FY2024/9 Second Quarter
Supplementary Material
on Financial Results
T&S Group Inc.
TSE Growth: 4055
July 12, 2024

Copyright ⓒ T&S Group Inc. All rights reserved.

Table of Contents
FY202４/９ Second QuarterHighlights

p. 3

Financial Results Overview

p. ４

Operating profit

p. 6

Net sales by Categoryp. 7

Net sales by Customer

p. 8

Business Environment

p. 9

Status of Engineers

p. 10Statement of Income

p. 11

Balance Sheets

p. 12

Topicsp. 1３

Earnings Forecast and Progress

ｐ. 15

Shareholder Returns

p. 17

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2

Highlights（ FY2024/2Q ）（Theme of current term）

Moving forward the next stage
１ Net sales and operating profit in 2Q recorded the highest ever.
➢ Cumulative net sales of 1-2Q also recorded the highest ever.
FY2023/2Q

FY2024/2Q

FY2024/1-2Q:

902 million yen

932 million yen (+30mil yen)

1,770 million yen

Operating profit :173 million yen

175 million yen (+ 2mil yen)

314 million yen

Net sales

２ DX Solution remain steady.
➢ Sales in the DX Solution category increased by 17.6% compared to the same quarter inthe previous year. Orders for large scale development project which started from theprevious year and from new customers contributed to the steady increase.
➢ Production adjustments completed in the semiconductor manufacturing industry.
Sales in the Semiconductor Solution category are expected to recover from 3Q
onwards.
➢ Sales in the AI Solution category increased from 1Q.

３

A holding company structure has started and a new subsidiary for
personnel recruitment has been established.

➢ Transition to a holding company structure completed on June 1.
➢ A new subsidiary has been established to recruit, hire and train engineers, and topromote utilization of human resources in our group companies. We have restarted asa new corporate group consisting of 3 companies including business subsidiary.
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3

Financial Results Overview
FY2024/9 Second Quarter

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4

Financial Results Overview（ FY2024/2Q ）Record-high net sales continues
Net sales and operating profit in 2Q recorded the highest ever.
Net sales
Operating profit
Ordinary profit
Quarterly profit

Net sales（Million yen）
2,000：：：：

1,7７０million yen3１４million yen
3１４million yen
2１８million yen(Million yen）

１，７７０

Operating profit

400

314

1,500
2Q

902

Up by
30mil

932

2Q

300

1,000

2Q

173

１Q

175

2Q

143

138

１Q

FY2023

FY2024

200

500
１Q

806

837

FY2023

FY2024

0１Q

UP by
２mil

1000

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5

Operating profit（ FY2024/２Q ）Operating profit in the current year has substantially increasedby 2.5% before deducting up-front costs for special factors
such as recruiting and transition to a holding company.
（Million yen)

■ Increase■ Decrease■ Operating profit

324.6

Holding company
transition costs

4．6
Recruitingcosts

5.9
Operatingprofit

３１４.1

Operatingprofit after
specialfactors

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6

Net sales by Category（ FY2024/2Q )DX Solution category continued steadily with 17.6% increase.
（compared to the previous same quarter）

Semiconductor Solution category is expected to recover from FY2024/3Q
onwards on a full scale by virtue of production adjustments completion in
the semiconductor manufacturing industry and is receiving rapidly
increasing number of inquiries.
AI Solution category increased net sales compared to 1Q.

Net Sales（by category）
DX Solution
453

FY20230200142mil yen

２Q

1,105593

512400600

AI Solution

940

486

１Q

FY2024

Sales Ratio（by category）(Million yen)

800

1,000

Semiconductor
Solution

8.0%

1,200

Semiconductor Solution
288

FY2023

１Q

FY2024200

522mil yen
29.5%

２Q

2600625336

262522400600

FY2024/2Q
1,770mil yen

１,１０５mil yen

AI Solution

62.5%
63

FY2023

79

１Q

２Q

65

FY2024
0142

7750

100

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142150DX Solution（Note） Our business segment is a single segment. Only Net sales arecalculated by category.
The category classification was changed in this period. For comparison
with the previous same quarter, the quarter’s Net sales wererecalculated and compared under the new category classification.

7

Net sales by Customer（ FY2024/2Q )Toshiba G has recovered.

Hitachi G is expanding. （Up by 10.0％）（compared to the previous same quarter）

Others are significantly increasing. （Up by 25.3％）
Net Sales(by customer)

Sales Ratio（by customer）(Million yen)

339
347

FY2023/2Q

Toshiba G（compared to the previous same quarter）

FY2024/2Q

Toshiba GOthers

Hitachi G

FY2024/2Q

19.6%

32.1%

382
421

FY2023/2Q

FY2024/2Q
530

FY2023/2Q
FY2024/2Q

Kioxia G433 ★

Hitachi G
Kioxia G454

FY2023/2Q

Others569

FY2024/2Q

0100

200

300

400500

★★

23.8%

24.5%

600

★
Rapid recovery is expected from FY2024/3Q onwards by virtue of production adjustments completion of Kioxia.
★★ Net sales to other customers are expanding by virtue of orders from existing customers for large scale
development projects and orders from Amano Corporation, a new customer.
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8Business Environment - Trend of Major Customers(Overall)Trend of Major Customers(As of July 12, 2024)

The semiconductor market, which has continued to decline, is expected to recover by virtueof vigorous investment in AI-related areas. There are recovery trend in capital investment
and increasing trend in software investment. Like this, the business environment
surrounding our company is expected to remain strong. On the other hand, adequate
attention should be paid to the impact of global monetary tightening, concerns over theChinese economic outlook, rising prices, and geopolitical risks such as those surrounding
the Middle East Region and fluctuations in financial capital markets.

Toshiba G
Hitachi G
Kioxia G

OthersA new management team has formulated a revitalization plan andannounced its business strategy and growth strategy for future. We expect
the result of executing such plans to be reflected in business results.
Inquiries to us are recovering, mainly in the fields of energy and social
infrastructure.
In the “Digital Systems & Services” segment, responsible for IT services, net
sales and operating profit are expected to increase, following the same
trend in FY2023, due to strong digital demand both in Japan and overseas.
An investment in generative AI is planned and their inquiries to us areexpected to increase continuously.
Operating profit has turned positive due to the improvement of supplydemand balance. Medium- and long-term growth of flash memory market
and consequent corporate performances are continuously expected toimprove as data center and AI are spreading. The funds required forcontinuous business expansion have been secured, capital investments areexpected to expand according to the market trend, and their inquiries to us
are increasing.
Backed by strong digital demand and AI-related investments, inquiries to us
from the customers other than the above 3 biggest customers areincreasing. We are meeting demands from such customers by securing
engineering resources.

(Compiled from publicly available information and media reports by the respective companies)
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9Status of Engineers
Increasing steadily towards annual goal.
Ready-to-work personnels increased thanks to theestablishment of subsidiary.
Expecting to contribute to net sales from FY2024/3Q onwards.
Changes in number of employees(unit： no. of people)

150

400
296300Changes in the number of(unit： no. of orders)BP（※1） orders

267

304

307

1920

328
20

19100

19200

248

287

285

277

308

144

Nov/2023

May/2024

11850

100014290
61

FY2020/11

FY2021/11

FY2022/11

Engineer

FY2023/11

Staff

0
FY2024/9※2

Nov/2020

Nov/2021※1 BP…Business partner. Engineers engaged in our business in the form of outsourcing etc.
※2 as of July 12, 2024（Figures of the whole T&S Group）
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Nov/2022

10Statement of Income（ FY2024/2Q )Statement of Income（ FY2024/2Q )Unit: thousand yen

FY2023/2Q

FY2024/2Q+/- amount+/- %Net sales

1,708,065

1,770,648

62,583

3.7%

Cost of sales

1,182,041

1,246,247

64,2055.4%

Gross profit

526,023

524,401(1,621)(0.3%)

SG&A expense

209,348210,255907

0.4%

Operating profit

316,674

314,145(2,528)(0.8%)

Operating profit rate

18.5%

17.7%

Ordinary profit

321,494

314,456(7,038)(2.2%)

Ordinary profit rate

18.8%

17.8%

Quarterly profit

225,181

218,625(6,555)(2.9%)

Quarterly profit rate

13.2%

12.3%

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Balance Sheets（ FY2024/2Q )Balance Sheets（ FY2024/2Q )Unit： thousand yen

FY2023

FY2024/2Q+/- amount

2,452,145

2,543,920

91,774

164,315

280,914

116,598

2,616,461

2,824,835

208,373

395,820

429,792

33,972

57,392

61,963

4,571

453，212491,755

38,543

Total shareholders’ equity

2,163,249

2,333,079

169,830

Total net assets

2,163,249

2,333,079

169,830

Total liabilities & net assets

2,616,461

2,824,835

208,373

Current assets
Non-current assets
Total assets

Current liabilities
Non-current liabilities
Total liabilities

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12Topics

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13

Topic: Start of a new structure
On June 1, 2024, our group completed transition to a holding company
structure by company split with T&S Group Inc. as a holding company.
T&S GROUPT&S Group Inc. （TSG）
T&S Inc. （T&S)
System Development Business HQ

TS SystemSolutions Inc.
（TSS)

Advanced Technology Business HQ
IT Services Business HQCustomers
CompanyBusiness Details

TSG

General management of business for the whole group, formulation andpromotion of business & management strategies.

T&S

Software development, operation and maintenance services, offers ofsolutions regarding advanced technologies.

TSS

Promotion of recruitment, hire and training of engineers, and utilization ofhuman resources within our group.

※ A consolidated financial statements shall be disclosed from FY2024/3Q onwards.
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Earnings Forecast and Progress
FY2024/9 Second Quarter

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Earnings Forecast and Progress
Progressing as planned toward achieving the budget.
Irregular period of 10 months for FY 2024/9 due to change of FY end.
Unit: million yen

FY 2024/9(Consolidated/Forecast)

FY 2024/9
2Q (Actual)

Progress rate(%)

Net sales

3,142

1,770

56.4%

Operating profit

588

314

53.4%

Ordinary profit

589

314

53.4%

Net profit (Quarterly)

401

218

54.5%

CompanyAll Business HQ are performing well for FY2024/3Q onwards. Inquiries from existing customers fordevelopment projects and other inquiries from new customers remain strong. While we continue to utilize
BP to secure necessary engineer resources, the utilization of resources within our group continues furtherand is expected to contribute to net sales thanks to an enhancement of human resources recruitment andincrease of ready-to-work resources by the new subsidiary for recruitment.

SystemDevelopment
Business HQ

Sales forecast are expected to remain strong, mainly due to ongoing projects from our major customers.
We are also receiving lots of inquiries from new customers, which are expected to lead to new orders forsystem development projects.
By enhancing engineer resources through mid-career recruitment and BP, we will aim to get new deals inaddition to orders from major customers.

IT Services
Business HQ

IT services for semiconductor factories are in operation steadily with improvement of demand-supply
balance due to production adjustments and recovery of demand.
Supply of engineers for operation and maintenance services at factories is expected to continue.
We will aim to secure and train human resources for expansion of new business by enhancing new
graduates and mid-career recruitment and promoting proper placement.

AdvancedTechnologyBusiness
HQ

Carrying on the flow from the 1st half of current FY, we expect steady growth in the business centered oncontinued projects from existing customers as well as from new customers.
Once customers’ business improves and becomes a tailwind in the current fiscal year, we expect toenlarge business scale further in the fields of latest AI processor, image recognition AI, and generative AI.

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16Shareholder ReturnsCopyright ⓒ T&S Group Inc. All rights reserved.

17Shareholder Returns

Dividend ratio is targeted at 10%
Basic Policy on dividends
The Company considers it an important management task to increase corporate value
through investment in the acquisition of new technologies in fields where future
growth is expected, and believes that achieving this goal shall lead to the return ofprofits to shareholders.
Our basic policy for profit distribution is to continue to pay appropriate dividends inconsideration of business performance, while giving priority to securing the internal
reserves necessary to improve our corporate value.
For the FY2024/9, we are forecasting a dividend of 7.00yen per share(Up by 0.45yenper share), targeting a payout ratio of around10% in line with the above policy.
The dividend payout ratio for the FY2024/9 appeared higher at 13.2% compared to10.5% for the FY2023/11(12months), however this is due to the irregular accounting
period of 10 months resulting from the change of fiscal year.
The financial index for the FY2024/9 is as follows.

Dividend per share

Dividend ratio

Dividend on
equity ratio（DOE）

FY202３/11

6.55yen

10.5%

2.5%

FY202４/９（Forecast）

７.００yen

13.2%

2.3％

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18

Contact

T&S Group Inc.
Corporate Planning and IR Dept.
Email / pr@tecsvc.co.jp
URL / https://www.tecsvc.co.jp/

Information contained in this material includes those related to prospects. Such information is based on thoseavailable to us at the present moment and certain assumptions that may be considered reasonable. Therefore
we do not guarantee any realization thereof and any future business performance. Various factors such aschanges in the economic climate, industries in general, customers' needs, and legislative changes may bringabout some situations substantially different from the current forecasts. In the future, even if some new
information and some event occur, we have no obligation to carry out any update or revision concerning any
information about the future contained in this material.
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19