LTS : Summary of Financial Results for First Quarter of the Year Ending December 2022

Summary of Financial Results for First Quarter of the Year Ending December 2022

[Japan GAAP] (Consolidated)

			May 13, 2022
Name of Company:	LTS, Inc.	Stock Exchange Listing: Tokyo
Stock Code:	6560	URL https://lt-s.jp/en/
Representative:	Title: President and CEO	Name: Hiroaki Kabashima
Contact Person:	Title: Executive Vice President	Name: Sungil Lee	Phone: [phone]
	and Manager of Group Management Office
Date of filing of quarterly report:	May 13, 2022
Date of commencement of dividend payment:	−
Preparation of quarterly supplementary materials:	Yes
Convening of a quarterly results meeting:	No

(Amounts less than one million are rounded down)

1. Financial results for first quarter of fiscal year ending December 2022 (January 1, 2022 - March 31, 2022)

(1) Operating results (consolidated)

(Percentage figures represent year-on-year change)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

million yen

%

million yen

%

million yen

%

million yen

%

Q1 of the year ending

2,154

23.6

265

54.0

262

46.8

180

48.9

December 2022

Q1 of the year ended

1,742

26.9

172

7.4

178

16.5

121

19.6

December 2021

(Note)

Comprehensive income

Q1 FY2022: 184 million yen (52.5%)

Q1 FY2021: 121 million yen (22.2%)

Profit per share

Profit per share fully

diluted

yen

yen

Q1 of the year ending

43.11

41.40

December 2022

Q1 of the year ended

29.39

27.31

December 2021

(Note)

The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) has been applied from the beginning of the first

quarter of the year under review. Figures for the first quarter of the year ending December 31, 2022 have been restated to reflect application of

the standard.

(2) Financial position (consolidated)

Total assets

Net assets

Capital adequacy ratio

million yen

million yen

%

Q1 of the year ending

4,290

1,961

45.6

December 2022

Year ended December 2021

5,080

2,076

40.9

(Reference) Shareholders' equity

Q1 FY2022: 1,957 million yen

FY2021: 2,076 million yen

(Note)

The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) has been applied from the beginning of the first

quarter of the year under review. Figures for the first quarter of the year ending December 31, 2022 have been restated to reflect application of

the standard.

2. Dividends

					Dividend per share
	End of Q1		End of Q2		End of Q3	End of FY	Total
		yen		yen	yen	yen	yen
Year ended December 2021		−		0.00	−	0.00	0.00
Year ending December 2022		−
Year ending December 2022				0.00	−	0.00	0.00
(forecast)
(Note) Revision to the most recently announced dividend forecast: No

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3. Forecast for the fiscal year ending December 2022 (January 1, 2022 - December 31, 2022)

(Percentage figures represent year-on-year change)

		Net sales		Operating profit	Ordinary profit	Profit attributable to	Profit per share
			owners of parent
		million yen		%	million yen	%	million yen	%	million yen	%	yen
Full year	8,542		15.8	480	-20.0	460	-20.7	297	-23.5	69.99
(Note)	Revisions to the most recently announced earnings forecast: No
(Note)	There is no first half forecast.

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* Notice

1. Changes in main subsidiaries during year to quarter end (Changes in specific subsidiaries accompanied by changes in the scope of consolidation): None

New consolidations:

company(ies) (Company name(s)); Exclusions:

company(ies) (Company name(s))

1. Application of accounting treatment specific to the preparation of the quarterly consolidated financial statements: No
2. Changes in accounting policies, accounting estimates, and restatements
3. 1. Changes in accounting policies due to revision of accounting standards: Yes
   2. Changes in accounting policies other than those in (a): No
   3. Changes in accounting estimates: No
   4. Restatements: No
4. Number of shares outstanding (common shares)

(a) Shares outstanding (including treasury shares) at	Q1 of year ending	4,371,500 shares	Year ended	4,371,100 shares
end of period	December 2022	December 2021
(b) Treasury shares at end of period
Q1 of year ending	271,202 shares	Year ended	127,802 shares
	December 2022	December 2021
(c) Average number of shares during period
Q1 of year ending	4,191,328 shares	Q1 of year ended	4,128,958 shares
	December 2022	December 2021

*Quarterly financial results summaries are not subject to audit.

• Cautionary statement regarding business results forecasts and special notes
  The financial forecasts and other forward-looking statements herein are based on currently available information and assumptions considered by the Company to be reasonable and do not represent a commitment from the Company that they will be achieved. Actual results may differ substantially due to various factors.

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• Contents of Accompanying Materials

1. Qualitative Information related to the Consolidated Business Results...................................................................................................	5
(1)	Explanation of Operating Results.....................................................................................................................................................	5
(2)	Explanation of Financial Position ....................................................................................................................................................	6
(3)	Explanation of Consolidated Earnings Forecasts and Other Future Projections...............................................................................	6
2. Quarterly Consolidated Financial Statements and Main Notes..............................................................................................................	7
(1)	Quarterly Consolidated Balance Sheet .............................................................................................................................................	7
(2)	Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income ..........................	9
(3)	Notes to the Quarterly Consolidated Financial Statements ............................................................................................................	11
(Notes Related to Going Concern Assumptions) .............................................................................................................................	11
(Notes on Significant Changes in Shareholders' Equity) .................................................................................................................	11
(Changes in Accounting Policies) ....................................................................................................................................................	12
(Additional Information)..................................................................................................................................................................	12
(Segment Information).....................................................................................................................................................................	13
(Revenue Recognition) ....................................................................................................................................................................	13

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1. Qualitative Information related to the Consolidated Business Results

(1) Explanation of Operating Results

During the first three months of the fiscal year (January 1 to March 31, 2022), the Japanese economy continued to struggle due to COVID-19. Although there were some signs of economic normalization, the number of cases has continued to fluctuate up and down in Japan and around the world, and the uncertainty in the global economy has further increased with the Russian invasion of Ukraine on top of soaring energy and material prices.

In the information services industry, which is the main business domain of our Group, COVID-19 has had a prolonged impact on corporate management. Digital transformation (DX) continues to attract a high level of attention for addressing changes in the social environment during and after the COVID-19 pandemic. As such, demand remains strong for providing support for such internal reform activities as work style reform, including introducing task performing robots such as AI and RPA (robotic process automation) and promoting telecommuting.

Under these circumstances, the Group has been developing a professional services business and a platform business as a company that supports and promotes corporate transformation and work style reform based on the Medium-Term Business Plan established in the previous year. In our professional services business, we enter our customers' work sites and deliver expected solutions, utilizing robotics, AI, and business process management to provide one-stop support catered to the customer's unique challenges and reform objectives. In this business, we actively hired human resources to promote efforts to expand our capacity to provide stable services. In our platform business, we solve IT personnel shortages and, in addition to actively rolling out existing Assign Navi and Consultant Job services, we promoted development of our new CS Clip service that matches operating companies with DX companies. In addition, efforts to further enhance the corporate culture and brand have begun to mark the Group's 20th anniversary.

As a result of the above, during the first three months of the fiscal year under review, we achieved net sales of ¥2,154.172 million (up 23.6% year on year), operating profit of ¥265.171 million (up 54.0% year on year), and ordinary profit of ¥262.077 million (up 46.8% year on year), and profit attributable to owners of parent of ¥180.695 million (up 48.9% year on year).

A summary of financial results by segment (net sales includes internal sales) is provided below.

(Professional Services Business)

In our professional services business, the environment surrounding our IT division is undergoing drastic changes due to various restrictions on corporate activities. In the midst of these circumstances, favorable conditions created by robust demand for DX provided a boost for us to steadily acquire traditional consulting projects (operational analysis/design, IT introduction support, on- site deployment) based on our strength of visualizing and improving operations utilizing business process management. We focused on communicating information to the outside on such topics as our DX approach leading to municipal and regional sustainability transformation (SX) through the example in Hiroshima Prefecture and our effectuation mentoring activities as well as on structural expansion to enhance hiring. We also received an award from a job search website operator for our new graduate hiring activities.

As a result, net sales in the professional services business came to ¥2,089.298 million (up 24.2% year on year) and segment profit (operating profit) came to ¥243.485 million (up 54.6% year on year).

(Platform Business)

In the platform business, the number of members in the Assign Navi platform, which provides business matching and a learning forum specialized for the IT industry, grew to 11,654 including both corporate and individual members as of March 31, 2022. This steady growth represents a 218-member increase over the end of the previous year. Net sales were strong as the Assign Navi and Consultant Job matching and member service results increased in conjunction with expansion of the membership base. We continued to invest in development in our new CS Clip service, conducted more aggressive marketing activities aimed at monetization, and reinforced our organizational structure for boosting the profitability of existing services.

As a result, net sales in the platform business came to ¥100.602 million (up 37.6% year on year), and the segment profit (operating profit) came to ¥21.686 million (up 48.4% year on year).

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