日本システム技術（4323） – 【Delayed】Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2022

Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 Company name: Stock code: Representative: Contact: Japan System Techniques Co., Ltd. 4323 Takeaki Hirabayashi, President and CEO Toshinori Hamada, General Manager of Planning & Administration Division Listing: Tokyo Stock Exchange URL: https://www.jast.jp Tel: +81-6-4560-1000 May 13, 2022 [Japanese GAAP] Scheduled date of Annual General Meeting of Shareholders: Scheduled date of payment of dividend: Scheduled date of filing of Annual Security Report: Preparation of supplementary materials for financial results: Holding of financial results meeting: Note: The original disclosure in Japanese was released on May 13, 2022 at 16:00 (GMT +9). June 23, 2022 June 9, 2022 June 24, 2022 Yes Yes (for analysts) (All amounts are rounded down to the nearest million yen) 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022) (1) Consolidated results of operations Net sales Operating income (Percentages represent year-on-year changes) Profit attributable to owners of parent Ordinary income Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 Note: Comprehensive income (million yen) Fiscal year ended Mar. 31, 2022: Fiscal year ended Mar. 31, 2021: – 4.3 1,342 (-%) 749 (-%) Million yen 21,399 18,789 % Million yen 2,000 1,216 % Million yen 2,052 1,310 – 25.3 % Million yen 1,330 578 – 28.3 % – – Return on equity Ordinary income on total assets Operating income to net sales Net income per share Diluted net income per share Yen – 107.90 Yen 224.65 107.95 Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 Reference: Equity in earnings of affiliates (million yen): Fiscal year ended Mar. 31, 2022: – Fiscal year ended Mar. 31, 2021: – Note: Beginning with the fiscal year ended March 31, 2022, JAST has applied Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020). All figures for the fiscal year ended March 31, 2022 incorporate this accounting standard and comparisons with the previous fiscal year are omitted. % 16.7 8.9 % 14.5 10.1 % 9.3 6.5 (2) Consolidated financial position Total assets Net assets Equity ratio As of Mar. 31, 2022 As of Mar. 31, 2021 Reference: Shareholders’ equity (million yen) Note: Beginning with the fiscal year ended March 31, 2022, JAST has applied Accounting Standard for Revenue Recognition (ASBJ As of Mar. 31, 2021: As of Mar. 31, 2022: 9,159 6,813 Million yen 15,539 12,861 Million yen 9,194 6,850 Net assets per share Yen 1,493.72 1,265.96 % 58.9 53.0 Statement No. 29, March 31, 2020). All figures as of March 31, 2022 incorporate this accounting standard. (3) Consolidated cash flows Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 2. Dividends Cash flows from operating activities Million yen 1,162 2,131 Cash flows from investing activities Million yen (80) 87 Cash flows from financing activities Million yen 486 (1,247) Cash and cash equivalents at end of period Dividend per share 1Q-end 2Q-end 3Q-end Year-end Total Total dividends Payout ratio (consolidated) Fiscal year ended Mar. 31, 2021 Fiscal year ended Mar. 31, 2022 Fiscal year ending Mar. 31, 2023 (forecasts) Note: Breakdown of the year-end dividend for the fiscal year ended March 31, 2022: Ordinary dividend: 40.00 yen 28.00 40.00 50.00 50.00 0.00 – – Yen – – Yen 28.00 40.00 Yen Million yen 152 248 Yen 0.00 0.00 Yen – – % 25.9 17.8 22.4 3. Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2023 (April 1, 2022 – March 31, 2023) (Percentages represent year-on-year changes) Profit attributable to owners of parent Net income per share Operating income Ordinary income Net sales Full year Million yen 22,400 % 4.7 Million yen 2,120 % Million yen 2,160 6.0 % Million yen 1,370 5.2 % 3.0 Yen 223.41 Million yen 6,463 4,853 Dividend on equity (consolidated) % 2.3 2.9 * Notes (1) Changes in consolidated subsidiaries during the period (changes in scope of consolidation): None Newly added: – Excluded: – (2) Changes in accounting policies and accounting-based estimates, and restatements 1) Changes in accounting policies due to revisions in accounting standards, others: Yes 2) Changes in accounting policies other than 1) above: 3) Changes in accounting-based estimates: 4) Restatements: Please refer to “Notes to Consolidated Financial Statements” for further information (3) Number of outstanding shares (common shares) 1) Number of shares outstanding at the end of the period (including treasury shares) None None None As of Mar. 31, 2022: 6,209,230 shares As of Mar. 31, 2021: 5,612,230 shares 2) Number of treasury shares at the end of the period 3) Average number of shares outstanding during the period As of Mar. 31, 2022: 76,966 shares As of Mar. 31, 2021: 230,423 shares Fiscal year ended Mar. 31, 2022: 5,922,871 shares Fiscal year ended Mar. 31, 2021: 5,362,310 shares Note: The Company’s stock held by the Board Benefit Trust (BBT) is included in the number of treasury shares (74,600 shares as of Mar. 31, 2022 and 47,800 shares as of Mar. 31, 2021), and is deducted from the number of shares that is used to calculate the average number of shares outstanding during the period. Reference: Summary of Non-consolidated Financial Results 1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022) (1) Non-consolidated results of operations (Percentages represent year-on-year changes) Operating income Ordinary income Net sales Profit Million yen 17,082 15,203 % Million yen 1,620 1,001 12.4 5.4 % Million yen 1,751 1,106 61.7 (1.1) % Million yen 999 401 58.3 (1.3) % 149.1 – Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 (2) Non-consolidated financial position Net income per share Diluted net income per share Yen – 74.79 Yen 168.78 74.83 Total assets Net assets Equity ratio As of Mar. 31, 2022 As of Mar. 31, 2021 Reference: Shareholders’ equity (million yen) Note 1: The current financial report is not subject to audit by certified public accountants or auditing firms. As of Mar. 31, 2022: 8,805 As of Mar. 31, 2021: Million yen 13,974 11,785 Million yen 8,805 6,897 % 63.0 58.5 Net assets per share Yen 1,435.85 1,280.62 6,892 Note 2: Cautionary statement with respect to forward-looking statements Forecasts of future performance in these materials are based on assumption judged to be valid and information available to the Company’s management at the time the materials were prepared, but are not promises by the Company regarding future performance. Actual results may differ materially from the forecasts. Please refer to “1. Overview of Results of Operations, (4) Outlook” on page 3 for forecast assumptions and notes of caution for usage. Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 Contents of Attachments 1. Overview of Results of Operations (1) Results of Operations (2) Financial Position (3) Cash Flows (4) Outlook 2. Basic Approach to the Selection of Accounting Standards 3. Consolidated Financial Statements and Notes (1) Consolidated Balance Sheet (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statement of Income Consolidated Statement of Comprehensive Income (3) Consolidated Statement of Changes in Equity (4) Consolidated Statement of Cash Flows (5) Notes to Consolidated Financial Statements Going Concern Assumption Changes in Accounting Policies Additional Information Segment and Other Information Per-share Information Subsequent Events 2 2 3 3 3 4 5 5 7 7 8 9 11 13 13 13 14 14 17 17 1 1. Overview of Results of Operations (1) Results of Operations Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 Although restrictions on economic activity decreased due to progress with COVID -19 vaccinations during the fiscal year that ended in March 2022, the outlook for the Japanese economy remained uncertain because of worries about another wave of infections, the Ukraine crisis and other reasons. In the IT industry in Japan, according to the latest statistics in the “Survey of Selected Service Industries” by the Ministry of Economy, Trade and Industry (the final February 2022 figures), net sales continued to climb, rising 3.5% year on year in fiscal 2021 compared with 0.4% annual growth in fiscal 2020. Despite this growth, the outlook for the IT industry is extremely uncertain because of the pandemic and other reasons. Consolidated sales of the Japan System Techniques Group (Japan System Techniques Co., Ltd. (JAST) and its consolidated subsidiaries, hereafter “the Group”) in the current fiscal year were 21,399 million yen (up 13.9% year on year). Operating income was 2,000 million yen (up 64.5% year on year), ordinary income was 2,052 million yen (up 56.6% year on year), and profit attributable to owners of parent was 1,330 million yen (up 129.9% year on year) due to booking of impairment losses of 87 million yen. Business segment performance was as follows. (Software business) The number of orders for large and prime new customers was larger than one year ea rlier and the volume of orders from current customers remained high. In addition, there were strong sales of BankNeo, a data integration package for financial institutions, growth of business in the ASEAN region, primarily Malaysia, and a decrease in development expenses due to the end of some unprofitable projects. Due to this performance, there was a big improvement in the profitability of this business. As a result, net sales in this business totaled 14,375 million yen (up 13.3% year on year) and the operating income was 585 million yen (up 263.7% year on year). (GAKUEN business) There was firm demand at current customers for replacing the current series of university program products with the new GAKUEN RX and GAKUEN UNIVERSAL PASSPORT RX series, which have high profit margins, contributed to the performance of this business. In addition, there were increases in orders for end user computing (EUC: outsourced development of individual related systems) and sales of IT equipment in association with the use of these two new series. The result was the maintenance of the high profitability of this business, which rose significantly in the previous fiscal year. In previous fiscal years, sales for support services for the use of new software and other work in progress was recognized when the final approval of customers was received. Due to the application of the Accounting Standard for Revenue Recognition beginning with the current fiscal year, this revenue is recognized based on progress with fulfilling performance obligations involving individual projects. As a result, net sales in this business totaled 3,832 million yen (up 19.2% year on year) and the operating income was 1,060 million yen (up 23.9% year on year). (System sales business) Delays in the procurement of IT equipment due to the global semiconductor shortage caused sales of IT equipment to universities, the main activity of this business, to decline. As a result, net sales totaled 1,384 million yen (down 5.5% year on year) and operating income was 106 million yen (down 11.6% year on year). (Medical big data business) Sales of automated inspection services for health insurance claims started to recover in the current fiscal year following the downturn in one year earlier when the number of people using healthcare institutions decreased due to the pandemic. There were also improvements in the performance of analysis services, services for the notification of the cost of medical care, support services for health insurance organizations and other highly profitable businesses. These positive factors increased profitability of this business. As a result, net sales in this business totaled 1,806 million yen (up 27.2% year on year) and operating income was 245 million yen (up 2 170.0% year on year). (2) Financial Position Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 The balance of current assets at the end of the current fiscal year was 12,389 million yen, up 27.8% over the end of the previous fiscal year. This was mainly due to an increase in the collection of accounts receivable -trade linked to performance, and an increase in cash and deposits resulting from the issuance of new shares through the exercise of share acquisition rights and the disposal of treasury shares. Non -current assets were 3,150 million yen (down 0.5% year on year). The balance of current liabilities at the end of the current fiscal year was 4,621 million yen, up 5.3% over the end of the previous fiscal year. This was mainly due to increases in accounts payable -trade and provision for bonuses, and a decrease in short-term borrowings. The balance of non-current liabilities was 1,724 million yen at the end of the current fiscal year, up 6.2% over the end of the previous year. The balance of total net assets was 9,194 million yen at the end of the current fiscal year, up 34.2% over the end of the previous fiscal year. (3) Cash Flows Cash and cash equivalents increased 1,610 million yen from 4,853 million yen at the beginning of the current fiscal year to 6,463 million yen at the end of the current fiscal year. Cash flows by category were as follows. Net cash provided by operating activities totaled 1,162 million yen, compared with 2,131 million yen provided in the previous fiscal year. This difference was mainly due to a decrease in proceeds from the collection of trade receivables, an increase in income taxes paid, an increase in trade payables and a decrease in inventories. Net cash used in investing activities totaled 80 million yen, compared with 87 million yen provided in the previous fiscal year. This difference was mainly due to a decrease in proceeds from redemption of investment securities. Net cash provided by financing activities totaled 486 million yen, compared with 1,247 million yen used in the previous fiscal year. This difference was mainly due to a decrease in short-term borrowings and increases in proceeds from issuance of shares and proceeds from disposal of treasury shares. Reference: Cash flow indicators FY3/19 FY3/20 FY3/21 FY3/18 FY3/22 Equity ratio (%) Equity ratio based on market value (%) Interest-bearing debt to cash flow ratio (years) 50.4 56.4 0.4 46.8 55.5 1.2 47.7 42.1 3.6 94.1 53.0 64.2 0.2 58.9 101.9 0.0 431.8 478.5 615.0 1,009.9 Interest coverage ratio (times) Note: 1. The above figures are calculated as follows. Equity ratio: Shareholders’ equity / Total assets Equity ratio based on market value: Market capitalization / Total assets Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows Interest coverage ratio: Operating cash flows / Interest payments * Market capitalization is calculated by multiplying the closing share price at the end of the period by the number of shares outstanding at the end of the period, excluding treasury shares. * Interest-bearing debt is calculated using total loans-payable on the consolidated balance sheet. * Interest payments use the amount of interest expenses paid stated on the consolidated statement of cash flows. (4) Outlook Although there are increasing expectations for an economic recovery in Japan backed by govern ment measures to support the economy, the business climate for the JAST Group is likely to remain challenging. The main reasons are the high prices and limited supplies of raw materials caused by the Ukraine crisis and uncertainty about the outlook for the COVID-19 pandemic. In the IT industry, where the business climate is extremely volatile, JAST 3 Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 understands that it will be difficult to achieve growth if it remains overly dependent on outsourced development projects, the IT industry’s mainstay source of earnings to date. Consequently, to define the medium to long-term basic policies for the management of the Group, we establish a new three-year medium-term plan every year. Each new plan starts with the fiscal year in which the plan was established. The plan includes the type of organization we want to become, our brand image, our business fields, the size of our operations and other goals. In this fiscal year, we will continue to take many actions in order to accomplish the goals of the current medium-term plan. The JAST Group has established “produce results by using rapid and bold initiatives and thoughtful actions” as its slogan for the fiscal year ending in March 2023. The goal is the use of the “co -creation DX” to expand to business domains with substantial added value while using the outsourced development business model as the primary base for earnings growth. In the GAKUEN, medical big data and other businesses using our own brands, we will focus on making all our brands stronger and increasing our market share as well as on R&D for new technologies and products and on starting new businesses in order to continue the growth of these businesses. Based on this outlook, we expect increases in sales and earnings in the fiscal year ending March 31, 202 3. We forecast net sales of 22,400 million yen (up 4.7% year on year), operating income of 2,120 million yen (up 6.0% year on year), ordinary income of 2,160 million yen (up 5.2% year on year), and profit attributable to owners of parent of 1,370 million yen (up 3.0% year on year). 2. Basic Approach to the Selection of Accounting Standards The Group will continue to prepare consolidated financial statements using generally accepted accounting principles in Japan for the time being to permit comparisons with prior years and with the financial data of other companies. We will take suitable actions with regard to the application of International Financial Reporting Standards (IFRS) by taking into account associated factors in Japan and other countries. 4 Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 FY3/21 (As of Mar. 31, 2021) (Thousands of yen) FY3/22 (As of Mar. 31, 2022) 3. Consolidated Financial Statements and Notes (1) Consolidated Balance Sheet Assets Current assets Cash and deposits Notes and accounts receivable-trade, and contract assets Notes and accounts receivable-trade 9,696,321 12,389,203 – 4,854,727 3,953,965 185,543 527,715 2,544 184,859 (13,034) 829,063 (533,263) 295,799 142,361 518,695 (414,255) 104,440 542,601 175,722 106,056 7,602 13,496 68,329 7,626 378,834 632,126 666,814 416,291 439,769 104,010 (15,208) 2,243,803 3,165,239 12,861,561 – – – 6,464,852 5,533,330 147,538 99,301 5,761 144,293 (5,875) 842,406 (548,763) 293,643 142,361 565,150 (454,587) 110,562 546,567 102,785 83,113 80,909 7,626 274,435 542,531 705,144 536,929 457,167 89,934 (1,925) 2,329,781 3,150,785 15,539,989 Merchandise and finished goods Work in process Raw materials and supplies Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures Accumulated depreciation Buildings and structures, net Land Other Accumulated depreciation Other, net Total property, plant and equipment Intangible assets Goodwill Customer-related assets Trademark right Technology assets Software Other Total intangible assets Investments and other assets Investment securities Retirement benefit asset Deferred tax assets Guarantee deposits Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 5 Liabilities Current liabilities Notes and accounts payable-trade Short-term borrowings Current portion of long-term borrowings Income taxes payable Advances received Contract liabilities Provision for bonuses Provision for bonuses for directors (and other officers) Provision for loss on construction contracts Other Total current liabilities Non-current liabilities Provision for share awards for directors (and other officers) Provision for retirement benefits for directors (and other officers) Retirement benefit liability Deferred tax liabilities Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Share acquisition rights Non-controlling interests Total net assets Total liabilities and net assets Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 FY3/21 (As of Mar. 31, 2021) (Thousands of yen) FY3/22 (As of Mar. 31, 2022) 1,021,837 407,800 2,800 473,761 605,148 – 885,138 62,319 12,797 916,547 4,388,151 84,228 4,239 1,017,504 34,890 482,171 1,623,034 6,011,185 1,076,669 1,128,115 4,605,874 (218,515) 6,592,143 186,775 (81,346) 115,566 220,996 5,530 31,705 6,850,375 12,861,561 – – 1,380,056 8,518 563,468 430,851 1,194,536 77,530 52,960 913,152 4,621,074 120,728 6,646 1,058,791 24,655 513,608 1,724,430 6,345,505 1,535,409 1,703,991 5,865,484 (175,264) 8,929,621 121,768 (2,240) 110,706 230,234 – 34,628 9,194,483 15,539,989 6 Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statement of Income FY3/21 (Thousands of yen) FY3/22 (Apr. 1, 2020 – Mar. 31, 2021) (Apr. 1, 2021 – Mar. 31, 2022) Selling, general and administrative expenses Net sales Cost of sales Gross profit Operating income Non-operating income Interest income Dividend income Rental income Commission income Foreign exchange gains Subsidy income Other Total non-operating income Non-operating expenses Interest expenses Commission expenses Rental expenses Share acquisition rights issuance costs Share issuance costs Other Total non-operating expenses Loss on valuation of investment securities Ordinary income Extraordinary losses Impairment losses Total extraordinary losses Profit before income taxes Income taxes-current Income taxes-deferred Total income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent 18,789,152 14,169,048 4,620,104 3,403,779 1,216,324 24,242 6,919 2,603 1,451 12,251 36,874 19,143 103,485 3,449 929 134 4,545 – 265 9,323 315,925 29,535 345,461 965,025 481,462 (99,559) 381,903 583,122 4,242 578,879 21,399,553 15,711,508 5,688,045 3,687,543 2,000,501 12,020 6,391 2,483 1,971 14,225 14,937 9,268 61,298 1,199 1,899 5,773 415 9,287 – – – 87,398 87,398 1,965,114 773,626 (140,936) 632,689 1,332,424 1,866 1,330,558 1,310,486 2,052,512 7 Consolidated Statement of Comprehensive Income Profit Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans, net of tax Total other comprehensive income Comprehensive income Comprehensive income attributable to: Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 FY3/21 (Thousands of yen) FY3/22 (Apr. 1, 2020 – Mar. 31, 2021) (Apr. 1, 2021 – Mar. 31, 2022) 583,122 73,379 (51,831) 144,545 166,094 749,216 746,171 3,045 1,332,424 (65,007) 79,646 (4,860) 9,779 1,342,203 1,339,796 2,407 8 Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 (3) Consolidated Statement of Changes in Equity FY3/21 (Apr. 1, 2020 – Mar. 31, 2021) Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity (Thousands of yen) Total shareholders’ equity 1,076,669 1,113,912 4,178,503 (233,240) 6,135,844 1,076,669 1,113,912 4,178,503 (233,240) 6,135,844 14,203 (62) 14,787 (151,509) 578,879 – – – (151,509) 578,879 (62) 28,991 456,298 6,592,143 – 1,076,669 14,203 1,128,115 427,370 4,605,874 14,724 (218,515) Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Share acquisition rights Non- controlling interests Total net assets 113,396 (30,713) (28,978) 53,704 – 28,668 6,218,217 113,396 (30,713) (28,978) 53,704 – 28,668 6,218,217 – – – (151,509) 578,879 (62) 28,991 Balance at beginning of period Cumulative effects of changes in accounting policies Restated balance Changes during period Issuance of new shares Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in ownership interest of parent due to transactions with non-controlling interests Net changes in items other than shareholders’ equity Total changes during period Balance at end of period Balance at beginning of period Cumulative effects of changes in accounting policies Restated balance Changes during period Issuance of new shares Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in ownership interest of parent due to transactions with non-controlling interests Net changes in items other than shareholders’ equity Total changes during period Balance at end of period 186,775 (81,346) 73,379 (50,633) 73,379 (50,633) 144,545 144,545 115,566 167,291 167,291 220,996 5,530 5,530 5,530 3,037 175,859 3,037 632,158 31,705 6,850,375 9 Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 FY3/22 (Apr. 1, 2021 – Mar. 31, 2022) Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity (Thousands of yen) Total shareholders’ equity 1,076,669 1,128,115 4,605,874 (218,515) 6,592,143 Issuance of new shares 458,739 458,739 1,076,669 1,128,115 4,686,954 (218,515) 6,673,223 81,080 81,080 116,125 1,011 (152,028) 1,330,558 (87,750) 131,002 458,739 1,535,409 575,876 1,703,991 1,178,529 5,865,484 43,251 (175,264) 2,256,397 8,929,621 Accumulated other comprehensive income Valuation difference on available-for- sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Share acquisition rights Non- controlling interests Total net assets 186,775 (81,346) 115,566 220,996 5,530 31,705 6,850,375 186,775 (81,346) 115,566 220,996 5,530 31,705 6,931,456 917,479 (152,028) 1,330,558 (87,750) 247,127 1,011 81,080 917,479 (152,028) 1,330,558 (87,750) 247,127 1,011 Balance at beginning of period Cumulative effects of changes in accounting policies Restated balance Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in ownership interest of parent due to transactions with non-controlling interests Net changes in items other than shareholders’ equity Total changes during period Balance at end of period Balance at beginning of period Cumulative effects of changes in accounting policies Restated balance Changes during period Issuance of new shares Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in ownership interest of parent due to transactions with non-controlling interests Net changes in items other than shareholders’ equity Total changes during period (65,007) 79,105 (65,007) 79,105 (4,860) (4,860) 9,238 (5,530) 2,923 6,630 9,238 (5,530) 2,923 2,263,027 Balance at end of period 121,768 (2,240) 110,706 230,234 – 34,628 9,194,483 10 (4) Consolidated Statement of Cash Flows Cash flows from operating activities Profit before income taxes Depreciation Amortization of software Amortization of goodwill Amortization of customer-related assets Amortization of trademark Amortization of technology assets Impairment losses Increase (decrease) in provision for bonuses Decrease (increase) in retirement benefit asset Increase (decrease) in retirement benefit liability Interest and dividend income Interest expenses Decrease (increase) in trade receivables Decrease (increase) in trade receivables and contract assets Increase (decrease) in advances received Increase (decrease) in contract liabilities Decrease (increase) in inventories Increase (decrease) in trade payables Other, net Subtotal Interest and dividends received Interest paid Income taxes paid Net cash provided by (used in) operating activities Cash flows from investing activities Proceeds from sale of membership Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of software Purchase of investment securities Proceeds from sale of investment securities Loan advances Collection of loans receivable Proceeds from redemption of investment securities Payments of guarantee deposits Proceeds from refund of guarantee deposits Other, net Net cash provided by (used in) investing activities Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 FY3/21 (Apr. 1, 2020 – Mar. 31, 2021) (Thousands of yen) FY3/22 (Apr. 1, 2021 – Mar. 31, 2022) 965,025 134,863 18,460 46,986 22,891 2,338 4,151 315,925 110,440 (200,870) 26,810 (31,161) 3,449 532,377 (216,632) 55,563 33,402 599,636 2,423,657 31,806 (3,465) (320,531) 2,131,466 (80,639) (22,453) (21,120) 9,909 200,000 (1,389) 4,458 (1,735) 87,030 – – – – – – 1,965,114 114,387 23,215 31,361 20,279 976 1,733 87,398 308,751 (38,329) 41,363 (18,411) 1,199 (1,316,502) – – 35,117 309,800 339,136 (72,578) 1,834,014 38,519 (1,151) (708,462) 1,162,919 690 (51,486) 6,483 (32,391) (1,532) 22,601 (51,812) 45,405 – (19,111) 1,194 (952) (80,912) 11 Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 FY3/21 (Apr. 1, 2020 – Mar. 31, 2021) FY3/22 (Apr. 1, 2021 – Mar. 31, 2022) (Thousands of yen) Cash flows from financing activities Net increase (decrease) in short-term borrowings Repayments of lease obligations Repayments of long-term borrowings Proceeds from issuance of shares Dividends paid Purchase of treasury shares Proceeds from disposal of treasury shares Other, net Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period – (1,092,200) (29,593) (8,400) (151,509) (62) 28,842 5,680 (1,247,242) (25,813) 945,440 3,908,254 4,853,695 (400,000) (28,185) (2,800) 914,768 (152,028) (87,750) 242,854 – 486,858 41,262 1,610,127 4,853,695 6,463,823 12 Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 (5) Notes to Consolidated Financial Statements Going Concern Assumption Not applicable. Changes in Accounting Policies Application of the Accounting Standard for Revenue Recognition JAST started to apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) at the beginning of the current fiscal year. Based on this standard, revenue expected to be received in exchange for the provision of goods and services is recognized when the control of the goods and services is transferred to customers. As a result, the major change involves some contracts where sales were recognized when a final acceptance inspection was performed in accordance with the applicable inspection standards. For contracts where JAST has fulfilled its obligation to the customer over a spec ified period, the amount of progress of fulfilling the obligation is estimated, except when the period is extremely short, and revenue based on the progress is recognized for that period. In addition, the total payment received from customers for a product or service was recognized as revenue in prior years. Now, for transactions where the Group functions as an agent for the provision of a product or service to a customer, the amount paid to the supplier of the product or service is deducted from the payment received from a customer and the resulting net amount is recognized a s revenue. For the application of the Accounting Standard for Revenue Recognition, in accordance with the transitional measures in the proviso to Paragraph 84 of this standard, the cumulative effect of the retrospective application of the new accounting standard, if it is applied prior to the current fiscal year, is added to or subtracted from retaine d earnings at the beginning of the current fiscal year. The new standard is then applied beginning with this amount of retained earnings. In addition, JAST has applied the method prescribed in Paragraph 86, Article 1 of the Accounting Standard for Revenue Recognition, and accounted for contract changes made prior to the beginning of the current fiscal year based on the contract terms after reflecting all contra ct changes, and added or subtracted the cumulative effect of such changes to retained earnings at the beginning of the current fiscal year. As a result, the application of the new standard resulted in reductions of 260,039 thousand yen in net sales and 344,003 thousand yen in cost of sales, and an increase of 83,963 thousand yen each in operating income, ordinary income and profit before income taxes. In addition, the new standard increased retained earnings at the beginning of the current fiscal year by 81,080 thousand yen. The effect of these changes on per-share information is shown in the corresponding section. “Notes and accounts receivable-trade” that was presented in the current assets section of the consolidated balance sheet in the previous fiscal year is presented as “Notes and accounts receivable-trade, and contract assets,” and “Advances received” that was presented in the current liabilities section is presented as “Contract liabilities” from the current fiscal year. In accordance with the transitional measures prescribed in Paragraph 89-2 of the Accounting Standard for Revenue Recognition, no reclassification has been made to the prior year ’s consolidated financial statements to conform to the new presentation. Furthermore, in accordance with the transitional measures prescribed in Paragraph 89-3 of the Accounting Standard for Revenue Recognition, JAST has not presented the Revenue Recognition, Note, for the previous fiscal year. Application of the Accounting Standard for Fair Value Measurement JAST has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019) and other standards from the beginning of the current fiscal year. JAST has applied the new accounting policies set forth by the Accounting Standard fo r Fair Value Measurement prospectively in accordance with the transitional measures in Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). There is no effect on the consolidated financial statements. 13 Additional Information Board Benefit Trust (BBT) Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 Based on the resolution of the 46th Annual General Meeting of Sh areholders, JAST on June 26, 2018 terminated the directors’ retirement benefit system and established a Board Benefit Trust (BBT) for the purpose of increasing motivation for contributing to the medium to long-term growth of sales and earnings and an increase in corporate value. The BBT plan clearly links the compensation of directors with the JAST stock price. Furthermore, directors share with shareholders the benefits of a higher stock price as well as the risk of a lower stock price. 1) Overview This is a stock compensation plan in which directors receive stock compensation through a BBT. The BBT acquires JAST stock using cash contributions from JAST as the source of funds. Directors (excluding external directors; same afterward unless indicated otherwise) receive stock compensation or a monetary amount equivalent to the market value of the stock in lieu of stock compensation in accordance with the rules on the stock compensation plan for directors. In principle, a director becomes eligible for stock compe nsation only after the individual is no longer a JAST director. 2) JAST stock held by the BBT The book value (excluding associated expenses) of JAST stock held by the BBT is shown as treasury shares in the net assets section of the consolidated balance sheet. The BBT held 47,800 shares of JAST with a book value of 87,713 thousand yen as of the end of the previous fiscal year, and the BBT held 74,600 shares with a book value of 171,700 thousand yen as of the end of the current fiscal year. Segment and Other Information Segment information 1. Overview of reportable segment Segments used for financial reporting are JAST and subsidiaries’ constituent units for which separate financial information is available and for which the Board of Directors performs periodic studies for the purposes of determining the allocation of resources and evaluating performance. The Group has four reportable business segments: software business, GAKUEN business, system sales business and medical big data business each of which conducts its business in line with the comprehensive strategy it has devised for products and services in both domestic and overseas markets. The software business handles the contracted software development. The GAKUEN business is engaged in development, sale, and provision of related services of operational reform packages for schools. The system sales business conducts IT equipment sales, IT/telecom infrastructure construction. The medical big data business provides a full line of services including automated inspection services for health insurance claims, data analysis and not ification of the cost of medical care. 2. Calculation method for net sales, profit or loss, assets, liabilities, and other items for each reportable segment The accounting method used for reportable business segments is generally the same as the methods l isted in “Significant Accounting Policies in the Preparation of Consolidated Financial Statements.” Profits for reportable business segments are operating income figures. Inter-segment sales and transfers are based on market prices. As described in Changes in Accounting Policies, JAST has applied the Accounting Standard for Revenue Recognition from the beginning of FY3/22 and changed the accounting method for revenue recognition. Accord ingly, the method for calculating segment profit has been changed as well. The effect of this change was to decrease net sales by 208,604 thousand yen and to decrease segment profit by 20,703 thousand yen for FY3/22 in the software business. Net sales and segment profit increased 150,841 thousand yen and 117,117 thousand yen, respectively, in the GAKUEN business. Furthermore, net sales and segment profit decreased 198,642 thousand yen and 14,390 thousand yen, respectively, in the system sales business, and decreased 3,634 thousand yen and increased 1,940 thousand yen, respectively, in the medical big data business. 14 Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 3. Information related to net sales, profit or loss, assets, liabilities, and other items for each reportable segment FY3/21 (Apr. 1, 2020 – Mar. 31, 2021) (Thousands of yen) Software business GAKUEN business System sales business Medical big data business Total Adjustment (Note 1) (Note 2) Amounts shown on consolidated financial statements (Note 3) 12,687,772 3,216,146 1,465,779 1,419,455 18,789,152 18,789,152 38,759 18,846 14,608 13 72,228 (72,228) Total 12,726,531 3,234,992 1,480,387 1,419,469 18,861,380 (72,228) 18,789,152 Segment profit (loss) 160,996 856,302 120,798 90,831 1,228,929 (12,605) 1,216,324 6,810,264 2,185,172 1,137,765 876,515 11,009,718 1,851,843 12,861,561 139,286 24,001 2,264 17,151 182,705 93,378 22,102 1,107 16,095 132,685 182,705 132,685 Notes: 1. Segment profit (loss) in the above adjustment represents eliminations for inter-segment transactions. 2. Segment assets in the above adjustment consist mainly of corporate assets that cannot be attributed to any of the 3. Segment profit (loss) is adjusted with operating income shown on the consolidated statement of income. reportable segments. FY3/22 (Apr. 1, 2021 – Mar. 31, 2022) Net sales 1. External sales 2. Inter-segment sales and transfers Segment assets Other items Depreciation Increase in property, plant and equipment and intangible assets Software business GAKUEN business System sales business Medical big data business Total Adjustment (Note 1) (Note 2) (Thousands of yen) Amounts shown on consolidated financial statements (Note 3) Net sales 1. External sales 2. Inter-segment sales and transfers Segment assets Other items Depreciation Increase in property, plant and equipment and intangible assets 14,375,818 3,832,613 1,384,900 1,806,220 21,399,553 21,399,553 69,399 6,339 5,323 – 81,061 (81,061) Total 14,445,217 3,838,952 1,390,223 1,806,220 21,480,614 (81,061) 21,399,553 Segment profit (loss) 585,498 1,060,939 106,826 245,209 1,998,473 2,028 2,000,501 8,367,843 2,877,693 1,247,998 1,257,172 13,750,709 1,789,279 15,539,989 119,937 22,888 1,878 15,889 160,593 78,532 20,252 588 12,690 112,063 160,593 112,063 Notes: 1. Segment profit (loss) in the above adjustment represents eliminations for inter-segment transactions. 2. Segment assets in the above adjustment consist mainly of corporate assets that cannot be attributed to any of the reportable segments. 3. Segment profit (loss) is adjusted with operating income shown on the consolidated statement of income. – – – – – – – – 15 Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 Related information 1. Information by product or service 2. Information by region (1) Net sales (2) Property, plant and equipment 3. Information by major client FY3/21 (Apr. 1, 2020 – Mar. 31, 2021) This information is omitted because the same information is presented in segment information. Geographical information concerning sales to external customers in Japan is not presented since sales to external customers exceeded 90% of net sales shown on the consolidated statement of income. Japan Overseas Total 479,692 thousand yen 66,875 thousand yen 546,567 thousand yen Company name Net sales Business segment NTT COMWARE CORPORATION 1,716,652 thousand yen Software business FY3/22 (Apr. 1, 2021 – Mar. 31, 2022) Company name Net sales Business segment TIS Inc. 1,520,224 thousand yen Software business Information related to impairment losses of non-current assets for each reportable segment FY3/21 (Apr. 1, 2020 – Mar. 31, 2021) Software business GAKUEN business System sales business Medical big data business Elimination or corporate Total (Thousands of yen) Impairment losses Note: In the software business, there were impairment losses of 1 98,521 thousand yen for goodwill, 45,255 thousand yen for customer-related assets, 25,997 thousand yen for trademark rights and 46,152 thousand yen for technology assets. 315,925 315,925 – – – – FY3/22 (Apr. 1, 2021 – Mar. 31, 2022) Software business GAKUEN business System sales business Medical big data business Elimination or corporate Total (Thousands of yen) Impairment losses Note: In the software business, there were impairment losses of 55,939 thousand yen for goodwill, 11,129 thousand yen for customer-related assets, 7,325 thousand yen for trademark rights and 13,004 thousand yen for technology assets. 87,398 – – – – 87,398 Information related to goodwill amortization and the unamortized balance for each reportable segment FY3/21 (Apr. 1, 2020 – Mar. 31, 2021) (Thousands of yen) Software business GAKUEN business System sales business Medical big data business Elimination or corporate Amortization for the period Balance at end of period 46,986 175,722 FY3/22 (Apr. 1, 2021 – Mar. 31, 2022) Software business Amortization for the period Balance at end of period 31,361 102,785 – – – – – – – – Total 46,986 175,722 Total 31,361 102,785 – – – – (Thousands of yen) GAKUEN business System sales business Medical big data business Elimination or corporate Note: In the software business, there was an impairment loss of 198,521 thousand yen for goodwill. Note: In the software business, there was an impairment loss of 55,939 thousand yen for goodwill. Information related to gain on bargain purchase for each reportab le segment Not applicable. – – – – 16 Notes: 1. Diluted net income per share for FY3/22 is not presented since the Company has no outstanding dilutive securities. 2. As described in the Changes in Accounting Policies, JAST has applied the Accounting Standard for Revenue Recognition. As a result, net income per share for FY3/22 increased by 14.18 yen. 3. The basis of calculation is as follows. FY3/21 (As of Mar. 31, 2021) FY3/22 (As of Mar. 31, 2022) (Thousands of yen) Per-share Information Net assets per share Net income per share Diluted net income per share Net assets per share Total net assets on balance sheet Deduction on total net assets (Non-controlling interests) Net assets applicable to common shares Number of common shares used in calculation of net assets per share Net income (loss) per share Profit (loss) attributable to owners of parent Amount not available to common shareholders Profit (loss) attributable to owners of parent applicable to common shares Diluted net income per share Adjustment to profit attributable to owners of parent Increase in the number of common shares (Share acquisition rights) Summary of potential stock not included in the calculation of diluted net income per share since there was no dilutive effect Japan System Techniques Co., Ltd. (4323) Financial Results for FY3/22 FY3/21 (Apr. 1, 2020 – Mar. 31, 2021) FY3/22 (Apr. 1, 2021 – Mar. 31, 2022) (Yen) 1,493.72 224.65 – 9,194,483 34,628 (34,628) 9,159,855 (Thousands of yen) – – 5,381,807 shares 6,132,264 shares FY3/21 (Apr. 1, 2020 – Mar. 31, 2021) FY3/22 (Apr. 1, 2021 – Mar. 31, 2022) 578,879 1,330,558 578,879 1,330,558 2,603 shares (2,603 shares) – shares ( – ) 1,265.96 107.95 107.90 6,850,375 37,236 (31,705) 6,813,139 – – – Average number of shares outstanding during period 5,362,310 shares 5,922,871 shares Note: JAST has established a new Board Benefit Trust (BBT). The Company’s stock remaining in the BBT (47,800 shares as of March 31, 2021 and 74,600 as of March 31, 2022) is included in treasury shares in shareholders’ equity and dedu cted from the number of shares outstanding at the end of the period that is used to calculate net assets per share. Moreover, the BBT shares (47,800 shares in FY3/21 and 55,100 shares in FY3/22) are included in treasury shares deducted from the number of shares used to calculate the average number of shares outstanding during the period that is used to calculate net income per share. Subsequent Events Not applicable. This financial report is solely a translation of “Kessan Tanshin” (in Japanese, includi ng 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. 17