Information Services International Dentsu : Consolidated Financial Results for the First Quarter of Fiscal Year Ending December 31, 2022 (Japanese GAAP)

Note: This English translation is solely for reference purposes and not a legally definitive translation of the original Japanese text.

In the event a difference arises regarding the meaning herein, the original Japanese version will prevail as the official authoritative version.

April 28, 2022

Consolidated Financial Results for the First Quarter of Fiscal Year Ending December 31, 2022(Japanese GAAP)

Name of Listed Company:	Information Services International-Dentsu, Ltd.
Listed Exchange:	Tokyo
Code Number:	4812
URL:	https://www.isid.co.jp/english
Representative:	Ryoichi Nawa, President, CEO and COO
Contact for Inquiries:	Naoto Momiki, General Manager, Corporate Planning Office
Tel: [phone]

Date of scheduled filing of securities report:	May 11, 2022
Date of scheduled payment of dividends:	--
Quarterly earnings supplementary explanatory documents:	Yes
Quarterly earnings presentation:	No

(Amounts less than one million yen are rounded down.)

1. Consolidated Business Performance for the First Quarter of FY2022 (from January 1, 2022 to March 31, 2022)

(1) Consolidated Operating Results (Cumulative)

Percentages indicate year-on-year increase/(decrease)

Net sales	Operating profit (loss)	Ordinary profit (loss)	Net profit (loss)*
(million yen) (%)	(million yen) (%)	(million yen) (%)	(million yen) (%)
First Quarter of FY2022 First Quarter of FY2021	29,982 9.0 27,495 4.3	5,305 42.4 3,726 13.1	5,331 46.3 3,643 12.0	4,033 59.9 2,521 22.4

* Net profit attributable to parent company's shareholders

Note: Comprehensive profit: First Quarter of FY2022: 4,307million yen (up59.4%); First Quarter of FY2021: 2,701million yen (up35.9%)

Net profit (loss) per share	Net profit per share after dilution
(yen)	(yen)
First Quarter of FY2022 First Quarter of FY2021	61.89 38.70	- -

(2) Consolidated Financial Position

Total assets	Net assets	Equity ratio
(million yen)	(million yen)	(%)
As of March 31, 2022 As of December 31, 2021	107,839 108,188	67,887 65,471	62.9 60.5

Reference: Total shareholders' equity: As of March 31, 2022: 67,852 million yen; As of December 31, 2021: 65,452 million yen

2. Dividends

Record date	Dividends per share
End of first quarter	End of second quarter	End of third quarter	Fiscal year-end	Full year
(yen)	(yen)	(yen)	(yen)	(yen)
FY2021 FY2022	- -	26.00	-	30.00	56.00
FY2022(forecast)	33.00	-	33.00	66.00

Note: Revision to the dividend forecasts from the latest announcement: No

3. Consolidated Forecasts for FY2022(from January 1, 2022 to December 31, 2022

Percentages indicate year-on-year increase/(decrease)

Net sales	Operating profit	Ordinary profit	Net profit *	EPS
(million yen) (%)	(million yen) (%)	(million yen) (%)	(million yen) (%)	(yen)
First half FY2022	59,000 8.7 120,000 7.1	7,100 8.8 15,000 9.2	7,100 10.2 15,000 13.4	5,000 13.8 10,500 17.4	76.73 161.13

*Net profit attributable to parent company's shareholders

Note: Revision to the consolidated forecasts from the latest announcement: No

4. Other Items

• (1) Changes in the scope of consolidation for significant subsidiaries during three months (Changes in specified subsidiaries resulting in change in the scope of consolidation): None

• (2) Application of special accounting practices in the preparation of the quarterly consolidated financial statements: None

• (3) Changes in accounting policies, changes in accounting estimates and restatements:

  • i. Changes in accounting policies in accordance with revision of accounting standards: Yes

  • ii. Changes in accounting policies other than 1) above: None

  • iii. Changes in accounting estimate: None

  • iv. Restatements: None

  Note: For details, please refer to "II. Consolidated Financial Statement 3. Notes on Quarterly Consolidated Financial Statement (Changes in Accounting Policies)."

• (4) Issued and outstanding common stock

  • i. Number of shares issued and outstanding at the end of the period, including treasury stock

  • ii. Number of treasury stock at the end of the period

  • iii. Average number of shares outstanding for each period

March 31, 2022: 65,182,480 shares	December 31, 2021: 65,182,480 shares
March 31, 2022: 17,984 shares	December 31, 2021: 17,984 shares
Three months ended 65,164,496 shares March 31, 2022	Three months ended 65,164,617 shares March 31, 2021:

This quarterly financial report is outside the scope of quarterly review procedures under the Financial Instruments and Exchange Act.

Explanation regarding the appropriate use of forecasts of business results

Forecast figures are projections based on information available at the time of release, and are not intended as a guarantee that the Company will achieve these targets. Actual results may differ significantly from the above forecasts as a result of changes in the business environment and other factors.

Index of the Attachment

• I. Qualitative Information on the Consolidated Financial Results for the Subject Period

  1. Explanation of Operating Results …………… . …………………………… . ……………………………… . 2

  2. Explanation of Financial Position ………………………………………… ... ……………… . ……………… 4

  3. Explanation of Consolidated Financial Results Forecasts …………… ..….. …………………… .…..………. 4

• II. Consolidated Financial Statements

  1. Consolidated Balance Sheets ……………………………………………………………………………… ... 5

  2. Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

  [Consolidated Statements of Income] ………………………………………………………………… .……. 7

  [Consolidated Statements of Comprehensive Income] ……………………………………………………… 7

  3. Notes on Quarterly Consolidated Financial Statement ……………………………………………………… 8

  Segment Information ………………………………………………………………………… ..……..….….… 10

I. Qualitative Information on the Consolidated Financial Results for the Subject Period

1. Explanation of Business Results

Effective from the beginning of the first quarter of the current consolidated fiscal year, we have adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020). For details, please refer to "II. Consolidated Financial Statement 3. Notes on

Quarterly Consolidated Financial Statement (Changes in Accounting Policies)."

(Millions of yen)

Reportable segment	First quarter of FY2021 (cumulative)	First quarter of FY2022 (cumulative)	YoY
Variance	% change
Net sales	27,495	29,982	2,487	9.0
Operating profit Operating profit margin	3,726	5,305	1,579	42.4
13.6%	17.7%	4.1p	-
Ordinary profit	3,643	5,331	1,688	46.3
Profit attributable to owners of parent	2,521	4,033	1,512	59.9

During first quarter of the current consolidated fiscal year under review (from January 1, 2022 to March 31, 2022), the Japanese economy continued to recover, although the outlook remained uncertain due to concerns about the re-expansion of COVID-19 and the worsening situation in Ukraine. Also, the business environment surrounding the ISID Group remained firm, as companies remained strongly motivated to utilize digital technology for operational and business innovation, although some conservative moves were seen against the backdrop of continued priority measures such as pre-emergency measures and production adjustments due to the shortage of semiconductors.

Amid these circumstances, the ISID Group formulated long-term management vision, "Vision 2030," and launched our three-year medium-term management plan, "ISID X(Cross) Innovation 2024," in the current fiscal year. In 2030, we aim to achieve net sales in the ¥300 billion range as a Group with diverse human resources, an abundance of technologies, and the various solutions. In the medium-term management plan, which is the first step toward achieving this goal, we aim to achieve our quantitative target (Net sales of ¥150 billion , operating profit of ¥18 billion, operating margin of 12%, and ROE of 15%) for the fiscal year ending December 31, 2024, by accelerating business growth and implementing to transform ourselves based on four action policies: "Business domain expansion," "New capability acquisition," "Earnings model innovation," and "Management foundation innovation."

In the first quarter of the current consolidated fiscal year, net sales was ¥29,982 million (up 9.0% year on year), operating profit was ¥5,305 million (up 42.4% year on year), ordinary profit was ¥5,331 million (up 46.3% year on year) and profit attributable to owners of parent was ¥4,033 million (up 59.9% year on year).

Net sales increased in all four business segments as a result of firm corporate strategic IT investments. Profits also increased at each stage , reflecting the effect of higher sales and an improvement in the gross profit margin, mainly for in-house software and third-party software.

The impact of the adoption of the accounting standard for revenue recognition in the first quarter under review was an increase of ¥547 million in net sales and an increase of ¥452 million in operating profit.

Net sales and operating profit (loss) by reportable segment

(Millions of yen)

Reportable segment	First quarter of FY2021 (cumulative)	First quarter of FY2022 (cumulative)	Variance
Net sales	Operating profit	Operating margin	Net sales	Operating profit	Operating margin	Net sales	Operating profit
Financial Solutions	6,333	647	10.2%	6,748	776	11.5%	415	129
Business Solutions	3,455	309	8.9%	4,171	1,138	27.3%	716	829
Manufacturing Solutions	8,220	1,090	13.3%	8,707	1,408	16.2%	487	318
Communication IT	9,485	1,679	17.7%	10,355	1,982	19.1%	870	303
Total	27,495	3,726	13.6%	29,982	5,305	17.7%	2,487	1,579

Status of business operations by reportable segment

Financial Solutions

The main business of this segment is providing IT solutions that support various financial operations at financial institutions and other companies.

Net sales and operating profit increased due to the strong performance of DX support projects for the banking industry, mainly in the area of customer contact reform, and the expansion of system development projects for the credit card and leasing industries.

Business Solutions

The main business of this segment is providing IT solutions for business management operations, centered on accounting and human resources.

Net sales and operating profit increased due to the expansion of sales and introduction of our four key solutions, the POSITIVE, human resource management solution, the STRAVIS, consolidated accounting solution, the Ci*X, accounting solution and the CCH Tagetik, a business management solution, mainly in the transportation equipment and service industries.

Manufacturing Solutions

The main business of this segment is providing IT solutions for the entire product lifecycle, from product development and production, to sales and maintenance in the manufacturing industry.

Net sales and operating profit increased due to the expansion of projects for the introduction of the Teamcenter, a PLM solution that supports the digitization of engineering chains, mainly in the transportation equipment industry and the electric and precision industries, as well as steady growth in projects for the process manufacturing industry, which is developing as a new market.

Communication IT

The main business of this segment is providing IT solutions that support companies optimize their value chains and business processes, from marketing to core business areas.

Net sales and operating profit increased due to an expansion of customer DX support projects in the marketing and core business areas to the service and pharmaceutical industries, despite the peak-out of several large-scale projects in the previous year.