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Company Structure Change

• Joyful Honda acquired all shares of Honda Co., Ltd. on September 30, 2025, making it a wholly owned subsidiary. The company transitioned from standalone to consolidated reporting starting in the 2026 June fiscal year, with a deemed acquisition date of December 20, 2025. Only Honda Co., Ltd.'s performance from December 21, 2025 to June 20, 2026 is included in the current fiscal year consolidated results, with negative goodwill of 1.94 billion yen recorded as special profit in the first half consolidated income statement.

Store Network Expansion

• 2 specialty stores opened in the first half of 2026 June fiscal year, with 5 more openings planned for the second half, for a full year total of 7 planned openings, including new format stores. The acquisition of Honda Co., Ltd. added 2 Home Joy Honda stores, 2 Exterior & Reform Center stores, and 5 lumber division branches and factories. Specialty stores are currently performing well, so active opening will continue from next fiscal year onward.
• Active investment is ongoing for existing store growth, including renovations, redevelopments, and floor space expansions. The pet specialty center at the Arakawaoki Store (Joyful Honda's first location) will be rebuilt and reopened as Pet's CLOVER, marking the first introduction of the impulse purchase prevention program CLOVER STEP to an existing store. The Joyful Honda Materials Store Isesaki Nirasucho Store (opened June prior year) will add undercroft floor space to increase materials display area, product variety, and inventory to better serve professional tradespeople.

Digital (OMO) Strategy

• Work has started on system construction and service renewal to target a broad customer base and improve operational efficiency. Specific initiatives in progress include introduction of customer service tablets, digitization of paper documents, online inventory display, and in-app product location navigation. All initiatives are in the early stages, and are progressing on schedule to launch during the mid-term management plan period.

Home Center & Reform Synergy Expansion / Product Focus Strategy

• The reform division launched the new renovation brand Studio.Re, and is expanding the foundation for the prior-launched exterior and garden design brand FREE DESIGN.EX to continue building brand identity. The division leverages its strength of integrated proposals from design to related products to win high value-added projects and upgrade the order structure.
• For product focus strategy, the company is enhancing product proposals aligned with customer needs in-store. Examples include expanded commercial cookware displays targeting food truck operators, and expanded truck accessories for professional tradespeople; truck accessories category is currently achieving double-digit sales growth. The company will continue to deepen product assortment across all departments.

M&A for Business Growth

• Following the acquisition and consolidation of Honda Co., Ltd., the company aims to expand sales and trading areas, and leverage each company's complementary strengths to further improve profitability and customer traffic. Initial synergies have already emerged, such as strong customer response to a joint flyer for New Year's first sales. The company will continue to proactively evaluate and pursue additional M&A opportunities that align with its growth strategy, regardless of vertical or horizontal industry boundaries, without eroding either party's existing strengths.

New Format Development for Specialty Stores

• In the second half, the company will open 2 Joyful Honda Materials Stores and one new format store based on the materials store format. The new format "Joyful Honda Materials Store FARM GARDEN+" combines the standard materials store format with garden and farm products, with an enhanced assortment of agricultural materials and equipment to meet the needs of professional farmers.
• The Chiba Hamanocho Store, the second Joyful Honda Materials Store, is newly built (not a converted existing property) and designed for low-cost opening to support future expansion, with a focus on customer-friendly layouts like material loading flow.

Intellectual Capital Investment & ESG Management

• The company expanded dialogue meetings previously held for store managers and assistant managers to include assistant team leaders, who are core frontline staff, to increase employee participation in discussing the company's future direction, share organizational alignment, and support talent development.
• A dedicated specialized team was established to inherit the company's strong repair service capability to the next generation. The team works with manufacturer partners to build training programs, improve overall technical skill, and maintain and enhance service quality.
• The company is ahead of schedule on reducing greenhouse gas emissions, and is progressing toward its 2040 carbon neutrality target. In 2025, the company responded to CDP's Climate Change Questionnaire for the first time and achieved a B score.

• Full year consolidated guidance has been updated to reflect the consolidation of Honda Co., Ltd., replacing prior standalone guidance. The company expects full year consolidated sales of 131 billion yen. While it incorporates expected sales of ~3 billion yen from Honda Co., Ltd. in the third and fourth quarters plus new store opening effects, the guidance accounts for first half sales missed targets and expected continued customer traffic decline, with the impact of late-year openings expected to be limited.
• SG&A expense guidance is maintained at prior levels. While Honda Co., Ltd. is now consolidated, labor costs linked to performance will decrease due to lower gross profit from lower core sales, offsetting the addition of Honda's expenses.
• Full year net profit is expected to increase year-over-year, driven by the 1.9 billion yen negative goodwill gain from the Honda Co., Ltd. acquisition, even as operating profit and ordinary profit decrease due to lower gross profit.
• The dividend policy has been raised to a target DOE of 4.0% or higher starting in the 2026 June fiscal year. Under this new policy, the interim dividend is set at 42 yen per share, a 10 yen increase from the prior year. Full year dividend including the year-end dividend is planned to be 20 yen higher than the prior year. The company will continue progressive dividends aligned with sustained profit growth under the new policy going forward.
• Consolidated capital expenditure is expected to increase gradually starting from the third quarter, including infrastructure investment for the newly acquired Honda Co., Ltd. subsidiary.

For Joyful Honda standalone (all figures reflect year-over-year comparisons to the prior fiscal year's first half):

• Overall sales: 98.6% of prior year, gross profit: 97.7% of prior year, operating profit: 90.5% of prior year, net income: 93.0% of prior year. Overall net sales decreased driven by the reversal of prior year disaster preparedness product special demand and impacts from extreme heat.
• Tenant operating revenue: 104.5% of prior year, growing due to effective utilization of existing store space to attract new tenants and replace existing tenants.
• All product groups were impacted by the reversal of disaster prevention and crime prevention special demand, with a total impact of 300 million yen for disaster prevention-related goods and 200 million yen for crime prevention goods.
• Reform Group: Sales fell below prior year levels, driven by decreased order volumes for exterior construction centered on carports, due to increased construction costs following revisions to the Building Standard Law. First quarter saw a large sales decline, but customer understanding of the regulation change improved from the second quarter onward, leading to a recovery trend; second quarter sales reached 97.3% of prior year levels, with the contraction narrowing. Gross profit margin continues a declining trend overall, driven by slow sales growth for high-margin construction materials.
• Agricultural-related goods: Sales performance is favorable. Gardening demand shrank due to abnormal weather.
• Pet & Leisure Group: After strong growth over the past several years driven by special demand post-Covid-19, demand has stabilized in the current period, weighing on performance.
• Selling, general and administrative (SG&A) expenses: 94.5% of forecast, 101.2% of prior year actual. SG&A came in below forecast due to controlled labor costs from underperformance of gross profit versus target, and rose versus prior year due to increased security management costs and repair expenses.

• Company-wide lower performance is primarily driven by overall customer traffic decline. The negative impact from the reversal of prior year disaster prevention and crime prevention special demand, and weak materials demand from declining housing starts, has been larger than initially expected.
• External changes including declining housing starts, abnormal weather, and rising consumer defensive spending have had an increasing negative impact on performance across all product groups.
• The company does not expect a quick recovery from a single short-term measure, and is currently focused on building mid- to long-term growth foundations across multiple parallel initiatives.

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