This document has been translated from the Japanese originalfor reference purposes only.
In the event of any discrepancy between this translated
document and the Japanese original, the original shall prevail.

FY2024 First Quarter Financial Results

Presentation Materials
August 9, 2024

IPS, Inc.
Ticker Symbol 4390

Copyright © 2024 IPS, Inc. All Rights
Reserved.

Corporate Philosophy
Corporate Philosophy

We create business opportunities ahead of anyone, develop business, change the industrial
structure, and realize the ideal society in the field closely related to life where there arebarriers that no one has yet overcome.
In order to contribute to the development of the Philippine economy by providing
telecommunications services that utilize cutting-edge telecommunications technology,
IPS Group is actively investing and working to expand its business in the Philippines.

※ Background: City of Makati, Philippines
2

Copyright © 2024 IPS, Inc. All Rights Reserved.

Executive

Summary

Results for FY2024 1Q

Net Sales

3,657（million yen）
Operating Profit

760 （million yen）

YoY

Progress+47.5%（+1,178 million yen）
YoY

22.2%
Progress+83.7%（+347 million yen）

17.7%

n

The Global Telecommunications will post higher revenues and profits due to strong business operations and the earlybooking of equipment sales related to the Philippine Domestic Submarine Cable Network (PDSCN).

n

In the Domestic Telecommunications, revenues decreased due to retroactive settlement of Access charges for interconnection
with major telecommunications carriers (260 million yen).

n

In the Medical & Healthcare, LASIK sales showed a recovery trend from the decline in the second half of last year, but sales
declined YoY. In the Healthcare, the company is developing new customers, mainly for regular health checkups for corporateclients, and the impact of depreciation of prior investments continues to be felt.

Forecasts for FY2024

Net Sales

16,500 （million yen）
3

Operating Profit

4,290 （million yen）

No change fromthe beginning of the period
Upwardly revised first half forecast

Copyright © 2024 IPS, Inc. All Rights Reserved.

1

4

FY2024 First Quarter Financial Results
Summary

Copyright © 2024 IPS, Inc. All Rights Reserved.

Financial Highlights
Results for the first quarter of FY2024（JPY：million）
FY2023

FY2024

１Q

２Q

３Q

４Q

１Q

YoY

Forecast

Progress

Net Sales

2,479

2,768

3,102

5,767

3,657

+1,178+47.5%

16,50022.2%

Operating Profit

413

511

529

2,439

760

+347

+83.7%

4,290

17.7%

Ordinary Profit

1,045

513

▲3

2,872

1,089

+44

+4.3%

3,900

27.9%

Profit Attributable to
Owners of the Parent

640

314

▲3

1,884

652

+12

+1.9%

2,550

25.6%

Analysis of Resultsn

Net Sales：In the Global Telecommunications, revenue increased 47.5% YoY, mainly due to the early booking of
telecommunications equipment sales, which offset the decline in revenue in the Domestic Telecommunications and Medical & Healthcare.

nOperating Profit： The increase in profit was due to higher revenues in the Global Telecommunications, which offset losses in theDomestic Telecommunications and the Medical and Healthcare , an increase of 83.7% YoY.

n

Ordinary Profit：In addition to the increase in operating profit, we recorded a foreign exchange gain of 350 million yen due to thedepreciation of the yen against the U.S. dollar to 161.14 yen per dollar at the end of June 2024 (609 million yen foreign exchange gain wasrecorded in the same period of the previous year), a 4.3% increase YoY.

n

5Profit Attributable to Owners of the Parent： It is increased by 1.9% YoY due to higher operating profit and ordinary profit.

Copyright © 2024 IPS, Inc. All Rights Reserved.

Analysis of Operating Profit（YoY）
The increase in profit was due to higher revenues in the Global Telecommunications, which offset losses in theDomestic Telecommunications and the Medical and Healthcare , an increase of 83.7% YoY.

（JPY：million）

308

6

325

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Results by Business Segment
JPY：million

Global Telecommunications

Domestic Telecommunications

Medical & Healthcare

Net Sales
Operating Profit

1Q
FY2023

FY2024
1,016

YoY
2,644 +1,628（+160.2%）

89

832

+742（+829.5%）

Net Sales

1,045

696

▲348（▲33.4%）

Operating Profit

208

▲26

▲235（▲112.7%）

Net Sales

418

316

▲101（▲24.4%）

Operating Profit

115

▲54

▲170（▲147.4%）

Analysis of Business Segmentn

Global Telecommunications：With the completion of the PDSCN, we are developing customers in rural areas as the backbone network covering the entire
Philippines is now in place. Business operations have been favorable, and the early booking of telecommunications equipment sales in thefirst quarter of the current fiscal year will lead to a significant increase in sales and profit.

n

Domestic Telecommunications：
Although services for call center operators combining AmeyoJ and second billing services remained strong, sales declined andoperating loss was recorded due to retroactive settlement of Access charges for interconnection with major telecommunications
carriers (260 million yen) for the past fiscal year.

n

Medical & Healthcare：LASIK performance is recovering from the decline in the second half of last year. In the Heathcare, demand for regular medical
checkups for corporate clients is steadily developing, but the segment as a whole will post lower sales and operating loss due to theimpact of depreciation of prior investments continues to be felt.

7

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Global Telecommunications（JPY:million）

Net Sales

Operating Income

3,000

Amid growing demand for telecommunications
against the backdrop of economic growth in thePhilippines, the provision of international
telecommunications lines, mainly C2C lines,
expanded steadily, and in the first quarter underreview, sales of telecommunications equipment
related to PDSCN were recorded early,
resulting in a significant increase in both sales
and profit.

2,644
2,500

2,000

1,500

1,000

1,016
832

500
89
0

8

FY2023 1Q

Contribution from accelerated recording of
PDSCN-related equipment sales

With the completion of PDSCN, we are now able
to provide services throughout the Philippines
and is expanding its service offerings to local
telecom and cable TV operators. Although thenumber of customers for ISP services for corporate
customers has been increasing, there are issues
such as delays in opening the service after signinga contract, and we will work to accelerate the paceof opening the service, including increasing thenumber of personnel.

FY2024 1Q

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Domestic Telecommunications（JPY:million）

Net Sales

Operating Income

1,200
1,045
1,000
800

696

600
400
200

208

0
▲ 26
▲ 200

9

FY2023 1Q

FY2024 1Q

Business remained strong, impacted byretroactive settlement of Access charges
Services for call center operators, which combine the"AmeyoJ" call center system and second billing service,remained strong.
The company also encountered a revenue decrease due
to a retrospective settlement of past communication
connection fees (access charges) amounting to 260
million yen. These fees arose from interconnection
agreements for voice communication lines with major
telecommunications operators. The communication
connection fees are negotiated annually between
operators, and the transition to IP-based connection
fees is scheduled for completion in December
2024.Despite this, significant differences arose between
the company and other operators regarding thecommunication connection fees for fiscal years 2022
and 2023. An agreement was reached on thecommunication connection fees for the past two years
in this year, leading to the recognition of the differencein the financial statements. As a result, net sales were
696 million yen (down 33.4% year-on-year), andsegment loss was 26 million yen (segment profit of 208
million yen in the same period last year).
※Access charges…A charge that is settled between the originating
and receiving carriers of voice communications when they use acommunications network. Also called an access charge, it isdetermined on a relative basis between carriers.
Copyright © 2024 IPS, Inc. All Rights Reserved.

Medical & Healthcare（JPY:million）

Net Sales

Operating Income

500
418
400

Recovering from the decline in the second halfof last year
LASIK services provided by Shinagawa Lasik & Aesthetic
Center Corporation (SLACC) are recovering from a decline
in the second half of last year due to competition forcustomers and other factors, thanks to a review ofmarketing methods and pricing.

316
300
Healthcare continues to bear the burden of upfront
investment despite progress in customer development

200

Shinagawa Diagnostic & Preventive Care Center (SDPCC), aphysical checkup/health screening center with high-quality
Japanese technology and state-of-the-art diagnostic
equipment, continues to develop demand for regular
medical checkups for corporate clients, but the burden ofamortization of prior investments continues.

115
100

0

▲ 100

10

▲ 54
FY2023 1Q

FY2024 1Q

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Financial Statements
Consolidated Balance Sheets
AssetsLiabilities・Net Assets

FY2023

FY2024 1Q

Current assets

17,864

19,213

Cash and deposits

4,234

4,493

Accounts receivable - trade

5,532

6,696

Lease receivables

5,789

6,141

Others

2,307

1,882

Non - current assets

15,624

16,570Property, plant andequipment

11,565Intangible assets
Investments and otherassetsDeferred assets

ChangeFY2023

1,349 Current liabilities

11

FY2024 1Q

Change12,532

13,515

983

670

755

85

4,587

5,403

815

4,076

4,131

55

3,197

3,224

26

946 Non - current liabilities

5,814

5,627

▲ 186

12,055489 Long - term borrowings

5,514

5,322

▲ 192

2,865

3,300

435 Others

299

305

5

1,194

1,215

21 Total liabilities

18,34619,142

796

40

37

▲ 2 Net assets

15,183

16,6791,496

11,09011,492402

Comprehensive income

210

581

370

Share acquisition right

264

262

▲1

Non - controlling interests

3,617

4,342

725

Total liabilities andnet assets

33,52935,8222,293

258 Accounts payable – trade
1,163 Borrowings
352 Deferred payment profit▲ 424 Others

Shareholders’ equity

Total assets（JPY:million）

33,52935,822

2,293

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Foreign Exchange Impact
Company

12

Impact Destination

Details of Foreign Exchange Impact

IPS Consolidated

Operating Profit

For the budgeted rate (140 yen/USD), a yen depreciation (appreciation) of 1 yen/USD results ina positive (negative) operating profit of over 10 million yen per year. For the Philippine peso yen(budgeted rate of 2.6 yen/PHP), a yen depreciation (appreciation) of 0.1 yen would result in anannual operating profit gain (loss) of about 25 million yen.

IPS

Ordinary Profit（Non-operating
profit/loss）

This is mainly caused by the translation of U.S. dollar denominated assets and liabilities (foreign
currency deposits, accounts receivable, invested assets in leases, etc.) at the end of eachquarter. Currently, since there is a net excess of assets, foreign exchange gains (losses) arerecorded when the yen depreciates (appreciates) against the U.S. dollar.

InfiniVAN

Ordinary Profit（Non-operating
profit/loss）

This is mainly caused by the translation of assets and liabilities denominated in US dollars(foreign currency deposits, accounts receivable, assets invested in leases, borrowings, etc.) at
the end of each quarter. Currently, since there is a net excess of liabilities, a foreign exchange
loss (gain) is recorded when the Philippine peso depreciates (appreciates) against the U.S.
dollar.

Other subsidiaries－

No (small) foreign exchange risk basically because the majority of transactions are denominatedin the local currency or in a foreign currency (U.S. dollar) as the functional currency•

A foreign exchange gain of 350 million yen was recorded in the first quarter, which mainly resulted from the translation of IPS's nonconsolidated assets denominated in U.S. dollars.

•

If the yen continues at its current level (around ¥147/USD) until the end of the second quarter due to the recent rapid appreciation of
the yen, a foreign exchange loss will be recorded from IPS on a non-consolidated basis, assuming the same size of assets denominatedin foreign currencies. In addition, since the Philippine peso depreciated against the U.S. dollar from January to June (1H), InfiniVAN will
also incur a foreign exchange loss in the second quarter.

•In the medium to long term, the yen and the Philippine peso will tend to move in the same direction against the U.S. dollar, and the U.S.
dollar positions of IPS and InfiniVAN will be reversed for the time being (IPS asset side and InfiniVAN liability side), offsetting thecurrency impact to some extent. However, in the short term, exchange rate effects could occur in one direction depending on the
difference in fiscal periods and macroeconomic conditions in each country.

•

However, the IPS Group does not take currency hedging measures since the U.S. dollar is currently reinvested or used to repay
borrowings, and foreign exchange gains/losses are valuation gains/losses.

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2

13

FY2024 Revised Forecasts of consolidated
financial results

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Revised Forecasts of consolidated financial results
FY2024 Forecast of the first half

（JPY:million）

FY2023
Actual of the first
half

As of May 2024

Revised this timeYoY

Net Sales

5,248

6,500

7,250

+2,002

Operating Profit

925

950

1,500

+575

Ordinary Profit

1,558

750

1,270

▲288

Profit Attributable to
Owners of the Parent

954

350

760

▲194

Summary of Revisions to First-Half Forecasts

14•

The company continues strong performance in the Global Telecommunications Business, driven by the expanded provision of
PDSCN-related services. We also expect steady progress in the Domestic Telecommunications Business and the Medical &Healthcare Business according to plan. Therefore, we are revising upwards our consolidated earnings forecast for the cumulative
period of the second quarter, which was announced on May 10, 2024.
Regarding the full-year consolidated earnings forecast, we do not intend to change the figures announced on May 10, 2024, at
this point. This is because we expect the strong performance in the Global Telecommunications Business to offset the impact of
the retroactive settlements in the Domestic Telecommunications Business.

•

We recorded ¥350 million in foreign exchange gains under non-operating income. This gain primarily resulted from thecomparison of the valuation of foreign currency-denominated receivables and payables held by the group at the end of theprevious fiscal year (exchange rate of 151.40 yen) with the exchange rate at the end of the first quarter consolidated accounting
period. Since this may fluctuate depending on future exchange rate conditions, the earnings forecasts for the second quarter
cumulative period and the full year have been prepared assuming no foreign exchange gains or losses, except for the confirmed
amounts in overseas subsidiaries.

Copyright © 2024 IPS, Inc. All Rights Reserved.

Revised Forecasts of Business Segment（JPY:million）
FY2023
Actual of the first half

（Revised）

YoY

Change

5,248

7,250

+2,002

38.1%

Global Telecommunications

2,349

4,918

+2,569109.4%

Domestic Telecommunications

2,093

1,600

▲493

▲ 23.6%

Medical & Healthcare

804

732

▲72

▲ 9.0%

925

1,500

+575

62.2%

Global Telecommunications

351

1,382

+1,031293.7%

Domestic Telecommunications

438

191

▲247

▲ 56.4%

Medical & Healthcare

132

▲73

▲205

▲ 155.3%

3

-

-

-

17.6%

20.7%

-

-

Global Telecommunications

14.9%

28.1%

-

-

Domestic Telecommunications

20.9%

11.9%

-

-

Medical & Healthcare

16.4%

-

-

-

Net Sales

Operating Profit

Inter-segment adjustment
Operating Profit margin

15

FY2024 Forecast of the first half

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3

16

Topics（FY2024 First Quarter）

Copyright © 2024 IPS, Inc. All Rights Reserved.

Topic 1．DMS contract with Quezon CityOn June 25, 2024, our subsidiary InfiniVAN, Inc. ("InfiniVAN") completed a contract with Quezon City, the largest cityin the Philippines by population, to deliver an online Artificial Intelligence (AI) based Document Management System("DMS"). It will help Quezon City administration to boost its DX and improve the efficiency of administrative
procedures.

Accelerating local governments' DX

InfiniVAN won Quezon City bid with DMS

In the Philippines, government agencies and many local
governments are still using paper-based documents, anddelays in administrative procedures have become a social
issue. The Philippines is promoting the policy ofdigital transformation (DX) throughout the country,
and InfiniVAN will contribute to the DX of thenational and local governments by providing DMS.
Quezon City, with a population of approximately 3 million,
is one of the largest cities in the Philippines. With theorder from Quezon City, we will aim to expand ourservices to other government agencies and about
150 large cities.
As for InfiniVAN, Philippine Domestic Submarine Cable
Network (“PDSCN”) was completed last December andthe company has been able to provide stabletelecommunications services of Japanese standards
throughout the Philippines. Taking advantage of thisopportunity, InfiniVAN will deploy cloud services and DX
services throughout the Philippines.

After receiving the Notice of Award at Quezon City Hall. The City Administrator
Michael Alimurung (second from left) and InfiniVAN President Shigeki
Nakahara (third from left).

17

Copyright © 2024 IPS, Inc. All Rights Reserved.

Topic 2． New Cebu office opened
InfiniVAN established its Cebu office in JEG Tower, Cebu City on July 15, 2024.
This is InfiniVAN's fourth office in the Philippines, following Makati City, Taguig City (Bonifacio Global City Area), andDavao City.

About Cebu officeName
Establishment

18

InfiniVAN CEBU OFFICE
July 15, 2024

Location

Archbishop Reyes Ave, corner Acacia St, Cebu City,
6000 Cebu, Philippines

Employees

14 persons

PurposePicture of Cebu office•

With the completion of the PDSCN (Philippine
Domestic Submarine Cable Network) in December
2023 and the establishment of the Philippine
domestic backbone network, a structure thatenables the provision of services totelecommunications and CATV operators in areas
outside Metro Manila and its suburbs•

The Davao office and others are already expanding
rapidly as they gain access to customers in rural
areas that they had not been able to reach before,
although there is a latent need.

•

Cebu office opened to further strengthen sales
capabilities in rural areas•

Efficient coverage of the entire Philippines with
offices in Metro Manila in the north, Cebu in thecenter, and Davao in the south

Copyright © 2024 IPS, Inc. All Rights Reserved.

About us
CompanyName

IPS, Inc.

Establishme
October 1991
nt
8F, Togeki Bldg, 4-1-1 Tsukiji, Chuo-ku, Tokyo, Japan
Location
104-0045
Global Telecommunications
Provision of international telecommunication lines tomajor telecommunication carriers etc., provision of
ISP services for corporate clients , and installation of
telecommunication lines in the Philippines
Domestic Telecommunications
Business

Tokyo

Sell software licenses for call centers and provide
second billing services in Japan.
Medical & Healthcare
Providing LASIK, cosmetic dermatology andpreventive medicine related services in thePhilippines

Major
consolidated
subsidiaries

ISMO Pte. Ltd.
InfiniVAN, Inc.
Carrier Domain, Inc.
KEYSQUARE INC.
IPS Pro, Inc.
Shinagawa Lasik & Aesthetics Center Corporation（SLACC）
Shinagawa Healthcare Solutions Corporation（SHSC）

19

Philippines

Philippines

Copyright © 2024 IPS, Inc. All Rights Reserved.

Disclaimer
n This document contains outlooks, future plans, management goals, etc. related to theCompany. These forward-looking statements are based on current assumptions about
future events and trends, and there is no guarantee that those assumptions areaccurate. Actual results may differ materially from those described in this document due
to various factors.
n Unless otherwise stated, the financial data contained in this document is presented inaccordance with generally accepted accounting principles in Japan.
n Regardless of the occurrence of future events, the Company does not necessarily revise
the announcements regarding future prospects that have already been made, unlessrequired by the disclosure rules.
n Information about companies other than our company relies on publicly known
information.

《Inquiries about IR》
IPS, Inc.
8F, Togeki Bldg, 4-1-1 Tsukiji, Chuo-ku, Tokyo, Japan
104-0045
TEL: +81-(0)3-3549-7719
20

FAX: +81-(0)3-3545-7331

Copyright © 2024 IPS, Inc. All Rights Reserved.