Air Water (4088) investor relations material

Executive summary

• Discovered inappropriate accounting practices at numerous group companies, leading to comprehensive investigations, restatement of prior-year financials, and establishment of a Special Investigating Committee.

• Implemented a new management structure with increased outside director representation, established a Management Reform Office, and planned transition after the June 2026 AGM.

• Launched extensive recurrence prevention measures, including corporate culture reform, governance overhaul, and internal control strengthening.

• Major impairment losses of ¥107,981 million were recorded, mainly related to goodwill and fixed assets in overseas businesses.

• Aiming to have the Security on Special Alert designation removed during FY2027 by rebuilding internal controls and meeting listing eligibility criteria.

Financial highlights

• FY2025 revenue rose to ¥1,066.8 billion (+5.3% year-over-year); business profit reached ¥74.5 billion (+6.1%).

• Operating profit dropped to -¥37.2 billion due to non-recurring factors, including ¥108.0 billion in impairment losses and ¥13.0 billion in investigation-related expenses.

• Profit attributable to owners of parent was -¥63.9 billion, reflecting the impact of accounting issues and related costs.

• Operating cash flow hit a record ¥107.6 billion; free cash flow was ¥19.0 billion.

• Dividend per share maintained at ¥75; future dividend policy under review.

Outlook and guidance

• FY2026 revenue forecast at ¥1,140.0 billion (+6.9%); operating profit expected to recover to ¥48.0 billion.

• Profit attributable to owners of parent projected at ¥28.0 billion; EPS forecast at ¥122.15.

• External support costs for FY2026 estimated at ¥25.0 billion, with a shift to internal personnel planned.

• Impact of new management policy and business portfolio review not yet incorporated in forecasts.