FY12/2016 Business Results Briefing

Broadleaf Co., Ltd.
TSE 1st Section: 3673

Feb. 14, 2017

Chapter 1

Contents

Overview of FY12/2016
Business Results

2

Chapter 2
Results Forecasts for FY12/2017

12

Chapter 3
Future Business Development

18

Appendix

Basic Information on theCompany, Other Information

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

241Chapter 1
Overview of FY12/2016 Business Results

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

2

PL SummaryPOINT

Net sales rose slightly, but income declined due to a temporary risein costs.
(¥ million)

FY12/2016Full-year

FY12/2015

YoY Change

Full-year

YoY (Ratio)

Net sales

16,851

270.2%

16,824

Operating income

2,227-286-11.4%

2,514

13.2%

-1.7%

-14.9%

Ordinary income

2,230-262-10.5%

2,493

Net income

1,142-108

-8.7%

1,251

EPS

¥24.05-¥1.19-4.7%¥25.24*

Operating income margin* A 2-for-1 stock split effective from December 17, 2016 is reflected.

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3

Sales by CategoryPOINT

Network Service, the key segment, maintained its sales growth.
(¥ million)
FY12/2016Full-year

FY12/2015

YoY Change

YoY (Ratio)

Full-year

Business Application Software

10,988

-327

-2.9%

11,316

System Support

1,239-26-2.1%

1,266

Maintenance

570

-27

-4.6%

597

Provision of Consumables

669

10.2%

668

Network Service

4,623

380

9.0%

4,242

Stock

3,662

311

9.3%

3,350

917

596.7%

858

657-15-2.6%672

260

7440.4%18542935.2%

32

16,851

270.2%

16,824

Transaction
PSF*1
Order Placing and Acceptance*2

OthersNet sales*1: Payment agency service for recycled parts*2: BL Parts Order System and CarpodTab

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4Breakdown of Sales in Business Application Software
POINT

Sales to new customers in the automotive sector increased as a resultof efforts to expand trade-ins, despite a low number of user renewals.
(¥ million)
FY12/2016
Full-year

Automotive

FY12/2015

YoY Change

YoY (Ratio)

Full-year

7,922-774

-8.9%

8,697

Renewed

6,861-975-12.4%

7,836

New customers

1,061

200

23.3％

860

Non-automotive

1,592

88

5.9％

1,503

Renewed

1,090

159

17.2%

930

501-71-12.4%

573

9,515

-686

-6.7%

10,325

Renewed

7,952-815

-9.3%

8,767

New customers

1,563

129

9.0%

1,433

Others

1,473

358

32.2%

1,114

Business Application
Software Total sales

10,988

-327

-2.9%

11,316

New customers
Total

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5Key Indicators in Network Service Domain
POINT

Continuous efforts for the industry standardization of the electronicorder service

End of FY12/2016

End of FY12/2015

 Stock.NS ratio*

85.7%

80.5%

2,041

1,666

335

312

3,054

2,322

 Transaction

BL Parts Order System
Number of connections withmaintenance shops
Number of parts dealers
participating in transactions
CarpodTab
Number of contracts* Proportion of total number of contracts accounted for by current business application software, “.NS Series”

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6Breakdown of Expenses
POINT

The decrease in income was caused mainly by a temporary rise incosts, including equipment purchases.
(¥ million)
FY12/2016
Full-year

FY12/2015

YoY Change

Full-year

Main factors behind the changes

Net Sales

16,851

27

16,824

Cost of Sales

5,192

3384,854 side

Personnel shifts to the personnel expense
Increase in equipment purchases

SG&A Expenses

9,430-24

9,455

4,633

212

4,420 (cost of labor)

285

-166

451 systems

4,512-70

4,582 Advertising expenses, etc.

Operating Income

2,227-286

2,514

Total Personnel Expenses*

5,313

-21

5,335 Reduced number of employees

Subcontract Cost

1,332-362

1,695 outsourced construction

Personnel Expenses
R&D Expenses
Other

Personnel shifts from the cost side
Partial capitalization of next-generation-Optimization of ratio of in-house and* Sum of labor cost (cost of sales) and personnel expenses (SG&A expenses)

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7BS Summary
POINT

Increased shareholder returns through an increase in dividends andthe acquisition of treasury stock while maintaining financial soundness.
(¥ million)
End of FY12/2016
Results

Change (YoY)

End of FY2015
Results

Main factors forincrease/decrease

Current Assets

12,408-624

13,033

Decrease in cash and deposits(-772)

Non-current
Assets

11,670-861

12,532

Amortization of goodwill (-668)*

24,079

-1,48625,565-Current Liabilities

4,960

622

4,338

Increase in income taxes payable (577)

Non-current
Liabilities

1,205-636

1,841

Decrease in long-term loans payable(-661)

Total Liabilities

6,165

-14

6,179

Total Net Assets

17,913-1,472

19,385

Total Liabilities andNet Assets

24,079

-1,48625,565

Total Assets

Recognition of net income (1,142)
Payment of dividends (-728)
Acquisition of treasury stock (-1,945)-* Goodwill outstanding on December 31, 2016: ¥8,963 million

Copyright (c) Broadleaf Co., Ltd. All rights reserved8CF SummaryPOINTFCF recovered significantly mainly due to a reduction in income taxespaid.
(¥ million)
FY12/2016
Full-year

FY12/2015

Change (YoY)

Full-year

Main factors forincrease/decrease

CF from operating
activities

3,201

2,545655

CF from investing
activities

-656

431

-1,088Purchase of intangible assets (292)

Income taxes paid (1,836)

CF from financing
activities-3,317-1,463-1,854

Proceeds from long-term loans payable(-2,500)
Purchase of treasury shares (728)Cash dividends paid (-153)

FCF

2,544

2,977-432-

Cash and cashequivalents

7,611-772

8,384-

Copyright (c) Broadleaf Co., Ltd. All rights reserved9(Reference) PL Summary (Comparison with Forecasts)(¥ million)
FY12/2016
Full-year

Difference

Achievement

Full-year forecast

Net sales

16,851-1,14893.6%

18,000Operating income

2,227-772

74.3%

3,000

13.2%

-3.5%

-16.7%

Ordinary income

2,230-739

75.1%

2,970

Net income

1,142-477

70.6%

1,620

EPS

¥24.05-¥9.42

71.9％¥33.47*

Operating income margin* A 2-for-1 stock split effective from December 17, 2016 is reflected.

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10(Reference) Summary of Sales by Category (Comparison with Forecasts)(¥ million)
FY12/2016
Full-year

Difference

Achievement

Full-year forecast

Business Application Software

10,988

-711

93.9%

11,700

System Support

1,239

-10

99.2%

1,250

Maintenance

570

-29

95.0%

600

Provision of Consumables

669

19103.0%

650

Network Service

4,623

-426

91.5%

5,050

Stock

3,662

112

103.2%

3,550

917

-282

76.5%

1,200

PSF

657

-4293.9%700

Order Placing andAcceptance, etc.

260

-239

52.1%

500

42-25714.2%

300

16,851-1,148

93.6%

18,000Transaction

OthersNet Sales

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11Chapter 2
Results Forecasts for FY12/2017

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12Results Forecasts
POINT

IFRS is applied from the fiscal year ending December 31, 2017.

(¥ million)
FY12/2017(IFRS)YoY (Ratio)
1H

Full-year

FY12/2016(Japanese standards)

YoY (Ratio)

Full-year

1HNet sales

17,000-8,100-

16,851

8,196

Operating income

2,000-

600-

2,227920

Operating income
margin

11.8%

-

7.4%

-13.2%

11.2%

Profit attributable toowners of parent

1,230-390-

1,142622

EPS¥27.79-¥8.81-¥24.05¥12.87** A 2-for-1 stock split effective from December 17, 2016 is reflected.

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13

Sales Forecasts by Category
POINT

Others of Network Service will be affected by the application of IFRS.
(¥ million)
FY12/2016(Japanese standards)

FY12/2017(IFRS)
Full-year YoY (Ratio)

1H

YoY (Ratio) Full-year

1H

Business Application Software

10,700-2.6%

5,000-5.5%

10,9885,293

System Support

1,2500.8%

620

-2.1%

1,239

633

Maintenance

600

5.3%

300

3.5%

570

289

Provision of Consumables

650-3.0%

320-6.9%

669

343

Network Service

5,050

9.2%

2,480

9.2%

4,623

2,270

Stock

3,900

6.5%

1,950

8.1%

3,662

1,803

950

3.5%

460

3.0%

917

446

PSF

650-1.1%

320

0.6%

657

322

Order Placing and Acceptance,
etc.

300

15.2%

140

12.5%

260

124

Others200

370.2%

70

249.9%

4220

17,000

0.9%

8,100

-1.2%

16,851

8,196

Transaction

Net Sales

Copyright (c) Broadleaf Co., Ltd. All rights reserved14Breakdown of Business Application Software Domain
POINT

The renewals of user contracts factor in the shortening of contract
periods.
(¥ million)
FY12/2017(IFRS)
Full year

Automotive

FY12/2016(Japanese standards)

YoY (Ratio)

Full year

7,800

-1.5%

7,922

Renewed

6,500

-5.3%

6,861

New customers

1,300

22.5%

1,061

1,900

19.3%

1,592

1,300

19.2%

1,090

600

19.6%

501

9,700

1.9%

9,515

Renewed

7,800

-1.9%

7,952

New customers

1,900

21.6%

1,563

Other

1,000-32.1%

1,473

Total sales of business application software10,700-2.6%

10,988Non-automotive
RenewedNew customers
Total

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15

Factors of the Increase and Decrease in Operating Income
POINT

Increase the allocation to human capital to ensure growth in themedium to long term
(Decrease in purchaseof equipment)+729(Increase in
Operating net sales)+148

income2,227(Personnelexpenses)(Outsourcing-736expense)-267(¥ million)(Applicationof IFRS)+560(R&Dexpenses)-164(Advertisingexpenses)-137

Operatingincome
2,000(Others)-359

Note: Plus (+) indicates an increase, and minus (-) indicates a decrease.

FY12/2017(Forecast)

FY12/2016
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16

Dividends
POINT

The annual dividend per share for the fiscal year ending
December 31, 2017 is planned to increase.

Annual dividend(Payout ratio)¥21.25*1(88.4%)¥12.50*1(49.5%)

Year¥12.50*2
end¥22.00(79.2%)

Year¥11.00
end

Year- ¥6.25*1
endInterim ¥6.25*1
FY12/2015

Interim ¥8.75*1

FY12/2016

Interim ¥11.00

FY12/2017(Forecast)*1 The amounts reflect a 2-for-1 stock split on December 16, 2016.
*2 The year-end dividend for the fiscal year ended December 31, 2016 will be determinedat the 8th Ordinary General Meeting of Shareholders.
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17Chapter 3
Future Business Development

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18

Review of Mid-term Business Plan (2016-2017)
 Direction of business expansion and review
Concept: Expand business areas by rolling out data-based services
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.

Basic strategies

Progress of initiatives up to FY2016

1. Expansion of customer base
2. Turnaround of profit structure
Priority measures
1. Establish and standardize computerizedordering within the industry.
2. Develop and launch new services and newproducts.
3. Develop and launch of next-generation
systems.
4. Strengthen the management base.

- Gaining new customers- Raising the ratio of Transaction sales- Standardizing computerized ordering
service in the industry- Releasing Buhin MAX and new OTRS- Developing next-generation systems

- Strengthening the executive systemCopyright (c) Broadleaf Co., Ltd. All rights reserved

19Environment Recognition and Priority Strategies
POINT
There are no major competitors in the market. Significant changes taking place in the industrial
structure right now give the Company attractive business opportunities and an excellent
chance to construct entry barriers.

Environment
recognition

Medium- to longterm opportunities
and challenges

Priority measures(2017-2018)

Maturing automotive aftermarket

From systems ownership
to use of systems

Practical application ofnew technologies

Entries from different industries

Creating new markets in response to subtle changes
Changing the profit structure

Changing the profit structureand gaining new customers
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Active investment
to create new markets
20FY2018 Performance Targets
POINTContinue to invest actively to expand business domains and create
new markets as renewals of user contracts increase

FY2018 Targets[Performance][Sales Structure]
Network ServiceNet Sales¥19 billion

30%
Net Sales

Operating Income¥3.2 billion(Operating Income Margin 16.8%)¥19 billion
Business Application
Software63%

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System Support7%21

Expansion of Target Markets and Evolution of Services
POINT

Create new services and new markets by generating value using big
data based on an overwhelming customer base and cloud computing[Expansion of target markets][Evolution of services][Markets and customers]

AppliedApplication of advanced technologies
technology- Application of VR/AR, AI, etc.
(Collaboration with other industries)
servicesAutomanufacturers
Services

Distribution

MobileManufacturingservices

Tourism

Machine tools

Automotive aftermarket
business operators

Bus

Information PF

Distribution PF

Information PF

FinanceBig data & analytics
Information- Auto safety and security support services
services(Collaboration with auto manufacturers)[Services]

Cloud service & software- Business applications- Work efficiency analysis tool (OTRS)

Industry-specificsystems

Business Applications(Web Ver.)

Network/ Web services- EC sites (Buhin MAX)- B2B ordering service (BLP/CPT)[IT infrastructure]

Vehicles

GCP

Components

Information networkHistories
Internet

Auto parts distribution andsettlement services- Recycled parts market (PSN)

Platform

Overseas (components distribution
network & platform)

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22Consider, Connect, Communicate
Field for Our Future
Broadleaf Co., Ltd.

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23

Appendix [Reference Material]

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

24Appendix 1

Our Profile

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 theautomotive 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:764(as of December 31, 2016)

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

Appendix 2Sales Domain

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

Small Classification

Type of Business- Development and sales of business application software for specificbusinesses.
- Development and sales of work analysis and optimization software- Purchase and sales of PCs and printers, etc., and others

Business Application Software

Maintenance- Provision of maintenance services for business application software andhardware to customers to which we sold business application software.

Provision of Consumables- Purchase and sales of special ledger sheets and OA supplies used inbusiness application software.

SystemSupport

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

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

Stock- Operation of “Parts Station NET,” a distribution network for recycled parts
that shares information on the inventories of recycled parts.
Providing payment agency services when selling and purchasing recycledparts and collecting commissions.
Electronic parts order placing - Provision of an electronic order placing and acceptance system for autoand acceptance system, tablet- parts.
based business support tools - Provision of tablet-based business terminals to maintenance shops, etc.,
and others
and others
Payment Agency Service for
Recycled Parts

NetworkServiceTransaction

Other- Products and services other than the above
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26

Disclaimer
Forward-looking statements contained in this material such as results forecasts
and future prospects are forecasts and estimates made by Broadleaf based on
information available at the time of the preparation of the material, and aresubject to potential risks and uncertainties. Please note that actual results may
differ from the statements contained in this material due to various factors.

For inquiries, please contact
Corporate Communications (IR/PR) Department
Broadleaf Co., Ltd.
E-mail: broadleaf-ir@broadleaf.co.jp

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