Briefing on FY12/2015 Business Results

Broadleaf Co., Ltd.
(Securities Code: 3673 / TSE 1st Section)

February 10, 20160

Chapter 1
Overview of FY12/2015
Business Results

2

Chapter 2

Contents

Results Forecasts for FY12/2016

10

Chapter 3
Mid-term Business Plan
Appendix

Basic Informationon the Company,
Other Information

Copyright (c) Broadleaf Co., Ltd. All rights reserved

18

27

Chapter 1
Overview of FY12/2015 Business Results

Copyright (c) Broadleaf Co., Ltd. All rights reserved

Chapter 1

Overview of FY12/2015 Business Results

Overview

Although both sales and income were below year-ago levels, income
forecasts (*1) were achieved.
Results

Net sales
Operating income
Net income¥16.8 billion (down 11% year on year/Achievement rate 95%）
¥ 2.5 billion (down 40% year on year/Achievement rate 101%)¥ 1.2 billion (down 43% year on year/Achievement rate 104%)

Priority strategies

Expansion ofcustomer baseBusiness Application Software:
Sales from new customers rose 11% year on year

Marketpenetration ofcomputerizedordering service

BLP ：Number of parts dealers participating in transactions 312（up 94% from the end of the previous year）(*2)
Number of connections with maintenance shops 1,666(up 109% from the end of the previous year)
CPT： Number of Carpod Tab contracts 2,322(up 84% from the end of the previous year)(*3)*1 Earnings forecast announced on July 31, 2015
*2 BLP：Computerized auto parts ordering service “BL Parts Order System”*3 CPT：Business support tool for tablets “CarpodTab”
Copyright (c) Broadleaf Co., Ltd. All rights reserved

3Chapter 1

Overview of FY12/2015 Business Results

PL Summary
POINT

Income forecasts were achieved as a result of lower total cost.
(¥ million)

FY12/2015
Full-year

YoY Change

FY12/2014
Full-year

YoY (Ratio)

FY12/2015
Forecasts(7/31)

16,824-2,069-11.0%

18,894

17,700Operating income

2,514-1,651-39.6%

4,165

2,500

Operating income
margin

14.9%

-7.1%

-

22.0%

14.1%

Ordinary income

2,493-1,605-39.2%

4,098

2,450

Net income

1,251

-941

-42.9%

2,193

1,200

¥50.47-33.56-39.9％¥84.03¥47.95Net Sales

EPS

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4Chapter 1

Overview of FY12/2015 Business Results

Sales by Category
POINT

Network Service sales were in line with the forecast.
(¥ million)

FY12/2015
Full-year
Business Application Software
System Support
Maintenance
Provision of Consumables
Network Service
Stock
Transaction

YoY (Ratio)

FY12/2015
Forecasts(7/31)

11,316
1,266
597
668
4,242
3,350
891

-2,502
-24
-17
-6
456
367
89

-18.1%
-1.9%
-2.9%
-1.0%
12.1%
12.3%
11.1%

13,818
1,290
614
675
3,785
2,983
801

12,150
1,250
600
650
4,300
3,350
950

672

-7

-1.1%

680

650

218

96

79.4%

121

300

16,824-2,069-11.0%

18,894

17,700

PSF*1
Order Placing andAcceptance, etc*2
Total

YoY Change

FY12/2014
Full-year*1: Payment agency service for recycled parts*2: BL Parts Order System, Carpod Tab, etc.
Copyright (c) Broadleaf Co., Ltd. All rights reserved

5Chapter 1

Overview of FY12/2015 Business Results

Strategy to Increase Order Transactions
The computerized ordering service is penetrating the market, on its
way to becoming the industry-wide standard.

POINT

CarpodTabParts dealers / maintenance shops
Number of connections with maintenance shops

Number of Carpod Tab contracts
2,322

Number of parts dealers participating in transactions
1,666

1,959

1,491

999

493
111

514
112

559
121

679

144

1,679

1,113

1,265

797
662
161

205

249

288

735

879

1,377

1,015

312

2013/12 2014/03 2014/06 2014/09 2014/12 2015/03 2015/06 2015/09 2015/12
end
end
end
end
end
end
end
end
end

2013/12 2014/03 2014/06 2014/09 2014/12 2015/03 2015/06 2015/09 2015/12
end
end
end
end
end
end
end
end
end

Copyright (c) Broadleaf Co., Ltd. All rights reserved

6Chapter 1

Overview of FY12/2015 Business Results

Breakdown of Expenses
POINT

Expenses were curbed, offsetting increased costs as a result of higher
purchase prices and higher maintenance costs.
(¥ million)

FY12/2015
Full-year

YoY Change

FY12/2014
Full-year

Net Sales

16,824-2,069Total Cost

4,854

33

SG&A expenses

9,455

-452

9,907

-

Personnel
Expenses

4,420

-292

4,713

-

451

101

4,582

-261

2,514

-1,651

R&D Expenses
Operating Income
Operating Income

18,894Main factors forincrease/decrease
Higher maintenance costs for

4,821 existing products, etc.

Development of new functions

350 and new services, etc.

4,844 Lower advertising expenses, etc.
4,165

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7Chapter 1

Overview of FY12/2015 Business Results

BS Summary
POINT

Carried out acquisition and retirement of treasury stock.
(¥ million)

End of FY12/2015
Results

Change (YoY)

End of FY12/2014
Results

Main factors for increase/decrease
Decrease in cash and deposits

Current Assets

13,033-2,508Non-current
Assets12,532-269

25,565-2,77728,343 -4,338-2,3986,736 (-1,452)

1,841

1,528

6,179

-869

Total Assets
Current
Liabilities
Non-current
Liabilities
Total Liabilities

Total Net Assets

19,385-1,908

Total Liabilities and25,565-2,777
Net Assets* Goodwill as of the end of December 2015: ¥ 9,362 million

15,541 （-2,287）

12,802 Amortization of goodwill（-668）*
Decrease in income taxes payable
Increase in long-term loans

313 payable(1,527)

7,049 21,294

Retirement of treasury stock(-1,430）
Purchase of treasury stock（-1,180）

28,343 -Copyright (c) Broadleaf Co., Ltd. All rights reserved

8Chapter 1

Overview of FY12/2015 Business Results

CF Summary
POINT

Free cash flow is expected to turn positive in the fiscal year ending December 31,
2016, offsetting the negative impact of factors in the fiscal year under review
such as the business results and an increase in income taxes paid.
(¥ million)

End of FY12/2015
Results

CF from operating
activities
CF from investing
activities
CF from financing
activities

Change(YoY)

655-4,193-1,08867

End of
FY12/2014
Results

4,849

Main factors forincrease/decrease
Decrease in income before income taxes（-1,715）
Increase in income taxes paid（-1,177）-1,156 -2,250

Increase in long-term loans payable（2,723）Purchase of treasury stock (-2,500)-1,854

396

FCF

-432

-4,126

3,693 -Cash and cash
equivalents

8,384-2,287

10,671 -Copyright (c) Broadleaf Co., Ltd. All rights reserved

9Chapter 2
Results Forecasts for FY12/2016

Copyright (c) Broadleaf Co., Ltd. All rights reserved

Chapter 2

Results Forecasts for FY12/2016

Overview of Business Environment
Automotive
In 2016, seven years on from Lehman Brothers collapse and five years

Maintenance market on from the Great East Japan Earthquake, the number of motor vehicle
inspections is expected to start rising.

Non-automotive
Tourism market

The number of domestic tourists and the number of foreign tourists toJapan continue to trend upward, and the domestic tourism market is
expected to remain robust.

Mobile sales market

Given uncertainties such as the impact of lower mobile tariffs, sales
companies are expected to become more cautious.

Copyright (c) Broadleaf Co., Ltd. All rights reserved

11Chapter 2

Results Forecasts for FY12/2016

Results Forecasts
POINT

Net sales are expected to recover as a result of the normalization of operations
and the launch of new products. Results will reflect upfront investmentin the development of next-generation business application software.
(¥ million)

FY12/2016
Full-year

YoY (Ratio)

FY12/2015
1H

YoY (Ratio)

Full-year

1H

18,000

7.0%

8,400

0.9%

16,824

8,325

Operating income

3,000

19.3%

1,050

4.2%

2,514

1,008

Operating income
margin

16.7%

-

12.5%

-

14.9%

12.1%

Ordinary income

2,970

19.1%

1,030

3.4%

2,493

996

Net income

1,620

29.4%

560

17.6%

1,251

476

¥66.93

32.6％¥23.1422.0％¥50.47¥18.97

Net Sales

EPS

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12Chapter 2

Results Forecasts for FY12/2016[Year-on-year Comparison] Sales by Category
POINT

Growth in the Network Service domain will pick up pace thanks to measures topromote use of the ordering system and the rollout of new services.
(¥ million)

FY12/2015

FY12/2016
Full-year
Business Application
Software

YoY (Ratio)

1H

YoY (Ratio)

Full-year

1H

11,700

3.4%

5,550

-1.7%

11,316

5,644

Maintenance

1,250
600

-1.3%
0.4%

650
300

2.4%
-0.3%

1,266
597

634
300

Provision ofConsumables

650

-2.8%

350

4.8%

668

334

5,050
3,550
1,200

19.0%
5.9%
39.8%

2,200
1,700
480

7.5%
4.6%
17.9%

4,242
3,350
858

2,046
1,624
407

700

4.0%

330

0.4%

672

328

500

169.3%

150

90.6%

185

78

300
18,000817.2%
7.0%

20
8,400

37.9%
0.9%

32
16,82414
8,325

System Support

Network Service
Stock
Transaction
PSF
Order Placing andAcceptance, etc
OthersNet Sales

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13Chapter 2

Results Forecasts for FY12/2016

Breakdown of Business Application Software Domain
POINT

Renewals of user contracts are expected to fall slightly year on year.
An operating structure to acquire new customers will be put in place,
involving a shift in personnel.
(¥ billion)* Excludes system integration, etc.

Overall（(1) + (2))
RenewedBreakdown (1): Automotive
0.8

New

1.4
10.3
1.6

1.8

7.8

7.4

2.5

FY12/20142014/12期

FY12/2015
2015/12期（予想）
FY12/2016（予想）
2016/12期(Forecast)

Breakdown (2): Non-automotive

11.4
8.8

8.3
0.6

1.1
2014/12期
FY12/2014

1.0

2015/12期
FY12/20152016/12期（予想）FY12/2016(Forecast)

2014/12期
FY12/2014

Copyright (c) Broadleaf Co., Ltd. All rights reserved

0.6

0.7

0.9

0.9

2015/12期
FY12/20152016/12期（予想）
FY12/2016（予想）(Forecast)

14

Chapter 2

Results Forecasts for FY12/2016

Key Indicators in Network Service Domain
POINT

Efforts will continue to be channelled into increasing the number ofconnections and contracts for BLP and CPT, with the aim of establishing
the computerized ordering system as the industry-wide standard.
FY12/2014

FY12/2016(Forecast)

FY12/2015■Stock.NS ratio *1

60.3%

68.3%

75.0％

797

1,666

3,000 or more

161

312

No set figure *3

1,265

2,322

4,500

■Transactions
Number of BLP connections withmaintenance shops
Number of parts dealers participating in
BLP transactions

Number of CPT contracts*1 .NS ratio: Proportion of total number of contracts accounted for by current business application software .NS Series*2 Number of charged connections: Number of user connections whereby period during which use is free has ended
and charges are incurred.
*3 No set figure: Since the target of 300 parts dealers has already been achieved, any further requests
to participate will be dealt with as appropriate.

15Chapter 2

Results Forecasts for FY12/2016

Factors of the Increase and Decrease in Operating Income
POINT

While investments in development will increase, cost increases will
be kept to a minimum, with the concentration of resources on growth areas.

Net sales

Personnel
expenses＋1,175＋459(¥ million, year-on-year change)
R&D Expenses（Others）（Outsourcing expense）

＋211

-146

Operatingincome＋165

Operatingincome

3,000

2,514

FY12/2015

FY12/2016(Forecast)
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16Chapter 2

Results Forecasts for FY12/2016

Dividends per SharePOINT

At the time of the interim dividend payment for the fiscal year
ending December 31, 2016, the Company plans to pay a special
dividend of 5.0 yen to commemorate its 10th anniversary inaddition to an ordinary dividend of 25 yen.

Annual dividend(Payout ratio)¥25（49.5%）¥20（23.8%）
Yearend¥12.5（Ordinary dividend）
10 yenInterim 10 yen
FY12/20142014/12期¥30（44.8%）

Yearend12.5 yen *1

Yearend¥5.0（Commemorative dividend）*2

Interim 12.5 yen

FY12/2015
2015/12期

Interim¥12.5（Ordinary dividend）

FY12/2016 (予想)2016/12期(Forecast)*1 The year-end dividend for the fiscal year ended December 31, 2015 will be determined at the
7th Ordinary General Meeting of Shareholders*2 The commemorative dividend will be paid to shareholders of the Company
as of June 30, 2016.
Copyright (c) Broadleaf Co., Ltd. All rights reserved

17Chapter 3
Mid-term Business Plan

Copyright (c) Broadleaf Co., Ltd. All rights reserved

18Chapter 3

Mid-term Business Plan

Direction of Business Expansion
Expand markets and business areas by rolling out data-based services.

【Markets and customers】

Services

Tourism

Distribution

Machine tools

Automotive
aftermarket business
operators

Bus

Information PF

Distribution PF

Information PF

Manufacturing
Services【Services】

MobileCPT

Finance

PF：Platform

BLP

Business Applications
Data = Core competence【IT infrastructure】
Vehicles

GCP

Components

Histories

Internet

Internet
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19Chapter 3

Mid-term Business Plan

Basic Policy and Performance Targets
Basic Policy
We plan to overhaul the Business Application Software tariff structure from FY2018. In
anticipation of this, we are setting targets for our performance and sale structure in FY2017.

FY2017 Targets【Performance】【Sales Structure】
Network Service

Net Sales¥20 billion

30%

Operating Income¥4.8 billion（Operating Income Margin24％）

Net
Sales
¥20
Business Application billion
Software63%

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System Support

7%20

Chapter 3

Mid-term Business Plan

Basic Strategies and Priority Measures
With expansion of customer base and turnaround of profit structure
as our basic strategies, we will implement four priority measures.

Basic Strategies

１．Expansion of customer base
２．Turnaround of profit structure
Priority Measures
１．Market penetration of computerized ordering
２．Development and launch of new services and new products
３．Development and launch of next-generation systems(business application software)
４．Strengthening of management base

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21Chapter 3

Mid-term Business Plan

Priority Measures (1)Expansion of customer base andturnaround of profit structure
1. Penetration of computerizedordering service“Number of connections” x “Usage frequency”

・ Continue to strengthen BLP functions
・ Implement measures to increase number of connections(number of charged connections through standalone installation of BLP)・Expand items subject to automatic response・Strengthen functions including recommendation

2-1. Development and launch of
new services

・Install alongside other companies’ products

Support services for auto parts transactions anddistribution

・ Develop and introduce platform services to support the distribution of auto repair parts
Expansion of customer base2-2. Development and launch of
new products

Specialist business solutions, etc.

・ Release major upgrade of business optimization software “OTRS”
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22Chapter 3

Mid-term Business Plan

Priority Measures (2)Expansion of customer base andturnaround of profit structure
3. Development and launch ofnext-generation system

Modularization and linkage with services

・Extremely user-friendly UI/UX design (giving everyone access to high functionality)
・Product designed for any size of user, allowing users to select the necessary modules
・Linkage of system and functions with computerized ordering system (BLP) and parts
distribution support service

Next-generation system（Web ver.）（Users）

Distribution support
services（For large users)
Module D

Large

Module E
Computerizedordering（For mid-sized users)

Mid-sized

Module A

Small（For small users）

Module B

Module C

Basic Module

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Parts distribution
platform

23

Chapter 3

Mid-term Business Plan

Overview of System Development Investment, etc.
Substantial shift in allocation of resources towards next-generation system development

FY2016～FY2017

From FY2018【Major development investments and R&D】

Next-generation
systemdevelopment

Databasedevelopment

Development in phases, starting with common module（Development of key elements to be completed
during FY2017)
Approx. ¥1.5 billion
Further development of automobile-related data
(foreign vehicle information, overseas data, etc.)
Approx. ¥0.5 billion

Renovation/improvement indealing with the system, etc.

Investment will basicallycontinue【Major operation, maintenance and support operations】

Operation,
maintenance andsupportCoexistence of existing system and next-generation system（incurrence of double the costs for operation and maintenance)

Copyright (c) Broadleaf Co., Ltd. All rights reserved

Lower costs as a resultof transition to thenext-generation system

24

Chapter 3

Mid-term Business Plan

Strengthening of Management Base1

Enhancement of product quality
・Development of high quality products
・Implementation of efficient development→ Establishment of PM Office, in charge ofdevelopment project management,
to strengthen control

32

Improvement of business efficiency
・Streamlining of organization, focusing on
corporate divisions→ Promotion of business process improvements
and implementation of workstyle reforms

Development of human resources
・Acquisition and training of highly skilled human resources
・Promotion of diversity→ Redesign the evaluation system to facilitate the acquisition
and retention of diverse human resources

Copyright (c) Broadleaf Co., Ltd. All rights reserved25Chapter 3

Mid-term Business Plan

Looking Towards the Next Decade

Consider, Connect, Communicate
FIELD FOR OUR FUTURE
Broadleaf Co., Ltd.

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26

Appendix [Reference Material]

27

Appendix 1

Basic Information on the Company

Our Profile
Under our principle of maintaining a spirit of gratitude and happiness, we will continue
to grow as an integrated service provider that supports enriched car lives and people’s
lives by contributing to the automotive aftermarket with the power of IT and people.
Corporate Name:

Broadleaf Co., Ltd.

President and CEO:Kenji Oyama

Stock Listing:

The First Section of the Tokyo Stock Exchange
Securities Code: 3673 (Listed on March 22, 2013)

Founded/Established:

December 2005/September 2009

Capital Stock:¥7,147 million

Business Outline:

Provision of services on an IT network system that supports the business of the players in
the automotive aftermarket(E.g. development of business applications, platform for collaboration between different
business sectors, marketplace for recycled auto parts, and automotive content）

Head Office Location:

Floor 8, Glass Cube Shinagawa, 4-13-14, Higashi-Shinagawa,Shinagawa-ku, Tokyo

Business Offices:

33 offices in Japan

Development Centers:

3 centers in Japan (Sapporo, Tokyo and Fukuoka)

Number of Employees: 788(as of Dec 30, 2015)28

Basic Information on the Company

Appendix 2

Sales Domain
We have a single business segment, which consists of IT services,
but sales are classified into the areas below.
Large
Classification

Category
MiddleClassification

Small
Classification

Type of Business- Development and sales of business application software for specific businesses.
- Development and sales of package software, such as information security.
- Purchase and sales of PCs and printers, etc., and others

Business Application Software

Maintenance- Provision of maintenance services for business application software and hardware tocustomers to which we sold business application software.

Provision of Consumables- Purchase and sales of special ledger sheets and OA supplies used in businessapplication software.

System Support

Database Provisioning
Service- Provision of automobile-related information and a database of parts-related information
updated daily.

Server Provisioning
Service- Receipt of consideration for server maintenance necessary for the use of network
systems.

Payment Agency Service
for Recycled Parts- Operation of “Parts Station NET,” a distribution network for recycled parts that sharesinformation on the inventories of recycled parts.
Providing payment agency services when selling and purchasing recycled parts andcollecting commissions.

Electronic parts order placing
and acceptance system,
tablet-based business support
tools and others- Provision of an electronic order placing and acceptance system for auto parts.
- Provision of tablet-based business terminals to maintenance shops, etc., and others

Stock

Network Service
Transaction

29