Value Creation's backdated correction turned out to be much more than a tidy line-item shuffle. The company said transactions related to G-Plan Co., Ltd. that had been recorded as sales and outsourcing costs will be cancelled in full and treated instead as non-operating income. That change sharply reduced operating profit, pushed every period shown in the correction table into operating loss territory, and cut total assets after the company cancelled related receivables and payables.
The more serious damage came after that first accounting change. Value Creation said that once the operating losses were recognised, it reviewed the future recoverability of all tangible and intangible fixed assets, including goodwill, booked impairment losses, and reassessed deferred tax assets. It concluded that it fell into "Category 5" under the guidance on deferred tax asset recoverability, meaning those tax assets generally could no longer be treated as recoverable. The company also acknowledged that on May 8 it had expected only a limited effect on final profit because it had assumed only a shift from sales to non-operating income. After discussions with its audit firm, it revisited the treatment of fixed assets as well, and the impact grew. It said the adjustments are based on accounting estimates and recoverability judgments and do not involve current cash outflows.
The figures are severe. For the year ended February 2025, sales were restated to 3,071,001 thousand yen from 3,431,976 thousand yen, operating profit became an operating loss of 233,904 thousand yen from a profit of 121,616 thousand yen, and total assets fell to 1,793,704 thousand yen from 4,304,988 thousand yen. In the first nine months of the year ending February 2026, sales were cut to 2,363,242 thousand yen from 2,751,767 thousand yen, operating profit swung to a loss of 257,230 thousand yen from a profit of 104,186 thousand yen, and total assets dropped to 2,049,660 thousand yen from 5,322,373 thousand yen. Net income did not move in one direction in every restated period, but several later periods flipped from profit to loss, including the first quarter, first half and first nine months of the year ending February 2026.
The reach of the restatement is almost as striking as the numbers. Value Creation said it corrected annual securities reports for the years ended February 2024 and February 2025, quarterly and half-year reports spanning from the third quarter of the year ended February 2024 through the interim period of the year ending February 2026, past earnings summaries, and a securities registration statement submitted in October 2023. This is not a one-quarter clean-up. It is a rewrite of much of the company's recent reporting history.