NS : Consolidated Financial Results From April 1, 2024 to June 30, 2024

Published August 6, 2024 at 6:07 a.m. UTC

Source: MarketScreener

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

	Consolidated Financial Results
	for the Three Months Ended June 30, 2024
	(Under IFRS)
	July 30, 2024
Company name:	NS Solutions Corporation
Listing:	Tokyo Stock Exchange
Securities code:	2327
URL:	https://www.nssol.nipponsteel.com
Representative:	Kazuhiko Tamaoki, Representative Director & President
Inquiries:	Hideki Miyake, Director, Accounting & Finance Department
Telephone:	+81-3-6899-6000

Scheduled date of commencing dividend payments:	-
Preparation of supplementary material on financial results:	Yes
Holding of financial results briefing:	Yes (for analysts)
	(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Three Months Ended June 30, 2024 (April 1, 2024 to June 30, 2024)

(1) Consolidated Operating Results (cumulative)		(% indicates changes from the previous corresponding period.)
		Revenue			Operating profit	Profit before tax	Profit attributable to
				owners of parent

	Three months ended	Million yen	%		Million yen	%	Million yen	%	Million yen	%
	June 30, 2024	76,826	11.7		8,815	33.9	9,021	31.2	5,381	33.8
	June 30, 2023	68,773	5.6		6,581	1.5	6,875	3.4	4,022	(7.6)

		Total comprehensive		Basic earnings	Diluted earnings
		income			per share		per share
	Three months ended	Million yen	%			Yen		Yen
	June 30, 2024	16,876	68.5			29.41		-
	June 30, 2023	10,015	-			21.99		-

(Note) The Company carried out a 2-for-1 stock split of common stock as of July 1, 2024. Basic earnings per share were calculated assuming the stock split had taken place at the beginning of the previous fiscal year.

(2) Consolidated Financial Position

				Ratio of equity
	Total assets	Total equity	Equity attributable	attributable to
	to owners of parent	owners of parent to

				total assets
As of	Million yen	Million yen	Million yen	%
June 30, 2024	383,724	250,785	243,036	63.3
March 31, 2024	374,637	244,783	236,829	63.2

2. Cash Dividends

			Annual dividends

	1st quarter-end	2nd quarter-end	3rd quarter-end	Year-end	Total

	Yen	Yen	Yen	Yen	Yen
Fiscal year ended	-	40.00		-	45.00	85.00
March 31, 2024

Fiscal year ending	-
March 31, 2025

Fiscal year ending		33.50		-	33.50	67.00
March 31, 2025 (Forecast)

(Note 1) Revision to the forecast for dividends announced most recently: None

(Note 2) The Company carried out a 2-for-1 stock split of common stock as of July 1, 2024. The annual dividends per share for the fiscal year ending March 31, 2025 (forecast) are based on the amount taking into consideration the stock split. Annual dividends per share for the fiscal year ending March 31, 2025 (forecast) without taking the stock split into account would be 134.00 yen.

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2025 (April 1, 2024 to March 31, 2025)

(% indicates changes from the previous corresponding period.)

	Revenue		Operating profit	Profit before tax	Profit attributable	Basic earnings
		to owners of parent	per share

	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
First half	153,000	5.7	16,000	9.3	16,200	7.9	10,500	10.5	57.39
Full year	330,000	6.2	37,000	5.7	37,500	5.8	25,200	4.0	137.73

(Note 1) Revision to the financial results forecast announced most recently: Yes

(Note 2) The Company carried out a 2-for-1 stock split of common stock as of July 1, 2024. Basic earnings per share is based on the amount taking into account the stock split. Basic earnings per share for the fiscal year ending March 31, 2025 without taking into account the stock split would be 114.78 yen for the first half and 275.47 yen for the full year.

* Notes:

Significant changes in the scope of consolidation during the period: Yes
Newly included: 1 company (NS Solutions BizTech Corporation)
Excluded: None
(Note) For further details, please see Business combination, etc. under 2. Condensed Quarterly Consolidated Financial Statements and Primary Notes (5) Notes to Condensed Quarterly Consolidated Financial Statements on page 13 of the attached document.
Changes in accounting policies and changes in accounting estimates
1. Changes in accounting policies required by IFRS: None
2. Changes in accounting policies other than 1) above: None
3. Changes in accounting estimates: None
Total number of issued shares (common stock)

1) Total number of issued shares at the end of the period (including treasury shares):

As of June 30, 2024:	183,002,000 shares
As of March 31, 2024:	183,002,000 shares
2) Total number of treasury shares at the end of the period:
As of June 30, 2024:	41,488 shares
As of March 31, 2024:	17,088 shares
3) Average number of shares outstanding during the period:
Three months ended June 30, 2024:	182,969,198 shares
Three months ended June 30, 2023:	182,975,342 shares

(Note) The Company carried out a 2-for-1 stock split of common stock as of July 1, 2024. The numbers of shares presented above were calculated assuming the stock split had taken place at the beginning of the previous fiscal year.

Review of the Japanese-language originals of the attached quarterly consolidated financial statements by certified public accountants or an audit firm: None
Proper use of financial results forecast and other notes
- The forecasts stated above are based on information available as of the date of publication of this document. Actual results may differ from these forecasts due to a wide range of factors hereafter.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results	2
(1)	Operating Results	2
(2)	Financial Position	3
(3)	Consolidated Financial Results Forecast and Other Forward-looking Information	5
2. Condensed Quarterly Consolidated Financial Statements and Primary Notes	6
(1)	Condensed Quarterly Consolidated Statements of Financial Position	6
(2)	Condensed Quarterly Consolidated Statements of Profit or Loss and Condensed Quarterly Consolidated
	Statements of Comprehensive Income	8
(3)	Condensed Quarterly Consolidated Statements of Changes in Equity	10
(4)	Condensed Quarterly Consolidated Statements of Cash Flows	12
(5)	Notes to Condensed Quarterly Consolidated Financial Statements	13
	Going concern assumption	13
	Segment information, etc. ....................................................................................................................... 13
	Business combination, etc. ...................................................................................................................... 13

1. Qualitative Information on Quarterly Financial Results

Operating Results Analysis of operating results
The Japanese economy saw continued signs of a mild recovery during the three months ended June 30, 2024. However, there was also a risk of a slowdown in the country's economy as it faced downward pressure from slowing overseas economies, such as with the impact of sustained high interest rates in Europe and the U.S., concerns about the outlook for the Chinese economy, the situation in the Middle East, and other factors.
Although close attention should be paid to the impact of rising prices and the yen's depreciation on corporate earnings, domestic companies' earnings have continuously improved. System investment by client companies remained firm, as the need for digital transformation (DX) with the purpose of expanding business and increasing competitiveness continued to be strong.
Based on the Medium-term Business Strategy 2021-2025 published in April 2021, NS Solutions Corporation (hereinafter, the "Company," and the Company and its subsidiaries are collectively referred to as the "Group") is endeavoring to expand our business by capturing customer needs for DX to the greatest extent possible.
As part of our efforts to promote customers' DX, we implemented a production planning system with mathematical optimization technology at Nippon Steel Corporation, reducing weekly planning time by over 70%. Additionally, the supply and demand management system that leverages "PPPlan," a cloud service introduced in a food company, optimized inventory levels for 500 items. Furthermore, we continue to focus on expanding sales of solutions with proven track records, including total support services for "Oracle Cloud VMware Solution," which aids in lifting backbone systems to the cloud, the virtual desktop service "M³DaaS@absonne," the electronic transaction and contract service "CONTRACTHUB," and several other offerings.
In the AI domain, where the Company has accumulated knowledge, we have introduced an AI platform into the research and development infrastructure of a pharmaceutical company to advance the AI-powered drug discovery process. Additionally, we conducted demonstration tests on the use of ChatGPT within the IT department of a retail business to eliminate reliance on individuals in handling inquiries, aiming to enhance the efficiency and sophistication of various AI-powered operations performed by customers. We have also launched AI platforms such as "Databricks" and "Alli LLM App Market," in an effort to strengthen our abilities to respond in the AI domain through collaborations with other companies.
To promote sustainability management, we have organized our value creation process based on our goals to achieve the purpose of our existence in society, defined five material issues, and are working to address them. We are endeavoring to solve social issues through IT by participating in a research project led by the Ministry of Health, Labour and Welfare, which aims to accelerate the secondary use of medical and other information among medical institutions through the leveraging of data utilization technologies in which we have extensive experience. In parallel, we have launched "NSDDD Cloud for Government," a cloud service designed to promote the use of public and private sector data by local governments. Additionally, the Company is engaged in various business activities from an ESG perspective to create a prosperous society. This includes supporting the "RIKOCHALLENGE SUMMER OF 2024-Experience the Work in Science and Engineering!" jointly organized by the Cabinet Office, the Ministry of Education, Culture, Sports, Science and Technology, and the Japan Business Federation (Keidanren). We are committed to ongoing support for next-generation education by delivering visiting lectures to elementary and junior high schools and offering the use of "K3Tunnel," a programming learning site ran by the Company. As a result of these efforts, the Company was selected again as an index component of the FTSE4Good Index Series, FTSE Blossom Japan Index, and FTSE Blossom

Japan Sector Relative Index, which are ESG investment benchmarks. 2

Revenue for the three months ended June 30, 2024 amounted to 76,826 million yen, an increase of 8,052 million yen compared to 68,773 million yen for the same period of the previous fiscal year. This was due to strong performance mainly in the fields of cloud-based services and software products, in addition to higher sales primarily in the financial services field. Operating profit amounted to 8,815 million yen, an increase of 2,233 million yen compared to 6,581 million yen for the same period of the previous fiscal year. This was due to increased gross profit resulting from higher revenue and adjustments in provision for bonuses associated with the salary system change, despite a rise in selling, general and administrative expenses as a result of the enhancement of human capital, including recruiting and training, as well as enhanced investments in technology, research and development, and other areas.

Financial Position

Analysis of financial position
Total assets at the end of the three months ended June 30, 2024 amounted to 383,724 million yen, an increase of 9,087 million yen compared to 374,637 million yen at the end of the previous fiscal year. This was mainly due to increases of 16,333 million yen in other financial assets (non-current assets) and 12,583 million yen in cash and cash equivalents, partly offset by a decrease of 21,198 million yen in trade and other receivables.
Total liabilities at the end of the three months ended June 30, 2024 amounted to 132,938 million yen, an increase of 3,085 million yen compared to 129,853 million yen at the end of the previous fiscal year. This was mainly due to increases of 6,852 million yen in contract liabilities, 4,143 million yen in deferred tax liabilities, and 2,906 million yen in trade and other payables, partly offset by decreases of 6,120 million yen in bonus payable included in other current liabilities, 3,372 million yen in income taxes payable, and 1,940 million yen in consumption taxes payable included in other current liabilities.
Total equity at the end of the three months ended June 30, 2024 amounted to 250,785 million yen, an increase of 6,002 million yen compared to 244,783 million yen at the end of the previous fiscal year. The breakdown mainly includes 5,546 million yen of profit, 11,329 million yen of other comprehensive income, 4,117 million yen of dividends paid, and a reduction of 6,320 million yen in capital surplus. As a result, the ratio of equity attributable to owners of parent to total assets was 63.3%.
Cash flows
Statement of cash flows
The balance of cash and cash equivalents at the end of the three months ended June 30, 2024 was 116,559 million yen. Net increase in cash and cash equivalents for the three months of the current fiscal year was 12,583 million yen, compared to a net increase of 11,007 million yen for the same period of the previous fiscal year. Cash flows by activity type are as follows.

Cash flows from operating activities
Cash flows from operating activities for the three months ended June 30, 2023 resulted in a cash inflow of 14,275 million yen. This is mainly attributable to 6,875 million yen of profit before tax and 3,022 million yen of depreciation and amortization, a 23,450 million yen decrease in trade and other receivables, a 5,483 million yen increase in contract assets, and a 9,356 million yen increase in inventories, partly offset by a 11,237 million yen increase in trade and other payables, a 5,536 million yen decrease in bonus payable, and income taxes paid of 6,525 million yen. On the other hand, cash flows from operating activities for the three months ended June 30, 2024 resulted in a cash inflow of 17,411 million yen. This is mainly attributable to 9,021 million yen of profit before tax and 3,036 million yen of depreciation and amortization, a 21,916 million yen decrease in trade and other receivables, a 3,835 million yen increase in contract assets,

a 6,651 million yen increase in inventories, a 10,273 million yen increase in trade and other payables, a 6,557 million yen decrease in bonus payable, and income taxes paid of 7,539 million yen.

Cash flows from investing activities
Cash flows from investing activities for the three months ended June 30, 2023 resulted in a cash inflow of 2,604 million yen. This is mainly attributable to 4,632 million yen of proceeds from sale and redemption of other financial assets, partly offset by 1,142 million yen of purchase of other financial assets and 1,130 million yen of purchase of property, plant and equipment, and intangible assets. On the other hand, cash flows from investing activities for the three months ended June 30, 2024 resulted in a cash inflow of 1,605 million yen. This is mainly attributable to 3,418 million yen of proceeds from sale and redemption of other financial assets and 1,308 million yen of proceeds from acquisition of shares of affiliated companies resulting in change in scope of consolidation, 2,347 million yen of purchase of other financial assets and 757 million yen of purchase of property, plant and equipment, and intangible assets.
Cash flows from financing activities
Cash flows from financing activities for the three months ended June 30, 2023 resulted in a cash outflow of 5,922 million yen. This is mainly attributable to 3,659 million yen of dividends paid and 1,947 million yen of repayments of lease liabilities. On the other hand, cash flows from financing activities for the three months ended June 30, 2024 resulted in a cash outflow of 6,540 million yen. This is mainly attributable to 4,117 million yen of dividends paid and 1,986 million yen of repayments of lease liabilities.

Information on capital resources and liquidity of funds

Basic policy
The Group believes that it is important to continuously maintain and strengthen its competitiveness and increase its corporate value into the future.
Therefore, we seek to maintain sufficient internal reserves to prepare for capital requirements for investments and other needs toward business growth and business risks such as wide-area disasters. The capital requirements include those for initiatives to steadily capture evolving DX needs, continuously enhance high-value-added businesses and overall corporate value, further strengthen acquisition and training of excellent human resources, and conduct thorough internal controls and risk management. At the same time, regarding profit distribution, our basic policy is to implement appropriate and stable distribution of dividends to shareholders.
We aim for a consolidated dividend payout ratio of 50%, with a focus on returning profits to shareholders in line with consolidated performance.
Capital requirements and financing
Major capital requirements of the Group include capital expenditures and operating expenses such as material costs, outsourcing costs, labor costs, overhead costs, and selling, general and administrative expenses. Those capital requirements are satisfied by own funds.
As for working capital on hand, the Company concentrates surplus funds from subsidiaries in the Company for centralized management by implementing the cash management system (CMS) and also having certain of its domestic subsidiaries implement the same system. Note that the Company's CMS is administered by Nippon Steel Corporation with 108,423 million yen deposited in the system as of June 30, 2024 being presented as part of cash and cash equivalents.
For unexpected capital requirements, the Company has overdraft arrangements with major banks and Nippon Steel Corporation, its parent company, to prepare for liquidity risks.

Consolidated Financial Results Forecast and Other Forward-looking Information
The following revisions have been made to the consolidated financial results forecast for the fiscal year ending March 31, 2025, announced on April 26, 2024, as profit is expected to increase compared to the initial forecast.
Revised forecast of the consolidated financial results for the first half of the fiscal year ending March 31, 2025 (April 1, 2024 to September 30, 2024)

	Revenue	Operating profit	Profit before tax	Profit attributable	Basic earnings
	to owners of parent	per share

	Million yen	Million yen	Million yen	Million yen	Yen
Previously announced	153,000	15,000	15,200	9,800	53.56
forecast (A)

Revised forecast (B)	153,000	16,000	16,200	10,500	57.39

Differences (B−A)	-	1,000	1,000	700	3.83

Change (%)	-	6.7%	6.6%	7.1%	7.1%

(Reference)
Results of the first half
of the previous fiscal	144,774	14,642	15,012	9,500	51.92
year ended March 31,
2024

Revised forecast of the consolidated financial results for the full year of the fiscal year ending March 31, 2025 (April 1, 2024 to March 31, 2025)

	Revenue	Operating profit	Profit before tax	Profit attributable	Basic earnings
	to owners of parent	per share

	Million yen	Million yen	Million yen	Million yen	Yen
Previously announced	330,000	36,000	36,500	24,500	133.91
forecast (A)

Revised forecast (B)	330,000	37,000	37,500	25,200	137.73

Differences (B−A)	-	1,000	1,000	700	3.83

Change (%)	-	2.8%	2.7%	2.9%	2.9%

(Reference)
Results of the previous	310,632	35,001	35,437	24,241	132.48
fiscal year ended

March 31, 2024

(Note) The Company carried out a 2-for-1 stock split of common stock as of July 1, 2024. Basic earnings per share for the fiscal year ended March 31, 2024 and the fiscal year ending March 31, 2025 (forecast) were calculated assuming the stock split had taken place at the beginning of the previous fiscal year. Basic earnings per share for the fiscal year ending March 31, 2025 without taking into account the stock split would be 114.78 yen for the first half and 275.47 yen for the full year.

The forecasts stated above are based on information available as of the date of publication of this document. Actual results may differ from these forecasts due to a wide range of factors hereafter.

2. Condensed Quarterly Consolidated Financial Statements and Primary Notes

Condensed Quarterly Consolidated Statements of Financial Position

			(Millions of yen)

	As of March 31, 2024	As of June 30, 2024

Assets
Current assets
Cash and cash equivalents	103,975		116,559
Trade and other receivables	67,767		46,568
Contract assets	18,162		21,999
Inventories	25,176		31,884
Other financial assets	1,555		571
Other current assets	11,620		4,560

Total current assets	228,258		222,143
Non-current assets
Property, plant and equipment	16,901		16,746
Right-of-use assets	34,801		33,343
Goodwill	2,923		2,923
Intangible assets	3,847		3,769
Investments accounted for using equity method	212		203
Other financial assets	83,597		99,931
Deferred tax assets	3,969		4,310
Other non-current assets	124		351

Total non-current assets	146,379		161,580

Total assets	374,637		383,724

				(Millions of yen)

		As of March 31, 2024		As of June 30, 2024

Liabilities
Current liabilities
Trade and other payables	23,263	26,170
Contract liabilities	24,523	31,376
Lease liabilities	6,936	6,712
Other financial liabilities	819	2,642
Income taxes payable	7,857	4,484
Provisions	1,080	1,367
Other current liabilities	16,756	8,339

Total current liabilities	81,237	81,093
Non-current liabilities
Lease liabilities	27,855	26,540
Other financial liabilities	104		-
Retirement benefit liability	4,732	5,202
Provisions	2,870	2,856
Deferred tax liabilities	8,943	13,087
Other non-current liabilities	4,108	4,159

Total non-current liabilities	48,615	51,845

Total liabilities	129,853	132,938
Equity

Share capital	12,952	12,952
Capital surplus	9,953	3,632
Retained earnings	174,625	177,478
Treasury shares	(32)	(94)
Other components of equity	39,330	49,067

Total equity attributable to owners of parent	236,829	243,036

Non-controlling interests	7,954	7,749

Total equity	244,783	250,785

Total liabilities and equity	374,637	383,724