Inter Action : Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending May 31, 2023

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Disclaimer: This is a Japanese-English translation of the summary of financial statements of the Company produced for your convenience. Since no auditor audited this report, officially only the Japanese version is assumed to be the summary of financial statements of the Company. This summary does not constitute any guarantee and the Company will not compensate any losses and/or damage stemming from actions taken based on these statements. Should there be any discrepancy between the Japanese and English versions, the Japanese version is assumed to be correct.

April 11, 2023

Consolidated Financial Results

for the Third Quarter of the Fiscal Year Ending May 31, 2023

Listed company:	INTER ACTION Corporation
Listed stock exchange: Tokyo
Securities code:	7725
URL:	https://www.inter-action.co.jp/en/
Representative:	Nobuo Kiji, CEO & President
Contact:	Kaori Kawaguchi, Chief, Business Planning Team
Telephone number:	[phone]

Submission of quarterly report: April 12, 2023

Dividend payment commencement date: -

Preparation of explanatory materials for quarterly financial results: Yes

Holding of a briefing on quarterly financial results: Yes (For Institutional Investors, Analysts)

(Amounts of less than one million yen are truncated)

1. Consolidated Financial Results for the Cumulative Third Quarter of the Fiscal Year Ending May 31, 2023 (June 1, 2022 to February 28, 2023)

(1) Consolidated operating results (Cumulative)					(% figures show year-on-year change)
				Net sales		Operating profit		Ordinary profit	Profit attributable to
						owners of parent
			Millions of yen	%	Millions of yen	%		Millions of yen		%	Millions of yen		%
	Nine months ended		5,094	23.3		1,204	62.4		1,251		62.8	811		68.2
	February 28, 2023
	Nine months ended		4,131	(19.1)		741	(46.7)		768		(45.4)	482		(48.3)
	February 28, 2022
(Note) Comprehensive income: Nine months ended February 28, 2023: ¥817 million / 69.7%
				Nine months ended February 28, 2022: ¥481 million / (49.1)%
					Basic earnings		Diluted earnings
						per share				per share
							Yen					Yen
	Nine months ended February 28, 2023			74.50					―
	Nine months ended February 28, 2022			43.99					―
(2) Consolidated financial position
				Total assets			Net assets		Shareholders' equity ratio
					Millions of yen			Millions of yen				%
	As of February 28, 2023				12,229					10,069					82.3
	As of May 31, 2022				11,533					9,340					81.0
(Reference) Shareholders' equity: As of February 28, 2023: ¥10,069 million
				As of May 31, 2022:	¥9,340 million

2. Dividends

					Annual dividends
			First quarter-end	Second quarter-end		Third quarter-end	Fiscal year-end	Total
			Yen	Yen		Yen	Yen	Yen
	Fiscal year ended May 31, 2022		−	0.00			−	20.00		20.00
	Fiscal year ending May 31, 2023		−	0.00			−
	Fiscal year ending May 31, 2023							25.00		25.00
	(Forecast)
(Note) Amendment to forecasts of dividends recently announced: None

3. Forecast of Consolidated Financial Results for the Fiscal Year Ending May 31, 2023 (June 1, 2022 to May 31, 2023)

(% figures show year-on-year change for the full year and quarter)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Profit per share
		owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	6,735	11.9	1,524	34.8	1,576	31.8	999	31.3	91.72

(Note) 1. Amendment to forecasts of financial results recently announced: Yes

1. The Company has implemented an ESOP and Directors' stock compensation plan both in the form of stock benefit trusts. Accordingly, profit per share is calculated based on the average number of shares during the fiscal year, excluding the number of treasury shares, which includes Inter Action stock held by the stock benefit ESOP trust accounts and Directors' compensation stock benefit trust accounts.
2. The Board of Directors resolved, at the meeting held on April 11, 2023, on the purchase of treasury shares.
   The effect of purchasing these shares is not reflected in "profit per share" in the Forecast of Consolidated Financial Results. Please refer to today's"Notice on Matters Decided Regarding the Purchase of Treasury Shares"for details of this purchase of treasury shares.

• Notes

1. Change in significant subsidiaries during nine months ended February 28, 2023 (changes in specified subsidiaries affecting the scope of consolidation): None

New: -

(Company name:

) Excluded: -

(Company name:

)

1. Application of special accounting for preparing quarterly consolidated financial statements: None
2. Changes in accounting policies and estimates, and retrospective restatements
3. 1. Changes in accounting policies in accordance with revision of accounting standards: Yes
   2. Changes in accounting policies other than item (i) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatements: None

(Note) For details, refer to "(3) Note regarding the quarterly consolidated financial statements (Changes in

accounting policies)" under "2. Quarterly Consolidated Financial Statements and Notes" (page 8) of the

Attached Materials.

1. Number of shares issued (common shares)
2. 1. Number of shares outstanding at end of period (including treasury shares)

As of February 28, 2023	11,510,200 shares
As of May 31, 2022	11,510,200 shares

(ii) Number of treasury shares at end of period

As of February 28, 2023	601,007 shares
As of May 31, 2022	647,207 shares

(iii) Average number of shares during period

For the nine months ended February 28, 2023	10,890,862 shares
For the nine months ended February 28, 2022	10,964,962 shares

(Note) The Company has implemented an ESOP and Directors' stock compensation plan both in the form of stock benefit trusts. Accordingly, treasury shares, as stated, include Inter Action stock held by the stock benefit ESOP trust accounts and Directors' compensation stock benefit trust accounts.

• Quarterly financial results are not subject to auditing by a certified public accountant or an audit firm.
• Proper use of earnings forecasts, and other special matters
  The above forecasts of consolidated financial results are based on certain assumptions on economic situation, market trends, etc. deemed to be reasonable when the forecasts were made. Consequently, actual results may differ from the forecasts due to a variety of future factors. For details of the above forecasts, refer to "(3) Explanation of forward-looking information including consolidated earnings forecasts" under "1. Qualitative Information on Quarterly Results" (page 2) of the Attached Materials.

[Attached Materials]

Index

1. Qualitative Information on Quarterly Results…………………………………………………………………………………	2
(1) Explanation of consolidated operating results …………………………………………………………………………….	2
(2) Explanation of financial position ……………………………………………………………………………………….…	2
(3) Explanation of forward-looking information including consolidated earnings forecasts …………………………………	3
2. Quarterly Consolidated Financial Statements and Notes……………………………………………………………………	4
(1) Quarterly consolidated balance sheets …………………………………………………………………………….………	4
(2) Quarterly consolidated statements of income and consolidated statements of comprehensive income……………………	6
(Quarterly consolidated statements of income)
June 1, 2022 - February 28, 2023 ………………………………………………………………………….…………	6
(Quarterly consolidated statements of comprehensive income)
June 1, 2022 - February 28, 2023………………………………………………………………………….…………	7
(3) Note regarding the quarterly consolidated financial statements …………………………………………………..………	8
(Notes on premise of going concern) ………………………………………………………………………….…………	8
(Notes on significant changes in the amount of shareholders' equity) …………………………………………..………	8
(Changes in accounting policies) ………………………………………………………………………………………	8
(Additional information) ………………………………………………………………………………………...………	8
(Segment information) ………………………………………………………………………………………………..…	9
(Revenue recognition-related information) …………………………………………………………………………...…	11

3. Supplementary explanation of consolidated financial results for the third quarter of the fiscal year ending May 31, 2023…. 12

(1) Status of orders …………………………………………………………………………………………………………… 12

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1. Qualitative Information on Quarterly Results

1. Explanation of consolidated operating results
   Net sales and profits in the Inter Action Group's financial results for the first nine months of the consolidated fiscal year under review rose year on year.
   The main reasons for increased net sales are solid sales of the products in the Internet of things related works segment and strong sales of the products in the promotion business of the Industry 4.0 segment.
   The main reason for increased operating profit is strong sales of high-profit products in the Internet of things related works segment and the promotion business of the Industry 4.0 segment.
   As a result of these business activities, the Inter Action Group's financial results for the first nine months of the consolidated fiscal year under review were as follows. Net sales rose by 23.3% to 5,094 million yen (compared with 4,131 million yen in the previous fiscal year); gross profit rose by 38.0% to 2,612 million yen (compared with 1,893 million yen in the previous fiscal year), largely due to increased net sales; operating profit rose by 62.4% to 1,204 million yen (compared with 741 million yen in the previous fiscal year); ordinary profit rose by 62.8% to 1,251 million yen (compared with 768 million yen in the previous fiscal year); and profit attributable to owners of parent excluding income taxes rose by 68.2% to 811 million yen (compared with 482 million yen of profit attributable to owners of parent in the previous fiscal year).
   The overall performance of each business segment was as follows.
   (Internet of things related works)
   During the first nine months of the consolidated fiscal year under review, net sales to this segment's external customers rose by 22.4% year on year to 3,194 million yen (compared with 2,609 million yen in the previous fiscal year), and segment profit increased by 38.8% to 1,748 million yen (compared with 1,259 million yen in the previous fiscal year). This reflects strong sales of the highly profitable inspection illuminators for overseas customers.
   (Environmental energy related works)
   During the first nine months of the consolidated fiscal year under review, net sales to this segment's external customers rose by 9.9% to 550 million yen (compared with 501 million yen in the previous fiscal year), and segment loss was 32 million yen (profit of 3 million yen in the previous fiscal year). This is attributable to sluggish sales of high-profit maintenance projects, which continued from the second quarter, although the segment enjoyed robust sales of drying deodorizer main units with high unit price.
   (Promotion business of Industry 4.0)
   During the first nine months of the consolidated fiscal year under review, net sales to this segment's external customers rose by 32.2% to 1,348 million yen (compared with 1,020 million yen in the previous fiscal year), and the segment recorded a profit of 105 million yen (loss of 26 million yen in the previous fiscal year). This is attributable to strong sales of precision vibration isolation systems and solid gear testing systems.
2. Explanation of financial position
   As of the end of the third quarter of the consolidated fiscal year under review, net assets amounted to 12,229 million yen, an increase of 696 million yen compared with the end of the previous consolidated fiscal year.
   Current assets amounted to 10,938 million yen, an increase of a 722 million yen compared with the end of the previous consolidated fiscal year. This is mainly attributable to a 194 million yen increase in notes and accounts receivable-trade, a 633 million yen increase in work in process, and a 138 million yen increase in raw materials and supplies, despite a 462 million yen decline in electronically recorded monetary claims-operating.
   Non-current assets amounted to 1,291 million yen, a decrease of 25 million yen compared with the end of the previous consolidated fiscal year.
   As of the end of the third quarter of the consolidated fiscal year under review, liabilities amounted to 2,159 million yen, a decrease of 32 million yen compared with the end of the previous consolidated fiscal year.
   As of the end of the third quarter of the consolidated fiscal year under review, total assets amounted to 10,069 million yen, an increase of 728 million yen compared with the amount held at the end of the previous consolidated fiscal year. This is mainly attributable to recording of profit attributable to owners of parent of 811 million yen and a 132 million yen decrease of treasury shares despite year-end dividends of 221 million yen in the previous fiscal year.

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