クレスコ（4674） – ［Delayed］Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Based on Japanese GAAP)

Translation Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail. Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Based on Japanese GAAP) May 10, 2022 Company name: CRESCO LTD. Stock exchange listing: Tokyo Stock code: 4674 Representative: Inquiries: Officer URL https://www.cresco.co.jp/ Chairman & CEO Director & Senior Managing Executive Hiroyuki Nemoto Kazuo Sugiyama TEL +81-3-5769-8011 Scheduled date of Ordinary General Meeting of Shareholders: Scheduled date to commence dividend payments: Scheduled date to file annual securities report: Preparation of supplementary material on financial results: June 17, 2022 June 20, 2022 June 20, 2022 No Yes for analysts Holding of financial results meeting: 1. Consolidated financial results for the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) (Amounts less than one million yen are rounded down) (1) Consolidated operating results Net sales Operating profit Ordinary profit Millions of yen 44,450 39,706 % Millions of yen 4,457 3,484 11.9 0.9 % Millions of yen 4,782 4,101 27.9 (2.0) % Millions of yen 3,236 2,634 16.6 10.5 % 22.9 8.8 Percentages indicate year-on-year changes Profit attributable to owners of parent Fiscal year ended March 31, 2022 March 31, 2021 Note: Comprehensive income Fiscal year ended March 31, 2022: ¥3,464 million Fiscal year ended March 31, 2021: ¥4,024 million [(13.9)%] [92.6%] Earnings per share Diluted earnings per share Return on equity Ordinary profit on total assets Operating profit on net sales Fiscal year ended March 31, 2022 March 31, 2021 Yen 153.92 125.43 Yen – – % 15.6 14.8 % 15.1 14.4 % 10.0 8.8 Reference: Share of profit (loss) of entities accounted for using equity method: Fiscal year ended March 31, 2022: ¥2 million Fiscal year ended March 31, 2021: ¥18 million Total assets Net assets Equity ratio Net assets per share Millions of yen 33,136 30,342 Millions of yen 22,134 19,485 % 66.8 64.2 Yen 1,051.97 926.96 As of March 31, 2022: ¥22,134 million As of March 31, 2021: ¥19,485 million (2) Consolidated financial position As of March 31, 2022 March 31, 2021 Reference: Equity (3) Consolidated cash flows Fiscal year ended March 31, 2022 March 31, 2021 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of period Millions of yen 3,222 3,155 Millions of yen (1,155) (47) Millions of yen (1,352) (1,479) Millions of yen 11,737 11,015 2. Cash dividends Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Fiscal year ending March 31, 2023 (Forecast) Annual dividends per share 3rd quarter-end Fiscal year-end 2nd quarter-end 1st quarter-end Yen Yen 18.00 20.00 23.00 – – – Yen – – – Total Yen 38.00 44.00 Yen 20.00 24.00 23.00 46.00 Total dividend payments Millions of yen 798 925 Dividend payout ratio (Consolidated) Dividend on equity (Consolidated) % 30.3 28.6 28.9 % 4.5 4.4 3. Forecast of consolidated financial results for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31, 2023) Net sales Operating profit Ordinary profit Percentages indicate year-on-year changes Profit attributable to owners of parent Earnings per share Six months ending September 30, 2022 Full year Millions of yen 22,840 47,500 % 8.4 6.9 Millions of yen 2,090 4,750 % 3.6 6.6 Millions of yen 2,340 5,150 % 5.2 7.7 Millions of yen % 1,420 (11.6) 3,350 3.5 Yen 67.49 159.22 4. Notes change in scope of consolidation): (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the (2) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements Changes in accounting policies due to revisions to accounting standards and other regulations: Changes in accounting policies due to other reasons: Changes in accounting estimates: Restatement of prior period financial statements: No Yes No No No (3) Number of issued shares (common shares) Total number of issued shares at the end of the period (including treasury shares) As of March 31, 2022 23,000,000 shares As of March 31, 2021 23,000,000 shares As of March 31, 2022 1,959,443 shares As of March 31, 2021 1,978,723 shares Fiscal year ended March 31, 2022 21,028,175 shares Fiscal year ended March 31, 2021 21,002,402 shares Number of treasury shares at the end of the period Average number of shares during the period (Reference) Summary of non-consolidated financial results 1. Non-consolidated financial results for the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) (1) Non-consolidated operating results Percentages indicate year-on-year changes Net sales Millions of yen 25,991 22,837 Operating profit Ordinary profit Profit % 13.8 (0.9) Millions of yen 2,850 2,211 % Millions of yen 3,380 2,937 28.9 (11.2) % Millions of yen 2,469 2,144 15.1 8.3 % 15.1 18.2 Fiscal year ended March 31, 2022 March 31, 2021 Fiscal year ended March 31, 2022 March 31, 2021 Earnings per share Diluted earnings per share Yen 117.42 102.12 Yen – – (2) Non-consolidated financial position As of March 31, 2022 March 31, 2021 Reference: Equity Total assets Net assets Equity ratio Net assets per share Millions of yen 26,819 25,205 Millions of yen 17,869 15,997 % 66.6 63.5 Yen 849.29 761.01 As of March 31, 2022 ¥17,869 million As of March 31, 2021 ¥15,997 million 2. Forecast of non-consolidated financial results for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31, 2023) Net sales Millions of yen 13,560 28,000 % 8.8 7.7 Ordinary profit Millions of yen % 7.4 9.5 1,940 3,700 Percentages indicate year-on-year changes Profit Millions of yen Earnings per share Yen % 1,350 (6.9) 2,560 3.7 64.16 121.67 Six months ending September 30, 2022 Full year corporation. * Financial results reports are exempt from audit conducted by certified public accountants or an audit * Proper use of earnings forecasts, and other special matters The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. The Company makes no promise regarding achievement of any content in the forward-looking statements. Actual business and other results may differ substantially due to various factors. Please refer to “(4) Outlook for the coming year, 1. Overview of operating results and others” on page 7 of the attached materials for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use of business results forecasts. Contents 1. Overview of operating results and others ……………………………………………………………………………………………………………. 2 (1) Overview of operating results for the fiscal year under review …………………………………………………………………………… 2 (2) Overview of financial position for the fiscal year under review ………………………………………………………………………….. 6 (3) Overview of cash flows for the fiscal year under review …………………………………………………………………………………… 6 (4) Outlook for the coming year ………………………………………………………………………………………………………………………….. 7 2. Basic policy on the selection of accounting standards ………………………………………………………………………………………….. 8 3. Consolidated financial statements and significant notes thereto …………………………………………………………………………….. 9 (1) Consolidated balance sheets ………………………………………………………………………………………………………………………….. 9 (2) Consolidated statements of income and consolidated statements of comprehensive income ………………………………….. 11 (3) Consolidated statements of changes in equity ………………………………………………………………………………………………… 14 (4) Consolidated statements of cash flows ………………………………………………………………………………………………………….. 16 (5) Notes on consolidated financial statements ……………………………………………………………………………………………………. 18 (Notes on the premise of going concern) ………………………………………………………………………………………………………….. 18 (Changes in accounting policies) …………………………………………………………………………………………………………………….. 18 (Additional information) ………………………………………………………………………………………………………………………………… 19 (Segment information, etc.) …………………………………………………………………………………………………………………………….. 19 (Per share information) ………………………………………………………………………………………………………………………………….. 24 (Material subsequent events) …………………………………………………………………………………………………………………………… 25 1 1. Overview of operating results and others (1) Overview of operating results for the fiscal year under review As the Company started the ten-year long-term Group vision “CRESCO Group Ambition 2030” on April 1, 2021, FY2021 was the first fiscal year under the vision. As medium-term management plans for realizing the said vision, the Group established the three-step plans: Medium-Term Management Plan 2023 (2021-2023), Medium-Term Management Plan 2026 (2024-2026) and Medium-Term Management Plan 2030 (2027-2030). The Medium-Term Management Plan 2023, step 1 plan, targets “50 billion yen consolidated net sales,” “5 billion yen consolidated operating profit” and “15% or greater ROE.” “CRESCO Group Ambition 2030” Create the future, Beyond the horizon We will realize a stimulating future through the best technology and partnerships Medium-Term Management Plan 2023 Net sales of 100 billion yen is aimed at through realizing the “CRESCO Group Ambition 2030.” In order to realize this goal, the Medium-Term Management Plan 2023 prescribes following key strategies, basic strategies, and operational targets. (Three Key Strategies for Creating New Business Pillars) ・ Reinforcement of digital solutions (doubling digital solution sales and adding new digital solutions) ・ Evolution of flexible management (being selected as a “DX stock” and expanding business by reinforcing group-wide coordination) ・ Enhancement of people-centered management (Aiming to rank among the upper tier of “Certified Health & Productivity Management Outstanding Organizations” and improving development of next-generation human resources) (Three basic strategies for fortifying core business areas) ・ Expansion of IT services (business expansion in accordance with measures specified for each of enterprise, finance and manufacturing subsegments) ・ Enhancement of quality (continual improvement and implementation of management processes in response to new technology and changes in demand) ・ Enhancement of technologies (business expansion by new or key technologies (AI, cloud computing and agile methodology)) (Operational targets) ・ Consolidated net sales: 50 billion yen ・ Consolidated operating profit: 5 billion yen ・ ROE: 15% or greater When it comes to the business environment during the fiscal year ended March 31, 2022, while the scourge of COVID-19 lingered, business confidence improved in a wide range of industries compared to the previous fiscal year although the extent of improvement varied by industry categories. While the spread of infection by Omicron variant was concerned after the total removal of the state of emergency declaration and semi-state of emergency COVID-19 measures, its impact was limited: the situation continued where vigorous moves are found toward the normalization of economic activities. While the trends in corporate activities improved, a progress in the execution of IT strategies also accelerated, led primarily by “digital transformation (DX).” The Group also has received many business inquiries. As those 2 April 2021: May 2021: June 2021: industries and categories of industries heavily hit by the scourge of COVID-19 look to the future, a sign of recovery is seen in IT investment. Besides online business meetings, the Group’s face-to-face sales activities recovered to the previous level, and there was no significant obstacle to developing new customers. In accordance with the Medium-Term Management Plan 2023, the Group devoted its efforts to reviewing the customer portfolio and business structure in response to changes in the environment, maintaining the amount of orders primarily from existing customers, and developing new businesses and services incorporating advanced technology (AI, cloud computing, etc.); and, at the same time, the Group consistently implemented aggressive measures including the promotion of internal digital transformation (reinforcing a teleworking system, making effective use of online communication tools, and reinforcing digital marketing) and the optimization of office spaces. In addition, as a part of evangelist activities, the Group implemented various promotional activities including open seminars related to AI, cloud computing, and RPA and lectures given at various events. Topics for the fiscal year under review are as follows. ・ Started the Group Vision, “CRESCO Group Ambition 2030.” ・ An employee of the Company gave a talk at “UiPath Today” held by UiPath. ・ Changed reportable segments. ・ Certified as a “Digital Transformation Certified Company” by the Ministry of Economy, Trade and Industry. ・ Attained a “gold competency” as a Microsoft partner. ・ Introduced a system of special leave for COVID-19 vaccination and any side effects experienced following vaccination. ・ Received a Gold Merit Award from the Japanese Red Cross Society for support provided by the Company regarding COVID-19. ・ Announced the acquisition of shares of OEC Ltd (as a subsidiary). ・ Established the Remuneration Committee. July 2021: ・ Announced the Microsoft Azure® support by the cloud management service “Creage.” ・ An employee of the Company gave a talk at “PMI Japan Forum 2021,” held by PMI Japan Chapter. ・ Changes in officers made (effective October 1, 2021). August 2021: ・ Established a multipurpose studio to serve as a “place for new normal social interaction” that blends real and online worlds. ・ Participated in an initiative to support the use of digital technology in public elementary and secondary schools in Tokyo. ・ Completed the disposal of treasury shares as restricted shares remuneration for directors of the Company and its subsidiaries. September 2021: ・ Opened a new website introducing the Company’s solutions, customer use cases, etc. ・ Organizational and personnel changes made (effective October 1, 2021). 3 ・ Creative Japan, Ltd., a subsidiary of the Company, announced the “Add-on IoT Development Kit for ELTRES.” (Product Name: ELTRESアドオンIoT開発キット) October 2021: ・ Held the online event “Cresco Fair 2021.” ・ Concluded a distributorship agreement for an IaaS-based cloud service “SOROBAN.” ・ Creative Japan, Ltd. held the “IoT and Edge AI Ideas Contest 2021” ・ An employee of the Company was certified as a “UiPath Japan MVP 2021” for two years in a row. November 2021: December 2021: ・ An employee of the Company gave a talk at “ET & IoT 2021” held by the Japan Embedded Systems Technology Association. ・ Earned a three-star rating in the Fifth Nikkei Smart Work Management Survey. ・ Selected the Prime Market in the new market segments of the Tokyo Stock Exchange. ・ An employee of the Company won a prize in the “AI Contest on Ophthalmology at the 2nd Annual Meeting of the Japanese Society of Artificial Intelligence in Ophthalmology.” ・ Started a joint research project with Nagoya University on embedded security. ・ Completed the disposal of treasury shares as restricted shares remuneration for employees of the Company. ・ Sold a part of shares of Wain Co., Ltd., an affiliate of the Company, and excluded it from the scope of application of the equity method. ・President changed (effective April 1, 2022). January 2022: ・ The Company’s IR website was awarded by IR website ranking surveys by major three companies. ・ Listed on the Prime Market in the new market segment of the Tokyo Stock Exchange. ・ Started granting a leave for third COVID-19 vaccination. ・ Started an initiative to support the use of digital technology in public elementary and secondary schools in Tokyo. ・ Announced the agreement on planned merger among the three consolidated subsidiaries of the Company. February 2022: ・ Extended the club sponsorship agreement with FC Tokyo of the Japan Professional Football League (J.League). ・ Announced a change in the corporate brand logo of the Company and the change of the trade name of Creative Japan, Ltd. ・ Changes in officers made (effective June 17, 2022). ・ Organizational and personnel changes made (effective April 1, 2022). ・ The forecasts of (consolidated and non-consolidated) financial results and cash dividends revised. March 2022: ・ An employee of the Company gave a talk at “IT Trend EXPO 2022 Spring.” ・ Certified as a “2022 recognized organization” under the Certified Health & Productivity Management Outstanding Organizations Recognition Program. ・ An employee of the Company selected as a “2022 IBM Champion.” 4 ・ Announced the restructuring of three consolidated subsidiaries (merger of wholly owned subsidiaries) of the Company. ・ Hiroshi Tominaga, the new President of the Company, appeared in the “この企業に注目！相場の福の神 (Kono-kigyo-ni chumoku! soba-no fuku-no-kami)” on Radio NIKKEI. As a result of the above, both sales and profit increased, and for the fiscal year ended March 31, 2022, the Company recorded 44,450 million yen in net sales (11.9% increase from 39,706 million yen for the previous fiscal year), 4,457 million yen in operating profit (27.9% increase from 3,484 million yen for the previous fiscal year), 4,782 million yen in ordinary profit (16.6% increase from 4,101 million yen for the previous fiscal year), and 3,236 million yen in profit attributable to owners of parent (22.9% increase from 2,634 million yen for the previous fiscal year). Operating results for each segment are as follows. As business segments to be indicated as reportable segments were changed from the current fiscal year, comparison and analysis regarding the current fiscal year are based on the classification after the change. Segment Fiscal year ended March 31, 2021 Net sales (thousand yen) Fiscal year ended March 31, 2022 Year on year Segment profit and loss (thousand yen) Fiscal year ended March 31, 2022 Fiscal year ended March 31, 2021 Year on year Enterprise 17,075,810 18,219,847 106.7% 1,676,054 2,255,224 Finance 12,360,724 13,689,402 110.7% 1,534,308 1,719,695 Manufacturing 8,809,725 10,433,216 118.4% 1,425,119 1,744,049 Total IT services business 38,246,259 42,342,466 110.7% 4,635,482 5,718,970 Digital solutions business 1,459,884 2,107,907 144.4% 126,175 145,193 Total 39,706,144 44,450,374 111.9% 4,761,657 5,864,164 134.6% 112.1% 122.4% 123.4% 115.1% 123.2% (i) IT services business (Enterprise) For the IT services business, net sales were 42,342 million yen (10.7% increase year on year), and segment profit (operating profit) was 5,718 million yen (23.4% increase year on year). Business results for each subsegment are as follows. Net sales of the enterprise subsegment were 18,219 million yen (6.7% increase year on year). This owes primarily to the recovery of orders received in areas of recruitment and dispatching, transport, construction and real estate and travel and hotels, which were affected by the scourge of COVID-19 in the previous fiscal year and to an increase in net sales in the area of medical and health care as a result of the consolidation of OEC Ltd. from the second quarter. The segment profit (operating profit) of the enterprise subsegment was 2,255 million yen (34.6% increase year on year). This owes primarily to the said increase in net sales, the elimination of a decline in productivity during the transition to the teleworking system as a result of the scourge of COVID-19 in the first half of the previous fiscal year, and, in addition, the disappearance of unprofitable projects that had occurred at consolidated subsidiaries in the first half of the previous fiscal year. (Finance) Net sales of the finance subsegment were 13,689 million yen (10.7% increase year on year). This owes to the reception of an order for a large project in the insurance area, an expansion in IT investment in other areas including securities and credit cards, and, in addition, an increase in revenue in other areas owing to the effect of consolidating OEC Ltd. The segment profit (operating profit) of the finance subsegment was 1,719 million yen (12.1% increase year on year). This owes mainly to the said increase in net sales. 5 (Manufacturing) Net sales of the manufacturing subsegment were 10,433 million yen (18.4% increase year on year). This owes to an increase in projects intended as anticipatory investment in the area of machinery and electronics and the consolidation of OEC Ltd. despite the fact that net sales ended up at almost the same level in the area of automotive and transport equipment due to semiconductor shortage resulting from COVID-19 calamity. The segment profit (operating profit) of the manufacturing subsegment was 1,744 million yen (22.4% increase year on year). This owes to the elimination of a decline in productivity due to COVID-19 in the first half of the previous fiscal year and, in addition, the said increase in net sales in the area of machinery and electronics in spite of the occurrence of an unprofitable project at a consolidated subsidiary in the area of automotive and transport equipment. (ii) Digital solutions business Net sales of the digital solution business was 2,107 million yen (44.4% increase year on year). This owes to an increase in sales of Creage, the Company’s main cloud service, and RPA license and the acquisition of large solution projects by certain consolidated subsidiaries. The segment profit (operating profit) was 145 million yen (15.1% increase year on year). This owes to a significant increase in net sales in the current fiscal year, as stated above, despite the sale of highly profitable license in the fourth quarter of the previous fiscal year. (2) Overview of financial position for the fiscal year under review Total assets at the end of the fiscal year under review were 33,136 million yen, a year-on-year increase of 2,794 million yen. Currents assets rose by 2,107 million yen year on year to 22,186 million yen. This is mainly because cash and deposits, notes and accounts receivable – trade, and contract assets, securities, prepaid cost and work in progress increased by 806 million yen, 683 million yen, 497 million yen, 60 million yen and 45 million yen, respectively. Non-current assets rose by 687 million yen year on year to 10,949 million yen. This is mainly because, although investment securities, software and deferred tax assets decreased by 237 million yen, 73 million yen and 37 million yen, respectively, goodwill increased by 1,034 million yen. Total liabilities at the end of the fiscal year under review were 11,002 million yen, a year-on-year increase of 146 million yen. Current liabilities increased by 281 million yen year on year to 7,434 million yen. This is mainly because, although income taxes payable decreased by 120 million yen, accounts payable – trade and provision for bonuses increased by 255 million yen and 142 million yen, respectively. Non-current liabilities decreased by 135 million yen year on year to 3,568 million yen. This is mainly because, although retirement benefit liability increased by 203 million yen, long-term borrowings and asset retirement obligations decreased by 322 million yen and 17 million yen, respectively. Total net assets at the end of the fiscal year under review were 22,134 million yen, a year-on-year increase of 2,648 million yen. This is mainly because retained earnings and valuation difference on available-for-sale securities increased by 2,377 million yen and 197 million yen, respectively and because treasury shares decreased by 23 million yen. (3) Overview of cash flows for the fiscal year under review The balance of cash and cash equivalents at the end of the fiscal year under review was 11,737 million yen, a year-on-year increase of 722 million yen. Cash flows from operating activities There was a net cash inflow of 3,222 million yen from operating activities, compared to a net cash inflow of 3,155 million yen for the previous fiscal year. This is primarily because of profit before income taxes of 4,879 million yen despite income taxes paid of 1,742 million yen. 6 Cash flows from investing activities There was a net cash outflow of 1,155 million yen from investing activities, compared to a net cash outflow of 47 million yen for the previous fiscal year. This is primarily because of the expenditure of 4,994 million yen for purchase of investment securities, 1,168 million yen for purchase of shares of subsidiaries resulting in change in scope of consolidation and 553 million yen for purchase of securities despite the revenue of 4,373 million yen from redemption of investment securities, 948 million yen from sales of investment securities and 385 million yen from sale of securities. Cash flows from financing activities There was a net cash outflow of 1,352 million yen from financing activities, compared to a net cash outflow of 1,479 million yen for the previous fiscal year. This was primarily because of dividends paid of 840 million yen and the expenditure of 809 million yen for repayment of long-term borrowings despite the revenue of 360 million yen from long-term loans payable. (4) Outlook for the coming year The consolidated earnings forecasts for the fiscal year ending March 31, 2023 herein found was created on the basis of judgment in light of presently available and reasonable information and following assumptions; they can differ significantly the actual results due to factors including various risks, uncertain elements, etc. ・ While the timing of the abatement of COVID-19 calamity is uncertain, its impact is limited, posing no obstacle to the Group’s business. The fact remains, however, that the abatement of COVID-19 calamity is difficult for the time being and that a downward risk for the economy caused by the occurrence and prevalence of a new variant can still not be eliminated. If requests for business suspension and shorter business hours in specific industries and other infection preventive measures due to COVID-19 are taken again or if a governmental action, etc. is taken in response to the global spread of infection resulting from the occurrence of a new variant, they will have unavoidable impacts on customers and the Group: the current situation still does not allow optimism. Recently, however, in addition to the fact that efforts are prevailing for reverting back to daily life and economic activities with as less restriction as possible by placing greater weight on infection prevention measures including the third vaccination, online and face-to-face sales activities, remote development and working from home have become normal: the scourge of COVID-19 is judged to have had a limited impact on the Group’s business during the fiscal year ended March 31, 2022. ・ Depending on its situation, the Russo-Ukrainian conflict may have a great impact on customers’ businesses and also affect IT investment. The Russo-Ukrainian conflict has developed into a war and became an international issue involving not only those two countries but also Europe, the U.S. and China. The aggravation of supply-chains and price hikes caused by economic sanctions and import and export restriction by countries concerned have manifested themselves to result in the situation that precludes prediction. It is predicted that, depending on changes in the situation of the Russo-Ukrainian conflict, the economy may deteriorate to give a great impact on customers’ businesses, resulting in a downturn in IT investment. By closely monitoring the economic trend and the conflict situation and conducting flexible sales activities in advance, it is intended to cope with the said crisis always in a flexible and responsive manner. ・ Regarding business confidence, despite opacity about the future, basically, an improving trend in IT investment will continue, and orders received will increase. The economic outlook for FY2022 deteriorated for both manufacturing and non-manufacturing enterprises in the BOJ Tankan survey in March 2022 for the first time in seven quarters since June, 2020. The actual result diffusion index (DI) for large manufacturing enterprises, a major indicator of the Tankan survey, was 14, deteriorating by 1 point from the value in the previous survey in December, and the forecast DI for them was 9, which factors in the deterioration of 5 points from the actual result DI of 14. The actual result DI for large nonmanufacturing enterprises also deteriorated by 1 point from the value in the previous survey in December to 9, and the forecast DI for them was 7, which factors in the deterioration of 2 points from the actual result DI of 9: opacity about the future is undeniable when it comes to business confidence. On the other hand, software 7 investment (forecast) for FY2022 continues to remain greater than in FY2021 for all enterprises in all industries: a reaction to a delay in IT investment in FY2021 and a further progress in digital transformation are expected to occur. Needs to respond to new normalcy will be tailwind for digital transformation (DX), which realizes business reform and competitiveness reinforcement, and orders received are expected to increase in the future also. It is intended to strive for acquiring orders steadily by satisfying diversifying and complicating needs. If any event that should be disclosed occurs due to any error in these assumptions, etc., the Company will promptly announce it. 2. Basic policy on the selection of accounting standards Taking into consideration the ability to compare not only consolidated financial statements for different accounting periods but also the Company to other companies, the Group has adopted, for the time being, a policy of creating consolidated financial statements based on Japanese generally accepted accounting principles. As for the application of International Financial Reporting Standards (IFRS), the Company plans on appropriately responding after considering conditions both in Japan and overseas. 8 3. Consolidated financial statements and significant notes thereto (1) Consolidated balance sheets Assets As of March 31, 2021 As of March 31, 2022 (Thousands of yen) 20,079,762 22,186,996 Current assets Cash and deposits Notes and accounts receivable – trade Notes receivable – trade Accounts receivable – trade Contract assets Electronically recorded monetary claims – operating Securities Money held in trust Merchandise and finished goods Work in process Supplies Prepaid expenses Other Total current assets Non-current assets Property, plant and equipment Buildings Accumulated depreciation Buildings, net Tools, furniture and fixtures Accumulated depreciation Tools, furniture and fixtures, net Land Leased assets Accumulated depreciation Leased assets, net Total property, plant and equipment Intangible assets Goodwill Software Other Total intangible assets Investments and other assets Investment securities Leasehold and guarantee deposits Insurance funds Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 9 11,039,932 7,855,304 – – – 15,608 459,292 64,146 37,315 156,750 1,655 343,748 106,008 733,255 (415,947) 317,308 589,040 (464,390) 124,650 19,990 18,408 (12,290) 6,117 468,066 494,413 556,142 12,950 1,063,506 6,704,112 896,299 124,480 906,330 207,127 (107,209) 8,731,141 10,262,714 30,342,477 11,846,082 – 434,665 7,905,749 198,834 31,361 957,044 73,436 41,477 202,280 32,870 404,271 58,922 774,542 (446,788) 327,754 558,987 (452,038) 106,948 19,990 21,888 (14,824) 7,063 461,756 1,528,539 482,691 14,163 2,025,393 6,466,936 896,403 121,835 868,409 216,363 (107,209) 8,462,740 10,949,890 33,136,886 (Thousands of yen) As of March 31, 2021 As of March 31, 2022 Liabilities Current liabilities Accounts payable – trade Short-term borrowings Current portion of long-term borrowings Lease liabilities Accounts payable – other Income taxes payable Accrued business office tax Accrued consumption taxes Contract liabilities Provision for bonuses Provision for bonuses for directors (and other officers) Provision for loss on orders received Other Total current liabilities Non-current liabilities Long-term borrowings Long-term accounts payable – other Lease liabilities Retirement benefit liability Asset retirement obligations Deferred tax liabilities 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 Total net assets Total liabilities and net assets 1,856,920 100,000 671,934 2,336 681,171 1,056,596 33,827 551,465 – 1,457,806 72,370 7,861 660,073 7,152,363 1,142,515 52,746 4,341 2,432,926 71,696 24 3,704,250 10,856,613 2,514,875 3,363,262 14,388,180 (2,207,691) 18,058,626 1,427,859 2,547 (3,169) 1,427,236 19,485,863 30,342,477 2,112,464 100,000 639,175 3,101 595,295 936,448 34,776 570,223 109,001 1,600,244 96,520 6,377 630,625 7,434,253 820,322 52,697 4,621 2,636,766 54,102 – 3,568,510 11,002,763 2,514,875 3,382,707 16,765,589 (2,184,556) 20,478,616 1,624,957 11,511 19,037 1,655,506 22,134,123 33,136,886 10 (2) Consolidated statements of income and consolidated statements of comprehensive income Consolidated statements of income Fiscal year ended March 31, 2021 (Thousands of yen) Fiscal year ended March 31, 2022 39,706,144 32,506,537 7,199,607 38,922 1,579,614 3,715,150 3,484,456 84,749 163,719 72,370 32,879 241,243 158,845 18,447 160,881 59,271 132,414 192,874 778,917 331,272 73,779 57,849 338,955 49,497 18,437 34,672 904,463 6,351 – – 65,409 200,000 16,104 287,865 4,101,054 44,450,374 35,751,636 8,698,737 61,355 1,755,013 4,241,000 4,457,736 130,307 227,885 95,520 54,613 289,039 161,051 31,851 159,155 93,170 180,893 204,075 797,067 388,988 49,782 29,783 – 34,185 2,228 41,703 546,670 6,160 15,035 90,464 96,348 3,000 10,764 221,772 4,782,634 Net sales Cost of sales Gross profit Selling, general and administrative expenses Advertising expenses Remuneration, salaries and allowances for directors (and other officers) Bonuses Provision for bonuses Provision for bonuses for directors (and other officers) Retirement benefit expenses Legal welfare expenses Hiring expenses Entertainment expenses Rent expenses on land and buildings Supplies expenses Amortization of goodwill Enterprise tax Other Total selling, general and administrative expenses Share of profit of entities accounted for using equity method Operating profit Non-operating income Interest income Dividend income Gain on sale of securities Gain on valuation of derivatives Subsidy income Other Total non-operating income Non-operating expenses Interest expenses Loss on valuation of securities Loss on valuation of derivatives Investment advisory fees Donations Other Total non-operating expenses Ordinary profit 11 Extraordinary income Gain on sale of investment securities Gain on redemption of investment securities Surrender value of insurance policies Other Total extraordinary income Extraordinary losses Loss on retirement of non-current assets Loss on sale of investment securities Loss on valuation of investment securities Loss on redemption of investment securities Impairment losses Corporate Logo Change Costs Other 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 Fiscal year ended March 31, 2021 (Thousands of yen) Fiscal year ended March 31, 2022 258,256 896 28,710 287,863 – 3,789 95,575 15,308 62,542 175,188 – 22,841 375,245 4,013,673 1,492,406 (113,136) 1,379,270 2,634,403 – 2,634,403 220,636 23,860 6,104 250,601 – 1,272 6,164 – 4,216 72,779 28,995 40,331 153,758 4,879,477 1,647,767 (4,929) 1,642,837 3,236,640 – 3,236,640 12 Consolidated statements 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 Fiscal year ended March 31, 2021 (Thousands of yen) Fiscal year ended March 31, 2022 2,634,403 1,382,020 2,547 5,409 1,389,977 4,024,380 4,024,380 – 3,236,640 197,098 8,964 22,207 228,269 3,464,909 3,464,909 – 13 (3) Consolidated statements of changes in equity Fiscal year ended March 31, 2021 Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity (Thousands of yen) Total shareholders’ equity Balance at beginning of period 2,514,875 4,473,108 12,509,598 (3,357,059) 16,140,523 5,153 (1,115,000) (755,822) 2,634,403 (95) 34,463 1,115,000 (755,822) 2,634,403 (95) 39,617 – – Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Cancellation of treasury shares Change in scope of equity method Net changes in items other than shareholders’ equity Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Cancellation of treasury shares Change in scope of equity method Net changes in items other than shareholders’ equity Total changes during period Balance at end of period Total changes during period Balance at end of period – 2,514,875 (1,109,846) 3,363,262 1,878,581 14,388,180 1,149,368 (2,207,691) 1,918,102 18,058,626 Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasure-ments of defined benefit plans Total accumulated other com-prehensive income Share acquisition rights Total net assets Balance at beginning of period 45,838 0 (8,579) 37,259 8,144 16,185,927 (755,822) 2,634,403 (95) 39,617 – – 1,382,020 1,382,020 1,427,859 2,547 2,547 2,547 5,409 1,389,977 (8,144) 1,381,832 5,409 (3,169) 1,389,977 1,427,236 (8,144) 3,299,935 – 19,485,863 14 Fiscal year ended March 31, 2022 Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity Balance at beginning of period 2,514,875 3,363,262 14,388,180 (2,207,691) 18,058,626 (Thousands of yen) Total shareholders’ equity (360) 23,496 (840,963) 3,236,640 (360) 42,941 – (18,268) 19,445 (840,963) 3,236,640 (18,268) Total changes during period Balance at end of period – 2,514,875 19,445 3,382,707 2,377,409 16,765,589 23,135 (2,184,556) 2,419,990 20,478,616 Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasure-ments of defined benefit plans Total accumulated other com-prehensive income Share acquisition rights Total net assets Balance at beginning of period 1,427,859 2,547 (3,169) 1,427,236 – 19,485,863 – – – (840,963) 3,236,640 (360) 42,941 – (18,268) 228,269 2,648,259 22,134,123 197,098 197,098 1,624,957 8,964 8,964 11,511 22,207 22,207 19,037 228,269 228,269 1,655,506 Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Cancellation of treasury shares Change in scope of equity method Net changes in items other than shareholders’ equity Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Cancellation of treasury shares Change in scope of equity method Net changes in items other than shareholders’ equity Total changes during period Balance at end of period 15 (4) Consolidated statements of cash flows Cash flows from operating activities Profit before income taxes Depreciation Amortization of goodwill Impairment losses Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Increase (decrease) in provision for bonuses for directors (and other officers) Increase (decrease) in provision for loss on orders received Increase (decrease) in retirement benefit liability Interest and dividend income Interest expenses Loss (gain) on sale of securities Loss (gain) on valuation of derivatives Share of loss (profit) of entities accounted for using equity method Loss on retirement of non-current assets Loss (gain) on valuation of investment securities Loss (gain) on sale of investment securities Loss (gain) on redemption of investment securities Decrease (increase) in trade receivables Decrease (increase) in inventories Decrease (increase) in contract assets Increase (decrease) in trade payables Increase (decrease) in accounts payable – other Increase (decrease) in long-term accounts payable – other Increase (decrease) in accrued consumption taxes Other, net Subtotal Interest and dividends received Interest paid Income taxes paid Net cash provided by (used in) operating activities Fiscal year ended March 31, 2021 4,013,673 (Thousands of yen) Fiscal year ended March 31, 2022 265,274 132,414 175,188 (2,105) 155,655 4,140 (21,295) 171,351 (405,051) 6,351 (57,849) (338,955) (18,437) 3,789 15,308 (162,681) 61,645 (332,636) 91,335 – (49,758) 201,311 (329,945) (69,995) 114,030 3,622,757 407,315 (7,204) (867,435) 3,155,433 4,879,477 260,580 180,893 72,779 – 113,369 24,150 (1,483) 113,877 (438,770) 6,160 (29,783) 90,464 (2,228) 1,272 – (214,472) 4,216 (288,983) (76,111) (198,834) 170,277 (89,412) (49) (26,632) (16,966) 4,533,790 437,881 (6,028) (1,742,941) 3,222,701 16 Cash flows from investing activities Payments into time deposits Purchase of securities Proceeds from sale of securities Purchase of property, plant and equipment Purchase of intangible assets Purchase of investment securities Proceeds from sale of investment securities Proceeds from redemption of investment securities Purchase of shares of subsidiaries resulting in change in scope of consolidation Purchase of shares of subsidiaries and associates Proceeds from cancellation of insurance funds Other, net Net cash provided by (used in) investing activities Cash flows from financing activities Net increase (decrease) in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Repayments of lease liabilities Dividends paid Purchase 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 Fiscal year ended March 31, 2021 (Thousands of yen) Fiscal year ended March 31, 2022 (1,201) (112,545) 190,939 (74,255) (109,441) (5,807,359) 888,196 5,317,304 (147,915) (102,000) 40,116 (129,242) (47,405) – – (713,284) (2,169) (755,592) (95) (8,144) (1,479,286) 2,140 1,630,882 9,384,749 11,015,631 (3,001) (553,469) 385,171 (99,921) (110,322) (4,994,729) 948,790 4,373,026 (1,168,714) – 65,106 2,195 (1,155,867) (60,000) 360,000 (809,153) (2,434) (840,405) (360) – (1,352,353) 7,804 722,284 11,015,631 11,737,916 17 (5) Notes on consolidated financial statements (Notes on the premise of going concern) There is nothing to report. (Changes in accounting policies) 1. Application of Accounting Standard for Revenue Recognition, etc. The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the beginning of the fiscal year under review, and it has recognized revenue at the time the control of promised goods or services is transferred to the customer at the amount expected to be received upon exchange of said goods or services. Major changes resulting from this are as follows. Quasi-mandate and dispatch agreements and contractor agreements for software For quasi-mandate and dispatch agreements and contractor agreements for software, whereas, previously, the percentage of completion method was applied to cases where the reliable estimate of outcome is available with regard to the progress toward completion by the end of each reporting period (the percentage of completion estimated by the cost to cost method) and the inspection basis method was applied to other cases; this was changed to the method where, if the control of goods or services is transferred to a customer over time, revenue is recognized as performance obligations for transferring goods or services are satisfied. A progress towards satisfaction of performance obligations is measured on the basis of indicators such as man-hours and work hours for service provided, in accordance with the content of an agreement, for quasi-mandate and dispatch agreements, or the percentage of the cost of a project incurred by the end of each reporting period in the total expected cost of the project, for contractor agreements. Furthermore, revenue is recognized on a cost recovery basis when it is not possible to reasonably estimate progress towards satisfaction of performance obligations, but it is probable that the costs incurred will be recovered, in the early stages of a contract. For contractor agreements, if the period from the transaction start date under a contract to the point in time when performance obligations are expected to be satisfied completely is extremely short, an alternative method will be applied, and revenue is recognized not over time but at the point in time when performance obligations are satisfied completely. The application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations is subject to the transitional treatment provided for in the proviso to paragraph 84 of the Accounting Standard for Revenue Recognition, but there is no effect on the opening balance of retained earnings of the fiscal year under review. Notes and accounts receivable – trade, represented under Current assets in the consolidated balance sheet for the previous fiscal year, have begun to be included in Notes, Accounts receivable -trade and Contract assets in the current fiscal year; and Other, represented under Current liabilities, has begun to be included in Contract liabilities and Other in the current fiscal year. In accordance with the transitional treatment provided for in paragraph 89-2 of the Accounting Standard for Revenue Recognition, figures for the previous fiscal year have not been restated in accordance with the new approach to presentation. As a result, compared with numbers before the application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations, in the consolidated balance sheet for the current fiscal year, Contract assets increased by 198,834 thousand yen, and Accounts receivable – trade decreased by the same amount. At the same time, Contract liabilities increased by 109,001 thousand yen, and Other decreased by the same amount. In the consolidated statements of cash flows, an increase (decrease) in notes and accounts receivable – trade decreased by 198,834 thousand yen, and an increase (decrease) in contract assets increased by the same amount. There is no impact that these changes have on the consolidated statements of income, consolidated statements of changes in equity and per share information for the fiscal year under review. 2. Application of the Accounting Standard for Fair Value Measurement, Etc. The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) and relevant ASBJ regulations from the beginning of the fiscal year under review, and it has 18 applied the new accounting policy provided for by the Accounting Standard for Fair Value Measurement, etc. prospectively in accordance with the transitional measures provided for 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 impact on consolidated financial statements. (Additional information) (Accounting estimates pertaining to the impact of the spread of COVID-19 infection) The Group makes accounting estimates of impairment of non-current assets, collectability of deferred tax assets, etc. on the basis of information available at the time of creating the consolidated financial statements. Assumptions in making such accounting estimates including how COVID-19 will spread in the future and when it will abate are indicated in “1. Overview of operating results and others, (4) Outlook for the coming year.” As there are many uncertain elements regarding the impact of COVID-19, a change in the situation occurring in the future can affect the financial condition and operating results of the Group in the future. (Segment information, etc.) [Segment information] 1. Summary of reportable segments (1) Method for determining reportable segments The Company’s reportable segments are based on those units within the Company where separate financial information is available and where the Board of Directors periodically reviews matters such as the distribution of management resources and financial performance. The Company has established divisions for product and service type, and each division creates a comprehensive strategy for the products and services it handles and conducts related business activities. Therefore, the Company are composed of segments by products and services based on divisions, and its reportable segments consist of “IT services business” and “Digital solution business.” In addition, the segment of IT services business is subdivided into three subsegments based on types of business of end users per contract: “Enterprise,” “Finance” and “Manufacturing.” Subsegment Enterprise Finance Manufacturing Types of end users’ business Information and communication, advertising, distribution services, transport, placement and dispatching, public services, resources and energy, construction and real estate, travel and hotels, medical and healthcare, etc. Banking, insurance, etc. Automotive, transport equipment, machinery, electronics, etc. (2) Types of products and services belonging to each reportable segment The IT service business segment is mainly engaged in the comprehensive service for consulting as well as IT planning, development and maintenance, covering enterprise systems, financial systems, embedded systems, AI systems, mobile systems, platform, agile, near-shore and off-shore development, RPA introduction support, data analytics, UX design, etc. The digital solution business segment mainly provides groups of solutions consisting of products and services supporting the realization of digital transformation by customers, which cover cloud computing, robotics, AI & data, security, UX/UI, etc. (3) Matters regarding changes, etc. in reportable segments In starting to execute the Medium-Term Management Plan 2023, whose first year is the fiscal year ended March 31, 2022, aiming at the full-scale growth of digital solution business, the method for business segmentation was revised in the current fiscal year, and reportable segments were changed from “Software development business” and “Embedded software development business” to “IT service business” and “Digital solution business.” 19 Segment information for the previous fiscal year was compiled in accordance with the changed segmentation and indicated under the previous fiscal year in “3. Information regarding amounts of net sales, profit (loss), assets, liabilities, and other items by reportable segment.” 2. Method for calculating net sales, profit (loss), assets, liabilities, and other items for each segment The accounting treatment for business segments reported is generally the same as those given in “Significant Matters Forming the Basis of Preparing the Consolidated Financial Statements.” Segment profit is based on operating profit. Internal earnings and transfers between segments are based on actual market prices. As the accounting method for revenue recognition was changed as a result of the application of the Accounting Standard for Revenue Recognition and relevant revised ASBJ regulations starting with consolidated financial statements for the current fiscal year, as indicated in “Changes in Accounting Policies,” the method for computing profit or loss for business segments was likewise changed. There is no impact of the said changes on the net sales and segment profit of IT services business and digital solution business segments. 3. Information regarding amounts of net sales, profit (loss), assets, liabilities, and other items by reportable segment Fiscal year ended March 31, 2021 Reportable segments IT services business Enterprise Finance Manufacturing Total Digital solutions business Total Adjustment (Thousands of yen) Amounts on consolidated financial statements 17,075,810 12,360,724 8,809,725 38,246,259 1,459,884 39,706,144 – 39,706,144 1,058 – – 1,058 492 1,551 (1,551) – 1,676,054 1,534,308 1,425,119 4,635,482 126,175 4,761,657 (1,277,200) 3,484,456 6,940,402 4,778,196 3,037,090 14,755,689 639,719 15,395,409 14,947,068 30,342,477 100,643 71,362 59,613 231,620 10,692 242,312 22,961 265,274 71,449 67,226 37,948 176,623 6,381 183,005 5,079 188,085 Net sales Sales to external customers Inter-segment sales or transactions Segment profit Segment assets Other items Depreciation Increase in property, plant and equipment and intangible assets Total sales 17,076,869 12,360,724 8,809,725 38,247,318 1,460,377 39,707,696 (1,551) 39,706,144 Notes: 1. The following adjustments have been made. (1) The negative 1,277,200 thousand yen adjustment to segment profit includes negative 1,277,200 thousand yen in all corporate expenses not allocated to reportable segments. All corporate expenses are mainly general and administrative expenses not attributed to reportable segments. (2) The 14,947,068 thousand yen adjustment to segment assets is all corporate assets not allocated to reportable segments. All corporate assets are primarily unused operating funds not attributed to reportable segments (cash and deposits and securities), long-term investments funds (investment securities), and assets, etc. related to administrative divisions. (3) The 5,079 thousand yen adjustment to increase in property, plant and equipment and intangible assets is for capital expenditures by the headquarters’ administrative divisions. 2. Segment profit is calculated by making adjustments to the operating profit appearing in the consolidated statement of income. 20 Fiscal year ended March 31, 2022 Reportable segments IT services business Enterprise Finance Manufacturing Total Digital solutions business Total Adjustment 18,219,847 13,689,402 10,433,216 42,342,466 2,107,907 44,450,374 44,450,374 – – – – – – 2,255,224 1,719,695 1,744,049 5,718,970 145,193 5,864,164 (1,406,427) 4,457,736 7,710,336 5,712,510 4,441,175 17,864,022 846,913 18,710,935 14,425,950 33,136,886 100,971 71,758 56,678 229,409 13,601 243,010 17,570 260,580 92,373 58,266 43,668 194,309 11,145 205,454 14,321 219,775 (Thousands of yen) Amounts on consolidated financial statements – – – – Net sales Sales to external customers Inter-segment sales or transactions Segment profit Segment assets Other items Depreciation Increase in property, plant and equipment and intangible assets Total sales 18,219,847 13,689,402 10,433,216 42,342,466 2,107,907 44,450,374 44,450,374 Notes: 1. The following adjustments have been made. (1) The negative 1,406,427 thousand yen adjustment to segment profit includes negative 1,406,427 thousand yen in all corporate expenses not allocated to reportable segments. All corporate expenses are mainly general and administrative expenses not attributed to reportable segments. (2) The 14,425,950 thousand yen adjustment to segment assets is all corporate assets not allocated to reportable segments. All corporate assets are primarily unused operating funds not attributed to reportable segments (cash and deposits and securities), long-term investments funds (investment securities), and assets, etc. related to administrative divisions. (3) The 14,321 thousand yen adjustment to increase in property, plant and equipment and intangible assets is for capital expenditures by the headquarters’ administrative divisions. 2. Segment profit is calculated by making adjustments to the operating profit appearing in the consolidated statement of income. (Related information) Fiscal year ended March 31, 2021 1. Information by product and service 2. Information by geographical area (1) Net sales (2) Property, plant and equipment 3. Information by major customer IBM Japan, Ltd. Fiscal year ended March 31, 2022 1. Information by product and service This has been omitted since the same information is provided in segment information. This has been omitted because net sales to external Japanese customers account for more than 90% of net sales on the consolidated statement of income. This has been omitted because the value of property, plant and equipment in Japan accounts for more than 90% of the value of property, plant and equipment on the consolidated balance sheet. Name of customer or individual Net sales Related segment name 5,032,470 IT services business (Thousands of yen) This has been omitted since the same information is pr