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

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.

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

(1) Consolidated Operating Results (cumulative)

(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

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2. Cash Dividends

(Note 1) Revision to the forecast for dividends announced most recently: Yes

(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 and 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 146.00 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.)

(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 289.66 yen.

Copyright (C) 2024 NS Solutions Corporation, All rights reserved.

* Notes:

1. 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 Semi-annual Consolidated Financial Statements and Primary Notes (5) Notes to Condensed Semi-annual Consolidated Financial Statements on page 14 of the attached document.
2. Changes in accounting policies and changes in accounting estimates
3. 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
4. Total number of issued shares (common stock)
5. 1. Total number of issued shares at the end of the period (including treasury 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.

• This semi-annual consolidated financial results report is exempt from the review conducted by certified public accountants or an audit corporation.
• 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.

Copyright (C) 2024 NS Solutions Corporation, All rights reserved.

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Copyright (C) 2024 NS Solutions Corporation, All rights reserved.

1. Qualitative Information on Semi-annual Financial Results

1. Operating Results Analysis of operating results
   The Japanese economy continued to show signs of a mild recovery during the six months ended September 30, 2024. While close attention should be paid to the impact of rising domestic prices, exchange rate fluctuations, and interest rate trends on corporate earnings, as well as concerns about the situation in the Middle East and the outlook for the Chinese economy, 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. Furthermore, we are working on formulating a new medium-term management plan (2025-2027) aimed at realizing the NSSOL 2030 Vision, which outlines our aspirations for the Company in 2030, as recently announced.
   We have strongly driven our customers' DX through various initiatives. These include expanding "PPMP" (Process-manufacturing Production Management Package), which was created by productizing the production management system introduced at Nippon Steel Corporation, to other manufacturing industries, providing IT strategy formulation support through "xSource," a professional service in which we work closely with customers to offer our IT assets as menu items, assisting in the construction of a remote monitoring system for methane hydrate production tests using our data utilization expertise, and implementing local 5G systems at driving test courses. Furthermore, we continue to focus on expanding sales of solutions with proven track records, including the virtual desktop service "M³DaaS@absonne," the electronic transaction and contract service "CONTRACTHUB," and several other offerings. In addition, to strengthen our ability to respond to operational maintenance service needs, on October 1, 2024, we acquired all issued shares of OSP Solutions Inc., a company based in Okinawa Prefecture with strengths in system operation maintenance and technical support, making it a wholly owned subsidiary.
   In the AI domain, where the Company has accumulated knowledge, we strive to strengthen our response capabilities, including through collaborations with other companies. We have introduced "Databricks," a data intelligence platform that utilizes AI for data integration and analysis, and "Alli LLM App Market," an AI platform that supports the promotion and utilization of generative AI and large language models to improve operational efficiency. Additionally, we have entered into a partnership agreement with Digital Humans, Inc. to provide digital human services that enable communication closely resembling human interaction.
   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. To realize "solving social issues through IT," in addition to the above initiatives, we have participated 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. We have also launched "NSDDD Cloud for Government," a cloud service designed to promote the use of public and private sector data by local governments. Furthermore, we continue to support next-generation education by delivering visiting lectures to elementary and junior high schools, utilizing "K3Tunnel," a programming learning site operated by the Company. As a result of these efforts, the Company was selected again as an index component of the FTSE4Good Index Series,

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FTSE Blossom Japan Index, and FTSE Blossom Japan Sector Relative Index, which are ESG investment benchmarks.

Revenue for the six months ended September 30, 2024 amounted to 156,612 million yen, an increase of 11,838 million yen compared to 144,774 million yen for the same period of the previous fiscal year. This was due to strong performance mainly in cloud solutions and software products, in addition to higher sales in the financial services field and the manufacturing, Nippon Steel Group field. Operating profit amounted to 18,125 million yen, an increase of 3,482 million yen compared to 14,642 million yen for the same period of the previous fiscal year. This was due to increased gross profit resulting from higher revenue and improved gross profit margin, 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.

An overview of the six months ended September 30, 2024 by service field (Business Solutions and Consulting & Digital Service) is as follows.

Business Solutions

Revenue for the six months ended September 30, 2024 amounted to 119,495 million yen, an increase of 10,636 million yen compared to 108,858 million yen for the same period of the previous fiscal year.

Manufacturing, Nippon Steel Group field

Revenue from this field increased compared to the same period of the previous fiscal year, driven by strong sales to automotive and auto parts manufacturers, as well as electrical and precision equipment manufacturers.

Retail and Platform field

Revenue from this field remained at the same level as the same period of the previous fiscal year.

Financial Services field

Revenue from this field increased compared to the same period of the previous fiscal year, primarily due to higher sales of software products, including maintenance services.

Consulting & Digital Service

Revenue for the six months ended September 30, 2024 amounted to 37,117 million yen, an increase of 1,202 million yen compared to 35,915 million yen for the same period of the previous fiscal year, owing to favorable sales in cloud solutions and software products such as Oracle solutions.

1. Financial Position

1. Analysis of financial position
   Total assets at the end of the six months ended September 30, 2024 amounted to 400,012 million yen, an increase of 25,375 million yen compared to 374,637 million yen at the end of the previous fiscal year. This was mainly due to increases of 88,311 million yen in cash and cash equivalents and 8,225 million yen in deferred tax assets, partly offset by decreases of 52,103 million yen in other financial assets (non-current assets) and 17,076 million yen in trade and other receivables.
   Total liabilities at the end of the six months ended September 30, 2024 amounted to 139,216 million yen, an increase of 9,363 million yen compared to 129,853 million yen at the end of the previous fiscal year. This was mainly due to an increase of 21,891 million yen in income taxes payable, partly offset by decreases of 8,943 million yen in deferred tax liabilities and 2,836 million yen in consumption taxes payable included in other current liabilities.

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Total equity at the end of the six months ended September 30, 2024 amounted to 260,796 million yen, an increase of 16,012 million yen compared to 244,783 million yen at the end of the previous fiscal year. The breakdown mainly includes 12,656 million yen of profit, 14,216 million yen of other comprehensive income, 4,117 million yen of dividends paid, and a reduction of 6,338 million yen in capital surplus. As a result, the ratio of equity attributable to owners of parent to total assets was 63.2%.

1. Cash flows
   Statement of cash flows
   The balance of cash and cash equivalents at the end of the six months ended September 30, 2024 was 192,286 million yen. Net increase in cash and cash equivalents for the six months of the current fiscal year was 88,311 million yen, compared to a net increase of 11,612 million yen for the same period of the previous fiscal year. Cash flows by activity type are as follows.

1. Cash flows from operating activities
   Cash flows from operating activities for the six months ended September 30, 2023 resulted in a cash inflow of 17,602 million yen. This is mainly attributable to 15,012 million yen of profit before tax, 5,990 million yen of depreciation and amortization, a 13,018 million yen decrease in trade and other receivables, a 6,757 million yen increase in contract assets, an 8,536 million yen increase in inventories, an 8,259 million yen increase in trade and other payables, a 2,736 million yen decrease in consumption tax payable etc., and income taxes paid of 6,571 million yen.
   On the other hand, cash flows from operating activities for the six months ended September 30, 2024 resulted in a cash inflow of 23,975 million yen. This is mainly attributable to 18,157 million yen of profit before tax, 6,038 million yen of depreciation and amortization, a 17,786 million yen decrease in trade and other receivables, a 4,973 million yen increase in contract assets, a 3,724 million yen increase in inventories, a 2,471 million yen increase in trade and other payables, a 2,970 million yen decrease in consumption tax payable etc., and income taxes paid of 7,551 million yen.
2. Cash flows from investing activities
   Cash flows from investing activities for the six months ended September 30, 2023 resulted in a cash inflow of 1,564 million yen. This is mainly attributable to 5,911 million yen of proceeds from sale and redemption of other financial assets, partly offset by 2,250 million yen of purchase of other financial assets and 2,035 million yen of purchase of property, plant and equipment, and intangible assets.
   On the other hand, cash flows from investing activities for the six months ended September 30, 2024 resulted in a cash inflow of 72,334 million yen. This is mainly attributable to 77,752 million yen of proceeds from sale and redemption of other financial assets, 4,574 million yen of purchase of other financial assets and 2,033 million yen of purchase of property, plant and equipment, and intangible assets.
3. Cash flows from financing activities
   Cash flows from financing activities for the six months ended September 30, 2023 resulted in a cash outflow of 7,717 million yen. This is mainly attributable to 3,742 million yen of repayments of lease liabilities and 3,659 million yen of dividends paid.
   On the other hand, cash flows from financing activities for the six months ended September 30, 2024 resulted in a cash outflow of 8,274 million yen. This is mainly attributable to 4,117 million yen of dividends paid and 3,720 million yen of repayments of lease liabilities.

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Information on capital resources and liquidity of funds

1. 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.
2. 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 182,457 million yen deposited in the system as of September 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.

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1. 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 July 30, 2024, as both revenue and profit are expected to increase compared to the most recent forecast.
   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)

(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 (forecast) without taking into account the stock split would be 289.66 yen for the full year.

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

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2. Condensed Semi-annual Consolidated Financial Statements and Primary Notes

1. Condensed Semi-annual Consolidated Statements of Financial Position

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