Takayoshi Miyamoto (hereafter, Miyamoto): My name is Takayoshi Miyamoto, Senior Executive Vice President, in charge of the administrative division.I will now report on the financial results.

First, here is a summary of the interim financial results. In the first half, we posted a year-on-year decrease in sales and income. Net sales decreased by 13.8%, ordinary income decreased by 40.3%, and net income attributable to owners of the parent decreased by 40.1%.

On the other hand, compared to the interim earnings forecast, net sales exceeded the forecast by 5.3%, ordinary income by 11.1%, and net income attributable to owners of the parent by 12.2%.

These are the actual figures along with a year-on-year comparison. Net sales were approximately 96.2 billion yen, a decrease of approximately 15.4 billion yen. Ordinary income was approximately 3.6 billion yen, a decrease of approximately 2.4 billion yen. The ordinary income ratio was 3.8%. Interim net income was approximately 2.5 billion yen, a decrease of approximately 1.7 billion yen.

Now let’s look at changes in net sales. Compared to net sales of approximately 111.7 billion yen in the interim period of the fiscal year ended March 31, 2025, in the CN Business, there was an increase of approximately 1.5 billion yen; in the EC Business, the distribution segment saw a decrease of approximately 15.6 billion yen, and the PB Business saw a decrease of approximately 1.3 billion yen. This resulted in net sales of approximately 96.2 billion yen for the interim period of the fiscal year ending March 31, 2026.

Next is sales and income by segment. In the CN Business, sales of storage-related products and security-related products showed strong performance, and maintenance and monitoring services also expanded accordingly. Net sales increased by 8.5% to approximately 19.1 billion yen, segment income increased by 20.3% to approximately 2.6 billion yen, and the segment income ratio was 13.6%.
In the EC Business, although customer commercial rights expanded, customer inventory adjustments have been prolonged. Net sales decreased by 18.1% to approximately 77.0 billion yen, and segment income decreased by 73.4% to approximately 1.0 billion yen.

Now for the status of each segment. In the CN Business, sales of storage-related products, security-related products, and maintenance and monitoring services increased.

Sales of storage-related products grew for telecommunications carriers, and sales of security-related products grew for enterprises.

Sales of maintenance and monitoring services grew for telecommunications carriers and data centers & cloud business operators.

On the other hand, network-related products saw a slight decrease in sales to data centers & cloud business operators, which had performed well in the previous period.

In the EC Business, performance was generally sluggish across all applications. For automotive equipment, sales of logic ICs increased due to expanded customer commercial rights, but sales of micro processors and analog ICs declined due to the prolonged impact of customer inventory adjustments, resulting in overall sales remaining at the same level as the previous period.

Meanwhile, sales for industrial equipment saw significant declines in micro processors and analog ICs.

Next is the net sales status of consolidated overseas subsidiaries. Net sales on a dollar basis were $140 million, a decrease of $32 million compared to the previous period. When looking at results by application, sales for computers and peripherals were particularly sluggish.

The exchange rate was approximately 7 yen stronger compared to the previous period.

In the PB Business, wafer inspection systems saw decreased sales due to continued customer inventory adjustments. Additionally, sales offor design and manufacturing services for industrial equipment were sluggish.

On the other hand, in-house developed brand products for information and communications equipment at TED Nagasaki performed well.

As a result, net sales in the PB Business decreased by 19.3% year-on-year to approximately 5.6 billion yen.

Now for the balance sheet. With the decrease in net sales, notes and accounts receivable and inventories decreased, resulting in total assets of approximately 154.9 billion yen, a decrease of approximately 1.9 billion yen compared to the end of the previous period.

Regarding liabilities and net assets, interest-bearing liabilities decreased in line with the reduction in working capital.

Now for the cash flow status. Operating cash flow tends to be positive during phases when net sales decline. Financing cash flow was negative due to repayment of borrowings, acquisition of treasury stock, and payment of dividends.

Orders received in the second quarter was approximately 50.8 billion yen, as shown on the far right of the graph. In the CN Business, IT investment remained steady, and orders for both products and maintenance & monitoring services performed well.

In the EC Business, customer inventories are gradually moving toward normalization, but demand has not yet reached a full-scale recovery.

That concludes my presentation.

Atsushi Tokushige (hereafter, Tokushige): My name is Atsushi Tokushige, President and Representative Director and CEO. Thank you very much for taking time out of your busy schedules to participate in our financial results briefing today. I will now explain the earnings forecast for the fiscal year ending March 31, 2026.

Let’s start with the overview. As disclosed in yesterday’s financial results summary, we have revised our full-year consolidated earnings forecast for the fiscal year ending March 31, 2026. Compared to the initial earnings forecast, ordinary income has been revised down by 9%, while net income has been revised up by 2.9%.

For the EC Business and PB Business, we had anticipated recovery from the second half of the fiscal year ending March 31, 2026, but the adjustment period continues, and we now expect the shift to a recovery phase will occur in the next fiscal year or later.

On the other hand, we expect the CN Business to continue performing steadily.

Regarding US tariff measures, quantitative forecasting of how the situation will unfold and its impact remains extremely difficult. We will continue to closely monitor exchange rate fluctuations, interest rates, inventory levels, and other factors.

Here are the revisions from the previous earnings forecast. For net sales, there is no change from 200 billion yen. Ordinary income has been revised down by 900 million yen from 10 billion yen to 9.1 billion yen, and net income has been revised up by 200 million yen from 7 billion yen to 7.2 billion yen.

The background for the decrease in ordinary income is that customer inventory adjustments in the EC Business have been prolonged, and business recovery is taking longer than initially anticipated.

Regarding net income, as stated in the Announcement Regarding Expected Recording of Extraordinary Income from Transfer of Shares in Equity Method Affiliate disclosed in a timely manner on September 29, 2025, we expect to record extraordinary income in the third quarter financial results for the fiscal year ending March 31, 2026, as we will transfer all shares held in Fidus Systems.

This shows the earnings forecast. For net sales by segment, the CN Business is expected to increase by 4.5% to 39 billion yen, while the EC Business (consolidated) is expected to decrease by 10.1% to 161 billion yen.

Now for changes in net sales by segment. Compared to net sales of approximately 216.3 billion yen in the previous period, sales for the CN Business will increase by approximately 1.6 billion yen, sales for the EC Business distribution segment will decrease by approximately 15.4 billion yen, and sales for the PB Business will decrease by approximately 2.6 billion yen, resulting in a forecast of 200 billion yen for this fiscal year.

This table shows the assumed business environment. We believe that the adjustment period will continue in the second half and the shift to a recovery phase will begin next fiscal year. The main factor is the delayed normalization of customer inventory levels in the EC Business and PB Business.

For semiconductors, we expect gradual normalization from the second half onward, while wafers are expected to remain sluggish in the second half. Due to these trends, we anticipate that sales for industrial equipment and automotive equipment will continue to be sluggish in the second half.

Regarding the Chinese market, although there are signs of bottoming out, we expect the prolonged stagnation to continue this fiscal year.

In terms of commercial rights, we continue to expect acquisition of new customer commercial rights.

Given this situation, we anticipate that full-scale recovery in the EC Business will occur in the next fiscal year or later. In the PB Business, we expect design and manufacturing services and the measurement and inspection systems business to gradually recover from the next fiscal year onward.

Regarding the market conditions for the CN Business, we expect the IT market to show steady performance, centered on the security field.

We assume an exchange rate range of 145 yen to 150 yen.

I will now introduce two initiatives to accelerate profit growth under our medium-term management plan, VISION 2030 .

In the CN Business, to achieve VISION 2030, we are working with overseas bases to constantly research the latest technologies and discover optimal solutions. In the second quarter of the fiscal year ending March 31, 2026, we newly signed distribution agreements with three overseas vendors and began sales.

These include Semperis in the security field, and Arize AI and Glean Technologies in the AI field. Going forward, we will continue to expand our products and services, focusing primarily on the security and AI fields where demand is strong.

We are currently focusing most intensively on the measurement and inspection systems business. In the PB Business, the acquisition of operations from Nippon Electro-Sensory Devices in 2023 provided the opportunity for us to enter the silicon field. Furthermore, this time we have shipped the first SiC (silicon carbide) wafer inspection system to an overseas manufacturer in the compound semiconductor field.

SiC is a material applied in power semiconductors and other applications, and represents a market with the highest growth expectations. We have been working on global expansion and entry into the SiC market for several years, and we consider this first shipment to be one of the results of those efforts.

We continue to actively conduct technology development related to inspection methods with the aim of expanding the range of objects we can inspection targets , and will continue to promote this business going forward.

Regarding dividends, we provide shareholder returns according to business performance, with a target dividend payout ratio of 40%.

For dividends in the fiscal year ending March 31, 2026, based on our dividend policy and recent business performance trends, we have increased the interim dividend by 3 yen from the previous forecast of 32 yen to 35 yen. Combined with the forecast year-end dividend of 64 yen, we plan a full-year dividend of 99 yen.

That concludes my presentation. Thank you very much.