Consolidated financial results for the Fiscal year ended February 28, 2025

• Accompanying Materials - Contents

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1. Overview of Operating Results, Etc.

(1) Overview of operating results

During the fiscal year ended February 28, 2025, the Japanese economy showed signs of a moderate recovery driven by the continued improvement of personal spending and capital investment partly due to the improving employment and income situation and the effects of various policy measures. However, persistent high interest rates in Europe and the US, a global economic downturn caused by the continued stagnation of China's real estate market, future policy developments in the US, the situation in the Middle East, and other overseas developments still need to be monitored as they could impact the cost of living and economic conditions in Japan. In addition, every company, regardless of sector and size, is facing the challenge of addressing labor shortages as their business performance improves.

In these circumstances, in the Customer Relationship Management (CRM) business, which is the Group's core business, the transformation of its business model into a solution-based model that promises higher profit margins through the use of new technologies such as generative AI is key. In such a market environment, we are striving to improve the quality of operations and added value, while also driving the development of new business domains through expansion of customer support domains in line with diversification of customer contact points and data utilization.

In the consolidated fiscal year, by accelerating the three priority measures in our Mid-term Management Plan, which are human resources (maximizing the active participation of our workforce of 40,000 employees), stylization (achieving more sophisticated data utilization), and co-creation (developing the NEW BPO areas), we have sought to achieve sustainable growth.

For the stylization initiatives (achieving more sophisticated data utilization), we began offering BPR consulting services in earnest. They are focused on planning and implementing business process transformations. These services leverage the knowledge and framework we developed through our BPO services that are provided to over 1,300 companies, including outsourced contact centers, sales agencies and administrative processing services. Over 100 BPR consultants have utilized multiple approaches to the recommendation of feasible business reforms, resulting in a reduction in person-hours, an increase in core business hours and the digitalization of operations. Furthermore, we began providing a Knowledge CX Design Service, which is intended to build a foundation for introducing generative AI. The target is client companies, which have been struggling to convert knowledge into useable data, as the basis for utilizing generative AI. The service will design and deliver mechanisms for aggregating and consolidating various unstructured data-such as response histories, manuals, and FAQs accumulated at contact centers, and scattered information such as operators' personal notes and tacit knowledge-that are essential for utilizing generative AI, and converting them into useable knowledge as searchable text data that can be easily understood by generative AI. By combining operational design adhering to Knowledge-Centered Service (KCS) processes-a practical process for real-time operation and firm establishment of knowledge at contact centers-with BELLSYSTEM24's own proprietary methods developed by its dedicated consultants, the service aims to contribute to CX improvement by providing fully integrated support from consulting to knowledge management system introduction, operational design, and operation system building.

We also launched an Anti-Customer Harassment Service, which comprehensively supports client companies in their implementation of specific and optimal measures to address harassment committed by customers. This initiative comes as the Ministry of Health, Labour and Welfare is considering making it mandatory for companies to address harassment from customers. In this service, end-to-end support is provided to help clients implement measures to address harassment committed by customers affecting their contact centers. We provide seven service menu items at each stage of the support process, including (1) developing policies and manuals that are the foundation of measure to be taken, (2) conducting harassment training for employees, and (3) providing solutions to enhance measures, such as speech recognition technology, emotional analysis and social media monitoring. We have successfully implemented this service for a number of client companies.

In the co-creation initiatives (developing the NEW BPO areas), we made SKY Perfect Customer-relations Corporation a subsidiary. The company is a wholly owned subsidiary of SKY Perfect JSAT Corporation that provides high-quality customer center operations. Demand for outsourcing and partnerships at in-house contact centers is expected to increase due to the coming shortage of human resources due to the decrease in the working population. Additionally, individual companies are facing challenges in investing in generative AI and other technologies. They are seeking to reduce costs and improve efficiency. In this environment, we aim to actively promote the use of new technologies such as generative AI and swiftly establish a hybrid contact center business that integrates generative AI and human agents.

We also launched the GenAI Co-Creation Lab., a user company participation program that enables companies to share case studies for the utilization of generative AI in contact centers. Participating companies include the Company, which

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possesses wide-ranging operational knowledge in the area of contact centers, ITOCHU Techno-Solutions Corporation, which has an established track record in AI-based system integration, Microsoft Japan Co., Ltd., Google Cloud and Amazon Web Services Japan G.K., who are leaders in the development of generative AI, THINKER Inc., the Company's subsidiary supporting data marketing and Vext Inc., which supports natural language processing. In the GenAI Co-Creation Lab., these companies utilize their AI technologies and expertise to address challenges and create advanced generative AI use cases. In November 2024, the GenAI Co-Creation Lab. started developing solutions for the provision of the Hybrid Operation Loop utilizing generative AI for the automation of contact centers. This initiative combines the state-of-the-art technologies of tech companies such as Microsoft Japan Co., Ltd. and our wide-ranging contact center knowhow to design our own unique hybrid human-artificial intelligence loop processes based on the "Human-in-the-Loop" concept whereby human beings interact with AI to complete tasks. The aim of the initiative is to achieve contact center automation that can be customized to meet the specific needs of different industries.

In the human resources initiatives (maximizing the active participation of our workforce of 40,000 employees), we aimed to achieve the company-wide target of 100% of eligible male employees taking childcare leave. We held an in-house roundtable discussion to share experiences and advice from men who have taken childcare leave. We also arranged an online webinar with a gynecologist to learn more about and promote understanding of the health issues that working women face as well as a seminar for learning tips about the promotion of the employment of people with disabilities. We are taking various measures to build a workplace where each individual employee can work in their own way. Members of management and employees participated in a rainbow parade, which protests discrimination and prejudice against LGBTQ+ people (LGBTQs and other sexual minorities and celebrates sexual and gender diversity. Employees with disabilities at the Kamiyacho head office are growing an LED vegetable garden. For the fourth consecutive year, we have been honored as the Best Workplace, the highest honor presented in the D&I Awards organized by JobRainbow Co., Ltd., which provides support for diversity and inclusion (D&I) training, consulting and recruitment.

We were certified as a Gold rank company in the FY2024 White Company Certification Program (the "Program") run by Japan White Spread. The Program is the only certification program in Japan that comprehensively and objectively evaluates companies' human resources management activities. It rates companies by comprehensively evaluating them based on their responses to 70 questions about requirement categorized into seven areas (business model and productivity, diversity and inclusion, flexible working arrangements, health and productivity management, human resource development and job satisfaction, risk management and labor law compliance). The Group believes that maximizing the capabilities of every employee contributes to sustainable growth and the development of corporate value. Based on this belief, we strive to create an environment where all employees feel comfortable and can focus on their work. In the Program, we received high marks in the areas of human resource development and job satisfaction, flexible working arrangements and diversity and inclusion, which earned us Gold rank certification.

For the first time, our environmental, social and corporate governance (ESG) initiatives were certified as Prime by ISS ESG's ESG Corporate Rating ("Index"). ISS ESG is the responsible investment arm of Institutional Shareholder Services Inc. (ISS), an American proxy advisory firm, and one of the leading ESG rating agencies. The Index assesses companies' ESG initiatives and designates those with outstanding ratings in each industry as Prime. We believe that this latest certification recognized not only our corporate governance initiatives, which had already been highly rated, but also our progress in our initiatives and information disclosure in the environmental and social areas of ESG.

Results for each business segment are as follows.

(CRM Business)

Revenue decreased year on year due to a significant reduction in business related to national policy matters including COVID-19. Income before income taxes rose year on year due to the implementation of profit improvement activities such as the control of SG&A expenses and a gain on sale of shares of subsidiaries.

As a result, the CRM business posted revenue of 143,196 million yen (down 3.3% year on year), and income before income taxes of 12,088 million yen (up 10.0%).

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(Others)

Impairment testing was performed regarding goodwill in the content business due to a decline in revenue from the sale of content, and impairment losses of 1,012 million yen were recorded.

Consequently, the Others segment posted revenue of 411 million yen (down 32.6% year on year) and a loss before income taxes of 856 million yen (income before income taxes of 240 million yen for the previous fiscal year).

As a result of the above, financial results for the fiscal year ended February 28, 2025 were revenue of 143,607 million yen (down 3.4% year on year), income before income taxes of 11,232 million yen (up 0.1%), and net income attributable to owners of the parent of 8,003 million yen (up 6.1%).

(2) Overview of financial position

Current assets decreased 255 million yen from the end of the previous consolidated fiscal year, to 28,042 million yen, mainly due to a decrease of 221 million yen in cash and cash equivalents.

Non-current assets amounted to 146,371 million yen, decreasing 797 million yen from the end of the previous consolidated fiscal year mainly due to decreases of 4,265 million yen in property, plant and equipment and 2,121 million yen in goodwill, partially offset by an increase of 4,870 million yen in investments accounted for using equity method.

As a result, total assets decreased 1,052 million yen from the end of the previous consolidated fiscal year, to 174,413 million yen.

Current liabilities increased 8,814 million yen from the end of the previous consolidated fiscal year, to 57,413 million yen due mainly to increases of 7,799 million yen in borrowings, 867 million yen in income taxes payable, and 662 million yen in other current liabilities.

Non-current liabilities amounted to 46,163 million yen, decreasing 12,964 million yen from the end of the previous consolidated fiscal year, due to decreases of 9,987 million yen in long-term borrowings and 3,417 million yen in other long- term financial liabilities.

As a result, total liabilities decreased 4,150 million yen from the end of the previous consolidated fiscal year, to 103,576 million yen.

Equity increased 3,098 million yen from the end of the previous consolidated fiscal year, to 70,837 million yen mainly due to an increase of 8,003 million yen in retained earnings, partially offset by a decrease of 4,232 million yen in capital surplus.

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(3) Overview of cash flows

Cash and cash equivalents at the end of the fiscal year under review decreased 221 million yen from the end of the previous fiscal year, to 6,992 million yen. The cash flows in the fiscal year under review and factors relating to each are as follows.

(Cash flows from operating activities)

Net cash provided by operating activities was 17,391 million yen (as compared to net cash provided of 13,587 million yen in the same period of the previous fiscal year). This mainly reflects income before income taxes of 11,232 million yen, depreciation and amortization of 9,556 million yen, impairment losses of 1,567 million, an increase in payable for consumption tax of 972 million yen, a gain on loss of control of subsidiaries of 3,539 million yen, and income taxes paid of 2,400 million yen.

(Cash flows from investing activities)

Net cash used in investing activities was 3,693 million yen (as compared to 3,097 million yen used in the same period of the previous fiscal year). This mainly reflects purchase of property, plant and equipment of 1,147 million yen, payments for sales of shares of subsidiaries resulting in change in scope of consolidation of 780 million yen, purchase of securities of 700 million yen, and purchase of intangible assets of 531 million yen.

(Cash flows from financing activities)

Net cash used in financing activities was 13,897 million yen (as compared to 10,286 million yen used in the same period of the previous fiscal year). This primarily reflects proceeds from long-term borrowings of 5,000 million yen, an increase in short-term borrowings of 1,625 million yen, repayment of long-term borrowings of 9,000 million yen, repayments of lease liability of 6,911 million yen, and dividends paid of 4,644 million yen.

(Reference) Cash flow-related indicators

(Note) Ratio of equity attributable to owners of the parent = Total equity attributable to owners of the parent / Total assets Ratio of equity attributable to owners of the parent based on market value: Market capitalization / Total assets Ratio of interest-bearing liabilities to cash flow: Interest-bearing liabilities / Operating cash flows

Interest coverage ratio: Operating cash flows / Interest payments

1. Each indicator is calculated based on consolidated financial data.
2. Market capitalization is the closing stock price at the end of the fiscal year multiplied by the number of shares issued at the end of the period (treasury shares are not included).
3. Operating cash flows are cash flows from operating activities in the consolidated statements of cash flows. Interest-bearing liabilities include all liabilities on the consolidated statements of financial position that incur interest.

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(4) Future outlook

The Group aims to increase revenue primarily from its core CRM business by increasing transactions with existing clients and by acquiring new clients and capturing outsourcing demand leveraging its network of partner companies, including ITOCHU Corporation and TOPPAN Inc. Furthermore, the Group intends to increase profit margins by developing next- generation contact centers utilizing the data and expertise it has accumulated.

The Group will strive to create business value that exceeds the expectations of its client companies by creating new customer experiences using generative AI and customer service data.

The Group will implement new personnel systems and human resource development initiatives to create a company where professionals can work and have job satisfaction. Additionally, the Group will continue to foster an environment that supports more diverse working styles by implementing training programs aimed at promoting women's participation, establishing in-house daycare centers and opening education and training facilities. The Group will further promote diversity and inclusion (D&I) and health and productivity management, thereby encouraging the active participation of diverse human resources.

(5) Basic policy for profit distribution and dividends for the fiscal year under review and the next fiscal year

The Group understands that the return of profits to shareholders is one of its most important business priorities. Based on this understanding, its fundamental policy in the medium term is to distribute surplus dividends twice a year (interim and year-end) with the goal of achieving a consolidated payout ratio of 50% based on net income attributable to owners of the parent, after comprehensively considering such factors as the necessity of stably and continuously distributing dividends from surplus, and enhancing payout ratios and necessary internal reserves according to the progress of operating performance. For the fiscal year ending February 28, 2026, the Company plans to distribute annual dividends of 60 yen per share, as interim dividends of 30 yen and year-end dividends of 30 yen.

2. Basic Approach towards Selection of Accounting Standards

The Group has been using the International Financial Reporting Standards (IFRS) since the fiscal year ended February 28, 2014 to enhance the international comparability of financial information in capital markets and diversify its fund-raising methods in international markets.

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3.Consolidated Financial Statements and Major Notes

(1) Consolidated statements of financial position

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