PRONEXUS : Earnings Report FY2022 Consolidated 1Q

Translation

July 29, 2022

Consolidated Financial Results

for the First Three Months of the Fiscal Year Ending March 31, 2023

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 12, 2022
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, 2023 (from April 1, 2022 to June 30, 2022)

(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, 2022	10,976	5.1	2,996	(1.5)	3,019	(1.5)	2,057	(2.4)
June 30, 2021	10,441	10.7	3,043	12.3	3,064	12.7	2,107	13.9
	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, 2022	2,056	(2.4)	1,820	(27.1)		80.60		-
June 30, 2021	2,106	14.0	2,496	31.8		79.33		-
(2) Consolidated financial position
	Total assets	Total equity	Equity attributable to	Ratio of equity
	attributable to owners
	owners of parent
					of parent to total assets
As of	Millions of yen	Millions of yen	Millions of yen		%
June 30, 2022		39,784		24,784		24,748		62.2
March 31, 2022		35,560		23,453		23,421		65.9

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	-	16.00		-	19.00	35.00
31, 2022
Fiscal year ending	-
March 31, 2023
Fiscal year ending		18.00		-	18.00	36.00
March 31, 2023
(Forecast)

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

3. Consolidated earnings forecasts for the fiscal year 2022 (from April 1, 2022 to March 31, 2023)

(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	15,700		2.0	2,800	(2.8)	2,800	(5.3)	1,930		(5.2)	1,930		(5.0)	75.66
September 30,
2022
Fiscal year ending	27,000		3.3	2,600	4.7	2,600	(0.9)	1,800		1.8	1,800		2.1	70.56
March 31, 2023
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, 2022 (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, 2022		27,716,688 shares
	As of March 31, 2022		27,716,688 shares
b. Number of treasury shares at the end of the period
	As of June 30, 2022		2,207,481 shares
	As of March 31, 2022		2,207,421 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, 2022	25,509,262 shares
For the first three months ended June 30, 2021	26,547,836 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 4 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.....................	4
2. Condensed quarterly consolidated financial statements and significant notes thereto .............................	5
(1)	Condensed quarterly consolidated statement of financial position ....................................................	5
(2)	Condensed quarterly consolidated statement of profit or loss and condensed quarterly consolidated
	statement of comprehensive income ..................................................................................................	7
(3)	Condensed quarterly consolidated statement of changes in equity ....................................................	9
(4)	Notes to condensed quarterly consolidated financial statements......................................................	11
	(Notes on premise of going concern) ...............................................................................................	11

- 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 progressing COVID-19 vaccinations and the easing of restrictions on economic activities. As a result, we saw an overall positive trend in corporate results.
   However, in addition to surging resource prices caused by Russia's invasion of Ukraine, as a result of the Japanese yen plunging due to the European and U.S. central banks raising interest rates, 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, against a backdrop of a rapidly weakening yen, the Nikkei Stock Average trended mainly in the 27,000-yen level. The Nikkei Stock Average trended mainly in the 29,000-yen level in the same period of the previous fiscal year, meaning stock price levels in the first three months fell below previous year levels.
2. Review of performance
   In the first three months, the Tokyo Stock Exchange started new market segments in April. In the Prime Market, one of the new segments, a higher level of standards was applied for Japan's Corporate Governance Code, updated in June of last year. As a result, there has been a move to strengthen information provision to shareholders and investors particularly among companies listed on the Prime Market, and related products, which are shareholder convocation notices and English translation services, were strong. On the other hand, against the backdrop of European and U.S. central banks raising interest rates and the resulting sharp drop in the yen, the J-REIT market and the foreign bond market were weak compared to the same period of the previous fiscal year, and orders for associated products decreased. As a result, consolidated revenue in the first three months was 10,976 million yen, an increase of 536 million yen, or 5.1%, year on year.
   Concerning profits, in addition to increases in labor costs and outsourcing expenses to respond mainly to increased orders, due to expenses associated with updating the support system for the preparation of disclosure documents, higher costs for printing paper from surging raw materials prices, and other factors, operating profit was 2,996 million yen, a decrease of 47 million yen, or 1.5%, year on year. Profit before tax was 3,019 million yen, a decrease of 46 million yen, or 1.5%, year on year, and profit attributable to owners of parent was 2,056 million yen, a decrease of 50 million yen, or 2.4%, year on year.
3. 1. Sales performance by business
      disclosure-related business>
      Regarding shareholder convocation notices, one of our mainstay products, there was further growth in response to the revised version of Japan's Corporate Governance Code, and the shift to color printing for notices and expansion of the information provided have continued to increase. Furthermore, our unit price for orders also increased due to the increased number of individual shareholders and higher number of pages as many listed companies amended their articles of incorporation to respond to electronic provision methods for materials for shareholders' meetings. Furthermore, with persisting high demands for operational streamlining in line with work-style reform, orders increased in outsourcing services for the preparation of disclosure documents. As a result, revenue of the listed companies disclosure-related business was 6,072 million yen, an increase of 413 million yen, or 7.3%, year on year.
      IR-related, etc. business>
      With the start of new market segments on the Tokyo Stock Exchange in April and the application of the Japan's Corporate Governance Code to the Prime Market requiring English-language information disclosure, our English translation services were strong. Furthermore, orders
   2. • 2 -