Transcosmos : Financial Results for Q3

Note: This English translation is for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

transcosmos inc.

Consolidated Financial Results for the Nine Months Ended December 31, 2022 [J-GAAP]

January 31, 2023

(Amounts are rounded down to the nearest million yen.)

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2023 (April 1, 2022 through December 31, 2022)

(1) Consolidated operating results (For the nine months ended December 31)

(% of change from the previous corresponding period)

		Net sales		Operating income	Ordinary income	Quarterly net income
									attributable to owners
									of transcosmos inc.
		Million yen		%	Million yen	%	Million yen	%	Million yen	%
Nine months	ended	276,037		6.9	17,235	(10.0)	16,777	(11.3)	9,979	(28.6)
Dec. 31, 2022
Nine months	ended	258,232		-	19,156	-	18,905	-	13,978	-
Dec. 31, 2021

(Note) Comprehensive income: Nine months ended December 31, 2022: 8,436 million yen (64.8%). Nine months ended December 31,

2021: 23,946 million yen -%

		Earnings per share - Basic	Earnings per share - Diluted
		Yen	Yen
Nine months	ended	242.86	228.89
Dec. 31, 2022
Nine months	ended	337.04	335.75
Dec. 31, 2021

(Note) transcosmos has adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and the related guidance since the beginning of the previous first quarterly consolidated accounting period. All figures for the third quarter of the fiscal year ended March 2022 are based on the standard and the guidance. In the table above, as such, we have not presented the percentage changes compared with the corresponding period of the previous fiscal year.

(2) Consolidated financial position

		Total assets	Net assets	Equity ratio	Net assets
					per share
		Million yen	Million yen	%	Yen
	As of Dec. 31, 2022	199,078	117,131	54.5	2,747.63
	As of Mar. 31, 2022	218,455	120,880	51.7	2,723.29
(Reference) Equity ratio: As of December 31, 2022: 108,457 million yen. As of March 31, 2022: 112,944 million yen

2. Cash dividends

			Annual dividends
	End of first	End of second	End of third	Year-end	Total
	quarter	quarter	quarter
	Yen	Yen	Yen	Yen	Yen
Year ended Mar. 31,	-	0.00	-	156.00	156.00
2022
Year ending Mar. 31,	-	0.00	-
2023
Year ending Mar. 31,				-	-
2023 (Forecast)

(Note) Revisions to the forecast of cash dividends since the latest announcement: None

Please note that the dividend forecast for the fiscal year ending March 31, 2023 has not been finalized.

3. Forecasts for Consolidated Financial Results for the Fiscal Year Ending March 31, 2023 (April 1, 2022 through March 31, 2023)

Please note that this document does not include the forecasts for consolidated financial results for the fiscal year ending March 31, 2023, due to the difficulty in making reasonably accurate projections for such period.

Unaudited Quarterly Consolidated Balance Sheet transcosmos inc. AND ITS CONSOLIDATED SUBSIDIARIES As of December 31, 2022 and March 31, 2022

								Thousands of U.S.
		Millions of yen			dollars (Note 1)
		As of December			As of March 31,			As of December
ASSETS		31, 2022			2022				31, 2022
Current assets:
Cash and deposits	¥	55,171	¥	64,834		$	415,757
Notes and accounts receivable - trade, and contract		67,727			73,708				510,384
assets
Merchandise and finished goods		7,353			5,425				55,417
Work in process		434			227				3,277
Supplies		97			84				735
Others		9,156			6,984				69,004
Less - allowance for doubtful accounts		(302)			(274)			(2,282)
Total current assets		139,639			150,990				1,052,294
Non-current assets:
Property, plant and equipment:
Buildings and structures, net		6,815			6,274				51,359
Tools, furniture and fixtures, net		7,198			6,477				54,243
Land		833			829				6,284
Others, net		1,813			1,893				13,669
Total property, plant and equipment, net		16,661			15,474				125,556
Intangible assets:
Goodwill		649			792				4,897
Software		2,978			3,271				22,448
Others		884			583				6,663
Total intangible assets		4,513			4,646				34,010
Investments and other assets:
Investment securities		11,124			16,579				83,833
Shares of unconsolidated subsidiaries and affiliates		11,201			14,108				84,415
Investments of capital subsidiaries and affiliates		1,546			1,324				11,652
Deferred tax assets		2,609			4,030				19,661
Guarantee deposits		10,454			10,021				78,786
Others		1,643			1,560				12,382
Less - allowance for doubtful accounts		(315)			(282)			(2,374)
Total investments and other assets		38,264			47,344				288,356
Total non-current assets		59,439			67,465				447,923
Total assets	¥	199,078	¥	218,455..	$	1,500,217

See accompanying notes to unaudited quarterly consolidated financial statements.

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Unaudited Quarterly Consolidated Balance Sheet transcosmos inc. AND ITS CONSOLIDATED SUBSIDIARIES As of December 31, 2022 and March 31, 2022

							Thousands of U.S.
		Millions of yen			dollars (Note 1)
		As of December			As of March 31,		As of December
LIABILITIES		31, 2022			2022			31, 2022
Current liabilities:
Accounts payable - trade	¥	16,283	¥	16,529	$	122,709
Short-term borrowings		1,697			1,563			12,790
Current portion of bonds payable		63			62			474
Current portion of long-term debt		2,054			12,060			15,485
Accounts payable - other		8,917			8,970			67,203
Accrued expenses		20,602			17,962			155,259
Income taxes payable		1,835			6,243			13,833
Accrued consumption taxes		5,722			5,455			43,121
Accrued compensation		3,643			6,395			27,455
Others		6,143			4,934			46,295
Total current liabilities		66,964			80,178			504,627
Non-current liabilities:
Bonds payable		138			174			1,043
Convertible bond-type bonds with subscription rights to		10,079			10,094			75,953
shares
Long-term debt		2,195			4,233			16,546
Deferred tax liabilities		541			1,025			4,077
Liability for retirement benefits		406			373			3,060
Others		1,623			1,496			12,233
Total non-current liabilities		14,983			17,396			112,914
Total liabilities
	81,947			97,575			617,542
NET ASSETS
Shareholders' equity:
Capital stock		29,065			29,065			219,035
Capital surplus		19,330			19,331			145,671
Retained earnings		71,951			67,408			542,208
Treasury stock, at cost		(21,777)			(15,240)			(164,107)
Total shareholders' equity		98,570			100,564			742,807
Accumulated other comprehensive income:
Unrealized holding gain on securities		4,653			11,324			35,065
Foreign currency translation gains adjustments		5,233			1,055			39,441
Total accumulated other comprehensive income		9,887			12,379			74,507
Stock acquisition rights		3			3			24
Non-controlling interests		8,670			7,932			65,336
Total net assets		117,131			120,880			882,675
Total liabilities and net assets	¥	199,078	¥	218,455	$	1,500,217

See accompanying notes to unaudited quarterly consolidated financial statements.

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Unaudited Quarterly Consolidated Statement of Income transcosmos inc. AND ITS CONSOLIDATED SUBSIDIARIES

For the nine months ended December 31, 2022 and 2021

								Thousands of U.S.
			Millions of yen				dollars (Note 1)
			2022			2021			2022
Net sales	¥	276,037	¥	258,232	$	2,080,164
Cost of sales		219,561			201,154			1,654,570
Gross profit		56,476			57,077			425,593
Selling, general and administrative expenses		39,240			37,921			295,708
Operating income		17,235			19,156			129,885
Non-operating income (expenses):
Interest income		117			57			885
Interest expenses		(59)			(103)			(445)
Dividend income		41			11			315
Share of profits (losses) of entities accounted for using equity		(940)			229			(7,086)
method
Subsidy income		225			192			1,702
Foreign exchange gains (losses)		161			(166)			1,219
Head office relocation costs		－			(630)			－
Gains on sales of investment securities		329			520			2,481
Gain on sale of shares of subsidiaries and associates		373			－			2,815
Gains(losses) on changes in ownership interests in affiliates		(141)			789			(1,065)
Impairment losses		(175)			(60)			(1,325)
Penalty income		－			734			－
Other income (expenses) net		19			(24)			148
Total non-operating income		(47)			1,550			(354)
Income before income taxes and non-controlling interests		17,188			20,706			129,530
Income taxes:
Current		5,006			4,450			37,726
Deferred		1,288			1,307			9,713
Total income taxes		6,295			5,757			47,439
Net income		10,893			14,949			82,090
Net income attributable to non-controlling interests		913			971			6,887
Net income attributable to shareholders of transcosmos inc.
¥	9,979	¥	13,978	$	75,203

See accompanying notes to unaudited quarterly consolidated financial statements.

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Unaudited Quarterly Consolidated Statement of Comprehensive Income transcosmos inc. AND ITS CONSOLIDATED SUBSIDIARIES

For the nine months ended December 31, 2022 and 2021

								Thousands of U.S.
			Millions of yen				dollars (Note 1)
			2022			2021			2022
Income before non-controlling interests	¥	10,893	¥	14,949	$	82,090
Other comprehensive income:
Unrealized holding gains (losses) on securities		(6,671)			7,434			(50,274)
Foreign currency translation gains adjustments		2,979			1,044			22,451
Share of other comprehensive income from ownership in
entities accounted for using the equity method		1,234			518			9,306
Total other comprehensive income		(2,457)			8,996			(18,516)
Quarterly comprehensive income	¥	8,436	¥	23,946	$	63,574
Total comprehensive income attributable to:
Shareholders of transcosmos inc.	¥	7,486	¥	22,984	$	56,417
Non-controlling interests		949			962			7,156

See accompanying notes to unaudited quarterly consolidated financial statements.

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