IPS : Consolidated Financial Results for the Three Months Ended June 30, 2022(Under Japanese GAAP)

Note: 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, 2022

(Under Japanese GAAP)

Company name:	IPS, Inc.
Securities code:	4390	URL:
Representative:	(Title)	President / CEO
Inquiries:	(Title)	Director and General Manager
Corporate Planning Unit

Scheduled date to file quarterly August 12, 2022 securities report:

Preparation of supplementary material on financial results:

Holding of quarterly financial results briefing:

		August 12, 2022
	https://ipsism.co.jp	Listing: Tokyo Stock Exchange
(Name)	Koji Miyashita
(Name)	Masamitsu Kawabuchi	TEL: [phone]

Scheduled date to commence	-
dividend payments:
Yes
None

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the three months ended March 31, 2022 (from April 1, 2022 to June 30, 2022)

(1) Consolidated operating results (cumulative)

(Percentages indicate year-on-year changes.)

Net sales

Operating profit

Ordinary profit

Profit

attributable to owners of parent

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Three months ended

2,823

44.0

828

123.5

1,458

282.7

1,027

370.3

June 30, 2022

Three months ended

1,961

8.1

370

13.9

381

33.2

218

12.8

June 30, 2021

(Note) Comprehensive

Three months

ended

1,483Millions of yen (184.8%)

Three months ended 520Millions of yen (195.0%)

income:

June 30, 2022

March 31, 2021

Profit

Diluted

per share

Profit per share

Yen

Yen

Three months ended

82.78

78.91

June 30, 2022

Three months ended

17.64

16.72

June 30, 2021

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen

%

As of June 30, 2022

18,392

10,373

45.1

As of March 31, 2022

18,420

9,136

39.7

(Reference) Equity:

As of June 30, 2022

8,299Millions of yen

As of March 31, 2022

7,309Millions of yen

2. Cash Dividends

Annual dividends per share

First quarter-end

Second quarter-end

Third quarter-end

Term end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended March 31, 2022

-

0.00

-

25.00

25.00

Fiscal year ended March 31, 2023

-

Fiscal year ending March 31, 2023

17.50

-

17.50

35.00

(Forecast)

(Note) Revisions to the forecast of cash dividends most recently announced: Non

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3. Consolidated earnings forecasts for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31, 2023)

(Percentage figures show year-on-year increase or decrease.)

							Profit		Profit
	Net sales		Operating profit	Ordinary profit	attributable to owners of
		per share
							parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
First 6 months	5,400	32.5	1,300	56.8	1,270	54.8	750	44.7	60.52
Full year	12,000	11.9	2,920	18.9	2,820	(2.7)	1,700	(10.0)	137.18

(Note) Revisions to the consolidated earnings forecasts most recently announced: Non

• Notes
• 1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
     Newly included: - (Company name) -, excluded: - (Company name) -
  2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: Yes

(Note) For details, refer to the attachment P.11 "2. Quarterly Consolidated Financial Statements and Key Notes (3) Notes to quarterly consolidated financial statements (Application of special accounting for preparing quarterly consolidated financial statements)".

1. Changes in accounting policies, changes in accounting estimates, and restatement
2. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
   2. Changes in accounting policies due to other than 1): None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
      (Note) For details, refer to the attachment P.11 "2. Quarterly Consolidated Financial Statements and Key Notes (3) Notes to consolidated financial statements (Changes in accounting policies)".

1. Number of issued shares (common shares)
2. 1. Total number of issued shares at the end of the period (including treasury shares)
   2. Number of treasury shares at the end of the period
   3. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

As of June 30, 2022	12,410,500 shares	As of March 31,	12,410,500shares
2022
As of June 30, 2022	395 shares	As of March 31,	395shares
		2022
Three months ended	12,410,105 shares	Three months ended	12,379,736shares
June 30, 2022		June 30, 2021

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts and other special matters

(Notes on description about the future, etc.)

Descriptions about the future such as earnings outlook, which are included in these materials, are based on the information currently available to the Company and on certain conditions that the Company deems reasonable, and it does not mean that the Company promises to realize them. Also, there is a possibility that the actual earnings, etc., may differ significantly due to various factors. For matters related to earnings forecasts, refer to Attachment P.6 "1. Qualitative Information on Financial Results for the Quarter (3)Explanation of forward-looking information such as consolidated earnings forecasts".

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○ Table of Contents of Attachments
1. Qualitative Information on Financial Results for the Quarter................................................................................................................	4
(1)	Explanation of operating result ........................................................................................................................................................	4
(2)	Explanation of financial position .....................................................................................................................................................	5
(3)	Explanation of forward-looking information such as consolidated earnings forecasts ....................................................................	6
2. Quarterly Consolidated Financial Statements and Key Notes ...............................................................................................................	7
(1)	Quarterly consolidated balance sheet...............................................................................................................................................	7
(2)	Quarterly consolidated statement of income and consolidated statement of comprehensive income ..............................................	9
(Quarterly consolidated statement of income) ...................................................................................................................................	9
(Quarterly consolidated statement of comprehensive income) ........................................................................................................	10
(3)	Notes to quarterly consolidated financial statements .....................................................................................................................	11
(Notes to assumptions for ongoing concerns)..................................................................................................................................	11
(Note when there is a significant change in the amount of shareholders' equity) ............................................................................	11
(Application of special accounting for preparing quarterly consolidated financial statements).......................................................	11
(Changes in accounting policies).....................................................................................................................................................	11
(Segment information, etc.) .............................................................................................................................................................	11
(Important subsequent events).........................................................................................................................................................	13

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1. Qualitative Information on Financial Results for the Quarter

(1) Explanation of operating result

Forward-looking statements in the text are based on the judgment of our group (the Company and its consolidated subsidiaries) as of the end of the current quarter.

The Group is engaged in various businesses in order to create business opportunities, develop businesses, change the industrial structure, and realize the ideal society ahead of anyone else in areas closely related to daily life, beyond barriers that no one has been able to break through, under the corporate philosophy of "Open Door". In particular, we are expanding our business in the Philippines to contribute to the development of the Philippine economy by providing a telecommunications environment that utilizes new IT technologies.

In the first quarter of the consolidated fiscal year under review, economic activities in countries around the world continued to normalize, mainly due to a decrease in the number of COVID-19 cases. However, inflationary pressures continued to mount due to the prolonged Russian invasion of Ukraine and rising prices of commodities resulting from surging resource prices. In the first quarter of the consolidated fiscal year under review, economic activities in countries around the world normalized due to a decrease in the number of new coronavirus cases. In Japan, although the impact of the new coronavirus infection remained, the priority measures to prevent the spread of the virus were lifted nationwide in late March, and there were signs of a gradual economic recovery. In the Philippines, one of the Group's major markets, the number of COVID-19 infected cases peaked in January 2022, and economic activity is recovering, with GDP growth of 8.3% in the first quarter of 2022. Society is rapidly changing, such as new lifestyles and a shift to new workstyles on the premise of remote work due to the impact of COVID-19, and the importance of communication via communication lines is further increasing. The development and expansion of telecommunication lines as a life infrastructure supporting society is a pressing issue in Japan, the Philippines, and all over the world. We will continue to aggressively expand our business in this area.

The Group has established a position as a carriers' carrier (wholesaler for communication carriers) to meet the growing demand for communications by acquiring part of the undersea cables that connect the Philippines and Singapore / Hong Kong (City-to- City Cable System, hereinafter referred to as the "C2C cable") and an international communication network that consists of the terrestrial circuits of each country (hereinafter referred to as the "international communication network") in 2020 and 2021, respectively, and also is working to expand its business in the Philippines by, for example, jointly constructing submarine cables in the Philippines to expand backbone lines in the country.

In Japan, we are expanding the provision of services optimized for each customer, mainly for call center operators whose communication traffic demand is increasing.

Shinagawa Lasik & Aesthetics Center Corporation (hereinafter referred to as "SLACC"), which operates clinics in the Manila metropolitan area, has been taking thorough measures to prevent COVID-19 infection so that customers can visit its clinics with peace of mind, and the number of visitors has increased significantly compared to the same period last year.

As a result of the above, net sales for the first quarter of the current fiscal year were 2,823 million yen (up 44.0% year on year), and operating income was 828 million yen (up 123.5% year on year). As a foreign exchange gain of 632 million yen was recorded in association with the depreciation of the yen, ordinary profit was 1,458 million yen (up 282.7% year on year) and profit attributable to owners of parent was 1,027 million yen (up 370.3% year on year).

The financial results by segment are as follows:

Effective from the first quarter of the current fiscal year, the reporting segments were renamed from " International telecommunications business" to "Global telecommunications business," from "Domestic telecommunications business in the Philippines" to "Philippine telecommunications business," and from " Health and wellness business " to "Medical & healthcare business," respectively. No change has been made to the "Domestic telecommunications business" segment. This change is a change in segment name and has no impact on segment information.

(Global telecommunications business)

In the Global telecommunications business, we continued to strengthen sales of C2C lines, an international telecommunications network for which the Group holds usage rights, to expand the stock business. In the quarter under review, the Company recorded a significant increase in both revenue and profit, with the addition of sales from the receipt of payments for the IRU provision of C2C lines contracted in the previous fiscal year.

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As a result, net sales were 1,191 million yen (up 211.6% year-on-year) and segment income was 392 million yen (up 792.3% year-on-year).

(Note) IRU stands for Indefeasible Right of Use and refers to a long-term stable communication line usage right that cannot be cancelled or terminated without agreement between the parties. The Company has concluded mainly a 15-year IRU contract to purchase and sell the right to use international communication lines.

(Philippines telecommunications business)

Sales of Internet access services for corporate clients in Metro Manila, the main earnings driver for InfiniVAN, Inc., continued to be weak due to a decrease in the number of employees coming to the office to prevent infection by the COVID-19. On the other hand, we are strengthening its sales force by increasing the number of sales representatives and other measures to respond to the increasing number of commuters in response to the easing of travel restrictions in Metro Manila and other areas in March 2022.

In addition, in order to build the major infrastructure necessary for the expansion of the Philippine telecommunications business and Global telecommunications business, we are preparing for the joint construction of a submarine cable system in the Philippines connecting Luzon, Visayas, and Mindanao. Construction has started in July 2022.

As a result, net sales were 243 million yen (down 19.2% year-on-year) and segment income was 121 million yen (up 39.9% year-on-year).

(Domestic telecommunications business)

We purchased a large amount of incoming call billing services (toll-free) provided by major telecommunications carriers for the call center system "AmeyoJ" developed by Drishti-soft Solutions Pvt. Ltd. of India, for which we have the sales agency rights in Japan. Sales of solutions for call centers in combination with second-based billing services to be sold by the second to call center operators continued to grow.

Also, the domestic telecommunications business was spun off as a separate company through a corporate split in order to further expand the business, and IPS Pro Inc. was established on July 1, 2022.

As a result, net sales were 1,020 million yen (up 0.1% year on year), and segment profit substantially increased to 183 million yen (up 15.5% year on year).

(Health and wellness business)

The SLACC, which performs LASIK and other surgeries, promoted safe operations through thorough measures to prevent coronavirus infection. As a result, the number of patients visiting the hospital increased significantly compared to the same period of the previous year.

In addition, Shinagawa Healthcare Solutions Corporation, a subsidiary that operates a high-quality physical checkup/health checkup center that employs Japan's specialized technologies, such as diagnostic imaging, which was decided on last November, was established in June 2022 and is preparing to open for business in the first quarter of 2023.

As a result, net sales were 359 million yen (up 46.0% year on year), and segment profit was 137 million yen (up 65.0% year on year).

(Other)

Promotion of use of international remittance services for foreign residents, which are provided by overseas remittance operators, is the main service.

Net sales were 7 million yen (down 31.6％ year on year), and segment loss was 6 million yen (a loss of 2 million yen in the same period of the previous year).

1. Explanation of financial position (Status of Assets)
   Current assets at the end of the first quarter of the consolidated fiscal year ending March 31, 2023, were 10,771 million yen, a decrease of 1,252 million yen from the end of the previous consolidated fiscal year. This was mainly caused by a decrease of 395 million yen in investments in leases, 818 million yen in cash and deposits, and 59 million yen in accounts receivable - trade, respectively. Also, noncurrent assets were 7,620million yen, an increase of 1,223 million yen from the end of the previous consolidated fiscal year. This was mainly caused by an increase of 787 million yen in property, plant and equipment and 119 million yen in the right to use communication lines, respectively, as a result of capital investment.
   As a result, total assets were 18,392million yen, a decrease of 28 million yen from the end of the previous consolidated fiscal

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