SB Technology : FY2023 Q2 Consolidated Financial Report (Japanese GAAP)（239K）

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.

October 30, 2023

SB Technology Corp.

Consolidated Financial Report for the Second Quarter of Fiscal Year Ending March 31, 2024

(Six Months Ended September 30, 2023)

[Japanese GAAP]

Company name: SB Technology Corp. (Tokyo Stock Exchange/Code No. 4726)

(URLhttps://www.softbanktech.co.jp/)
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:	November 13, 2023
Scheduled date of payment of dividend:	December 1, 2023
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 Six Months Ended September 30, 2023 (April 1, 2023 - September 30, 2023)

(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	%
Six Months ended Sep. 30, 2023	32,206	1.6	2,282	0.6	2,182	△1.8	6,272	365.9
Six Months ended Sep. 30, 2022	31,706	1.2	2,270	2.9	2,222	1.5	1,346	2.3

Note: Comprehensive income (million yen)	Six Months ended Sep. 30, 2023:	6,400	(up 335.8%)
		Six Months ended Sep. 30, 2022:	1,468	(up 4.7%)
	Net income per share	Diluted net income per share
Six Months ended Sep. 30, 2023		Yen	Yen
	315.63	315.35
Six Months ended Sep. 30, 2022		66.99	66.32

(2) Consolidated Financial Position

	Total assets	Net assets		Shareholders' equity	Net assets per share
		ratio
		Million yen	Million yen		%	Yen
As of Sep. 30, 2023		48,140	30,963		58.6	1,417.91
As of Mar. 31, 2023		45,466	25,167		49.4	1,131.42
Reference: Shareholders' equity (million yen)	As of Sep. 30, 2023: 28,218	As of Mar. 31, 2023: 22,475

2. Dividends

				Dividends per share
		1Q-end		2Q-end	3Q-end	Year-end	Total
		Yen		Yen	Yen	Yen	Yen
Fiscal year ended Mar. 31, 2023		－	25.00	－	35.00	60.00
Fiscal year ending Mar. 31, 2023		－	30.00
Fiscal year ending Mar. 31, 2023 (forecast)					－	30.00	60.00

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

3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2024 (April 1, 2023 - March 31, 2024)

(Percentages represent year-on-year changes)

	Net sales		Operating income	Ordinary income	Profit attributable to	Net income per share
							owners of parent
Full year	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
68,000	1.1	5,900	6.2	5,750	4.6	8,200	134.5	412.60

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

* 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: None
   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 Sep. 30, 2023:

22,757,800 shares

As of Mar. 31, 2023:

22,757,800 shares

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

As of Sep. 30, 2023:	2,856,020 shares	As of Mar. 31, 2023:	2,892,930 shares
iii. Average number of shares outstanding during the period
Six Months ended Sep. 30, 2023:	19,874,019 shares	Six Months ended Sep. 30, 2022:	20,095,960 shares

• 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 for institutional investors and analysts on October 30, 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/).

SB Technology Corp. (4726) Financial Report

For the six-month period ended September 30, 2023

Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheet

				(Millions of yen)
			As of March 31, 2023	As of September 30, 2023
	Assets
	Current assets
	Cash and deposits	8,221	14,568
	Notes and accounts receivable - trade, and contract assets	24,133	16,882
	Merchandise		131	82
	Other	3,136	6,558
	Allowance for doubtful accounts		△0	△0
	Total current assets		35,622	38,092
	Non-current assets
	Property, plant and equipment
	Buildings, net	684	502
	Tools, furniture and fixtures, net	991	841
	Other, net		5	45
	Total property, plant and equipment		1,681	1,389
	Intangible assets
	Goodwill	836	671
	Software	2,531	2,038
	Software in progress	476	692
	Customer relationships	189	41
	Other	86	66
	Total intangible assets	4,120	3,509
	Investments and other assets
	Investment securities	667	663
	Deferred tax assets	1,297	1,069
	Other		2,075	3,416
	Total investments and other assets		4,040	5,148
	Total non-current assets	9,842	10,047
	Deferred assets
	Share issuance costs		1	0
	Total deferred assets		1	0
	Total assets		45,466	48,140

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SB Technology Corp. (4726) Financial Report

For the six-month period ended September 30, 2023

				(Millions of yen)
			As of March 31, 2023	As of September 30, 2023
	Liabilities
	Current liabilities
	Accounts payable - trade	7,020	4,132
	Current portion of long-term borrowings	309	289
	Lease liabilities	14	10
	Accounts payable - other	4,493	4,925
	Income taxes payable	1,372	1,344
	Contract liabilities	2,186	2,488
	Provision for bonuses	1,784	1,375
	Provision for bonuses for directors (and other officers)		－	47
	Provision for loss on orders received		626	576
	Provision for defect repair	39	－
	Other		742	695
	Total current liabilities		18,590	15,885
	Non-current liabilities
	Long-term borrowings	489	255
	Lease liabilities	81	76
	Contract liabilities	670	579
	Retirement benefit liability	60	4
	Asset retirement obligations	336	319
	Other		69	55
	Total non-current liabilities		1,708	1,290
	Total liabilities	20,298	17,176
	Net assets
	Shareholders' equity
	Share capital	1,270	1,270
	Capital surplus	1,613	1,662
	Retained earnings	22,182	27,838
	Treasury shares		△2,600	△2,567
	Total shareholders' equity	22,466	28,204
	Accumulated other comprehensive income
	Valuation difference on available-for-sale securities	3	7
	Foreign currency translation adjustment		5	7
	Total accumulated other comprehensive income		9	14
	Share acquisition rights	320	292
	Non-controlling interests	2,371	2,451
	Total net assets		25,167	30,963
	Total liabilities and net assets		45,466	48,140

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SB Technology Corp. (4726) Financial Report

For the six-month period ended September 30, 2023

1. Quarterly Consolidated Statements of Income and Comprehensive Income (For the Six-month Period)

				(Millions of yen)
			Six months ended	Six months ended
			September 30, 2022	September 30, 2023
	Net sales	31,706	32,206
	Cost of sales	24,762	24,608
	Gross profit		6,944	7,597
	Selling, general and administrative expenses		4,673	5,315
	Operating profit		2,270	2,282

Non-operating income

Interest income

Dividend income

Share of profit of entities accounted for using equity method

Foreign exchange gains

Miscellaneous income

Total non-operating income

Non-operating expenses

Interest expenses

Commission expenses

Donations

Foreign exchange losses

Loss on investments in investment partnerships Miscellaneous losses

Total non-operating expenses

Ordinary profit

Extraordinary income

Compensation income

Gain on reversal of share acquisition rights Gain on transfer from business divestitures Total extraordinary income

Extraordinary losses

Industrial accident settlement

Amortization of goodwill

Total extraordinary losses

Profit before income taxes

Income taxes - current

Income taxes - deferred

Total income taxes

Profit

	0	0
	2	1
	1			4
	－	1
	12	7
	16	15
	4	3
	20	95
	10	10

18－

	2	4
	8		2
	64	115
	2,222	2,182

16－

14		32
	－	6,562
30		6,594
	－	70
	－			63
	－	133
2,253		8,643
421		2,032
	366			215
788		2,248
	1,465			6,394

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SB Technology Corp. (4726) Financial Report

For the six-month period ended September 30, 2023

				(Millions of yen)
			Six months ended	Six months ended
			September 30, 2022	September 30, 2023
	Profit attributable to
	Profit attributable to owners of parent	1,346	6,272
	Profit attributable to non-controlling interests	118	121
	Other comprehensive income
	Valuation difference on available-for-sale securities		2	3
	Foreign currency translation adjustment		1	1
	Total other comprehensive income		3	5
	Comprehensive income	1,468	6,400
	Comprehensive income attributable to
	Comprehensive income attributable to owners of parent	1,349	6,278
	Comprehensive income attributable to non-controlling
	interests		118	121

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SB Technology Corp. (4726) Financial Report

For the six-month period ended September 30, 2023

(3) Quarterly Consolidated Statement of Cash Flows

			(Millions of yen)
		Six months ended	Six months ended
		September 30, 2022	September 30, 2023
Cash flows from operating activities
Profit before income taxes	2,253	8,643
Depreciation		694	772
Amortization of goodwill	128	165
Share-based payment expenses		55	34
Increase (decrease) in allowance for doubtful accounts	0	△0
Increase (decrease) in provision for bonuses		△546	△350
Increase (decrease) in provision for bonuses for directors (and
other officers)	53	47
Increase (decrease) in retirement benefit liability		3	4
Increase (decrease) in provision for loss on orders received		△192	△49
Increase (decrease) in provision for defect repair		△9	△39
Interest and dividend income		△2	△2
Interest expenses	4	3
Commission expenses	20	95
Share of loss (profit) of entities accounted for using equity
method		△1	△4
Loss (gain) on investments in investment partnerships	2	4
Gain on transfer from business divestitures		－	△6,562
Decrease (increase) in notes and accounts receivable-trade and
contract assets	6,941	6,919
Decrease (increase) in inventories		△26	66
Decrease (increase) in trade receivables		△791	△1,191
Increase (decrease) in trade payables		△2,784	△2,839
Increase (decrease) in contract liabilities	510	220
Increase (decrease) in accrued consumption taxes		△101	△59
Increase (decrease) in trade payables		△320	△122
Other, net		△10	△33
Subtotal		5,881	5,721
Interest and dividends received	2	8
Interest paid		△4	△2
Income taxes paid		△1,178	△1,975
Net cash provided by (used in) operating activities	4,700	3,751
Cash flows from investing activities
Purchase of property, plant and equipment		△237	△120
Purchase of intangible assets		△570	△695
Proceeds from sale of investment securities	0	－
Proceeds from business divestitures		－	3,485
Proceeds from collection of loans receivable	3	0
Payments of guarantee deposits		△3	△3
Proceeds from refund of guarantee deposits	0	3
Other, net		△20	6
Net cash provided by (used in) investing activities		△826	2,676

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SB Technology Corp. (4726) Financial Report

For the six-month period ended September 30, 2023

			(Millions of yen)
		Six months ended	Six months ended
		September 30, 2022	September 30, 2023
Cash flows from financing activities
Proceeds from short-term borrowings		－	951
Repayments of short-term borrowings		－	△100
Repayments of long-term borrowings		△227	△254
Proceeds from issuance of shares		32	－
Purchase of treasury shares		△1,098	△0
Proceeds from disposal of treasury shares	69	66
Dividends paid		△607	△694
Dividends paid to non-controlling interests		－	△58
Repayments of lease liabilities		△9	△9
Proceeds from share issuance to non-controlling shareholders		14	12
Net cash provided by (used in) financing activities		△1,825	△88
Effect of exchange rate change on cash and cash equivalents		9	7
Net increase (decrease) in cash and cash equivalents	2,057	6,347
Cash and cash equivalents at beginning of period		8,701	8,160
Cash and cash equivalents at end of period		10,758	14,507

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SB Technology Corp. (4726) Financial Report

For the six-month period ended September 30, 2023

1. Notes to Consolidated Financial Statements
   Going Concern Assumption

Not applicable.

Significant Changes in Shareholders' Equity

At a meeting of the Board of Directors held on July 19, 2023, the Company passed a resolution on the transfer of all the shares that the Company holds in Fontworks Inc., its consolidated subsidiary, to Monotype K.K., and the transfer of intangible assets related to Fontworks' business to Monotype Imaging Inc. The Transfer was executed on September 1, 2023.

Due to the Transfer, because of recording a gain on transfer from business divestitures of 6,562million yen, retained earnings at the end of the second quarter consolidated accounting period was 27,838million yen.

Disclaimer:

This financial report is solely a translation of "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.

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