Net One : Notice regarding revisions to “Results for FY23 Ended March 31, 2024”

Translation

Notice: This document is a translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

June 17, 2024

To whom it may concern:

Net One Systems Co., Ltd. (Stock Code: 7518, TSE Prime)

Notice regarding revisions to "Results for FY23 Ended March 31, 2024"

Net One Systems Co., Ltd. (the "Company") hereby announces the discovery of the following errors in its May 8, 2024 IR release entitled "Results for FY23 Ended March 31, 2024."

1. Reasons for revisions

The Company is revising this release because it was found to contain inaccuracies following the May 8, 2024 release of the Company's financial results. These revisions will have no impact on the Company's financial results. (Revisions are included below and are underlined for purposes of clarity.)

2. Revisions

The Company has revised FY23 progress-related information included in the "Sustainability"

section on page 28 of "Results for FY23 Ended March 31, 2024" as follows. The information to be revised is located within the red frame in the image below and has been underlined for purposes of clarity.

Prior to revision

• Cloud personnel, front office departments
• • Front office departments-2030 target: 50% increase in cloud personnel; result of 428 vs. FY23 target of 410
• DX personnel
• • Development of next-generation ICT personnel, academic-industrial collaboration programs: 10
    curriculums provided; number of lectures: 49; attended by 2,889 individuals (cumulative)
• Promoting diversity and inclusion
• • Ratio of female executives-2030 target: 15%; result of 7.8%vs. FY23 target of 7.5%
  • Percentage of freshly recruited new graduates who are women-2030 target: 50%; result of 42.7% vs. FY23 target of 35.5%

After revision

• Cloud personnel, front office departments
• • Front office departments-2030 target: 50% increase in cloud personnel; result of 516 vs. FY23 target of 498
• DX personnel
• • Development of next-generation ICT personnel, academic-industrial collaboration programs: 10
    curriculums provided; number of lectures: 52; attended by 3,092 individuals (cumulative)
• Promoting diversity and inclusion
• • Ratio of female executives-2030 target: 15%; result of 8.1%vs. FY23 target of 7.5%
  • Percentage of freshly recruited new graduates who are women-2030 target: 50%; result of 42.7% vs. FY23 target of 36.5%

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Results for Q4 FY23

Ended March 31, 2024

Net One Systems Co., Ltd.

May 8, 2024 (Stock Code 7518: JP)

CONTENTS

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Summary	P.02-06
FY23 results	P.07-21
Progress of medium-term business plan	P.22-29
Measures aimed at realizing management conscious of cost of capital and stock prices	P.30-32
FY24 forecast	P.33-37
Progress of measures to prevent recurrence	P.38-42
[Appendix] Q4 FY23 (Jan.-Mar. 3 months) results	P.43-50

® Net One Systems Co., Ltd. All rights reserved.

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1 Summary

® Net One Systems Co., Ltd. All rights reserved.

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FY23 results overview

* Please refer to pages 8 and 10 for details.

Bookings were lower than the revised plan, but were up YoY to a record high in Q4 (January-March 2024). Revenue and operating income exceeded the revised plan thanks to improved profitability.

	FY22	FY23	FY23
	revised
	results	results
	plan
				(YoY)
				⚫ Bookings were down YoY due to the absence of large product projects (two projects totaling JPY13.2bn) and
	JPY	JPY	JPY		lackluster performance in the Telecom Carrier, Public, and Partner segments
Bookings	⚫	In Q4 (Jan.-Mar.), bookings were up 13.1% YoY (FY22 Q4: JPY64.6bn, FY23 Q4: JPY73.1bn)
219.8bn	210.0bn	201.4bn
	(Versus revised plan)
				⚫ Due to delays in some projects and other factors, bookings were lower than the revised plan in the Enterprise,
					Public, and Partner segments

				(YoY)
Revenue	JPY	JPY	JPY ⚫ Revenue declined YoY due to sluggish performance in the Telecom Carrier, Public, and Partner segments
209.6bn	201.0bn	205.1bn
	(Versus revised plan)

• Revenue exceeded the revised plan, driven by growth in the Enterprise and Telecom Carrier segments

					(YoY)
					⚫ GPM improved, but operating income was down YoY on lower revenue and higher SG&A expenses
					⚫ GPM: +1.6pts YoY (FY22: 24.0%, FY23: 25.6%)
Operating	JPY	JPY	JPY	⚫ SG&A expenses: +JPY3.2bn YoY (FY22: JPY29.7bn, FY23: JPY33.0bn)
income	20.6bn	16.5bn	19.5bn	(Versus revised plan)
					⚫ Operating income exceeded the revised plan due to revenue growth, improved GPM, and reduced SG&A expenses
					⚫ GPM: +0.6pts (revised plan: 25.0%, result: 25.6%)
					⚫ SG&A expenses: -JPY0.7bn (revised plan: JPY33.8bn, result: JPY33.0bn)
® Net One Systems Co., Ltd. All rights reserved.				3

FY24 forecast overview * Please refer to pages 34-36 for details.

We expect bookings and revenue to increase YoY, primarily in the Public segment.

Operating income is also projected to grow YoY, with continued improvements in profitability offsetting higher SG&A expenses.

	FY23	FY24	Forecast
	results	forecast
			⚫ +JPY23.5bn (+11.7%) YoY
	JPY	JPY	✓ Enterprise: +JPY2.3bn (recovery in the financial sector and continued growth of the manufacturing and non-
Bookings	manufacturing sectors)
201.4bn	225.0bn	✓ Telecom Carrier: +JPY2.1bn (expansion of co-creation businesses)

• • Public: +JPY15.3bn (projects for cloud connectivity among government systems, multiple large projects)
  • Partner: +JPY3.7bn (intensifying efforts for Wi-Fi service business operations targeting MSPs and value-added products)
• +JPY14.8bn (+7.3%) YoY

Revenue	JPY	JPY	✓ Enterprise: +JPY4.2bn
✓ Telecom Carrier: +JPY2.7bn
205.1bn	220.0bn
	✓
			Public: +JPY5.3bn

• • Partner: +JPY2.5bn
• GPM: +0.1pts YoY (FY23: 25.6%, FY24: 25.7%)
• • Factors contributing to YoY increase: optimization of service prices, etc.
  • Factors contributing to YoY decrease: absence of positive impacts of foreign exchange and one-off gains recorded in the

Operating	JPY	JPY	Partner segment in FY23
income	19.5bn	21.0bn	⚫ SG&A expenses: +JPY2.5bn (FY23: JPY33.0bn, FY24: JPY35.6bn)
			✓ Factors contributing to YoY increase: personnel expenses +JPY2.5bn (higher starting salary for new graduates, pay rise,
			bonus increase, engineer dispatch, etc.), equipment expenses +JPY0.7bn (new enterprise system, etc.)
			✓ Factors contributing to YoY decrease: office expenses -JPY0.8bn (return of the leased office building)

® Net One Systems Co., Ltd. All rights reserved.

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FY24 Operating income plan analysis (YoY)

(JPYmn)

Revenue by segment

• Enterprise: +JPY4.2bn
• Telecom Carrier: +JPY2.7bn
• Public: +JPY5.3bn
• Partner: +JPY2.5bn

Gross profit margin

• Factors contributing to YoY increase: optimization of service prices, etc.
• Factors contributing to YoY decrease: absence of positive impacts of foreign exchange and one-off gains recorded in the Partner segment in FY23

Main factors

• Personnel expenses: +JPY2.5bn
• Equipment expense: +JPY0.7bn
• Office expenses: -JPY0.8bn

FY23	Revenue		Gross profit margin		SG&A	FY24
operating income						operating income
results						plan

® Net One Systems Co., Ltd. All rights reserved.

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Dividend forecast

We raised our FY23 year-end dividend forecast as income exceeded the revised plan.

We expect our FY24 dividend to increase YoY due to the introduction of a system that, in principle, facilitates progressive dividend growth.

• Revision of dividend forecast for the fiscal year ending March 31, 2024

			Annual dividends (Yen)
		Second quarter-end	Fiscal-year end	Total
	Previous forecast	-	37.00	74.00
	(announced on October 26, 2023)
	Revised forecast	-	40.00	77.00
	Results for ended March 31, 2024	37.00	-	-
	Results for the previous fiscal year	37.00	37.00	74.00
	ended March 31, 2023

For details, please refer to the release entitled "Notice regarding revision of dividend forecasts" released on May 8, 2024.

• Dividend forecast for the fiscal year ending March 31, 2025

			Annual dividends (Yen)
		Second quarter-end	Fiscal-year end	Total
	Forecast	43.00	43.00	86.00

® Net One Systems Co., Ltd. All rights reserved.

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2 FY23 results

® Net One Systems Co., Ltd. All rights reserved.

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