Broadleaf : 1Q FY12/2023 Financial Results

The following information was originally prepared and published by the Company in Japanese as it contains timely disclosure materials to be submitted to the Tokyo Stock Exchange. This English translation is for your convenience only. If there is any discrepancy between this English translation and the original Japanese version, please refer to the Japanese version.

Consolidated Financial Results for the First Quarter of the

Fiscal Year Ending December 2023 [IFRS] (Consolidated)

Broadleaf Co., Ltd
Stock listing:	Tokyo Stock Exchange Prime Market
Representative:	Representative Director, President and CEO Kenji Oyama
Scheduled date of commencement of dividend payout
Earnings Supplementary Explanatory Documents	Yes
Earnings Results Briefing:	Yes (For institutional investors and analysts)

(Amounts of less than JPY one million are rounded)

1. Consolidated Financial Results for 1Q FY2023 (January 1, 2023 to March 31, 2023)
(1) Consolidated Operating Results (Cumulative)												(% shown is YtoY change)
																Profit		Total
	Revenue		Operating profit		Profit before tax		Profit		attributable to
					comprehensive
					owners of the
																income
																parent
	Millions	%		Millions		%		Millions		%		Millions	%		Millions		%	Millions		%
	of yen			of yen				of yen				of yen			of yen			of yen
1Q FY2023	3,629	11.5		-536)		-		-541		-		-414	-		-405		-	-275		-
1Q FY2022	3,254	-37.4		-737)		-		-646		-		-570	-		-570		-	-586		-
	Basic earnings per share	Diluted earnings per share
				Yen						Yen
1Q FY2023			-4.58							-4.58
1Q FY2022			-6.48							-6.48
(2) Consolidated Financial Position
													Equity attributable to			Percentage of equity
	Total assets			Total equity				attributable to owners of
				owners of the parent
																the parent
		Millions of yen				Millions of yen			Millions of yen						%
1Q FY2023			34,891							23,374				23,352						66.9
FY2022			33,535							23,662				23,632						70.5
2. Dividends
								Dividend per share
	1Q End		2Q End			3Q End	Year-end		Total
		Yen					Yen				Yen		Yen					Yen
FY2022		-					0.00				-			1.00					1.00
FY2023		-
FY2023 (forecast)							-				-			-					-

(NOTE) 1. Revisions to the most recently announced dividend forecasts: None

2. Dividends for FY2023 is not determined at the time.

3. Consolidated Earnings Forecasts for FY2023 (January 1, 2023 to December 31, 2023)

								(% shown is YtoY change)
	Revenue		Operating profit		Profit before tax		Profit attributable to	Basic earnings per
				owners of the parent	share
	Millions of	%	Millions of	%	Millions of	%	Millions of	%	Yen
	yen		yen		yen		yen
1H FY2023	7,100	8.9	-1,550	-	-1,600	-	-1,400	-	-15.80
FY2023	15,000	8.4	-2,700	-	-2,800	-	-2,400	-	-27.07

(NOTE) Revisions to the most recently announced earnings forecasts: Yes

The following information was originally prepared and published by the Company in Japanese as it contains timely disclosure materials to be submitted to the Tokyo Stock Exchange. This English translation is for your convenience only. If there is any discrepancy between this English translation and the original Japanese version, please refer to the Japanese version.

* Notes

(1) Changes in significant subsidiaries during the current period (changes in specified subsidiaries with changes in the scope of

consolidation): None
(2) Changes in accounting policies and changes in accounting estimates
(i) Changes in accounting policies required by IFRS: None
(ii)	Other changes in accounting policies: None
(iii) Changes in accounting estimates: None
(3) Number of shares outstanding (common stock)
(i)	Number of shares outstanding (including treasury shares)	1Q	FY2023	97,896,800	Shares	1Q	FY2022 97,896,800	Shares
(ii)	Number of shares of treasury shares	1Q	FY2023	9,277,599	Shares	1Q	FY2022 9,507,349	Shares
(iii) Average number of shares outstanding (during the period)	1Q	FY2023	88,481,351	Shares	1Q	FY2022 88,093,743	Shares

* Summary of financial statements is outside the scope of audit procedures by certified public accountants and audit firm.

* Comments regarding appropriate usage of earnings forecasts, and other special notes (Notes on forward-looking statements)

The forward-looking statements such as earnings forecasts contained in this document are based on the information currently available to the Company and certain assumptions which are regarded as legitimate. The Company makes no warranty as to the achievability of what is described in the statements. Actual results may differ from these forecasts due to various factors.

(Availability of earnings supplementary explanatory documents and information on earnings results briefings)

The Company plan to hold a briefing in the form of a telephone conference for institutional investors and analysts on Wednesday, May 10, 2023. The materials used at the meeting will be posted on its website.

	The following information was originally prepared and published by the Company in Japanese as it contains timely disclosure
	materials to be submitted to the Tokyo Stock Exchange. This English translation is for your convenience only. If there is any
	discrepancy between this English translation and the original Japanese version, please refer to the Japanese version.
○Table of Contents of the Attached Material
1. Qualitative Information on Operating Results for the first Three Months Ended March 31, 2023…………………………	1
(1)	Explanation of Operating Results	1
(2)	Description of Financial Position	2
(3) Explanation of Consolidated Earnings Forecasts and Other Forward-Looking Information………………………………	3

2. Consolidated Financial Statements and Major Notes………………………………………………………………………. 4

(1) Consolidated Statements of Financial Position……………………………………………………………………………	4
(2)	Consolidated Statements of Income	5
(3) Consolidated Statements of Comprehensive Income………………………………………………………………………	6
(4)	Consolidated Statements of Changes in Equity	7
(5) Consolidated Statements of Cash Flows…………………………………………………………………………………..	9
(6)	Notes to Consolidated Financial Statements	10
	(Notes on Going Concern)	10
	(Segment Information)	10

The following information was originally prepared and published by the Company in Japanese as it contains timely disclosure materials to be submitted to the Tokyo Stock Exchange. This English translation is for your convenience only. If there is any discrepancy between this English translation and the original Japanese version, please refer to the Japanese version.

1. Qualitative Information on Operating Results for the first Three Months Ended March 31, 2023

(1) Explanation of Operating Results

During the first three months of the current fiscal year (January 1, 2023 to March 31, 2023), Japanese economy is gradually picking up with normal economic development due to the lessening of the impact of COVID-19. On the other hand, The Russian military's invasion of Ukraine has become protracted, and price of things and items have continued to rise. Therefore, the economic outlook remains uncertain.

Under such social and economic conditions, companies are increasingly moving toward digital transformation (DX), such as automating and streamlining business processes and responding to new digital infrastructures. In the domestic mobility sector, where many of our customers belong, the Group has seen a positive stance toward investing in IT that not only improves operational productivity, but also enhances the added value of products and services provided to consumers and leads to the creation of new businesses.

Based on our corporate philosophy of "Gratitude and Happiness", Broadleaf Co., Ltd group (hereinafter "the Group") is implementing our Medium-Term Management Plan (2022-2028) (hereinafter "the Plan"). Our performance targets for the fiscal year ending December 31, 2028, the final year of the plans, which are consolidated revenue of 32.5 billion yen, operating income of 13 billion yen (operating margin of 40%), and profit attributable to owners of the parent of 8 billion yen. The Group is promoting two growth strategies, "Cloud Penetration" and "Service Expansion."

The fiscal year ending 2023 is revenue enters a growth trend toward the achievement of the Plan. In the previous fiscal year (fiscal year ending December 31, 2022), the first year of the Plan, the Group has started offering Cloud services and shifted to a monthly subscription-type business model as a foundation for revenue growth. In the recent fiscal year (fiscal year ending December 31, 2023), the second year of the Plan, the Group proactively proposed Cloud services that will lead to customer DX not only for domestic mobility sector but also for non-mobility sector. As a result, the accumulation of recurring sales through monthly subscription services will progress further from the previous fiscal year, and revenue will enter a growth trend.

In addition, the Group is providing services for users in a wide range of industries and types of businesses by incorporating large-sized language model and knowledge database that utilizes the massive proprietary data of Mobility sector owned by the Group, and the generation-type AI function built by combining "ChatGPT" into the ".c Series" and the ".DX Series". Through these measures, the Group will solve the problems that arise from the chronic shortage of human resources, EV of vehicles, and the advancement of automobiles that accompany the evolution of automated driving functions. In addition to Mobility sector, the Group aims to improve productivity through the streamlining of various sector operations. In this way, the Group will increase the added value of services provided to customers.

Against this backdrop, the Group was able to exceed our initial forecasts for the first three months of the current fiscal year. The Group strengthened sales of various DX solutions centered on ".c Series" of cloud software, our mainstay product. This resulted in a steady increase in the total number of customers and a significant increase in recurring sales in the monthly subscription service. Orders for packaged software, mainly for non-mobility sector, also performed well, exceeding the initial forecast. In terms of costs, the Group made upfront investments to prepare for future service expansion, such as strengthening the foundation for providing Cloud services. At the same time, the Group worked to reduce administrative costs by improving the efficiency of our business processes.

As a result of these factors, in the first three months of the current fiscal year, revenue amounted to 3,629 million yen (up 11.5% year on year), the operating loss was 536 million yen (loss of 737 million yen in the same period of the previous fiscal year), the loss before income taxes was 541 million yen (loss of 646 million yen in the same period of the previous fiscal year), and the loss attributable to owners of the parent was 405 million yen (loss of 570 million yen in the same period of the previous fiscal year). As a result, the fiscal year in which revenue begins a growth trend toward the achievement of the Plan

The Group only has a single business segment of IT services, but the breakdown of revenues by service category is as follows.

			(Millions of yen)
Category	1Q FY2022	1Q FY2023
(January 1, 2022	(January 1, 2023	YoY ratio
	to March 31, 2022)	to March 31, 2023)
Cloud services	517	935	80.9%
Packaged system	2,737	2,694	-1.6%
Total	3,254	3,629	11.5%

Cloud services

Consists of usage fees for ".c Series" and other monthly subscription-based software, as well as usage fees or commissions related to platforms for ordering automotive aftermarket parts.

The Mobility sector customers who use our ".NS Series" package software have gradually switched to ".c Series" upon the expiration of their usage rights (mostly for 6 years). In addition, ".c Series" is highly convenient and the menu system is

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The following information was originally prepared and published by the Company in Japanese as it contains timely disclosure materials to be submitted to the Tokyo Stock Exchange. This English translation is for your convenience only. If there is any discrepancy between this English translation and the original Japanese version, please refer to the Japanese version.

flexible, so the number of new customers is increasing significantly. Furthermore, the number of "Dencho.DX", which is covered Electronic Book Storage Act, and other DX solutions offered is increasing. With the increase in the number of customers for these monthly subscription-based software, revenue from Cloud services increased 80.9% year on year.

Packaged system

Comprised of sales proceeds from sales of ".NS series" and other packaged software (leased or sold out), commissions for various services required for the use of Packaged software, and sales proceeds for PC and other equipment and supplies.

Sales of support services related to the use of ".NS series" were firm, and orders for packaged software for non-mobility sector were strong, and sales of equipment were also steady. On the other hand, revenue from packaged system was flat year on year (down 1.6%) due to the ended sales of leasing contracts of packaged software for Mobility sector by sales agents.

Ended sales of leasing contracts for packaged software for the mobility industry by distributors

1. Description of Financial Position.
2. 1. Analysis of financial condition (Assets)
      Assets at the end of the first quarter of the current fiscal year increased by 1,356 million yen from the end of the previous fiscal year to 34,891 million yen. Current assets decreased by 37 million yen to 6,518 million yen and non-current assets increased by 1,393 million yen to 28,373 million yen. Current assets decreased mainly due to a decrease of 156 million yen in cash and cash equivalents, despite an increase of 66 million yen in inventories and 59 million yen in other current assets. The increase in non-current assets was mainly attributable to increases of 729 million yen in property, plant and equipment, 419 million yen in intangible assets, and 218 million yen in other financial assets.

(Liabilities)

Liabilities at the end of the first quarter of the current fiscal year increased by 1,644 million yen from the end of the previous fiscal year to 11,517 million yen. Current liabilities increased 1,012 million yen to 7,594 million yen, while non-current liabilities increased 632 million yen to 3,923 million yen. Current liabilities increased mainly due to increases of 975 million yen in short- term interest-bearing debt and 437 million yen in contract liabilities, despite decreases of 278 million yen in other current liabilities and 120 million yen in trade and other payables. The increase in non-current liabilities was mainly attributable to an increase of 631 million yen in long-terminterest-bearing debt.

(Equity)

Equity decreased by 288 million yen from the end of the previous fiscal year to 23,374 million yen at the end of the first quarter of the current fiscal year. The decrease in capital was mainly due to an increase in capital surplus of 84 million yen, an increase in other components of equity of 65 million yen, a decrease in treasury stock of 61 million yen, and a decrease in retained earnings of 489 million yen.

1. Analysis of cash flows
   Cash and cash equivalents (hereinafter "the Cash") at the end of the first quarter of the current fiscal year decreased by 156

million yen from the end of the previous fiscal year to 3.301 billion yen.

The situation of each cash flow and its factors for the first quarter of the current fiscal year are as follows.

(Cash flow from operating activities)

The Cash provided by operating activities was 136 million yen (year-on-year increase of 395.1%). This was mainly due to depreciation and amortization of 668 million yen and an increase in contractual liabilities of 437 million yen, despite a loss of 541 million yen for the quarterly period before tax, a decrease of 244 million yen in accrued employee bonuses, a decrease of 123 million yen in trade and other payables, and an increase of 66 million yen in inventories.

(Cash flow from investment activities)

The Cash used in investing activities was 854 million yen (year-on-year increase of 11.3%). This was mainly due to an expenditure of 854 million yen for the acquisition of intangible assets.

(Cash flow from financing activities)

The Cash provided by financing activities was 561 million yen (year-on-year decrease of 2.2%). This was mainly due to a net increase in short-term loans payable of 920 million yen, despite repayments of lease liabilities of 264 million yen and cash dividends paid of 88 million yen.

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