SB Technology : FY2022 Q3 Consolidated Financial Report (Japanese GAAP)（384K）

Disclaimer:

This financial report is solely a translation of the "Kessan Tanshin" (in Japanese, including attachments), which has been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer an English translation.

January 25, 2023

SB Technology Corp.

Consolidated Financial Report for the Third Quarter of Fiscal Year Ending March 31, 2023

(Nine Months Ended December 31, 2022)

[Japanese GAAP]

Company name: SB Technology Corp. (Tokyo Stock Exchange/Code No. 4726) (URL https://www.softbanktech.co.jp/en/)

Representative:	Shinichi Ata, President & CEO
Contact:	Masaaki Okazaki, Member of the Board, Executive Vice President & CFO
		Phone: [phone]
Scheduled date of filing of Quarterly Report:	February 13, 2023
Scheduled date of payment of dividend:	－
Preparation of supplementary materials for quarterly financial results:	Yes
Holding of quarterly financial results meeting:	Yes (for institutional investors and analysts)

(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Nine months Ended December 31, 2022 (April 1, 2022 - December 31, 2022)

(1) Consolidated Results of Operations (Percentages represent year-on-year changes)

	Net sales		Operating income	Ordinary income	Profit attributable to
		owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%
Nine months ended Dec. 31, 2022	48,231	1.3	3,541	△3.2	3,489	△3.7	2,108	△3.6
Nine months ended Dec. 31, 2021	47,626	－	3,660	－	3,622	－	2,187	－

Note: Comprehensive income (million yen)	Nine months ended Dec. 31, 2022:	2,301	(down 33.0%)
		Nine months ended Dec. 31, 2021:	3,435	(－%)
	Net income per share	Diluted net income per share
	Yen	Yen
Nine months ended Dec. 31, 2022	105.32	104.36
Nine months ended Dec. 31, 2021	108.10	106.75

Note: Effective from the beginning of the fiscal year ended March 2022, the Company has adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29), etc., and accordingly, the consolidated results above for the fiscal year ended March 2022 is the amount after the adoption of the said accounting standard, etc.

2. Dividends

			Dividends per share
	1Q-end	2Q-end		3Q-end	Year-end	Total
	Yen	Yen		Yen	Yen	Yen
Fiscal year ended Mar. 31, 2022	－	20.00		－		30.00	50.00
Fiscal year ending Mar.31, 2023	－	25.00		－
Fiscal year ending Mar. 31, 2023 (forecast)						25.00	50.00

Note: Revisions to the most recently announced dividend forecast: None

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3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)

(Percentages represent year-on-year changes)

	Net sales	Operating income	Ordinary income	Profit attributable to	Net income per share
	owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	67,000	1.2	5,400	4.8	5,380	4.8	3,400	△6.4	169.84

Note: Revisions to the most recently announced consolidated forecast: Yes

For details regarding revisions to the consolidated financial results forecasts, please refer to the press release titled "Notice on the Revision of Consolidated Financial Results Forecasts for the Fiscal Year Ending March 31, 2023" that was announced today (January 25, 2023).

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None
2. Application of special accounting for presenting quarterly consolidated financial statements: None
3. Changes in accounting policies and accounting estimates, and restatements
4. 1. Changes in accounting policies due to revisions in accounting standards, others: Yes
   2. Changes in accounting policies other than i. above: None
   3. Changes in accounting estimates: None
   4. Restatements: None
5. Number of outstanding shares (common stock)
6. 1. Number of shares outstanding at the end of the period (including treasury shares)

As of Dec.31, 2022:

22,757,800shares

As of Mar. 31, 2022:

22,742,800shares

1. Number of treasury shares at the end of the period

As of Dec.31, 2022:	2,891,430shares	As of Mar. 31, 2022:	2,484,351shares
iii. Average number of shares outstanding during the period
Nine months ended Dec.31, 2022:	20,019,152shares	Nine months ended Dec. 31, 2021:	20,235,495shares

• This consolidated financial report is not subject to quarterly review procedures by a certified public accountant or audit company.
• Explanation for appropriate use of operating forecasts, and other special items

Cautionary statement with respect to forward-looking statements

Forecasts regarding future performance in this report are based on assumptions based upon valid and other reasonable information available to the Company at the time this report was created. This report is not promised by the Company regarding future performance. The actual performance may differ significantly from these forecasts for a variety of reasons.

How to view supplementary information at the financial results meeting

The Company plans to hold the financial results meeting (online) for institutional investors and analysts on Wednesday, January 25, 2023.Supplementary materials for financial results will be disclosed, using the Timely Disclosure network (TDnet), and will be available on the Company's website (https://www.softbanktech.co.jp/corp/ir/).

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○Appendix Table of Contents

1. Qualitative Information on Financial Results of the Period Under Review ……………………………………………	2
(1) Explanation of Business Results ……………………………………………………………………………………	2
(2) Explanation of Financial Position ……………………………………………………………………………………	6
(3) Explanation on Consolidated Forecast and Other Forward-looking Statements ……………………………………	7
2. Quarterly Consolidated Financial Statements ……………………………………………………………………………	8
(1) Quarterly Consolidated Balance Sheet ………………………………………………………………………………	8
(2) Quarterly Consolidated Statements of Income and Comprehensive Income ………………………………………	10
(For the Nine-month Period) ………………………………………………………………………………………	10
(3) Notes to Quarterly Consolidated Financial Statements ……………………………………………………………	12
(Going Concern Assumption) ………………………………………………………………………………………	12
(Significant Changes in Shareholders' Equity) ………………………………………………………………………	12
(Changes in accounting policies) ……………………………………………………………………………………	12
(Reclassifications)	…………………………………………………………………………………………	12

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１．Qualitative Information on Financial Results of the Period Under Review

(1) Explanation of Business Results

Despite the COVID-19 pandemic's lingering impact, the recovery in economic activity has gradually gathered momentum, with measures to control infections being kept in place. However, the social and economic outlook remains uncertain amid rising energy prices and inflation fueled by concerns about the world situation.

In this operating environment, companies are still under pressure to implement initiatives such as advancing digital transformation (DX), reinforcing operations using digital technologies, creating secure work-from-home environments and promoting the use of cloud computing services to address workstyle changes. As a result, Japanese corporate demand for investment in digital transformation (DX) has remained steady. Additionally, cybercrimes targeting weaknesses in security measures are on the increase. Cyber-attacks on suppliers are growing in particular as corporate supply chains continue to grow more and more complex. Under these conditions, it has become apparent that both individual companies and entire supply chains need to take cyber security measures. More companies are disclosing cyber security risks and countermeasures and are adopted cyber security measures as a key element of business continuity.

Meanwhile, in the government sector, a year has passed since the establishment of the Digital Agency and steady progress is being made on the digital transformation of government, including scrapping health insurance certificates and integrating them into My Number Cards. Progress has also been made on the development of the Government Cloud, with Microsoft Azure, which is one of the Company's areas of expertise, selected as one of the cloud services. Through such initiatives, demand for the digitalization of government has also remained robust.

The Company and other ICT-related companies are expected to respond to rapid social changes through the promotion of DX accompanied with support for security measures.

Amid this business environment, the ICT services business remained firm, and performance by solution was as follows compared to the same period in the previous fiscal year.

・Telecommunication

Sales in the Telecommunication segment fell year on year, with the shift of vendor management projects for SoftBank Corp. towards the high value added domain. However, profits for the segment rose year on year, reflecting increased efficiency and improved profit margins.

・Enterprise

Both sales and profits increased, and profit margins improved in the Enterprise segment. Contributing factors included an increase in the number of projects to build cloud systems for manufacturers and steady progress in the Company's own Managed Security Services (MSS).

・Public Sector

Sales in the Public Sector segment grew year on year, supported by projects for the additional development and application of an electronic application platform and projects preparing digital maps for the Ministry of Agriculture, Forestry and Fisheries as well as the operational launch of next-generation Local Government Information Security Cloud. However, growth in gross profit was modest due to increases in costs for dealing with faults related to next-generation Local Government Information Security Cloud and costs for activities to roll out across national government ministries.

・Consumer

Both sales and profits decreased in the Consumer segment, reflecting the impact from changes in the contract with NortonLifeLock Co., Ltd. in the business of operating e-commerce sites as an agent.

As a result, the Group's financial results for the first nine-months of the fiscal year under review were as follows.

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			(Millions of yen)
	Nine-month ended	Nine-month ended	Change (Amount)	Change (Ratio)
	December 31, 2021	December 31, 2022
Net sales	47,626	48,231	605	1.3％
Gross profit	9,943	10,569	626	6.3％
Total selling, general and	6,282	7,028	745	11.9％
administrative expenses
Operating income	3,660	3,541	(118)	(3.2)％
Ordinary income	3,622	3,489	(133)	(3.7)％
Profit attributable to	2,187	2,108	(79)	(3.6)％
owners of parent
EBITDA(*)	4,813	4,778	(34)	(0.7)％
Net income per share	JPY108.10	JPY 105.32	JPY (2.78)	(2.6)％

*Note: EBITDA=Operating income + Amortization of goodwill + Depreciation

The Group operates in a single reportable segment of the ICT Services segment. Refer to "Segment Explanation" on page 5 for details on the content and performance of the solutions that comprise the ICT Services segment.

• Progress in the Fourth Medium-Term Management Plan >

The Company and its consolidated subsidiaries (the "Group") established the Fourth Medium-Term Management Plan covering three years from the fiscal year ending March 31, 2023 to the fiscal year ending March 31, 2025, and began implementing initiatives based on the Plan.

(i) Basic business policy

The Group's mission reads: "Information Revolution, Happiness for everyone - Technologies Design the Future-" It thus enhances its advanced technologies and creativity in an environment that supports diverse work styles and attempts in an aim to be a company that continues to offer new value to society. In line with this management philosophy, it formulated a long-term vision of becoming a leader of cloud consulting and service company to increase enterprise Japanese company's competitiveness. The Group has a management policy of creating a prosperous information society through the provision of ICT services.

Furthermore, the Group is addressing a range of social issues through its corporate activities for the realization of a sustainable society. The Group identified six material issues (important issues) as themes for advancing activities for the realization of sustainability.

Please see the Company's website for more information about sustainability and the material issues. https://www.softbanktech.co.jp/corp/sustainability/

The Group has a management policy of creating a prosperous information society through the provision of ICT services.

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