FY2024/9 First Quarter
Supplementary Material
on Financial Results
T&S inc.
TSE Growth: 4055
April 12, 2024

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Table of Contents
FY202４/９ First 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（ FY2024/１Q ）（Theme of current term）

Moving forward the next stage
１ Record-high net sales continues.
Net sales
Operating profit
Ordinary profit
Quarterly profit：：：：

837 million yen
138 million yen
138 million yen
100 million yen

DX Solutions remain steady.

２ Semiconductor Solutions expected to recover from 2Q.
➢ Sales in the DX Solutions category increased by 13.0% compared to the same quarter inthe previous year, expanding orders for contracted development projects from othercustomers and maintaining stable orders from major customers.
➢ Production adjustments completed in the semiconductor manufacturing industry.
Sales in the Semiconductor Solutions category are expected to recover from 2Q onwards.
➢ Sales in the AI Solutions category increased by 2.4% compared to the same quarter inthe previous year, maintaining stable orders from other customers.

Recruitment of new personnel is doubled. Organizational

３ restructuring by transition to a holding company in progress.
➢ Strengthen recruitment. 20 new graduates are joining in April 2024(220% increase
from previous year).
➢ Restructuring including transition to a holding company in progress. Consolidated
accounting is scheduled to commence in June.
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3

Financial Results Overview
FY2024/9 First Quarter

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4

Financial Results Overview（ FY2024/１Q ）Record-high net sales continues
Net sales
Operating profit
Ordinary profit
Quarterly profit

Net sales（Million yen）
1,000

800

：：
：：

837 million yen
138 million yen
138 million yen
１00 million yen(Million yen)

Operating profit ※

150

806

Up by
4.0%

Up by 2.2%

837

146.6

in real terms

143140600138
Down by５milHoldingcompany
transitioncost（1.9mil yen）
Investment inRecruitment（6.5mil yen）

400
130

Operatingprofit（138mil yen）

2000120
FY2023/1Q

FY2024/1Q

FY2023/1Q

FY2024/1Q※ please see the next page for more details.

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Operating profit（ FY2024/1Q ）Operating profit in the current year has substantially increasedby 2.2% before deducting up-front costs for special factors suchas recruiting and transition to a holding company.
（Million yen)

■ Increase■ Decrease■ Operating profit

Holding company
transition costs

146.6
1.9
Recruiting
costs
6.5

Operatingprofit138.1

Operatingprofit after
specialfactors
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6

Net sales by Category （ FY2024/1Q )DX Solution’s business are performing steadily with a 13.0% increase.
（compared to the previous same quarter）

Semiconductor Solution’s business are expected to recover from 2Q onward,
although the effect of production adjustments in the semiconductor
manufacturing industry will remain until 1Q.
AI Solution’s business increased by ２.４％.
（compared to the previous same quarter）

Sales proportion（by category）

Net sales（by category）(Million yen)

DX Solution

AI Solution

453

FY2023/1Q

512

FY2024/1Q
0100200300

400500

Semiconductor Solution
288

FY2023/1Q

FY2024/1Q
100200２６０mil yen
31.１%

FY2024/1Q
837mil yen

300

AI Solution
FY2023/1Q

63

FY2024/1Q

65
020

40

７.8%

600

260
065mil yen

SemiconductorSolution

60

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DX Solution

512mil yen
61.１%（Note） Our business segment is a single segment. Only Net sales are calculated
by category. The category classification was changed in this period.
For comparison with the previous same quarter, the quarter’s Net sales
were recalculated and compared under the new category classification.
80

7

Net sales by Customer （ FY2024/１Q )Sales to Others and Hitachi G increased（Up by 19.7％）（Up by10.5％）（compared to the previous same quarter）（Compared to the previous same quarter）

Net sales(by customer)
161
158

FY2023/1Q

Toshiba G

FY2024/1Q

Others
30.1%

192
212

FY2023/1Q

Hitachi G

Sales proportion（by customer）(Million yen)

FY2024/１Q

Toshiba G
18.9%

FY2024/1Q
241

FY2023/1QKioxia G

215

FY2024/1Q

Kioxia GOthers

252

FY2024/１Q

050

25.3%

25.7%

210

FY2023/1Q

Hitachi G

100

150

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200250300

8Business Environment -Trend of Major Customers(Overall)Trend of Major Customers(As of April 12, 2024)

The business environment surrounding our company is expected to remain strong. The
semiconductor market, which has continued to decline, is expected to see a recovery ingrowth as production adjustments increase good effect throughout the supply chain. On
the other hand, the impact of global monetary tightening, concerns over the Chinese
economic outlook, rising prices, and geopolitical risks such as those surrounding theMiddle East region remains as our challenges.

Toshiba G

The company’s stock was de-listed on December 20, 2023, and at thesame time a new management structure was established. A recovery inbusiness performance is anticipated, going forward, by drastic
measures for improving profit and future growth strategy.

Hitachi G

In the “Digital Systems & Services” segment, responsible for IT services,order status have been strong, especially for large-scale projects. Inaddition, orders related to generative AI are expanding. Businessexpansion is expected to continue based on digital transformation
demand, and inquiries to our company are also expected to increase
further.

Kioxia GOthers

The supply-demand balance is improving due to continued production
adjustments by flash memory manufacturers. Although production
adjustments are expected to continue in line with demand trends, there
has been no significant change in our view of the medium- to long-term
growth trend of the flash memory market, and a recovery is expected.
We have joined Hailo Partners Ecosystem as a design partner and,taking this as an opportunity, started to offer software solutions for
Hailo Edge AI processor. We will meet demands from customers byworking closely with Hailo.

(Compiled from publicly available information and media reports by the respective companies)
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9

Status of Engineers

Strengthen recruitment of new graduates in FY2024/9.
20 new graduates joined on April 1.
Promoting in-house production. BP（※１） orders on a downward trend.
Changes in Number of Employees(unit： no. of people)

150

400

267307

304

296
300

Changes in the number of BPorders(unit： no. of orders)

32５
20201919100

19200

142

248

287285

277

305

50100

0136

11890
61

FY2020/11

FY2021/11

FY2022/11

Engineer

FY2023/11

staff

FY2024/9※２

0Nov/2020

Nov/2021

Nov/2022※1 BP…Business partner. Engineers engaged in our business in the form of outsourcing etc.
※2 as of April 12, 2024

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Nov/2023

Feb/2024

10

Statement of Income（ FY2024/1Q )Statement of Income（ FY2024/1Q )Unit: thousand yen

FY2023/1Q

FY2024/1Q+/- amount+/- %Net sales

806,016

837,993

31,977

4.0%

Cost of sales

559,687

595,460

35,772

6.4%

Gross profit

246,328

242,533(3,795)(1.5%)

SG&A expense

102,910

104,386

1,476

1.4%

Operating profit

143,418

138,146(5,271)(3.7%)

Operating profit rate

17.8%

16.5%

Ordinary profit

143,246

138,260(4,986)(3.5%)

Ordinary profit rate

1７.8%

16.5%

Quarterly profit

100,916

100,743(173)(0.2%)

Quarterly profit rate

12.5%

12.0%Copyright ⓒ 202４ T&S inc. All rights reserved.

11

Balance Sheets（ FY2024/1Q )Balance Sheets（ FY2024/1Q )Unit： thousand yen

FY2023

FY2024/1Q+/- amount

2,452,145

2,331,064(121,081)

164,315265,136

100,820

2,616,461

2,596,201(20,260)

395,820

323,462(72,358)

57,39258,4771,085

453，212

381,939(71,273)

Total shareholders’ equity

2,163,249

2,214,261

51,012

Total net assets

2,163,249

2,214,261

51,012

Total liabilities & net assets

2,616,461

2,596,201(20,260)

Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

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12Topics

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Topics： Transition to holding company structure progress
Our company has decided on the transition to a holding
company structure through a corporate split.
Goals
✓
✓
✓
✓
✓
✓

Schedule

Achieving agile and detailed management
Ensuring the independence of operatingcompanies
Efficient resource allocation
Achieving effective corporate governance
Creating new businesses
Achieving business expansion through M&AApril. 12, 2024

Corporate HQ
System Development
Business HQAdvanced Technology
Business HQ
IT Services Business
HQ
T&S preparation company
for corporate split✓✓✓✓

Establishing preparation company for corporate
split on Jan. 12
Concluding absorption-type split agreement onJan.30
Obtaining approval at the shareholders’ meetingfor the split contract on Feb. 28
Taking effect of the absorption-type split（scheduled for Jun. 1）

Scheduled forJun. 1, 2024

Ultimate target
structure

Holding Company
T&S Group Inc.
(Management, Strategy)

Holding Company
T&S Group Inc.
(Management, Strategy)

Business Subsidiary(New) T&S Inc.

Business Subsidiary

System Development
Business HQBusiness Subsidiary
Advanced Technology
Business HQ
IT Services BusinessHQ

Business Subsidiary（As of April 12,2024）

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14

Earnings Forecast and Progress
FY2024/9 First Quarter

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Earnings Forecast and Progress

Irregular period of 10 months for FY 2024/９
due to change of FY end(No change in forecast for whole FY)

Unit: million yen

FY 2024/9(Forecast)

Net sales

FY 2024/9
1Q (Actual)

Progress rate(%)

3,142837

26.７%

Operating profit

588

138

23.4%

Ordinary profit

589

138

23.5%

Net profit(quarterly)

401

100

25.1%

CompanySystemDevelopment
Business HQAll Business HQ are performing well. Inquiries status for development projects from existingcustomers remain strong. No major changes are expected in the cost structure, and the use of BP is
expected to continue due to supplement technical personnel resources. On the other hand, inFY2024, the company will significantly increase the number of new graduates hired and strengthen
its education system. Including mid-career hires, as in the past, we expect to see a sequential
contribution to sales.
Sales forecast are expected to remain strong, mainly due to ongoing projects from our major
customers. We expects to maintain its order structure over the long term, as an increasing percentage
of customers are shifting to system operation and maintenance contract after system development
contract. We will increase our engineering resources by hiring mid-career personnel and using BP toacquire new projects not only from our main customers.

IT ServicesBusiness HQ

Production adjustments at semiconductor factories are downsizing towards an end, factories areoperating stably, the market is expected to recover, and the supply of engineers for operation andmaintenance services at factories is continuing. We will increase the hire of new graduates, andaggressively secure and educate appropriate personnel for the expansion in expected business area.

AdvancedTechnology
Business
HQ

We expect steady growth in the business centered on continued projects from existing customers
and its lateral expansion, mainly in image recognition AI projects. We plan to expand projects related
to generative AI and the latest AI processors, which started in the previous fiscal year, and expect toexpand business by utilizing more advanced technologies. We will also focus on acquiring newcustomers more aggressively than in the previous fiscal year.

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16

Shareholder Returns

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Shareholder Returns

Divided 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 wherefuture growth is expected, and believes that the return of profits to shareholders is
the key to achieving this goal.
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 reference, the dividend forecast for the FY2024/11(before thechange of FY end), announced on January 12,2024, is as follows.
Dividend per share

Dividend ratio

Return on equity（ROE）

FY202３/11

6.55yen

10.5%

24.3%

FY202４/11（Forecast）

７.００yen1１.0%

20.2％

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18ContactT&S 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