PRONEXUS : Earnings Report FY2022 Consolidated 1Q

Translation

July 31, 2023

Consolidated Financial Results

for the First Three Months of the Fiscal Year Ending March 31, 2024

Company name:	PRONEXUS INC.
Listing:	Tokyo Stock Exchange
Stock code:	7893
URL	https://www.pronexus.co.jp
Representative:	Takeshi Ueno, President and Representative Director
Inquiries:	Jun Takamatsu, Executive Officer, General Manager, President's Office
TEL	[phone] (from overseas)

Scheduled date to file Quarterly Securities Report:	August 10, 2023
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly earnings:	Yes
Holding of quarterly earnings performance review:	None

(Millions of yen with fractional amounts rounded, unless otherwise noted)

1. Consolidated performance for the first three months of the fiscal year ending March 31, 2024 (from April 1, 2023 to June 30, 2023)

(1) Consolidated operating results (cumulative)			(Percentages indicate year-on-year changes.)
	Revenue		Operating profit	Profit before tax	Profit
First three months ended	Millions of yen		%	Millions of yen	%		Millions of yen	%	Millions of yen	%
June 30, 2023	11,800		7.5	3,221	7.5		3,248	7.6	2,225	8.2
June 30, 2022	10,976		5.1	2,996	(1.5)		3,019	(1.5)	2,057	(2.4)
	Profit attributable to	Total comprehensive		Basic earnings per	Diluted earnings per
	owners of parent	income			share		share
First three months ended	Millions of yen		%	Millions of yen	%			Yen		Yen
June 30, 2023	2,224		8.2	2,984	64.0			87.18		-
June 30, 2022	2,056		(2.4)	1,820	(27.1)			80.60		-

(2) Consolidated financial position

	Total assets	Total equity
As of	Millions of yen	Millions of yen
June 30, 2023	44,244	26,961
March 31, 2023	36,918	24,436

Equity attributable to

owners of parent

Millions of yen

26,919

24,395

Ratio of equity

attributable to owners of parent to total assets

%

60.8

66.1

2. Cash dividends

				Annual dividends
	First quarter-end	Second quarter-end		Third quarter-end	Fiscal year-end	Total
	Yen	Yen		Yen	Yen	Yen
Fiscal year ended March	-	18.00		-	18.00	36.00
31, 2023
Fiscal year ending	-
March 31, 2024
Fiscal year ending		18.00		-	18.00	36.00
March 31, 2024
(Forecast)

Note: Revisions to the forecasts of cash dividends most recently announced: None

3. Consolidated earnings forecasts for the fiscal year 2024 (from April 1, 2023 to March 31, 2024)

							(Percentages indicate year-on-year changes.)
	Revenue	Operating profit	Profit before tax	Profit		Profit attributable	Basic
		to owners of	earnings
										parent		per share
	Millions of	%	Millions of	%	Millions of	%	Millions of		%	Millions of		%	Yen
	yen		yen		yen		yen			yen
First six months
ending	17,400	8.6	2,630	(2.5)	2,630	(4.6)	1,820		(2.5)	1,820		(2.3)	71.35
September 30,
2023
Fiscal year ending	30,000	11.9	2,400	8.5	2,400	0.4	1,650		1.6	1,650		2.0	64.68
March 31, 2024
Note: Revisions to	the consolidated earnings forecasts most recently announced: None

* Notes

1. Changes in significant subsidiaries during the first three months ended June 30, 2023 (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Changes in accounting policies and changes in accounting estimates
3. 1. Changes in accounting policies required by IFRS: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
4. Number of issued shares (common shares)
5. 1. Total number of issued shares at the end of the period (including treasury shares)

	As of June 30, 2023		27,716,688 shares
	As of March 31, 2023		27,716,688 shares
b. Number of treasury shares at the end of the period
	As of June 30, 2023		2,207,521 shares
	As of March 31, 2023		2,207,521 shares

c. Average number of shares during the period (cumulative from the beginning of the fiscal year)

For the first three months ended June 30, 2023	25,509,167 shares
For the first three months ended June 30, 2022	25,509,262 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters
  (Caution regarding forward-looking statements and others)
  The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to PRONEXUS INC. (hereinafter the "Company") and on certain assumptions deemed to be reasonable. Consequently, any statements herein do not constitute assurances regarding actual results by the Company. Actual business and other results may differ substantially due to various factors. Please refer to the section of "(3) Explanation of consolidated earnings forecasts and other forward-looking statements" of "1. Qualitative information regarding earnings for the first three months" on page 5 of [Attached Material] for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use thereof.
  (Means of access to contents of supplementary material on quarterly earnings and quarterly earnings performance review)
  The supplementary material on quarterly earnings will be available on the Company's website. The Company holds presentations for analysts regarding the six-month and year-end results. Distributed presentation materials as well as video recordings of the performance reviews will be available on the Company's website. Furthermore, depending on future conditions regarding the novel coronavirus disease (COVID-19), we may not hold the briefing in person, and instead upload a video recording of the earnings performance review on a later date.

[Attached Material]
	Index
1. Qualitative information regarding earnings for the first three months	2
(1)	Explanation of operating results	2
(2)	Explanation of financial position	4
(3)	Explanation of consolidated earnings forecasts and other forward-looking statements	5
2. Condensed quarterly consolidated financial statements and significant notes thereto	6
(1)	Condensed quarterly consolidated statement of financial position	6
(2)	Condensed quarterly consolidated statement of profit or loss and condensed quarterly consolidated
	statement of comprehensive income	8
(3)	Condensed quarterly consolidated statement of changes in equity	10
(4)	Notes to condensed quarterly consolidated financial statements	12
	(Notes on premise of going concern)	12

- 1 -

1. Qualitative information regarding earnings for the first three months

1. Explanation of operating results

1. Condition of Japanese economy

In the first three months, the Japanese economy experienced a recovery in personal consumption due to the easing of activity restrictions against COVID-19 infection, leading to a moderate improvement in corporate earnings.

However, in addition to surging resource prices caused by Russia's invasion of Ukraine, as a result of the Japanese yen depreciation in foreign exchange markets and an increase in prices and other factors, the future of the economy remains unclear.

In addition, in the securities markets of Japan, to which the business of the Company is closely linked, the Nikkei Stock Average at one time hit the 33,000-yen level, the highest since the bursting of the bubble economy, against the backdrop of the Bank of Japan's continued monetary easing measures and expectations for a domestic economic recovery. The Nikkei Stock Average trended mainly in the 31,000-yen level during the first three months of the current fiscal year, surpassing that of the same period of the previous fiscal year, which was in the 26,800-yen level.

(ii) Review of performance

In the first three months of the current fiscal year, Cine Holdings Co., Ltd., and Cine Focus Corp. which is engaged in video equipment rental and operational support for events, joined our consolidated subsidiaries in March of this year, making a significant contribution to our business performance. The business of preparing the shareholder convocation notices, one of our mainstay products, saw the number of their printed pages decrease due to the implementation of the system for the electronic provision of convocation notices starting from the general meetings of shareholders held in March of this year. Nevertheless, the business achieved an increased revenue owing to an increase in the number of individual shareholders, solicitation of orders at reasonable prices in response to rising costs such as those of printing paper, and promotion of orders for new services in response to the introduction of the new system. In the meantime, the cessation of the issuance of structured notes that combine bonds and financial derivatives led to a significant decline in revenues from foreign bond-related products, but the increase in revenues more than offset this, resulting in a year-on-year increase in consolidated revenue of 824 million yen, or by 7.5%, to 11,800 million yen in the first three months of the current fiscal year.

In terms of profit, operating profit was 3,221 million yen, an increase of 225 million yen, or 7.5%, year on year owing to an increase in revenues, which compensated for the initial costs incurred mainly in labor costs arising from making changes in the workflows and an increase in man-hours mainly due to the introduction of the system for the electronic provision of convocation notices of general meetings of shareholders, and from the launch of new services, as well as higher personnel expenses associated with strengthening of the sales structure. Profit before tax was 3,248 million yen, an increase of 230 million yen, or 7.6%, year on year, and profit attributable to owners of parent was 2,224 million yen, an increase of 168 million yen, or 8.2%, year on year.

1. Sales performance by business
   disclosure-related business>
   The business of preparing shareholder convocation notices, one of our mainstay products, saw a decrease in number of their printed pages due to the implementation of the system for the electronic provision of convocation notices starting from the general meetings of shareholders held in March of this year, and to the absence of the temporary increase in the printed pages that occurred in the same period of the previous fiscal year that notified amendments to articles of incorporation of many listed companies to respond to the introduction of the system. Nevertheless, the business achieved an increased revenue, due to the fact that, in the first year of the introduction of the electronic provision system, approximately 70% of listed companies still printed the convocation notice of general meetings of shareholders as before, and to an increase
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