Information Services International Dentsu : Consolidated Financial Results for the Second Quarter of Fiscal Year Ending December 31, 2021 (Japanese GAAP)

Note: This English translation is solely for reference purposes and not a legally definitive translation of the original Japanese text.

In the event a difference arises regarding the meaning herein, the original Japanese version will prevail as the official authoritative version.

July 29, 2021

Consolidated Financial Results for the Second Quarter of Fiscal Year Ending December 31, 2021 (Japanese GAAP)

Name of Listed Company:	Information Services International-Dentsu, Ltd.
Listed Exchange:	Tokyo
Code Number:	4812
URL:	https://www.isid.co.jp/english/index.html
Representative:	Ryoichi Nawa, President, CEO and COO
Contact for Inquiries:	Naoto Momiki, General Manager, Corporate Planning Office
	Tel: [phone]

	Date of scheduled filing of securities report:			August 6, 2021
	Date of scheduled payment of dividends:			September 1, 2021
	Quarterly earnings supplementary explanatory documents:	Yes
	Quarterly earnings presentation:				Yes
								(Amounts less than one million yen are rounded down.)
1. Consolidated Business Performance for the Second Quarter of FY2021 (from January1, 2021 to June 30, 2021)
(1) Consolidated Operating Results (Cumulative)			Percentages indicate year-on-year increase/(decrease)
			Net sales			Operating profit (loss)	Ordinary profit (loss)	Net profit (loss)*
			(million yen)	(%)		(million yen)	(%)	(million yen)	(%)	(million yen)	(%)
	Second Quarter of FY2021		54,293	(1.3)		6,525	(6.4)	6,443	(6.1)	4,392	(2.7)
	Second Quarter of FY2020		55,020	11.9		6,971	33.9	6,862	33.2	4.512	32.2

* Net profit attributable to parent company's shareholders

Note: Comprehensive profit: Second Quarter of FY2021: 4,567million yen (up2.3%); Second Quarter of FY2020: 4,464million yen (up33.8%)

	Net profit (loss)	Net profit per share
	per share	after dilution
	(yen)	(yen)
Second Quarter of FY2021	67.40	-
Second Quarter of FY2020	69.25	-

Note: Effective January 1, 2021, we conducted a 2-for-1 stock split of common stock. " Net profit (loss) per share " is calculated as if the stock split had taken place at the beginning of the previous consolidated fiscal year.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	(million yen)	(million yen)	(%)
As of June 30, 2021	100,448	62,555	62.3
As of December 31, 2020	97,147	59,587	61.3

Reference: Total shareholders' equity: As of June 30, 2021: 62,534 million yen; As of December 31, 2020: 59,565 million yen

2. Dividends

			Dividends per share
Record date	End of first	End of second	End of third	Fiscal year-end	Full year
quarter	quarter	quarter
	(yen)	(yen)	(yen)	(yen)	(yen)
FY2020	-	43.00	-	49.00	92.00
FY2021	-	26.00
FY2021 (forecast)			-	26.00	52.00

Note: Revision to the dividend forecasts from the latest announcement: None

Note: Effective January 1, 2021, we conducted a 2-for-1 stock split of common stock. "Cash dividends" prior to the year ended December 31, 2020 are the actual amount of dividends prior to the stock split.

3. Consolidated Forecasts for FY2021 (from January 1, 2021 to December 31, 2021)

Percentages indicate year-on-year increase/(decrease)

	Net sales		Operating profit	Ordinary profit	Net profit *		EPS
	(million yen)	(%)	(million yen)	(%)	(million yen)	(%)	(million yen)	(%)	(yen)
Full year	110,000	1.2	12,500	2.6	12,300	6.9	8,300	12.7	127.37

*Net profit attributable to parent company's shareholders

Note: Revision to the consolidated forecasts from the latest announcement: None

Note: Effective January 1, 2021, we conducted a 2-for-1 stock split of common stock. The impact of the stock split is taken into account for the "EPS" in the forecast for the fiscal year ending December 2021.

4. Other Items

1. Changes in the scope of consolidation for significant subsidiaries during three months (Changes in specified subsidiaries resulting in change in the scope of consolidation): None
2. Application of special accounting practices in the preparation of the quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates and restatements:
4. 1. Changes in accounting policies in accordance with revision of accounting standards: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimate: None
   4. Restatements: None
5. Issued and outstanding common stock

i. Number of shares issued and outstanding at	June 30, 2021:	65,182,480 shares	December 31, 2020:	65,182,480 shares
the end of the period, including treasury stock
ii. Number of treasury stock at the end of the
June 30, 2021:	17,898 shares	December 31, 2020:	17,818 shares
period
iii. Average number of shares outstanding for
Six months ended	65,164,599 shares	Six months ended	65,164,727 shares
each period	June 30, 2021	June 30, 2020:
Note: Effective January 1, 2021, we conducted a 2-for-1 stock split of common stock. "Number of shares issued and outstanding at end of
period", "Number of treasury stock at end of period", and "Average number of shares outstanding for each period" have been
calculated as if the stock split had taken place at the beginning of the previous consolidated fiscal year.

This quarterly financial report is outside the scope of quarterly review procedures under the Financial Instruments and Exchange Act.

Explanation regarding the appropriate use of forecasts of business results

Forecast figures are projections based on information available at the time of release, and are not intended as a guarantee that the Company will achieve these targets. Actual results may differ significantly from the above forecasts as a result of changes in the business environment and other factors.

Index of the Attachment
I. Qualitative Information on the Consolidated Financial Results for the Subject Period
1.	Explanation of Operating Results ……………. …………………………….……………………………….	2
2.	Explanation of Financial Position …………………………………………...……………….………………	4
3.	Explanation of Consolidated Financial Results Forecasts ……………..…..…………………….…..……….	4
II. Consolidated Financial Statements
1.	Consolidated Balance Sheets………………………………………………………………………………...	5
2.	Consolidated Statements of Profit and Consolidated Statements of Comprehensive Profit
	[Consolidated Statements of Profit] ………………………………………………………………….…….	7
	[Consolidated Statements of Comprehensive Profit] ………………………………………………………	8
3.	Notes on Quarterly Consolidated Financial Statement………………………………………………………	9
Segment Information…………………………………………………………………………..……..….….…	10

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1. Qualitative Information on the Consolidated Financial Results for the Subject Period

1. Explanation of Business Results

						(Millions of yen)
	Reportable segment	Second quarter of FY2020	Second quarter of FY2021		YoY
	(cumulative)	(cumulative)	Variance		% change
Net sales	55,020	54,293	(727)		98.7%
Operating profit	6,971	6,525	(446)		93.6%
	Operating margin	12.7%	12.0%	(0.7) p		-
Ordinary profit	6,862	6,443	(419)		93.9%
Profit attributable to owners of parent	4,512	4,392	(120)		97.3%

During the second quarter of the current consolidated fiscal year under review (from January 1, 2021 to June 30, 2021), the Japanese economy showed some signs of recovery against the backdrop of the effects of various policies and improvement in overseas economies. However, due to the restrictions on socio-economic activities accompanying the re-expansion of the Coronavirus Disease 2019 (COVID-19), etc., the situation remained severe. On the other hand, the business environment surrounding the ISID Group remains firm amid the acceleration of society and corporate expectations for DX (Digital Transformation), which utilizes digital technology for business process and business innovation, despite the risk that the impact of COVID-19 crisis will expand in the future.

Under these circumstances, we are continuing to focus on the three basic policies set out in the medium-term management plan "ISID X (Cross) Innovation 2021": "core business evolution", "new business creation", and "business foundation innovations", in order to link rising social and corporate IT-investment demand to sustainable growth. In addition, we are working to improve our business processes and introduce IT tools to increase productivity, as well as making active use of remote working, while taking all possible measures against the coronavirus. At the same time, the ISID Group is working on its own corporate transformation through the activities of the Business Transformation Project, which was launched last year.

As a result of these efforts, for the second quarter of the current consolidated fiscal year, net sales was ¥54,293 million (down 1.3% year on year), operating profit was ¥6,525 million (down 6.4% year on year), ordinary profit was ¥6,443 million (down 6.1% year on year) and profit attributable to owners of parent was ¥4,392 million (down 2.7% year on year).

Net sales decreased mainly due to the peak-out of several large-scale projects, despite growth in businesses such as marketing and accounting areas. Profits also declined, reflecting the impact of lower sales and an increase in selling, general and administrative expenses, mainly due to an increase in personnel costs associated with an increase in the number of employees, despite an improvement in the gross profit margin, mainly for consulting services and software products.

In comparison with the forecast figures for the first half of the current consolidated fiscal year, which were set at the beginning of the fiscal year, net sales was 101.9% and operating profit was 108.8%, mainly due to the expansion of the Manufacturing Solutions and Communication IT segments.

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Net sales, operating profit, and status of business operations by reportable segment are as follows:

From the first quarter of the current consolidated fiscal year, the Enterprise IT division, which is engaged in the development and implementation of mission-critical systems, was transferred from the Business Solutions segment to the Communication IT segment, establishing a structure that provides integrated support from the marketing domain to mission-critical operations. The figures for the second quarter of the previous consolidated fiscal year and the second quarter of the current consolidated fiscal year have not been reclassified because it is not practicable to prepare the reportable segments for the same period as the respective comparative periods.

Net sales and operating profit (loss) by reportable segment

								(Millions of yen)
	Second quarter of FY2020	Second quarter of FY2021	Variance
		(cumulative)		(cumulative)
Reportable segment
	Net sales		Operating	Operating	Net sales	Operating	Operating	Net sales	Operating
			profit	margin		profit	margin		profit
Financial Solutions	12,224		866	7.1%	11,804	520	4.4%	(420)	(346)
Business Solutions	10,885		1,720	15.8%	7,718	1,231	15.9%	(3,167)	(489)
Manufacturing Solutions	15,531		1,257	8.1%	15,637	1,511	9.7%	106	254
Communication IT	16,378		3,126	19.1%	19,132	3,261	17.0%	2,754	135
Total	55,020		6,971	12.7%	54,293	6,525	12.0%	(727)	(446)

Status of business operations by reportable segment Financial Solutions

The main business of this segment is providing IT solutions that support various financial operations at financial institutions and other companies.

Net sales decreased mainly due to the postponement of the recording of sales for large-scale projects, despite the expansion of sales and installation of BANK･R, a next-generation financing solution, and DX-support projects by financial institutions. Operating profit also declined due to the impact of lower sales and an increase in the cost of sales of some system development projects.

Business Solutions

The main business of this segment is providing IT solutions for business management operations, centered on accounting and human resources. Net Sales and operating profit declined due to a decline in sales in this division following the transfer of the Enterprise IT division to Communication IT segment. However, the business performed well, centered on POSITIVE, a human resources management solution, Ci*X,

an accounting solution, and CCH Tagetik, a business management solution.

Manufacturing Solutions

The main business of this segment is providing IT solutions for the entire product lifecycle, from product development and production, to sales and maintenance in the manufacturing industry.

Net sales and operating profit increased due to the expansion of DX support projects that comprehensively provide consulting services, system development, and in-house and third-party software for the automotive industry and the electric/precision equipment industry, which aim to innovate their entire value chain.

Communication IT

The main business of this segment is providing IT solutions that support companies optimize their value chains and business processes, from marketing to core business areas.

Despite the peak-out of several large-scale projects, both net sales and operating profit increased due to an increase in DX support projects for customers, mainly in the marketing area, and the transfer and integration of the Enterprise IT division from the Business Solutions segment.

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