ギークス（7060） – [Delayed] Consolidated Financial Results for FY2022 [Japan GAAP]

Disclaimer: This document is a translation of the original version in Japanese. In the case that there is any discrepancy between the original version and this document, the original Japanese version is assumed to be correct. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 [Japan GAAP] Director CFO geechs inc. 7060 Naruhito Sonehara Daisuke Sakuma Company name Stock Code Representative President & CEO Contact Scheduled date of Ordinary General Meeting of Shareholders Scheduled date of commencement of dividend payment Scheduled date of filing of securities report Preparation of supplementary materials for financial results Holding of financial results briefing 1. Consolidated Results for the Fiscal Year Ended March 31, 2022 May 13, 2022 Listing Market TSE Prime Market URL https://geechs.com (TEL) +8150-1741-6928 : June 24, 2022 : June 10, 2022 : June 24, 2022 : Yes : Yes(For Institutional Investors and Analysts) (Figures are rounded down to the nearest million yen) (April 1, 2021 to March 31, 2022) (1) Consolidated Results of Operations Net Sales Operating Income Ordinary Income (Percentage indicate year-on-year changes) Net Income attributable to Owners of Parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % 5,388 57.2 1,133 53.5 1,135 59.1 705 54.1 Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 3,427 △3.3 738 7.9 713 5.7 457 17.2 (Note) Comprehensive income Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 703 Millions of yen 458 Millions of yen 53.7 % 17.1 % Earnings per Share Diluted Earnings Per Share Shareholders’ Equity Net Income Margin % Total Assets Ordinary Margin Net Sales Operating Margin Yen 67.18 Yen 66.17 43.83 43.06 17.0 12.7 % 19.3 11.0 (Reference) Equity in net income of affiliates Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 ― Millions of yen ― Millions of yen (2) Consolidated Financial Position Total Assets Net Assets Equity Ratio Net Assets Per Share Millions of yen Millions of yen 5,874 6,486 4,470 3,830 % 75.7 59.1 (Reference) Shareholders’ equity Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 4,444 Millions of yen 3,830 Millions of yen % 21.0 21.5 Yen 422.26 365.74 Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 2. Dividends Fiscal Year Ended March 31, 2021 Fiscal Year Ended March 31, 2022 Fiscal Year Ending March 31, 2023 (Forecast) (3) Consolidated Cash Flows Cash Flows From operating activities Cash Flows From investing activities Cash Flows From financing activities Millions of yen Millions of yen Millions of yen Cash and cash equivalents Balance at end of year Millions of yen 369 661 △68 △48 △91 △22 3,357 3,149 Dividend per share 1st Quarter-End 2nd Quarter-End 3rd Quarter-End Year-End Total Yen Yen Yen Yen Total dividends (Total) Yen Millions of yen Dividend Payout Ratio (Consolidated) Net assets Dividend Ratio (Consolidated) % % ― 0.00 ― 10.00 10.00 104 22.8 2.7 ― 0.00 ― 10.00 10.00 105 14.9 2.4 ― 0.00 ― 10.00 10.00 21.9 3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March 31, 2023) Net Sales Operating Income Ordinary Income Full year Millions of yen 5,800 Millions of yen % 800 △29.4 Millions of yen % 800 △29.6 Millions of yen % 480 △31.9 Yen 45.61 (Percentage indicate year-on-year changes) Net Income attributable to Owners of Parent Earnings per Share % 7.6 * Notes (1) Changes in Significant Subsidiaries during the Period (Changes in Specified Subsidiaries Resulting in Changes in the Scope of Consolidation) ― Exclusion ― : None Newly added (2) Changes in Accounting Policies, Changes in Accounting Estimates, and Restatement of Errors ① Changes in accounting policies due to revisions to accounting standards, etc. : Yes ② Changes in accounting policies due to other reasons ③ Changes in accounting estimates ④ Restatement of prior period financial statements after error corrections : None : None : None (3) Number of shares outstanding (common stock) ① Number of shares outstanding at the end of the period (including treasury stock) ② Number of treasury shares at the end of the period 31, 2022 Fiscal Year 31, 2022 Fiscal Year Fiscal Year Fiscal Year Ended March 10,564,840 shares Ended March 10,513,440 shares Ended March 40,151 shares Ended March 40,104 shares 31, 2021 Fiscal Year 31, 2021 Fiscal Year ③ Average number of shares during the period Ended March 10,497,369 shares Ended March 10,443,408 shares 31, 2022 31, 2021 (Reference) Summary of Non-Consolidated Results 1. Non-consolidated Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 to March 31, 2022) (1) Non-Consolidated Results of Operations (Percentages indicate year-on-year changes) Net Sales Operating Income Ordinary Income Net Income Millions of yen % Millions of yen % Millions of yen % Millions of yen % 2,118 23.9 545 18.4 577 23.1 364 11.8 1,710 11.4 460 35.8 468 33.0 325 56.7 Earnings per Share Diluted Earnings Per Share Yen 34.68 31.18 4,854 4,489 Yen 34.16 30.63 3,604 3,303 (2) Non-Consolidated Financial Position Total Assets Net Assets Equity Ratio Net Assets Per Share Millions of yen Millions of yen (Reference) Shareholders’ equity Fiscal Year Ended March 31, 2022 3,577 Millions of yen Fiscal Year Ended March 31, 2021 3,303 Millions of yen % 73.7 73.6 Yen 339.92 315.44 Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 Fiscal Year Ended March 31, 2022 Fiscal Year Ended March 31, 2021 ※ ※ This financial results report is exempted from audit by certified public accountants or auditing firms. Explanation regarding the appropriate use of financial results forecasts and other special notes The forward-looking statements in this document are based on information currently available to us and on certain assumptions that we believe to be reasonable. Actual results may differ materially from those in this document due to a variety of factors. ○ Contents of the attached materials 1. Overview of Business Results, etc. ……………………………………………………. 2 (1) Overview of Consolidated Results of Operation ……………………………………….. 2 (2) Overview of the Financial Position for the Current Fiscal Year ………………………… 3 (3) Overview of Cash Flows for the Period ………………………………………………. 4 (4) Future Outlook …………………………………………………………………… 4 (5) Significant events, etc. related to the premise of a going concern …………………….. 5 2. Basic Approach to Selection of Accounting Standards …………………………………….. 5 3. Consolidated Financial Statements and Major Notes ………………………………………. 6 (1) Consolidated Balance Sheet ………………………………………………………… 6 (2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ……… 8 (3) Consolidated Statement of Changes in Net Assets …………………………………….. 10 (4) Consolidated Statement of Cash Flows ………………………………………………. 12 (5) Notes to Consolidated Financial Statements …………………………………………. 14 (Note on Going Concern Assumption) ………………………………………………….. 14 (Changes in Accounting Policies) ……………………………………………………. 14 (Segment Information, etc.) ………………………………………………………… 15 (Per Share Information) ……………………………………………………………. 17 (Significant Subsequent Events) …………………………………………………….. 17 1 1. Overview of Business Results, etc. (1) Overview of Consolidated Results of Operation Under our Grand Vision “Make the biggest impression in the 21st century,” we aim to continuously increase corporate value by leveraging our IT Freelance database, human resources infrastructure such as the development of IT engineers who are active globally, proactively grasping the lifestyles of people who are rapidly changing due to the spread of the Internet and corporate behavior and continuing to grow through the creation and evolution of services that are responsive to change. The Group consists of four business segments, including three subsidiaries. The four business segments are classified into: [IT Freelance Matching Business], [Game Business], [x-Tech Business] and [Seed Tech Business]. From the current consolidated fiscal year, the name of the segment has been changed from the previous [IT Human Resource Development Business]to [Seed Tech Business]. The change in the segment name has no impact on segment information. During the consolidated fiscal year, the Japanese economy was significantly affected by such factors as a stagnation in economic activities due to the announcement of repeated State of Emergency Declarations associated with the spread of the new coronavirus infections and the implementation of priority measures to prevent the spread of the virus. Furthermore, the outlook remains uncertain due to soaring resource prices and the impact of Russia’s invasion of Ukraine. With the rapid digital transformation amid the prolonged impact of the new coronavirus, we recognize that the need to strengthen IT skills among IT professionals and individuals is increasing further. Under these circumstances, the Group continued to implement various measures based on the policies set forth in the Medium-Term Management Plan (G100) released on May 14, 2021 (from the fiscal year ended March 31, 2022 to the fiscal year ending March 31, 2025). We have built a business structure to fulfill our role as a technology resource sharing platform by grasping the needs of companies promoting digital shifts and individuals searching for new ways of working. As a result, for the fiscal year, net sales were ¥5,388 million (up 57.2% year on year), operating income was ¥1,133 million (up 53.5%), ordinary income was ¥1,135 million (up 59.1%), and net income attributable to owners of parent was ¥705 million (up 54.1%). [Accounting Standard for Revenue Recognition] (ASBJ Statement No. 29, March 31, 2020) As a result of the adoption of the “Revenue Recognition Accounting Standard” and other standards, net sales increased by ¥544 million, while operating income, ordinary income, and income before income taxes increased by ¥228 million. Results by business segment were as follows. In the IT Freelance Matching Business, the business performed well. As the demand from companies continue, the number of new IT Freelance registrations is steadily increasing in parallel to the number of matchings between the Tokyo metropolitan and regional areas through remote work. In addition, the number of new client companies grew significantly throughout the fiscal year due to the expansion of corporate advertising investment and the strengthening of sales enablement. As a result, in this business segment, net sales were ¥1,814 million (up 25.6% year on year) and segment income was ¥996 million (up 21.0%). In the Game Business, the Group operates six titles, including [IDOLiSH7], which is distributed by BANDAI NAMCO Online Inc., and [My Hero ULTRA IMPACT], which is distributed by BANDAI NAMCO Entertainment Inc., and develops three new titles. As the number of development lines is increasing, we are focusing on appropriate resource control utilizing freelance. In the fourth quarter of the fiscal year ended March 31, 2022, the Group commenced operations of overseas versions of existing titles. 2 As a result, in this business segment, net sales were ¥3,153 million (up 95.1% year on year) and segment income was ¥584 million (up 116.2%). In the x-Tech Business, the Group aims to become a technology partner for business model transformation using [Technology x Data], by utilizing cutting-edge technologies and methods, and mainly conducts app and video production utilizing cutting-edge AR (augmented reality) and other technologies, as well as digital marketing support and D2C support in the sports field such as golf. As a result, net sales in this business segment were ¥304 million (up 14.3% year on year) and segment income was ¥15 million (compared with a segment loss of ¥12 million in the previous fiscal year). In the seed tech business, the Group provides on-demand programming school services and offshore development consignment business. In addition, we made preparations for the SaaS-type DX/IT Human Resource Development Service [sodatech] for corporations scheduled to launch in the next fiscal year. As a result, net sales in this business segment were ¥116 million (up 12.2% year on year) and segment loss was ¥26 million (compared with segment loss of ¥15 million in the previous fiscal year). (2) Overview of the Financial Position for the Current Fiscal Year (Assets) Current assets decreased ¥391,112 thousand from the end of the previous fiscal year to ¥5,524,378 thousand. This was mainly due to a decrease of ¥1,111,660 thousand in work in process, while cash and deposits increased ¥207,502 thousand and accounts receivable and contract assets increased ¥508,449 thousand. Non-current assets decreased by ¥220,896 thousand from the end of the previous fiscal year to ¥349,916 thousand. This was mainly due to decreases of ¥133,407 thousand in deferred tax assets, ¥58,589 thousand in buildings and structures (net), and ¥56,443 thousand in lease and guarantee deposits, while there was an increase of ¥19,870 thousand in investment securities. As a result, total assets were ¥5,874,294 thousand, down ¥612,008 thousand from the end of the previous fiscal year. (Liabilities) ¥1,403,433 thousand. (Net Assets) Current liabilities decreased by ¥1,248,118 thousand from the end of the previous fiscal year to ¥1,398,549 thousand. This was mainly due to a ¥1,125,380 thousand decrease in advances received. Non-current liabilities decreased by ¥4,254 thousand from the end of the previous fiscal year to ¥4,884 thousand. This was mainly due to a decrease of ¥3,848 thousand in lease obligations. As a result, total liabilities decreased by ¥1,252,373 thousand from the end of the previous fiscal year to Net assets increased by ¥640,364 thousand from the end of the previous fiscal year to ¥4,470,860 thousand. This was mainly due to an increase of ¥600,460 thousand in retained earnings. As a result, the equity ratio was 75.7% (compared to 59.1% at the end of the previous fiscal year). 3 (3) Overview of Cash Flows for the Period Cash and cash equivalents (hereinafter, “cash”) at the end of the current consolidated fiscal year increased by ¥207,502 thousand from the end of the previous consolidated fiscal year to ¥3,357,198 thousand. (Cash Flows from Operating Activities) Net cash provided by operating activities was ¥369,207 thousand. This was mainly due to a ¥1,111,603 thousand decrease in inventories and a ¥507,949 thousand increase in accounts receivable and contract assets. (Net Cash Provided by (Used in) Investing Activities) Net cash used in investing activities was ¥68,653 thousand (compared with ¥48,908 thousand used in the same period of the previous fiscal year). This was mainly due to purchase of investment securities of ¥49,950 thousand and purchase of property, plant and equipment of ¥23,103 thousand. (Net Cash Provided by (Used in) Financing Activities) Net cash used in financing activities was ¥91,339 thousand (compared with ¥22,588 thousand used in the same period of the previous fiscal year). This was mainly due to dividend payment of ¥104,561 thousand. (4) Future Outlook Although it is expected that the spread of new coronavirus infections will gradually converge due to the development and diffusion of vaccines and therapeutic drugs, the situation remains uncertain. In addition, there are various factors surrounding Ukraine, including the unstable international situation, rapid exchange rate fluctuations, and increases in energy and raw material prices. Therefore, the Group recognizes that a cautious economic outlook is necessary. Under this business environment, the Group will continue to make strategic investments in order to achieve the goals of the Medium-Term Management Plan [G100] from the fiscal year ending March 2022 to the fiscal year ending March 2025. In the IT Freelance Matching Business, with the aim of further accelerating growth, the Group will invest in human resources to strengthen its organizational capabilities and in strategic advertising to improve its branding. In the Game Business, we expect to receive orders for multiple new titles in addition to those existing under development, and we have positioned the next fiscal year for the preparation of the achievement of the Medium-Term Management Plan. We will thoroughly control our resources and strive for development. In the SeedTech Business, in addition to the existing businesses, the Group will continue to make upfront investments for the early launch and profitability of the SaaS-type DX/IT Human Resource Development Service [sodatech] for corporate customers. In the x-Tech Business, the xR Business will be transferred to the Game Business, and the Group will focus on the Digital Marketing Business, which leverages its strengths in consulting, production, and operations utilizing the latest technologies for sports manufacturers, centered on golf-related companies. In light of these factors, for the next fiscal year, we forecast net sales of ¥5,800 million (up 7.6% year-on-year), operating income of ¥800 million (down 29.4% year-on-year), ordinary income of ¥800 million (down 29.6% year-on-year), and net income attributable to owners of parent of ¥480 million (down 31.9% year-on-year). 4 Following fiscal year (Forecast) Current fiscal year (Results) (Thousand yen) Change from the previous fiscal year (%) 5,800,000 5,388,647 IT Freelance Matching Business Game Business Seed Tech Business x-Tech Business Game Business Seed Tech Business x-Tech Business IT Freelance Matching Business 2,200,000 3,200,000 150,000 250,000 800,000 900,000 400,000 △80,000 50,000 1,814,443 3,153,713 116,194 304,296 1,133,696 996,534 584,016 △26,880 15,054 Corporate expenses and adjustments △470,000 △435,029 800,000 1,135,706 480,000 705,194 (5) Significant events, etc. related to the premise of a going concern Not applicable. 7.6% 21.2% 1.5% 29.1% △17.8% △29.4% △9.7% △31.5% 232.1% – – △29.6% △31.9% 2. Basic Approach to Selection of Accounting Standards Taking into account the comparability of consolidated financial statements between periods and among companies, for the time being our policy is to prepare consolidated financial statements under Japanese GAAP. 5 3. Consolidated Financial Statements and Major Notes (1) Consolidated Balance Sheet Previous consolidated fiscal year (As of March 31, 2021) (Thousand Yen) Current consolidated fiscal year (As of March 31, 2022) Accounts receivable and contract assets Work in process Assets Current assets Cash and deposits Accounts receivable Supplies Advance payment Prepaid expenses Other Allowance for doubtful accounts Total current assets Fixed assets Property, plant and equipment Buildings and structures, net Tools, furniture and fixtures, net Lease assets, net Net property, plant and equipment Intangible assets Software Total intangible assets Investments and other assets Investment securities Lease and guarantee deposits Long-term prepaid expenses Deferred tax assets Other Total investments and other assets Total fixed assets Total assets 3,149,695 1,518,823 – 1,117,488 410 14 81,789 49,840 △2,572 5,915,490 60,687 6,574 15,465 82,726 1,006 1,006 109,912 169,202 7,338 200,626 – 487,080 570,813 3,357,198 – 2,027,272 5,827 467 8,456 78,283 49,635 △2,763 5,524,378 2,097 5,260 17,187 24,545 581 581 129,782 112,759 3,028 67,219 12,000 324,789 349,916 6,486,303 5,874,294 6 Previous consolidated fiscal year (As at March 31, 2021) (Thousand yen) Current consolidated fiscal year (As at March 31, 2022) Liabilities Current liabilities Accounts payable Accounts payable other Accrued expenses Income taxes payable Accrued consumption taxes Deposits received Advance received Contract liabilities Unearned revenue Asset retirement obligations Lease obligations Other Total current liabilities Long-term liabilities Lease obligations Other Total long-term liabilities Total liabilities Net assets Shareholders’ equity Paid-in capital Capital surplus Retained earnings Treasury stock Total shareholders’ equity Accumulated other comprehensive income Foreign currency translation adjustments Total accumulated other comprehensive income Subscription rights to shares Non-controlling interests Net assets Total liabilities and net assets 858,138 35,514 28,235 337,593 144,805 29,088 1,125,380 – 20,526 55,662 11,721 – 2,646,667 7,101 2,037 9,139 1,094,214 1,044,157 1,714,342 △21,155 3,831,559 △1,073 △1,073 – 10 3,830,496 6,486,303 1,033,545 98,741 51,177 101,752 54,407 34,906 – 9,591 – – 14,255 171 1,398,549 3,252 1,631 4,884 1,101,531 1,051,474 2,314,803 △21,252 4,446,556 △2,426 △2,426 26,718 12 4,470,860 5,874,294 2,655,807 1,403,433 7 (2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Previous consolidated fiscal year From April 1, 2020 to March 31, 2021 (Thousand yen) Current consolidated fiscal year From April 1, 2021 to March 31, 2022 Consolidated Statements of Income Selling, general and administrative expenses Net sales Cost of sales Gross margin Operating income Non-operating income Interest income Consignment revenue Lecture fee income Late charge Subsidy income Foreign exchange gain Other Total non-operating income Non-operating expenses Interest expenses Foreign exchange loss Stock issuance expenses Market change cost Commitment fee Other Total non-operating expenses Ordinary income Total extraordinary losses Net income before income taxes Income taxes – current Income taxes-deferred Total income taxes Extraordinary losses Loss on valuation of investment securities Net income Net income (loss) attributable to non-controlling interests (△) Net income attributable to owners of parent 8 3,427,816 1,388,538 2,039,278 1,300,798 738,479 120 – 100 372 – – 188 782 55 6,836 103 15,859 2,436 25 25,318 713,942 – – 713,942 419,371 △163,027 256,344 457,598 △157 457,755 5,388,647 2,605,184 2,783,463 1,649,767 1,133,696 43 500 – – 2,540 1,054 338 4,475 127 – 842 – 1,495 – 2,465 1,135,706 30,080 30,080 1,105,626 266,029 134,400 400,429 705,197 3 705,194 Consolidated Statement of Comprehensive Income Net income Other comprehensive income Foreign currency translation adjustments Total other comprehensive income Comprehensive income (Comprehensive income attributable to) Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests Previous consolidated fiscal year From April 1, 2020 to March 31, 2021 (Thousand yen) Current consolidated fiscal year From April 1, 2021 to March 31, 2022 457,598 422 422 458,020 458,170 △149 705,197 △1,353 △1,353 703,843 703,842 1 9 Balance at the beginning of the year Changes of items during the period Issuance of new shares Dividends from surplus Net income attributable to owners of parent Purchase of treasury stock Issuance of Subscription Rights Lapse of stock acquisition rights Net changes of items other than shareholders’ equity Total changes of items during the period Balance at the end of the period Balance at the beginning of the year Changes of items during the period Issuance of new shares Dividends from surplus Net income attributable to owners of parent Purchase of treasury stock Issuance of Subscription Rights Lapse of stock acquisition rights (3) Consolidated Statement of Changes in Net Assets For the Fiscal Year Ended March 31, 2021 (From April 1, 2020 to March 31, 2021) Shareholders’ Equity Paid-in Capital Capital surplus Retained earnings Treasury stock Total shareholders’ equity (Thousand yen) Non-controlling Interests Equity Subscription Rights to Shares Net Assets Accumulated Other Comprehensive Income Foreign currency translation Adjustment Account Other Comprehensive income Cumulative total 1,086,015 1,035,958 1,256,587 △21,000 3,357,560 △1,495 △1,495 167 – 3,356,232 422 422 △156 – 265 8,199 8,199 457,755 △155 473,998 422 422 △156 – 474,263 1,094,214 1,044,157 1,714,342 △21,155 3,831,559 △1,073 △1,073 10 – 3,830,496 Current fiscal year (From April 1, 2021 to March 31, 2022) Shareholders’ Equity Paid-in Capital Capital surplus Retained earnings Treasury stock Total shareholders’ equity (Thousand yen) Non-controlling interests Equity Subscription rights to shares Net assets Accumulated other comprehensive income Foreign currency translation Adjustment Account Other Comprehensive income Cumulative total 1,094,214 1,044,157 1,714,342 △21,155 3,831,559 △1,073 △1,073 10 – 3,830,496 8,199 8,199 16,398 – 457,755 457,755 △155 △155 10 16,398 457,755 △155 – – – 14,634 705,194 △97 29,875 29,875 △3,156 △3,156 7,317 7,317 14,634 △104,733 △104,733 △104,733 705,194 705,194 △97 △97 Net changes of items other than shareholders’ equity Total changes of items during the period Balance at the end of the period (Thousand yen) Shareholders’ Equity Paid-in Capital Capital surplus Retained earnings Treasury stock Total shareholders’ equity Accumulated other comprehensive income Foreign currency translation Adjustment Account Other Comprehensive income Cumulative total Non-controlling interests Equity Subscription rights to shares Net assets – △1,353 △1,353 1 – △1,351 7,317 7,317 600,460 △97 614,997 △1,353 △1,353 1 26,718 640,364 1,101,531 1,051,474 2,314,803 △21,252 4,446,556 △2,426 △2,426 12 26,718 4,470,860 11 (4) Consolidated Statement of Cash Flows Previous consolidated fiscal year From April 1, 2020 to March 31, 2021 (Thousand yen) Current consolidated fiscal year From April 1, 2021 to March 31, 2022 Net cash provided by (used in) operating activities Net income before income taxes Depreciation Share-based compensation expense Loss (gain) on valuation of investment securities (△ indicates gain) Increase (decrease) in allowance for doubtful accounts (△ indicates decrease) Interest and dividend income Interest expenses Subsidy income Stock issuance expenses Market Change Cost Increase (decrease) in notes and accounts receivable – trade (△ indicates increase) Increase (decrease) in trade receivables and contract assets (△ indicates increase) Increase (decrease) in inventories ( △ indicates increase) Increase (decrease) in notes and accounts payable – trade (△ indicates decrease) Increase (decrease) in advances received (△ indicates decrease) Increase (decrease) in unearned revenue (△ indicates decrease) Increase (decrease) liabilities (△ indicates decrease) Increase (decrease) in accrued consumption taxes (△ indicates decrease) contractual in Interest and dividend income received Other Subtotal Interest paid Income taxes paid Other Net cash provided by (used in) operating activities Net cash provided by (used in) investing activities Purchase of investment securities Purchase of property, plant and equipment Purchase of intangible assets Proceeds from collection of lease and guarantee deposits Payment for lease and guarantee deposits Payment for asset retirement obligations Other Net cash provided by (used in) investing activities Net cash provided by (used in) financing activities Repayment of lease obligations Proceeds from issuance of common stock Market Change Expense Purchase of treasury stock 12 713,942 77,015 – – △6,398 △120 55 – 103 15,859 △238,456 – △752,466 46,377 923,880 △5,347 105,659 △42,212 837,893 120 △55 △176,239 661,718 – △79,832 △9,409 △870 52,802 △1,314 △10,285 – △48,908 △22,868 16,294 △15,859 △155 – △1,137,077 1,105,626 66,485 26,718 30,080 190 △43 127 △2,540 842 – – △507,949 1,111,603 174,691 – – △90,398 122,650 901,008 43 △127 △534,256 2,540 369,207 △49,950 △23,103 – 144,072 △87,753 △39,920 △12,000 △68,653 △1,314 14,634 – △97 Dividends paid Net cash provided by (used in) financing activities Effect of exchange rate Changes on cash and cash Equivalents Net increase (decrease) in cash and cash equivalents (△ indicates decrease) Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Previous consolidated fiscal year From April 1, 2020 to March 31, 2021 (Thousand yen) Current consolidated fiscal year From April 1, 2021 to March 31, 2022 △22,588 – 205 590,426 2,559,268 3,149,695 △104,561 △91,339 △1,711 207,502 3,149,695 3,357,198 13 (5) Notes to Consolidated Financial Statements (Note on Going Concern Assumption) Not applicable. (Changes in Accounting Policies) (Application of Accounting Standard for Revenue Recognition) [Accounting Standard for Revenue Recognition] (ASBJ Statement No. 29, March 31, 2020) Effective from the beginning of the fiscal year, the Group applies the “Revenue Recognition Accounting Standard” and other standards and recognizes revenue in the amount that is expected to be received in exchange for the promised goods or services when the control of the promised goods or services is transferred to the customer. As a result, with regard to commissioned development sales in the Game Business, previously revenue was recognized on an acceptance basis. However, the Company has changed its method to recognize revenue over a certain period based on the progress rate of fulfillment of performance obligations. In cases where it is not possible to reasonably estimate the progress of fulfillment of performance obligations, but it is expected that expenses incurred will be recovered, revenue is recognized on a cost recovery basis. year. With regard to the application of the Revenue Recognition Standard, etc., in accordance with the transitional treatment stipulated in the provision of paragraph 84, the cumulative effect of retroactively applying the new accounting policy is adjusted to retained earnings at the beginning of the current fiscal As a result, net sales increased by ¥544,209 thousand, cost of sales increased by ¥316,140 thousand, operating income, ordinary income and income before income taxes increased by ¥228,068 thousand, current assets decreased by ¥1,110,214 thousand, and current liabilities decreased by ¥1,338,283 thousand. This change has no impact on the beginning balance of retained earnings. As the Accounting Standard for Revenue Recognition, etc. has been applied, from the current fiscal year, [Accounts Receivable] presented in [Current Assets] in the consolidated balance sheet for the previous fiscal year has been included in [Accounts Receivable and Contract Assets], [Advance Received] and [Advance Received Revenue] presented in [Current Liabilities] in the consolidated balance sheet for the previous fiscal year are now included in [Contract Liabilities]. In accordance with the transitional treatment stipulated in Paragraph 89-2 of the Revenue Recognition Accounting Standard, the Company has not reclassified the previous fiscal year using a new method of presentation. (Application of Accounting Standard for Calculation of Market Value, etc.) [Accounting Standard for Calculation of Market Value] (ASBJ Statement No. 30, July 4, 2019)The Company has applied the “Current Value Accounting Standard” and other standards from the beginning of the fiscal year, and in accordance with the transitional treatment stipulated in Paragraph 19 and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), the new accounting policies stipulated in the Current Value Accounting Standard and other standards will be applied prospectively. This change has no impact on the current consolidated financial statements. 14 (Segment Information, etc.) 1. Overview of reportable segments (1) Method of determining reportable segments The reportable segments of our group are those for which separate financial information is available among the constituent units of our group and which are regularly reported to our board of directors for the purpose of deciding how to allocate resources and evaluating performance. The Group consists of four business segments, including three subsidiaries. The four reportable segments are [IT Freelance Matching Business], [Game Business], [x-Tech Business] and [Seed Tech Business]. (2) Types of services belonging to each reportable segment The IT Freelance Business mainly provides matching services for IT freelancers and companies. The Game Business mainly develops and operates smartphone games on a consignment basis. The x-Tech Business provides apps, video production, and digital marketing support that make the most of cutting-edge augmented reality (AR) and other technologies. [Seed Tech Business] mainly conducts on-demand programming school services and offshore consigned development. (3) Matters relating to changes in reportable segments, etc. From the current consolidated fiscal year, the name of the segment has been changed from the previous [IT Human Resource Development Business] to [Seed Tech Business ] ,changing the order of presentation of reportable Segment information for the previous fiscal year has been prepared based on the segment classification after 2 Methods of calculating the amounts of net sales, income or loss, assets, liabilities, and other items by Segment income is based on operating income. Inter-segment sales and transfers are based prices at an arm’s As stated in Changes in Accounting Policies, the Company has applied the Revenue Recognition Accounting Standard and other standards and changed the accounting method for revenue recognition from the beginning of the current consolidated fiscal year. The method of calculating profit or loss for business segments has been changed, and as a result, compared with the previous accounting method for revenue recognition, net sales and segment income for the Game Business for the current fiscal year have increased by ¥544,209 thousand and ¥228,068 thousand, respectively. segments. the change. reportable segment length. 15 segment 3 Information on the amounts of net sales, income or loss, assets, liabilities, and other items by reportable Previous Fiscal Year (From April 1, 2020 to March 31, 2021) (Thousand yen) Reportable Segments Game Business x-Tech Business Seed Tech Business IT Freelance Matching Business Total Adjustment (Note 1) Consolidated income (loss) Statement of Accounts (Note 2) Net Sales Net Sales to External Customers Inter-segment Net Sales or Transfers 1,444,289 1,616,506 266,204 100,816 3,427,816 – 3,427,816 – – – 2,744 2,744 △2,744 – Total 1,444,289 1,616,506 266,204 103,560 3,430,560 △2,744 3,427,816 Segment income Or loss (△) (Note) 1. The adjustment for segment income or loss △ ¥327,329 thousand is not allocated to each 270,112 △12,187 △15,615 1,065,809 △327,329 823,498 738,479 reportable segment includes corporate expenses of △ ¥350,846 thousand and inter-segment eliminations of ¥23,517 thousand. 2. The total of segment income (loss) and other adjustments are reflected to operating income in the consolidated statements of income. 3. The amounts of segment assets and liabilities are not disclosed as they are not allocated among business segments. Current fiscal year (From April 1, 2021 to March 31, 2022) Reportable Segments Game Business x-Tech Business Seed Tech Business IT Freelance Matching Business Total Adjustment (Note 1) (Thousand yen) Consolidated income (loss) Statement of Accounts (Note 2) Net Sales Net Sales to External Customers Inter-segment Net Sales or Transfer 1,814,443 3,153,713 304,296 116,194 5,388,647 – 5,388,647 – – – – – – – Total 1,814,443 3,153,713 304,296 116,194 5,388,647 – 5,388,647 Segment income Or loss (△) (Note) 1. Adjustment of segment income (loss) △ ¥435,029 thousand is not allocated to each reportable 15,054 △26,880 1,568,725 △435,029 1,133,696 996,534 584,016 segment Includes corporate expenses of △ ¥466,529 thousand and inter-segment eliminations of ¥31,500 thousand. 2. The total of segment income (loss) and other adjustments are reflected to operating income in the consolidated statements of income. 3. The amounts of segment assets and liabilities are not disclosed as they are not allocated among business segments. 16 (Note) The basis for calculating net income per share and diluted net income per share is as follows. (Per Share Information) Net assets per share Earnings per share Diluted earnings per share Item Item Earnings per share Net income attributable to owners of parent (thousand yen) Amount not shareholders (thousand yen) attributable common to Net income attributable to owners of parent related to common stock (thousand yen) Average number of shares during the period (shares) Diluted net income per share Net income attributable to owners of parent (thousand yen) Increase in number of common shares (shares) Summary of dilutive shares not included in the calculation of diluted net income per share due to lack of dilutive effect Total net assets (thousands of yen) Amount deducted from total net assets (thousand yen) (Of (Subscription rights to shares (thousand yen)) which, (thousand yen)) Net assets attributable to common stock at the end of the period (thousand yen) non-controlling interests Number of shares of common stock used for calculation of net assets per share (shares) (Significant Subsequent Events) Not applicable. 17 Previous consolidated fiscal year From April 1, 2020 to March 31, 2021 Current consolidated fiscal year From April 1, 2021 to March 31, 2022 ¥365.74 ¥43.83 ¥43.06 ¥422.26 ¥67.18 ¥66.17 Previous consolidated fiscal year From April 1, 2020 to March 31, 2021 Current consolidated fiscal year From April 1, 2021 to March 31, 2022 457,755 705,194 457,755 705,194 10,443,408 10,497,369 – – 457,755 187,331 705,194 159,793 – 2 types of Subscription Rights by resolution of the Board of Directors on August 26, 2021 (Number of Subscription Rights: 1,270) 3,830,496 10 (-) (10) 3,830,485 10,473,336 4,470,860 26,730 (26,718) (12) 4,444,129 10,524,689 (Note) The basis for calculation of net assets per share is as follows. Item Previous consolidated fiscal year From April 1, 2020 March 31, 2021 Current consolidated fiscal year From April 1, 2021 March 31, 2022 (Subscription Rights to Shares) (Shares) (187,331) (159,793)