Overview of the financial results for No.1 <3562>.

1. Overview of the first half of the fiscal year ending February 2025.

The consolidated performance for the first half of the fiscal year ending February 2025 shows revenue of 6,824 million yen, an increase of 3.7% compared to the same period last year, operating profit of 479 million yen, an increase of 1.0% year-on-year, ordinary profit of 480 million yen, an increase of 2.5% year-on-year, and net profit attributable to the parent company's shareholders (hereinafter, interim net profit) was 221 million yen, a decrease of 37.8% compared to the same period last year, resulting in increased revenue and profit (excluding interim net profit). Progress is also on track against the full-year forecast. The decline in interim net profit is attributed to the drop in gains from the sale of investment securities recorded in the previous period.

Held for pure investment purposes.

The increase in revenue was supported by steady sales of information security devices against the backdrop of DX progression and the accumulation of focus on the "No.1 business support." Furthermore, the consolidated effect of OZ MODE, which was made part of the group in June 2024 (for 3 months), also contributed to the revenue increase. Regarding "No.1 business support," the number of contracts held increased to 4,916 (an increase of 193 from the end of the previous period), and the average customer unit price (for the second quarter) was 11,700 yen (compared to 9,800 yen in the same period last year), indicating a steady growth in both contract numbers and customer unit price. Consequently, stock earnings were also raised by 13.6% year-on-year to 1,101 million yen, and the proportion of total revenue represented by this also rose to 16.1% (compared to 14.7% in the same period last year).

On the profit side, despite an increase in labor costs (including salary revisions) based on human capital management and expenses related to due diligence in M&A occurring as per the initial plan, operating profit was secured due to revenue growth boosting earnings and cost control. The operating margin was maintained at 7.0% (compared to 7.1% in the same period last year).

On the financial side, total assets increased by 1.9% to 8,258 million yen compared to the end of the previous period due to the consolidation of OZ MODE. On the other hand, shareholders' equity expanded by 12.3% to 4,212 million yen, due to the accumulation of profit reserves and a reduction in treasury stock, thus improving the shareholders' equity ratio to 51.0% (compared to 46.3% at the end of the previous period).

Due to the M&A of OZ MODE (via stock exchange method).

2. Summary of the first half of the fiscal period ending February 2025.

Based on the above, summarizing the first half of the fiscal period ending February 2025, it has been confirmed that the sales of information security equipment, which have been driving performance in recent years, and the 'No.1 business resistance' continue to perform well, and that stock revenue is steadily accumulating, which should be viewed as positive points. On the other hand, from a profit perspective, while preliminary expenses such as investments in human capital and M&A-related costs have increased, it is within expectations. Rather, the key issues will be whether costs can be invested as planned and whether the anticipated investment effects can be realized. In this regard, steady progress is being made in strengthening the growth foundation for the future, including the realization of M&A and the conclusion of business partnerships, and a smooth start has been achieved towards the execution of the priority strategies outlined in the medium-term management plan 'Evolution 2027' (strengthening human capital, expanding business areas, stabilizing revenue structure, etc.).

(Written by Fisco Guest Analyst Ikuo Shibata)