ID : Consolidated Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2023 (J-GAAP)

Note: This document is an English translation of the "Kessan Tanshin" for the second quarter of the fiscal year ending March 31, 2023 and is provided solely for reference purposes. In the event of any inconsistency between the Japanese and English versions, the Japanese version will govern.

Consolidated Financial Results for the First Six Months of the Fiscal Year

Ending March 31, 2023 (J-GAAP)

October 31, 2022

Company name:

ID Holdings Corporation

Listing:

Tokyo Stock Exchange, Prime Market

Securities code:

4709

URL:

https://www.idnet-hd.co.jp

Company representative:

Masaki Funakoshi, President and Representative Director

Direct inquiries to:

Yasuhiro Araki, Senior Officer

Manager, Corporate Strategy Department

Tel: [phone]

Scheduled date of filing of Quarterly Securities Report:

November 4, 2022

Scheduled date of dividend payment:

December 5, 2022

Preparation of supplementary materials on financial results:

Yes

Presentation on quarterly results:

Yes (for institutional investors and financial analysts)

(Amounts of less than ¥1 million are truncated)

1. Consolidated Financial Results for H1 of FY2022 (April 1-September 30, 2022)

(1) Consolidated Business Results

(% indicates YoY changes)

Net sales

Operating income

Ordinary income

Net income attributable to

owners of parent

¥ million

%

¥ million

%

¥ million

%

¥ million

%

H1 FY2022

14,861

11.4

1,155

63.9

1,209

63.1

680

81.5

H1 FY2021

13,340

－

704

－

741

－

375

－

Note: Comprehensive income

H1 FY2022

¥887 million

(59.1%)

H1 FY2021

¥557 million

(－%)

Net income

Diluted net income

EBITDA

EPS before amortization

per share

per share

of goodwill

¥

¥

¥ million

%

¥

%

H1 FY2022

41.04

－

1,454

44.1

54.43

56.5

H1 FY2021

21.84

21.77

1,009

－

34.78

－

Notes: 1. From the beginning of the consolidated first quarter of the previous fiscal year, the Group has applied the Accounting Standard for Revenue Recognition(Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) of the Japanese generally accepted accounting principles (J-GAAP).The numerical figures in the above H1 FY2021 consolidated business results constitute the figures after the application of this standard. As such, YoY comparisons are not provided.

1. 1. Effective July 1, 2021, the Group executed a share split at a ratio of 1.5 new shares per previous common share. The figures for net income per share, diluted net income per share and EPS before amortization of goodwill are calculated as if this share split had occurred at the beginning of the previous consolidated fiscal year.
   2. Diluted net income per share during the consolidated first half under review is not listed, as the Group has no potential shares.
2. Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	¥ million	¥ million	%
Q2 FY2022	16,168	9,992	61.5
FY2021	16,238	9,446	57.9

Reference: Equity Q2 FY2022 ¥9,943 millionFY2021 ¥9,400 million

2. Dividends

			Annual dividends
	End of first quarter	End of second quarter	End of third quarter End of fiscal period	Total
	¥	¥	¥	¥	¥
FY2021	－	20.00	－	20.00	40.00
FY2022	－	20.00
FY2022 (forecast)			－	20.00	40.00

Note: Revision of most recently published dividend forecast: No

3. Forecasts of Consolidated Results for FY2022 (April 1, 2022-March 31, 2023)

																	(% indicates YoY changes)
															Net income		Net income
			Net sales			Operating income		Ordinary income		attributable to
								per share
															owners of parent
			¥ million	%		¥ million	%		¥ million	%		¥ million	%	¥
	FY2022		29,000		4.3		1,950		4.3		2,000		4.0		1,100		5.1		66.30
	(full fiscal year)

							EPS before
			EBITDA			amortization of
							goodwill
			¥ million	%	¥		%
	FY2022		2,580		3.5		93.10		6.1
	(full fiscal year)

Note: Revision of most recently published results forecast: No

*Notes

(1) Changes in important subsidiaries during the period

Changes in specified subsidiaries resulting in change in consolidation scope

1. Adoption of special accounting treatments for quarterly consolidated financial statements:
2. Changes in accounting policies, changes in accounting estimates and restatements:
3. 1. Changes in accounting policies due to revisions of accounting standards, etc.:
   2. Changes in accounting policies other than (i):
   3. Changes in accounting estimates:
   4. Restatements:

No

No

Yes

No

No

No

Note: For details, please refer to (4) Notes on Consolidated Financial Statements (Changes in Accounting Policies) under Section 2. Consolidated Financial Statements and Important Notes on page 13 of the Attachment.

1. Number of shares outstanding (common stock)
2. 1. Number of shares outstanding (inclusive of treasury stock):
   2. Amount of treasury stock:
   3. Interim average number of shares (Consolidated total for the quarter)

Q2 FY2022	18,066,453	shares	FY2021	18,066,453	shares
Q2 FY2022	1,476,289	shares	FY2021	1,476,462	shares
Q2 FY2022	16,590,015	shares	Q2 FY2021	17,174,843	shares

Note: Effective July 1, 2021, the Group executed a share split at a ratio of 1.5 new shares per previous common share. The figures for number of shares outstanding, amount of treasury stock and interim average number of shares are calculated as if this share split had occurred at the beginning of the previous consolidated fiscal year.

1. Calculation of certain management indices
2. • EBITDA = Operating income + depreciation + amortization of goodwill
   • EPS before amortization of goodwill = Net income after adjustments* ÷ interim average number of shares

*Net income after adjustments = Net income attributable to owners of parent + amortization of goodwill

• These quarterly consolidated financial results are not subject to quarterly review by a certified public accountant or audit corporation.
• Qualitative information relating to the appropriate use of results forecasts, and other noteworthy items
  Results forecasts are estimates based on information available as of the day the results were announced. Forecasts are inherently uncertain. The actual results, etc. may be different from the forecasts because of changes in business conditions, etc. See (3) Qualitative Information on the Consolidated Results Forecast under Section 1. Qualitative Information on the Second Quarter of the Fiscal Year Ending March 31, 2023, on page 6 of the Attachment for the assumptions that form the basis of results forecasts and other things to remember when relying on results forecasts.
  The ID Group has also introduced a board benefit trust (BBT) and Japanese employee stock ownership plan (J-ESOP). Company shares held by Custody Bank of Japan, Ltd. (Trust Account E) as trust property for the BBT and J-ESOP plans are included in treasury stock.

(Method of obtaining supplementary explanatory materials regarding quarterly results and details of the quarterly results briefing) The ID Group will hold a quarterly results briefing for institutional investors and analysts on November 28, 2022. The materials that will be distributed at the briefing will be posted on the Group website promptly after the briefing.

Contents

1. Qualitative Information on the Second Quarter of the Fiscal Year Ending March 31, 2023	..................- 2 -
(1)	Qualitative Information on the Consolidated Business Results.......................................................	- 2 -
(2)	Qualitative Information on the Consolidated Financial Position.....................................................	- 6 -
(3)	Qualitative Information on the Consolidated Results Forecast........................................................	- 6 -
2. Consolidated Financial Statements and Important Notes........................................................................	- 7 -
(1)	Consolidated Balance Sheet.............................................................................................................	- 7 -
(2)	Consolidated Statement of Income and Comprehensive Income.....................................................	- 9 -
(Consolidated Statement of Income).......................................................................................................	- 9 -
(Consolidated Cumulative Second Quarter)............................................................................................	- 9 -
(Consolidated Statement of Comprehensive Income)...........................................................................	- 10 -
(Consolidated Cumulative Second Quarter)..........................................................................................	- 10 -
(3)	Consolidated Cash Flow Statement ...............................................................................................	- 11 -
(4)	Notes on Consolidated Financial Statements.................................................................................	- 13 -
(Notes on Assumptions Regarding Going Concern).............................................................................	- 13 -
(Notes on Significant Changes (If Any) in Shareholders' Equity)........................................................	- 13 -
(Changes in Accounting Policies) .........................................................................................................	- 13 -
(Additional Information) .......................................................................................................................	- 13 -
(Material Subsequent Events) ...............................................................................................................	- 14 -

- 1 -

1. Qualitative Information on the Second Quarter of the Fiscal Year Ending March 31, 2023

1. Qualitative Information on the Consolidated Business Results

During the consolidated fiscal first half under review (H1 FY2022: April 1 to September 30, 2022), the Japanese economy was beset by challenges on all sides. As vaccination against COVID-19 progressed nationwide, restrictions on activity were eased, stirring hopes that an economic recovery was in the offing. However, as the Russian invasion of Ukraine dragged on, resource prices spiked and the yen exchange rate slipped, stoking inflation. Future prospects remain stubbornly unclear.

Fortunately for the ID Group, the information services industry, to which the Group belongs, is on a firmer footing. Demand for IT investment related to digital transformation (DX), an approach aimed at establishing new business models and transforming existing ones, was solid and is expected to continue to enjoy steady support. Moreover, while the impact of the COVID-19 pandemic lingers on, corporate clients' needs for IT investment, previously restrained, are continuing to bounce back.

Amid the environment just described, business results for the ID Group trended favorably in software development; system operation management; and cybersecurity, consulting and training. Net sales jumped 11.4% from the same period of the previous fiscal year (YoY) to ¥14.861 billion.

Earnings results were even more satisfying. Although cost of sales climbed as a result of Group reorganization, the Group's high- margin DX-related business expanded. As sales grew, so did earnings. Operating income soared 63.9% YoY to ¥1.155 billion, and ordinary income leapt 63.1% YoY to ¥1.209 billion. Net income attributable to owners of parent surged 81.5% YoY to ¥680 million, while EBITDA broadened 44.1% YoY to ¥1.454 billion.

- 2 -

The Group's business consists of a single segment. Business results for each service are as follows.

						(Millions of ¥)
			Previous consolidated	Consolidated cumulative	Compared with same period of
			second quarter under	previous fiscal year (YoY)
			cumulative second quarter
			review
			(April 1, 2021 to	Increase/	Rate of
			(April 1, 2022 to
			September 30, 2021)	increase/
			decrease
			September 30, 2022)
				decrease (%)
	System operation	Net sales	6,053	6,641	588	9.7
	management
Gross profit	1,449	1,476	26	1.8
		Gross profit margin	24.0%	22.2%	-1.7P	―
	Software	Net sales	4,988	5,647	659	13.2
	development
Gross profit	1,096	1,210	114	10.4
		Gross profit margin	22.0％	21.4％	-0.5P	―
	IT infrastructure	Net sales	1,221	1,228	7	0.6
		Gross profit	292	310	17	6.1
		Gross profit margin	24.0%	25.3%	1.3P	―
	Cybersecurity,	Net sales	960	1,130	169	17.7
	consulting and
Gross profit	315	315	0	0.2
	training
		Gross profit margin	32.8%	27.9%	-4.9P	―
	Others	Net sales	116	212	96	82.4
		Gross profit	2	10	7	265.8
		Gross profit margin	2.6%	5.1%	2.6P	―
	Total	Net sales	13,340	14,861	1,520	11.4
		Gross profit	3,157	3,324	167	5.3
		Gross profit margin	23.7%	22.4%	-1.3P	―

(i) System operation management

Reinforced sales efforts toward major IT vendors led to expansion in transactions, while orders received from existing financial-related customers increased. Net sales lifted 9.7% YoY to ¥6.641 billion.

(ii) Software development

Some projects with existing financial-related customers wrapped up. However, reinforced sales efforts toward major IT vendors led to expansion in transactions, while previously postponed major projects with existing transport-related customers were restarted and orders from existing public-sector-related customers grew. Net sales improved 13.2% YoY to ¥5.647 billion.

(iii) IT infrastructure

Although some projects with existing customers related to IT and the public sector were concluded, the Group expanded transactions with multiple existing customers, particularly with those related to finance. Net sales rose 0.6% YoY to ¥1.228 billion.

(iv) Cybersecurity, consulting and training

In addition to swelling product sales and growing order acceptance in cybersecurity, this category benefited from heightened sales in consulting. Net sales lifted 17.7% YoY to ¥1.130 billion.

(v) Others

Orders accepted for data entry and product sales expanded. Net sales rose 82.4% YoY to ¥212 million.

- 3 -