PRONEXUS : Earnings Report FY2022 Consolidated 3Q

Translation

January 31, 2023

Consolidated Financial Results

for the First Nine 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/english/
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:	February 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 nine months of the fiscal year ending March 31, 2023 (from April 1, 2022 to December 31, 2022)

(1) Consolidated operating results (cumulative)			(Percentages indicate year-on-year changes.)
	Revenue		Operating profit	Profit before tax	Profit
First nine months ended	Millions of yen		%	Millions of yen	%		Millions of yen	%	Millions of yen	%
December 31, 2022	21,232		2.4	2,481	(15.9)		2,580	(15.5)	1,753	(16.4)
December 31, 2021	20,737		5.3	2,952	9.1		3,055	5.1	2,096	3.7
	Profit attributable to	Total comprehensive		Basic earnings per	Diluted earnings per
	owners of parent	income			share		share
First nine months ended	Millions of yen		%	Millions of yen	%			Yen		Yen
December 31, 2022	1,748		(16.4)	1,694	(32.4)			68.52		-
December 31, 2021	2,090		3.8	2,507	10.4			80.50		-

(2) Consolidated financial position

	Total assets	Total equity
As of	Millions of yen	Millions of yen
December 31, 2022	35,043	24,198
March 31, 2022	35,560	23,453

Equity attributable to

owners of parent

Millions of yen

24,159

23,421

Ratio of equity

attributable to owners of parent to total assets

%

68.9

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	-	18.00		-
March 31, 2023
Fiscal year ending					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

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 nine months ended December 31, 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 December 31, 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 December 31, 2022		2,207,521 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 nine months ended December 31, 2022	25,509,208 shares
For the first nine months ended December 31, 2021	25,969,302 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 nine 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 nine 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	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 nine months

1. Explanation of operating results

1. Condition of Japanese economy
   In the first nine months, the Japanese economy experienced a recovery in personal consumption due to the easing of COVID-19 restrictions and 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, a rapid increase in prices, the resurgence of COVID-19 from July onward 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 28,500-yen level in the same period of the previous fiscal year, meaning stock price levels in the first nine months fell below previous year levels.
2. Review of performance
   In the first nine months, the Tokyo Stock Exchange started new market segments in April 2022. In the Prime Market, one of the new segments, principles requiring a higher level of governance standards were applied for updated Japan's Corporate Governance Code. Consequently, 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 nine months was 21,232 million yen, an increase of 494 million yen, or 2.4%, 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 2,481 million yen, a decrease of 471 million yen, or 15.9%, year on year. Profit before tax was 2,580 million yen, a decrease of 475 million yen, or 15.5%, year on year, and profit attributable to owners of parent was 1,748 million yen, a decrease of 342 million yen, or 16.4%, 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 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. In addition, 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 9,452 million yen, an increase of 405 million yen, or 4.5%, year on year.
      IR-related, etc. business>
      With the start of new market segments on the Tokyo Stock Exchange in April 2022 and the application of the Japan's Corporate Governance Code to the Prime Market requiring English-
   2. • 2 -