026 to June 30, 2027) (Percentages indicate year-on-year changes) (Note) Since the Company manages its operations on an annual basis, consolidated earnings forecasts for the second quarter (cumulative) are not provided. For details, please refer to " 1. Overview of the operating results, etc. (4) Explanation on earnings forecast " on page 9 of the attached document. Notes (1) Significant changes in the scope of consolidation during the period : No (2) Changes in accounting policies, accounting estimates and restatement 1) Changes in accounting policies due to revision of accounting standards : No 2) Changes in accounting policies due to reasons other than item 1) above : No 3) Changes in accounting estimates : No 4) Restatement : No (3) Number of issued shares (common stock) 1)Total number of issued shares (including treasury shares) As of June 30, 2026 35,509,251 shares As of June 30, 2025 37,645,851 shares 2) Number of treasury shares held As of June 30, 2026 1,054,899 shares As of June 30, 2025 1,150,177 shares 3) Average number of shares Fiscal year ended June 30, 2026 35,796,012 shares Fiscal year ended June 30, 2025 36,479,901 shares Notes: 1. Beginning with the fiscal year ended June 30, 2024 (28th term), the Company introduced a share issuance trust for employees and executive officers, and from the fiscal year ending June 30, 2025 (29th term), a share issuance trust for directors. The shares of the Company held by these trusts are included in the number of treasury shares held at the end of the period and the average number of treasury shares held during the period. 2. The total number of issued shares including treasury shares at the end of the fiscal year decreased by 2,136,600 shares due to the cancelation of treasury shares on March 31, 2026, and June 30, 2026. * This release is outside the scope of audit procedures by certified public accountants and audit firms. * Notes for using forecasted information and others Forward-looking statements in this report, including earnings forecasts, are based on information currently available to the Company and on certain assumptions deemed to be reasonable. These statements are not guarantees by the Company regarding future pe rformance. Actual results may differ materially from the forecast depending on a range of factors. Please refer to " 1. Overview of the operating results, etc. (4) Explanation on earnings forecast " on page 9 of the attached document for the assumptions behind the earnings forecasts and notes for using earnings forecasts. Net sales Operating profit Ordinary profit Profit attributable to owners of parent Earnings per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Fiscal year ending June 30, 2027 32,800 7.6 5,000 6.4 5,000 9.3 3,450 15.6 100.13
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1 Accompanying Materials - Table of Contents 1. Overview of the operating results, etc. .................................................................................................................................................2 (1) Explanation on operating results .....................................................................................................................................................2 (2) Explanation on financial position ....................................................................................................................................................7 (3) Explanation on cash flows ...............................................................................................................................................................7 (4) Explanation on earnings forecast .....................................................................................................................................................9 2. Basic rationale for selection of accounting standards ...........................................................................................................................9 3. Consolidated financial statements and notes ......................................................................................................................................10 (1) Consolidated balance sheet ............................................................................................................................................................10 (2) Consolidated statement of income and statement of comprehensive income .................................................................................12 (3) Consolidated statements of changes in net assets ...........................................................................................................................15 (4) Consolidated statements of cash flows ..........................................................................................................................................17 (5) Notes to consolidated financial statements ....................................................................................................................................19 (Going concern assumption) .............................................................................................................................................................19 (Changes in presentation) .................................................................................................................................................................19 (Additional information) ...................................................................................................................................................................19 (Segment information) ......................................................................................................................................................................20 (Revenue recognition) ......................................................................................................................................................................23 (Per share information) .....................................................................................................................................................................24 (Subsequent events) ..........................................................................................................................................................................24
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2 1. Overview of the operating results, etc. (1) Explanation on operating results Consolidated financial results for the current fiscal year are as follows (Millions of yen, rounded down to the nearest unit) Fiscal year ended June 30, 2025 Fiscal year ended June 30, 2026 Year-on-year change Amount % Net sales 28,227 30,481 2,253 8.0 Operating profit 4,604 4,697 93 2.0 Ordinary profit 4,613 4,573 (39) (0.9) Profit attributable to owners of parent 3,434 2,985 (449) (13.1) Regarding net sales, investment demand among our Japanese corporate clients for maintaining and strengthening competitiveness through "upgrading corporate management and business activities using data and digital technologies"-a medium- to long-term trend has moderated somewhat following the completion of basic IT infrastructure upgrades but remains solid overall. With the Consolidated Financial Disclosure Business and Digital Transformation Promotion Business continuing to achieve strong sales growth, net sales increased to ¥30,481 million (8.0% increase year-on-year). Regarding profits, despite increases in personnel, hiring and IT expenses in line with business expansion, office expenses associated with office relocation and expansion, investment expenses to achieve future growth centered on strengthening the software business, as well as the recognition of a provision for loss on orders received as a one -time expense, profits increased due to improved profit margins from growth in the software business and a decrease in outsourced processing expenses to supplement inhouse resources . Operating profit was ¥4,697 million (2.0% increase year-on-year), ordinary profit was ¥4,573 million (0.9% decrease year-on-year), and profit attributable to owners of parent was ¥2,985 million (13.1% decrease year-on-year). Effective from the current fiscal year, the Company has reviewed its business segment classification method and has changed t he classification of its operating segments so that "Consolidated Financial Disclosure Business," "Digital Transformation Promotion Business," and "Management Solutions Business" consist of one company per segment, and other small companies are categorized as "Other." In accordance with this change, results for the same period of the previous fiscal year for each segment have been restated to reflect the amended segment categories.
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3 The status of each segment is as follows. 1) Net sales (Millions of yen, rounded down to the nearest unit) Fiscal year ended June 30, 2025 Fiscal year ended June 30, 2026 Year-on-year change Amount % Consolidated Financial Disclosure Business 8,301 9,648 1,346 16.2 Digital Transformation Promotion Business 10,318 11,022 703 6.8 Management Solutions Business 9,520 9,685 164 1.7 Other 437 531 94 21.5 Elimination of inter-segment transactions (349) (405) (55) - Consolidated net sales 28,227 30,481 2,253 8.0 2) Operating profit (Millions of yen, rounded down to the nearest unit) Fiscal year ended June 30, 2025 Fiscal year ended June 30, 2026 Year-on-year change Amount % Consolidated Financial Disclosure Business 2,006 2,923 917 45.7 Digital Transformation Promotion Business 1,716 1,717 1 0.1 Management Solutions Business 1,772 1,129 (643) (36.3) Other 99 104 4 4.7 Corporate expenses and elimination of inter-segment transactions (990) (1,176) (186) - Consolidated operating profit 4,604 4,697 93 2.0 In the Consolidated Financial Disclosure Business, net sales increased to ¥9,648 million (16.2% increase year -on-year) as in addition to a transfer of some maintenance service transactions from the Management Solutions Business starting from the current consolidated fiscal year, the outsourcing business contributed to revenue growth. In terms of profitability, operating profit increased to ¥2,923 million (45.7% increase year-on-year), significantly outpacing net sales growth due to an improved profit margin resulting from a decrease in hiring expenses, the effects of improved productivity and promotion of cloud migration in the software business, despite factors that increased costs, such as increased personnel expenses and office expenses due to an increase in the numb er of employees and the expansion of office space. In the Digital Transformation Promotion Business, while demand has moderated somewhat as client needs have become more sophisticated, and despite the cancellation of some projects, demand for leveraging data in management and business decision-making remains solid, resulting in net sales of ¥11,022 million (6.8% increase year -on-year). Although outsourcing costs to supplement internal resources declined, personnel expenses rose due to headcount increases to support sales growth, and temporary and ongoing office expenses increased due to an office relocation; furthermore, profitability was negatively impacted by the aforementioned cancellation of some projects, leading to operating profit of ¥1,717 million (0.1% increase year-on-year). In the Management Solutions Business, despite an increase in software business sales, net sales increased only slightly to ¥9,685 million (1.7% increase year -on-year), due to the transfer of some maintenance service transactions to the Consolidated Financial Disclosure Business from th e current consolidated fiscal year. Operating profit was ¥1,129 million (36.3% decrease year -on-year) due to the above-mentioned factors that kept the sales growth at a low level, as well as an increase in personnel expenses to secure personnel for future growth and in research and development expenses and marketing expenses , outsourcing expenses to strengthen the software business as well as the recognition of a provision for loss on orders received as a one-time expense.
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4 The number of employees on a consolidated basis was 1,883 at the end of the current fiscal year, up 176 from the end of the previous fiscal year.
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5 The status of orders and net sales by segment for the current fiscal year is as follows. 1) Orders (Millions of yen, rounded down to the nearest unit) Fiscal year ended June 30, 2025 Fiscal year ended June 30, 2026 Year-on-year change Amount Orders received Orders backlog Orders received Orders backlog Orders received Orders backlog Consolidated Financial Disclosure Business 8,777 4,990 10,770 6,112 1,992 1,122 Digital Transformation Promotion Business 10,260 2,012 11,005 1,995 745 (16) Management Solutions Business 9,694 4,175 10,274 3,761 580 (413) Other 464 199 543 211 79 12 Elimination of inter-segment transactions (472) (1,879) (492) (963) (19) 916 Total 28,724 9,497 32,102 11,118 3,378 1,620 2) Net sales (Millions of yen, rounded down to the nearest unit) Fiscal year ended June 30, 2025 Fiscal year ended June 30, 2026 Year-on-year change Amount % Consolidated Financial Disclosure Business 8,301 9,648 1,346 16.2 Digital Transformation Promotion Business 10,318 11,022 703 6.8 Management Solutions Business 9,520 9,685 164 1.7 Other 437 531 94 21.5 Elimination of inter-segment transactions (349) (405) (55) - Total 28,227 30,481 2,253 8.0
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6 Quarterly trends in net sales and operating profit are as follows. Net sales and operating profit for the last four quarters (Millions of yen, rounded down to the nearest unit) Fiscal year ended June 30, 2026 First quarter Second quarter Third quarter Fourth quarter Net sales 7,515 7,686 7,625 7,653 Operating profit 1,341 1,404 1,326 624 Operating profit margin (%) 17.8 18.3 17.4 8.2
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7 (2) Explanation on financial position Total assets at the end of the current consolidated fiscal year amounted to ¥ 24,147 million (a decrease of ¥225 million compared to the end of the previous consolidated fiscal year). This was primarily due to a decrease of ¥1,778 million in cash and deposits, an increase of ¥135 million in notes and accounts receivable - trade, and contract assets, an increase of ¥325 million in prepaid expenses, an increase of ¥579 million in buildings, an increase of ¥386 million in shares of subsidiaries and affiliates, and an increa se of ¥166 million in long-term loans receivable. On the other hand, total liabilities amounted to ¥9,577 million (an increase of ¥802 million from the end of the previous consolidated fiscal year). This was mainly due to an increase of ¥436 million in contract liabilities and an increase of ¥246 million in asset retirement obligations. Total net assets amounted to ¥ 14,570 million (¥1,027 million decrease from the end of the previous consolidated fiscal year), mainly due to profit attributable to owners of parent of ¥2,985 million and payment of dividends of surplus of ¥930 million, a decrease of ¥135 million in capital surplus due to the cancelation of treasury shares, and a decrease of ¥3,095 million in retained earnings. As a result, the equity ratio was 60.3% (63.9% at the end of the previous consolidated fiscal year), a decline of 3.6 percentage points from the previous fiscal year, and the Company believes it maintains a highly stable financial balance with low interest -bearing liabilities. (3) Explanation on cash flows Cash and cash equivalents ("funds") at the end of the current consolidated fiscal year decreased ¥1,779 million from the end of the previous consolidated fiscal year to ¥13,382 million. The status of each cash flow and their factors are as follows. (Cash flows from operating activities) Funds generated from operating activities amounted to ¥3,790 million. (In the previous consolidated fiscal year, ¥4,469 million was generated.) The main sources were profit before income taxes of ¥4,505 million and depreciation of ¥417 million, an increase of ¥238 million in provision for loss on orders received, and an increase of ¥436 million in contract liabilities. The main uses were an increase of ¥135 million in trade receivables and contract assets, an increase of ¥322 million in prepaid expenses, and ¥1,565 million in income taxes paid. (Cash flows from investing activities) Funds used in investing activities amounted to ¥1,338 million. (In the previous consolidated fiscal year, ¥201 million was used.) The main expenditures were purchases of property, plant and equipment of ¥597 million, purchases of investment securities of ¥146 million, purchase of shares of subsidiaries and affiliates of ¥420 million, and long-term loan advances of ¥158 million. (Cash flows from financing activities) Funds used in financing activities amounted to ¥4,257 million. (In the previous consolidated fiscal year, ¥1,036 million was used.) The main cash outflows were ¥3,231 million for purchase of treasury shares and ¥930 million for dividends paid.
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8 In the Group, cash flows from operating activities in the first quarter is typically at a low level due to the payment of income taxes and the payment of performance-based bonuses to officers and employees. It then gradually increases from the second quarter onward, and is usually positive over the full fiscal year. Maintenance fees in the Consolidated Financial Disclosure Business and the Management Solutions Business and commissions for the outsourcing business are paid annually in advance before the services are provided, making this a business model that req uires almost no working capital. On the other hand, since outsourcing expenses and other payments for the Digital Transformation Promotion Business are incurred in advance, the demand for working capital increases as sales grow. However, by concentrating on the Group's surplus funds at the holding company, smooth inter -group financing is made possible. In addition to the Group's total cash holdings, commitment lines totaling ¥3.5 billion have been established with the Group's banking partners, so there are currently no cash flow concerns. Rather, we intend to utilize surplus funds for strategic investments going forward.
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9 (4) Explanation on earnings forecast In August 2023, the Company announced a medium -term management plan, a five-year plan through the fiscal year ending June 2028, with targets to be achieved in five years. In the fiscal year ending June 2027, the fourth year of the plan, the Group will continue to promote measures to realize the AVANT GROUP ʼs materiality ('Becoming a software company that contributes to enhancing corporate value'), with a focus on strengthening the software business. We expect that the growth investments necessary to realize the Group's materiality will continue to be implemented continuously and flexibly, primarily centered on the Group’s operating companies, and additionally, we anticipate that R&D expenses for new product development and recruitment of management personnel to execute the Group's strategy will also be incurred at the holding company level. Although unstable factors such as continued inflation, fluctuations in financial and capital markets, and concerns of an economic recession against the backdrop of heightened geopolitical risks in the Middle East and Ukraine may affect the Group's perform ance, the Group believes that demand for the Group's businesses, such as an increase in the number of companies that want to utiliz e data for management and strengthen group governance, will continue to increase in the medium to long term. As a result, the Company forecasts net sales of ¥32,800 million and operating profit of ¥5,000 million in the next consolidat ed fiscal year. In accordance with our existing dividend policy, we will raise the ratio of total amount of dividends to net assets, always being conscious of exceeding the average of all listed companies, while at the same time striving to maintain stable dividends (in principle, dividends per share should not fall below the level of the previous fiscal year). The dividend for the current fiscal year will remain unchanged from the forecast at ¥32 per share, which will be submitted to the Company's general meeting of shareholders to be held on September 25, 2026. For the next fiscal year, the above policy itself remains unchanged, and we forecast dividends of ¥34 per share, aiming to achieve the ratio of total amount of dividends to net assets (consolidated) of 8%, which is our target to be achieved within the period of our new medium-term management plan. 2. Basic rationale for selection of accounting standards For the time being, the Group's policy is to prepare consolidated financial statements in accordance with Japanese GAAP. The Group's policy is to adopt IFRS as appropriate, taking into consideration various circumstances in Japan and overseas.
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10 3. Consolidated financial statements and notes (1) Consolidated balance sheet (Thousands of yen) Previous fiscal year (June 30, 2025) Current fiscal year (June 30, 2026) Assets Current assets Cash and deposits 14,593,169 12,815,077 Notes and accounts receivable - trade, and contract assets 4,228,796 4,364,133 Securities 500,000 500,000 Work in process 17,868 6,974 Raw materials and supplies 55,016 158,640 Prepaid expenses 1,163,320 1,488,650 Accounts receivable - other 5,728 14,928 Other 205,558 230,364 Allowance for doubtful accounts (3,516) (3,108) Total current assets 20,765,941 19,575,660 Non-current assets Property, plant and equipment Buildings 691,499 1,342,656 Accumulated depreciation (341,024) (412,925) Buildings, net 350,475 929,730 Vehicles 1,956 843 Accumulated depreciation (1,956) (843) Vehicles, net 0 0 Tools, furniture and fixtures 653,884 669,396 Accumulated depreciation (501,797) (526,506) Tools, furniture and fixtures, net 152,087 142,890 Right-of-use assets 30,968 3,129 Accumulated depreciation (3,946) (1,055) Right-of-use assets, net 27,022 2,073 Construction in progress 19,580 440 Total property, plant and equipment 549,165 1,075,135 Intangible assets Trademark rights 37,802 33,077 Software 342,474 206,816 Other 225 225 Total intangible assets 380,502 240,119 Investments and other assets Investment securities 830,184 877,134 Shares of subsidiaries and affiliates - 386,743 Long-term loans receivable - 166,523 Long-term prepaid expenses 10,158 8,678 Leasehold and guarantee deposits 826,752 752,258 Deferred tax assets 864,785 952,503 Other 145,566 113,066 Total investments and other assets 2,677,446 3,256,908 Total non-current assets 3,607,114 4,572,162 Total assets 24,373,055 24,147,822
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11 (Thousands of yen) Previous fiscal year (June 30, 2025) Current fiscal year (June 30, 2026) Liabilities Current liabilities Accounts payable - trade 769,142 673,622 Lease liabilities 6,112 2,888 Accounts payable - other, and accrued expenses 783,077 876,591 Income taxes payable 797,648 855,094 Contract liabilities 3,766,666 4,202,695 Asset retirement obligations 49,224 30,217 Provision for bonuses 1,232,404 1,173,888 Provision for bonuses for directors (and other officers) 140,888 79,387 Provision for loss on orders received 11,363 249,873 Provision for stock benefits 131,442 130,248 Accrued consumption taxes 523,566 507,721 Deposits received 227,053 234,700 Other 2,030 760 Total current liabilities 8,440,619 9,017,689 Non-current liabilities Lease liabilities 27,111 3,724 Asset retirement obligations 305,984 552,748 Deferred tax liabilities 1,350 2,913 Total non-current liabilities 334,446 559,386 Total liabilities 8,775,065 9,577,076 Net assets Shareholders' equity Share capital 345,113 345,113 Capital surplus 417,417 270,367 Retained earnings 16,490,130 15,449,311 Treasury shares (1,688,845) (1,553,512) Total shareholders' equity 15,563,815 14,511,279 Accumulated other comprehensive income Valuation difference on available-for-sale securities (1,193) 12,874 Deferred gains or losses on hedges (2,921) 3,150 Foreign currency translation adjustment 22,354 43,441 Total accumulated other comprehensive income 18,239 59,466 Non-controlling interests 15,934 - Total net assets 15,597,989 14,570,746 Total liabilities and net assets 24,373,055 24,147,822
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12 (2) Consolidated statement of income and statement of comprehensive income Consolidated statement of income (Thousands of yen) Previous fiscal year (July 1, 2024 to June 30, 2025) Current fiscal year (July 1, 2025 to June 30, 2026) Net sales 28,227,703 30,481,393 Cost of sales 15,649,179 16,958,328 Gross profit 12,578,523 13,523,065 Selling, general and administrative expenses Remuneration for directors (and other officers) 424,236 425,587 Employees' salaries and bonuses 2,149,746 2,627,812 Provision for bonuses 1,225,693 1,129,897 Provision for bonuses for directors (and other officers) 206,777 87,941 Legal welfare expenses 338,761 402,891 Share-based payment expenses 143,954 136,160 Outsourcing expenses 160,216 191,044 Rent expenses on land and buildings 218,777 299,372 Utilities expenses 80,696 84,479 Commission expenses 1,005,262 1,057,108 Depreciation 267,495 282,690 Research and development expenses 360,974 361,117 Other 1,391,782 1,739,195 Total selling, general and administrative expenses 7,974,374 8,825,298 Operating profit 4,604,149 4,697,766 Non-operating income Interest income 11,572 37,075 Dividend income 11,238 3,333 Foreign exchange gains 1,641 - Subsidy income 16,593 3,212 Other 4,521 10,678 Total non-operating income 45,566 54,299 Non-operating expenses Interest expenses 1,751 2,422 Share of loss of entities accounted for using equity method - 23,002 Loss on investments in investment partnerships 16,035 79,629 Commission expenses 17,079 62,949 Foreign exchange losses - 7,197 Other 1,829 3,135 Total non-operating expenses 36,696 178,336 Ordinary profit 4,613,019 4,573,729
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13 (Thousands of yen) Previous fiscal year (July 1, 2024 to June 30, 2025) Current fiscal year (July 1, 2025 to June 30, 2026) Extraordinary profit Gain on sales of investment securities 318,265 - Insurance income 300 - Total extraordinary income 318,565 - Extraordinary losses Loss on valuation of investment securities - 68,372 Loss on retirement of non-current assets 252 - Loss on cancellation of leases 86 - Total extraordinary losses 339 68,372 Profit before income taxes 4,931,245 4,505,356 Income taxes - current 1,535,316 1,620,082 Income taxes - deferred (33,485) (95,172) Total income taxes 1,501,831 1,524,909 Profit 3,429,414 2,980,446 Profit attributable to non-controlling interests (5,273) (5,159) Profit attributable to owners of parent 3,434,688 2,985,606
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14 Consolidated statement of comprehensive income (Thousands of yen) Previous fiscal year (July 1, 2024 to June 30, 2025) Current fiscal year (July 1, 2025 to June 30, 2026) Profit 3,429,414 2,980,446 Other comprehensive income Valuation difference on available-for-sale securities (225,212) 14,068 Deferred gains or losses on hedges (5,784) 6,072 Foreign currency translation adjustment (51,821) 42,205 Share of other comprehensive income of entities accounted for using equity method - (21,721) Total other comprehensive income (282,818) 40,623 Comprehensive income 3,146,596 3,021,070 Comprehensive income attributable to Owners of parent 3,153,341 3,026,833 Non-controlling interests (6,745) (5,763)
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15 (3) Consolidated statement of changes in net assets Previous fiscal year (July 1, 2024 to June 30, 2025) (Thousands of yen) Shareholders' equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders' equity Balance at beginning of period 345,113 281,913 13,763,738 (1,396,622) 12,994,141 Changes during period Dividends of surplus (708,296) (708,296) Disposal of treasury shares 135,504 409,041 544,545 Increase in consolidated subsidiaries - non-controlling interests - Profit attributable to owners of parent 3,434,688 3,434,688 Purchase of treasury shares (351,351) (351,351) Purchase of treasury shares through a share issuance trust (349,911) (349,911) Net changes in items other than shareholders' equity Total changes during period - 135,504 2,726,391 (292,222) 2,569,673 Balance at end of period 345,113 417,417 16,490,130 (1,688,845) 15,563,815 Accumulated other comprehensive income Non-controlling interests Total net assets Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Total accumulated other comprehensive income Balance at beginning of period 224,019 2,862 72,704 299,586 - 13,293,728 Changes during period Dividends of surplus (708,296) Disposal of treasury shares 544,545 Increase in consolidated subsidiaries - non-controlling interests 22,680 22,680 Profit attributable to owners of parent 3,434,688 Purchase of treasury shares (351,351) Purchase of treasury shares through a share issuance trust (349,911) Net changes in items other than shareholders' equity (225,212) (5,784) (50,349) (281,346) (6,745) (288,091) Total changes during period (225,212) (5,784) (50,349) (281,346) 15,934 2,304,261 Balance at end of period (1,193) (2,921) 22,354 18,239 15,934 15,597,989
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16 Current fiscal year (July 1, 2025 to June 30, 2026) (Thousands of yen) Shareholders' equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders' equity Balance at beginning of period 345,113 417,417 16,490,130 (1,688,845) 15,563,815 Changes during period Dividends of surplus (930,856) (930,856) Disposal of treasury shares 135,332 135,332 Cancellation of treasury shares (135,504) (3,095,569) 3,231,073 - Purchase of shares of consolidated subsidiaries (11,545) (11,545) Profit attributable to owners of parent 2,985,606 2,985,606 Purchase of treasury shares (3,231,073) (3,231,073) Net changes in items other than shareholders' equity Total changes during period - (147,049) (1,040,818) 135,332 (1,052,536) Balance at end of period 345,113 270,367 15,449,311 (1,553,512) 14,511,279 Accumulated other comprehensive income Non-controlling interests Total net assets Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Total accumulated other comprehensive income Balance at beginning of period (1,193) (2,921) 22,354 18,239 15,934 15,597,989 Changes during period Dividends of surplus (930,856) Disposal of treasury shares 135,332 Cancellation of treasury shares - Purchase of shares of consolidated subsidiaries (11,545) Profit attributable to owners of parent 2,985,606 Purchase of treasury shares (3,231,073) Net changes in items other than shareholders' equity 14,068 6,072 21,086 41,227 (15,934) 25,292 Total changes during period 14,068 6,072 21,086 41,227 (15,934) (1,027,243) Balance at end of period 12,874 3,150 43,441 59,466 - 14,570,746
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17 (4) Consolidated statement of cash flows (Thousands of yen) Previous fiscal year (July 1, 2024 to June 30, 2025) Current fiscal year (July 1, 2025 to June 30, 2026) Cash flows from operating activities Profit before income taxes 4,931,245 4,505,356 Depreciation 506,567 417,015 Share-based payment expenses 9,704 2,512 Insurance income (300) - Increase (decrease) in allowance for doubtful accounts (625) (407) Increase (decrease) in provision for bonuses (87,363) (58,516) Increase (decrease) in provision for bonuses for directors (and other officers) (29,266) (61,501) Increase (decrease) in provision for loss on orders received (6,549) 238,510 Increase (decrease) in provision for share benefits 1,823 (1,193) Interest and dividend income (22,810) (40,408) Interest expenses 1,751 2,422 Commission expenses 17,079 62,949 Share of loss (profit) of entities accounted for using equity method - 23,002 Loss (gain) on investments in investment partnerships 16,035 79,629 Subsidy income (16,593) (3,212) Loss (gain) on valuation of investment securities - 68,372 Loss (gain) on sale of investment securities (318,265) - Loss (gain) on sale and retirement of property, plant and equipment 140 (39) Decrease (increase) in notes and accounts receivable trade and contract assets 211,272 (135,312) Decrease (increase) in inventories 14,867 (92,730) Decrease (increase) in prepaid expenses (12,569) (322,238) Increase (decrease) in trade payables (32,245) (95,482) Increase (decrease) in accounts payable - other, and accrued expenses (327,789) 215,568 Increase (decrease) in accrued consumption taxes 62,504 (34,578) Increase (decrease) in contract liabilities 421,182 436,028 Increase (decrease) in deposits received 5,077 7,647 Other 480,750 98,492 Subtotal 5,825,623 5,311,887 Interest and dividends received 16,548 43,337 Interest paid (1,751) (2,422) Subsidies received 16,593 3,212 Amount of insurance proceeds received 300 - Income taxes paid (1,727,241) (1,565,950) Income taxes refund 339,657 - Cash flows from operating activities 4,469,729 3,790,065
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18 (Thousands of yen) Previous fiscal year (July 1, 2024 to June 30, 2025) Current fiscal year (July 1, 2025 to June 30, 2026) Cash flows from investing activities Purchase of property, plant and equipment (75,541) (597,508) Payments for asset retirement obligations - (45,858) Purchase of intangible assets (56,484) (70,623) Purchase of investment securities (242,731) (146,984) Proceeds from sale and redemption of investment securities 410,025 6,850 Purchase of shares of subsidiaries and affiliates - (420,981) Payments of leasehold and guarantee deposits (344,289) (59,768) Proceeds from refund of leasehold and guarantee deposits 149,599 133,514 Purchase of insurance funds (4,459) (4,459) Payments into time deposits (37,590) (15,996) Proceeds from withdrawal of time deposits - 40,420 Long-term loan advances - (158,392) Other 228 799 Cash flows from investing activities (201,243) (1,338,987) Cash flows from financing activities Repayments of finance lease liabilities (9,024) (9,332) Commission fee paid (17,083) (64,071) Purchase of treasury shares (701,263) (3,231,073) Dividends paid (708,296) (930,856) Proceeds from share issuance to non-controlling shareholders 22,680 - Proceeds from sale of treasury shares 376,265 - Purchase of shares of subsidiaries not resulting in change in scope of consolidation - (21,717) Other (91) - Cash flows from financing activities (1,036,813) (4,257,050) Effect of exchange rate change on cash and cash equivalents (46,212) 26,746 Net increase (decrease) in cash and cash equivalents 3,185,460 (1,779,226) Cash and cash equivalents at beginning of period 11,976,585 15,162,045 Cash and cash equivalents at end of period 15,162,045 13,382,819
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19 (5) Notes to consolidated financial statements (Going concern assumption) Not applicable. (Changes in presentation) (Consolidated balance sheet) 'Deposits paid,' which were previously presented separately under 'Current assets' in the previous fiscal year, are now included in 'Other' beginning with the current fiscal year as the amount has become immaterial. To reflect this change in presentation, t he consolidated financial statements for the previous fiscal year have been reclassified. As a result, the "Deposits paid" of 314 thousand yen and "Other" of 205,244 thousand yen, which were presented under "Current assets" on the consolidated balance sheets for the previous fiscal year, have been reclassified as " Other" in the amount of 205,558 thousand yen. (Additional information) (Transaction for the issuance of company shares to employees through a trust) Starting from the fiscal year ending June 2024 (the 28th term), the Company has introduced a share issuance trust as an incentive for its employees and executive officers (hereinafter referred to as 'Employees, etc.') to provide benefits and to enhance th e Company's corporate value. 1. Outline of the transaction Under this scheme, in accordance with the share issuance regulations established by the Company in advance, points are granted to Employees, etc. who fulfil certain requirements, and the Company common shares (hereinafter referred to as "the Company's shares") corresponding to the number of points granted to such beneficiaries are delivered to those Employees, etc. who fulfil the requirements to be beneficiaries as stipulated in the share delivery regulations. The shares to be issued are acquired in accorda nce with the amount set in the trust in advance, including the future portion, and are segregated and managed as trust assets. 2. Company shares remaining in the trust The Company's shares remaining in the trust are recorded as treasury shares under net assets based on the book value (excluding incidental expenses) in the trust. The book value and number of shares of such treasury shares were ¥788,116 thousand and 559,778 shares at the end of the previous consolidated fiscal year and ¥652,784 thousand and 463,799 shares at the end of the current consolidated fiscal year. (Performance-linked share-based payment plan for directors (and other officers)) Starting from the fiscal year ending June 2025 (the 29th term), the Company has introduced a stock-based compensation plan utilizing a trust (the "Plan") for its directors (excluding directors who are Audit Committee Members and outside directors). The purpose of this system is to provide directors (excluding directors who are Audit Committee Members and outside directors) with long-term incentives to enhance corporate value, including the period after stocks have been granted. 1. Outline of the transaction The Plan is a stock compensation plan under which a trust (the "Trust") established through monetary contributions by the Company acquires shares of the Company's stock and a number of the Company's shares equivalent to the points granted to each director (excluding directors who are Audit Committee Members and outside directors) by the Company are delivered to each director (excluding directors who are Audit Committee Members and outside directors) through the Trust. 2. Company shares remaining in the trust The Company's shares remaining in the trust are recorded as treasury shares under net assets based on the book value (excluding incidental expenses) in the trust. The book value and number of shares of such treasury shares were ¥349,911 thousand and 178,800 shares at the end of the previous consolidated fiscal year and ¥349,911 thousand and 178,800 shares at the end of the current consolidated fiscal year.
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20 (Segment information) 1. Overview of reportable segments (1) Method of determining reportable segments The Group's reportable segments are components of the Company for which separate financial information is available and which are subject to periodic review by the Board of Directors for the purpose of determining the allocation of management resources and evaluating performance. (2) Products and services in each reportable segment The Consolidated Financial Disclosure Business supports corporate value creation through the development and maintenance of our proprietary software DivaSystem for consolidated management support and consolidated accounting, as well as the provision of outsourcing of consolidated and non-consolidated financial statements using this software. With regards the segment's position within the Group, we aim to establish a business model that combines both software and outsourcing businesses. The Digital Transformation Promotion Business supports the promotion of digital transformation at companies and data- driven management through consulting and system development services, including the provision of a data platform for utilizing all kinds of data related to companies, to AI and BI solutions that can analyze, predict and enable data visualization. From major cloud vendors to multi-cloud compatible software, customers can find out about the latest data utilization methods and generative AI specializing in data utilization, as well as train engineers and develop their own data utilization platform products. The suite of products offered is also slated for expansion. The Management Solutions Business focuses on group management, consolidated accounting, and business management, with the aim of visualizing and maximizing the "invisible value" of companies. We provide comprehensive support, from consulting to system planning, development, implementation, operation, and maintenance, all in a one-stop manner. In addition to developing our own software, we also integrate software developed by other companies. By making full use of the Group assets, we continuously create solutions that provide management information to enhance corporate value. (3) Matters regarding changes, etc. in reportable segments Effective from the current consolidated fiscal year, the Company has reviewed its performance management categories and added a new operating segment, "Other". Segment information for the previous consolidated fiscal year is disclosed based on the amended segment categories. 2. Method of calculating net sales, income or loss, assets, liabilities and other items by reportable segment The accounting method for the reportable business segments is generally the same as the accounting method used in preparing the consolidated financial statements. Reportable segment income figures are based on operating profit. Inter-segment net sales and transfers are based on prevailing market prices.
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21 3. Information on net sales, profit, assets, liabilities and other items by reportable segment Previous fiscal year (July 1, 2024 to June 30, 2025) (Thousands of yen) Reportable segments Other (Note) 1 Total Adjustments (Note) 2 Amount recorded on consolidated financial statements (Note) 3 Consolidated Financial Disclosure Business Digital Transformation Promotion Business Management Solutions Business Total Net sales Net sales to external customers 8,018,776 10,300,384 9,488,980 27,808,142 419,561 28,227,703 - 28,227,703 Inter-segment net sales or transfers 282,740 17,874 31,591 332,206 17,572 349,778 (349,778) - Total 8,301,517 10,318,259 9,520,572 28,140,348 437,133 28,577,482 (349,778) 28,227,703 Segment profit 2,006,594 1,716,053 1,772,581 5,495,229 99,435 5,594,665 (990,516) 4,604,149 Segment assets 5,712,403 3,769,052 7,785,416 17,266,872 1,313,737 18,580,610 5,792,445 24,373,055 Segment liabilities 3,463,914 1,925,309 4,884,185 10,273,408 350,123 10,623,531 (1,848,466) 8,775,065 Other items Depreciation 132,775 11,995 237,963 382,733 23,770 406,504 100,063 506,567 Increase in property, plant and equipment, intangible assets 52,623 17,795 21,077 91,495 3,275 94,770 37,254 132,025 Notes: 1. The "Other" category refers to business segments not included in the reportable segments, such as information and service businesses. 2. The segment profit adjustment of ¥(990,516) thousand includes elimination of inter -segment transactions of ¥1,060,576 thousand, corporate expenses ¥(2,051,495) thousand not allocated to each reportable segment and ¥402 thousand of non- current assets adjustment. Corporate expenses are mainly general and administrative expenses not attributable to reportable segments. 3. Segment profit is adjusted to reconcile with operating profit in the consolidated statement of income. 4. The adjustments to depreciation mainly refer to depreciation of assets not attributable to reportable segments. 5. The adjustments to the increase in property, plant and equipment and intangible assets are primarily related to assets not attributable to the reportable segments.
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22 Current fiscal year (July 1, 2025 to June 30, 2026) (Thousands of yen) Reportable segments Other (Note) 1 Total Adjustments (Note) 2 Amount recorded on consolidated financial statements (Note) 3 Consolidated Financial Disclosure Business Digital Transformation Promotion Business Management Solutions Business Total Net sales Net sales to external customers 9,345,491 11,016,014 9,653,197 30,014,704 466,689 30,481,393 - 30,481,393 Inter-segment net sales or transfers 302,757 6,212 32,076 341,047 64,459 405,506 (405,506) - Total 9,648,249 11,022,227 9,685,274 30,355,751 531,148 30,886,900 (405,506) 30,481,393 Segment profit 2,923,682 1,717,760 1,129,101 5,770,544 104,115 5,874,659 (1,176,893) 4,697,766 Segment assets 6,627,938 4,154,730 6,251,414 17,034,083 1,319,532 18,353,615 5,794,207 24,147,822 Segment liabilities 3,780,422 2,387,097 3,873,456 10,040,975 334,844 10,375,820 (798,743) 9,577,076 Other items Depreciation 124,072 33,109 153,270 310,453 19,645 330,098 86,917 417,015 Loss on valuation of investment securities - - - - 68,372 68,372 - 68,372 Increase in property, plant and equipment, intangible assets 119,803 439,839 2,776 562,419 2,941 565,360 102,770 668,131 Notes: 1. The "Other" category refers to business segments not included in the reportable segments, such as information and service businesses. 2. The segment profit adjustment of ¥( 1,176,893) thousand includes elimination of inter -segment transactions of ¥ 1,262,353 thousand, corporate expenses ¥( 2,453,067) thousand not allocated to each reportable segment and ¥ 13,820 thousand of non-current assets adjustment. Corporate expenses are mainly general and administrative expenses not attributable to reportable segments. 3. Segment profit is adjusted to reconcile with operating profit in the consolidated statement of income. 4. The adjustments to depreciation mainly refer to depreciation of assets not attributable to reportable segments. 5. The adjustments to the increase in property, plant and equipment and intangible assets are primarily related to assets not attributable to the reportable segments.
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23 (Revenue recognition) Breakdown of net sales from contracts with customers Previous fiscal year (July 1, 2024 to June 30, 2025) (Thousands of yen) Reportable segments Other Total Consolidated Financial Disclosure Business Digital Transformation Promotion Business Management Solutions Business Sub-total Goods or services transferred at a point in time 255,124 41,494 90,439 387,058 - 387,058 Goods or services that are transferred over a period of time 7,763,651 10,258,889 9,398,541 27,421,083 419,561 27,840,645 Sales from contracts with customers 8,018,776 10,300,384 9,488,980 27,808,142 419,561 28,227,703 Other sales - - - - - - Net sales to external customers 8,018,776 10,300,384 9,488,980 27,808,142 419,561 28,227,703 Current fiscal year (July 1, 2025 to June 30, 2026) (Thousands of yen) Reportable segments Other Total Consolidated Financial Disclosure Business Digital Transformation Promotion Business Management Solutions Business Sub-total Goods or services transferred at a point in time 370,684 55,799 65,979 492,462 - 492,462 Goods or services that are transferred over a period of time 8,974,807 10,960,215 9,587,218 29,522,241 466,689 29,988,930 Sales from contracts with customers 9,345,491 11,016,014 9,653,197 30,014,704 466,689 30,481,393 Other sales - - - - - - Net sales to external customers 9,345,491 11,016,014 9,653,197 30,014,704 466,689 30,481,393
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24 (Per share information) Previous fiscal year (July 1, 2024 to June 30, 2025) Current fiscal year (July 1, 2025 to June 30, 2026) Net assets per share 426.96 yen 422.90 yen Earnings per share 94.15 yen 83.41 yen Notes 1. Diluted earnings per share is not provided as there are no dilutive shares. 2. Basis for calculation of net assets per share is as follows Item End of the previous consolidated fiscal year (June 30, 2025) End of the current consolidated fiscal year (June 30, 2026) Total of net assets (thousands of yen) 15,597,989 14,570,746 Amount deducted from total of net assets (thousands of yen) 15,934 - (of which non-controlling interests) (thousands of yen) (15,934) (-) Net assets attributable to common shares (thousands of yen) 15,582,055 14,570,746 Number of common shares outstanding for calculating net assets per share (shares) 36,495,674 34,454,352 Note: The Company has established a stock delivery trust for employees and executive officers, as well as a trust for the stock remuneration plan for directors. For the purpose of calculating net assets per share, the Company’s shares held by these trusts are included in the treasury shares deducted from the number of issued and outstanding shares at the end of fiscal year (including treasury stock). For the purpose of calculating net assets per share, the number of such treasury shares deducted at the fiscal year-end was 738,578 shares for the previous fiscal year and 642,599 shares for the current fiscal year. 3. The basis for calculating earnings per share is as follows. Item Previous fiscal year (July 1, 2024 to June 30, 2025) Current fiscal year (July 1, 2025 to June 30, 2026) Profit attributable to owners of parent (thousands of yen) 3,434,688 2,985,606 Amounts not attributable to owners of common shares (thousands of yen) - - Profit attributable to owners of common shares of parent (thousands of yen) 3,434,688 2,985,606 Average number of common shares (shares) 36,479,901 35,796,012 Note: The Company has established a stock delivery trust for employees and executive officers, as well as a trust for the stock remuneration plan for directors. For the purpose of calculating net assets per share, the Company’s shares held by these trusts are included in the treasury shares deducted from the number of issued and outstanding shares at the end of fiscal year (including treasury stock). For the purpose of calculating net assets per share, the number of such treasury shares deducted at the fiscal year-end was 640,834 shares for the previous fiscal year and 669,110 shares for the current fiscal year. (Subsequent events) Not applicable.