Matters to be disclosed on the Internet in connection with the Notice ofConvocation of the 26th Ordinary General Meeting of Shareholders<Business Report>
Matters related to the Company's shares
Matters relating to stock acquisition rights of the Company
Accounting Auditors< Consolidated Financial Statements >Notes to Consolidated Financial Statements< Financial Statements >Notes to Parent Company Financial Statements(From July 1, 2021 to June 30, 2022)
Avant Corporation
The above matters are provided to shareholders by posting them on the Company's website inaccordance with laws and regulations and the Articles of Incorporation.
Our website https://www.avantcorp.com/

This is an unofficial translation. In case of any difference in meaning between the original Japanese text and the English translation,
Japanese text shall prevail.

1. Matters related to the Company's shares (As of June 30, 2022)(1) Total number of shares authorized(2) Total number of shares issued

62,304,000 shares
37,625,501 shares(of which 2,998 shares are treasury stock)(Note) The total number of shares issued increased by 8,705 shares due to the issuance of new shares as performance-linked stockcompensation on November 12, 2021, and by 13,593 shares due to the issuance of new shares as restricted stock compensation on thesame date.

(3) Number of shareholders

3,311 persons(4) Major shareholders (Top 10)
Number of shares
held (shares)

Shareholding ratio(%)

Tetsuji Morikawa

9,764,000

25.95

The Master Trust Bank of Japan, Ltd.

3,067,700

8.15

Avant Employee Stock Ownership Plan

2,287,200

6.08

Tsuyoshi Noshiro

1,868,800

4.97

OBIC Business Consultant Co.

1,600,000

4.25

The Custody Bank of Japan, Ltd.

1,537,100

4.09

JP MORGAN CHASE BANK

1,146,900

3.05

SSBTC CLIENT OMNIBUS ACCOUNT

911,291

2.42

FCP SEXTANT AUTOUR DU MONDE

874,600

2.32

PCA Corporation

778,400

2.07

Name of shareholder(Note) Shareholding ratio is calculated excluding treasury stock (2,998 shares).

(5) Shares issued to corporate officers as compensation for the execution of their duties during the
fiscal year under review
Number of shares(shares)Number of grantees(persons)

8,705

1

Outside Director--

Auditor--Directors (excluding outside directors)(Note) The details of the Company's stock-based compensation are described on page 41 of the Notice of the 26th Ordinary General
Meeting of Shareholders.

(6) Other important matters concerning shares
Not applicable.

-2-2. Matters concerning stock acquisition rights, etc. of the Company(1) Stock acquisition rights issued to the Company's Directors and Corporate Auditors ascompensation for the execution of their duties(As of June 30, 2022)
Not applicable.
(2) Stock acquisition rights issued to employees, etc. as compensation for the execution of duties
during the fiscal year under review
Not applicable.
3. Accounting Auditors(1) Name

Deloitte Touche Tohmatsu LLC(2) Amount of compensation
Amount paid
Amount of compensation, etc. for services set forth in Article 2, Paragraph 1 of theCertified Public Accountants Act (auditing services)
Total amount of monetary and other financial benefits payable by the Company andits subsidiaries to the accounting auditor

30 million yen
32 million yen(Note) 1. The audit contract between the Company and Deloitte Touche Tohmatsu LLC does not distinguish between compensation for audits
based on the Companies Act and compensation for audits based on the Financial Instruments and Exchange Act, and such
distinction is not practicable. Therefore, the above amounts include the amount of remuneration for the audit based on the Financial
Instruments and Exchange Act.
2. The Audit & Supervisory Board of the Company received an explanation of the audit plan from the accounting auditor and, basedon the details of the audit fee agreement, confirmed and reviewed the audit hours and personnel assignments, and as a result, gave
its consent to the audit fee, as stipulated in Article 399, Paragraph 1 of the Companies Act.
3. In addition to the above, additional remuneration of 2 million yen was paid for the audit in the previous fiscal year.

(3) Non-audit services
The Company pays an accounting auditor for advisory services related to human rights due
diligence, which are services other than those stipulated in Article 2, Paragraph 1 of the Certified
Public Accountants Act.
(4) Policy on Dismissal or Non-reappointment of Accounting Auditor
The Board of Corporate Auditors shall make the dismissal or non-reappointment of the
Accounting Auditor the purpose of the meeting of the General Meeting of Shareholders if it
determines that such dismissal or non-reappointment is necessary, such as when there is a problem
with the performance of duties by the Accounting Auditor.
In addition, the Board of Corporate Auditors will dismiss the accounting auditor based on theunanimous consent of the Corporate Auditors if the accounting auditor is deemed to fall under
any of the items of Article 340, Paragraph 1 of the Companies Act. In this case, the corporate
auditor selected by the Board of Corporate Auditors will report the dismissal of the accounting
auditor and the reasons for the dismissal at the first general meeting of shareholders convened
after the dismissal.

-3-Notes to Consolidated Financial Statements.
1. Basis of Presenting Consolidated Financial Statements(1) Scope of consolidation
Number of consolidated subsidiaries and names of major consolidated subsidiaries

Number of consolidated subsidiaries 5 companies
Name of consolidated subsidiary
DIVA Corporation
Internet Disclosure Co., Ltd.
Zeal Corporation
FIERTE Corporation
DIVA CORPORATION OF AMERICA(2) Application of equity method
Number of affiliates accounted for by the equity method and names of major affiliates

Number of affiliates accounted for by the equity method
Name of affiliated company

1 company
Metapraxis Limited(3) Fiscal year of consolidated subsidiaries
The fiscal year end of all consolidated subsidiaries is the same as the consolidated fiscal year
end.
(4) Matters related to accounting policies(i) Valuation standards and methods for significant assets
1) Valuation standards and methods for securities
Held-to-maturity debt securities Amortized cost method (straight-line method)
Other marketable securities
Other than stocks and otherMarket value method (unrealized gains and losses are accounted for as
securities with no market price a component of net assets, and the cost of securities sold is determinedby the moving-average method)
Non-marketable
equityCost method based on the moving average method
securities, etc.
For investments in limited liability investment partnerships (deemed as securities under Article 2,
Paragraph 2 of the Financial Instruments and Exchange Law), the most recent financial statements
available according to the financial reporting date stipulated in the partnership agreement are used as
the basis for calculating the net amount equivalent to the Company's equity interest. The net amountequivalent to the Company's interest in the partnership is taken into account.

2) Valuation standards and methods for inventories
Work in process
Raw materials
Supplies

Cost method based on the specific cost method (the amount on the balance sheet is
calculated by writing down the book value of assets which decreased in profitability)
Cost method based on the first-in, first-out method (the amount on the balance sheet
is calculated by writing down the book value of assets which decreased in
profitability)
Cost method based on the specific cost method (the amount on the balance sheet is
calculated by writing down the book value of assets which decreased in profitability)-4-

(ii) Depreciation and amortization method for significant depreciable assets
1) Tangible fixed assets(excluding leased assets)

Declining-balance method However, the straight-line method is used for buildings
and accompanying facilities acquired on or after April 1, 2016. (Principal useful life)
Building
Tools, furniture and fixtures

3 to 10 years
2 to 8 years

2) Intangible assets Straight-line method
Software for sale Amortization based on estimated sales revenue within the estimated sales period (3in the market
years)
Softwarefor The useful life is the period of internal use (3 to 5 years).
internal use3) Lease assets
Leased assets related to finance lease transactions that do not transfer ownership
Straight-line method over the lease term with a residual value of zero.
(iii) Basis for significant reserves
1) Allowance for The allowance for doubtful accounts is provided for possible losses on receivables
doubtful accounts based on the historical write-off ratio for general receivables and on the estimatedamount of uncollectible receivables based on a case-by-case determination ofcollectability for specific receivables such as doubtful receivables.
2) Allowance for To provide for bonuses to employees, an amount accrued for the current fiscal year
bonuses is recorded based on the estimated amount of payment.
3) Allowance for To provide for bonuses to directors and corporate auditors, an amount accrued forbonuses to directors the current fiscal year is recorded based on the estimated amount of payment.
and corporate auditors
4) Allowance for loss The Company records estimated losses from projects related to order contracts foron orders received which future losses are expected as of the end of the current fiscal year and forwhich the amount of such losses can be reasonably estimated.

(iv) Other important matters that serve as the basis for the preparation of the consolidated financial
statements
1) Accounting for significant deferred assets
Share grant expensesThe entire amount is expensed at the time of expenditure.
2) Significant hedge accounting methods

Hedge
accountingDeferred hedge accounting is adopted.
methodHedging instrumentsHedging instrument...Foreign currency deposits
and hedged items
Hedged items...Anticipated transactions denominated in foreign currencies
Hedging policy
Foreign currency deposits are used to hedge the risk of exchange rate fluctuations.
The Company's policy is to use such transactions within the scope of actual demandand not to conduct transactions for speculative purposes.

-5-Methods of evaluatingSince the material terms of the hedging instruments and hedged items are identicalthe effectiveness ofand the cash flow fluctuations can be offset after the inception of the hedge, thehedging
assessment of the effectiveness of the hedge is omitted at the consolidated balance
sheet date.

3) Basis for recording significant revenues and expenses
The Group recognizes revenue for contracts with customers at the amount of consideration
to which it expects to be entitled in exchange for the promised goods or services when controlof the promised goods or services is transferred to the customer, by applying the five-step
approach described below.
Step 1: Identify the contract with the customer
Step 2: Identify performance obligations in the contract
Step 3: Calculate the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) performance obligations are satisfied
In our group, we are engaged in group governance business, digital transformation promotion
business, and outsourcing business.
The Group Governance Business provides license sales of DivaSystem, a proprietary
software package for consolidated management and consolidated accounting, implementation
consulting services, and ongoing maintenance services, including version upgrades after the
product is put into operation. The company is a member of the DivaSystem Group.
In license sales, the performance obligation is deemed to be satisfied when the license is
granted to the customer, and revenue is recognized as goods or services that are transferred ata single point in time.
In the case of implementation consulting services, the performance obligation is deemed tobe satisfied based on the degree of progress in implementing DivaSystem to the customer, andrevenue is recognized based on the percentage of progress.
For maintenance services, the Company recognizes revenue over the contract period basedon the judgment that the performance obligation will be satisfied over the contract period.
The Digital Transformation Business mainly provides system integration services for theutilization of information called BI (Business Intelligence), support services for the
introduction of cloud data platforms, and sales and maintenance of software licenses andhardware.
In the sale of software licenses, the performance obligation is deemed to be satisfied when
the license is granted to the customer, and revenue is recognized on a net basis as an agency
transaction at the time the license is granted.
For system development services, the Company recognizes revenue based on the percentage
of progress in determining that performance obligations are satisfied based on the degree ofprogress of development.
For maintenance services, the Company recognizes revenue over the contract period basedon the judgment that the performance obligation will be satisfied over the contract period.
The outsourcing business mainly provides outsourcing services for consolidated financial
statements and consolidated tax payments.
Since control over the service is transferred to the customer upon delivery of the service, theCompany recognizes revenue over the contract period based on the determination that theperformance obligation is satisfied in proportion to the progress of service delivery.
The consideration for the transaction is received within one year of satisfaction of theperformance obligation and does not include a significant financial component.
4) Standards for translation of significant foreign currency-denominated assets or liabilities into
Japanese currency-6-

Monetary receivables and payables denominated in foreign currencies are translated into
Japanese yen at the spot exchange rates prevailing on the consolidated balance sheet date, withtranslation differences recognized as gains or losses.
Assets and liabilities of overseas subsidiaries are translated into yen at the spot exchange
rate prevailing on the consolidated balance sheet date, while revenues and expenses aretranslated into yen at the average exchange rate during the period.
(5) Application of consolidated tax payment system
The Company and its domestic consolidated subsidiaries apply the consolidated tax payment
system.
(6) Application of tax effect accounting for the transition from a consolidated tax payment
system to a group totalization system
The Company and its domestic consolidated subsidiaries will shift from the consolidated
taxation system to the group totalization system from the next consolidated fiscal year.
However, with respect to the transition to the group totalization system established by the "Actfor Partial Revision of the Income Tax Act, etc." (Act No. 8 of 2020) and items for which the
non-consolidated tax payment system was revised in conjunction with the transition to thegroup totalization system, the Company and its domestic consolidated subsidiaries will be
required to change from the consolidated tax payment system to the group totalization systemfrom the next consolidated fiscal year. The items which were revised in accordance with thetransition to the group-totaling system and the transition to the non-consolidated tax payment
system along with the transition to the group-totaling system are treated in accordance with
Paragraph 3 of "Treatment of Application of Tax Effect Accounting for Transition from
Consolidated Taxation System to Group Titling System" (PITF No. 39, March 31, 2020) andParagraph 44 of "Guidance on Accounting Standard for Tax Effect Accounting" (ASBJ
Guidance No. 28, February 16, 2018). (February 16, 2018) paragraph 44 is not applied, theamount of deferred tax assets and deferred tax liabilities are based on the provisions of the tax
law before the revision.
Effective from the beginning of the next consolidated fiscal year, the Company plans to apply
the "Treatment of Accounting and Disclosure for Group Taxes" (Practical Issues Task Force
No. 42 (August 12, 2021) will be applied.
2. Notes on Changes in Accounting Policies(1) Application of Accounting Standard for Revenue Recognition
The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020.
(hereinafter referred to as the "Accounting Standard for Revenue Recognition") and others areapplied from the beginning of the current fiscal year, and revenue is recognized at the amount
expected to be received in exchange for the promised goods or services when control of the promised
goods or services is transferred to the customer.
As a result of this change, the Company now recognizes revenue over a certain period of time
based on the estimated degree of completion of performance obligations, except for contracts witha very short period of time, in which the Company previously recognized revenue upon acceptanceof the contract based on the acceptance inspection method. In the past, the Group recognized asrevenue the gross amount of consideration received from customers, but for transactions in which
the Group's role in providing goods or services to customers constitutes that of an agent, the Groupnow recognizes revenue on a net basis, i.e., the amount received from customers less the amount
paid to suppliers.
In accordance with the transitional treatment prescribed in the proviso of Paragraph 84 of the
Accounting Standard for Revenue Recognition, the cumulative effect of retrospective application of
the new accounting policy prior to the beginning of the current fiscal year is added to or deductedfrom retained earnings at the beginning of the current fiscal year, and the new accounting policy isapplied from such beginning balance. The new accounting policy is applied from the balance at the
beginning of the current fiscal year. However, the new accounting policy was not applied-7-

retrospectively to contracts for which almost all revenue amounts were recognized in accordancewith the previous treatment prior to the beginning of the current fiscal year by applying the method
prescribed in Paragraph 86 of the Accounting Standard for Revenue Recognition. In addition, theCompany has applied the method prescribed in Paragraph 86 and Note (1) of the AccountingStandard for Revenue Recognition to account for contract modifications made prior to the beginningof the current fiscal year based on the contract terms after reflecting all contract modifications, andthe cumulative effect of such modifications has been added to or subtracted from retained earnings
at the beginning of the current fiscal year. The cumulative effect of these changes is added to or
deducted from retained earnings at the beginning of the current fiscal year.
As a result, net sales decreased 100,655 thousand yen, cost of sales decreased 309,255 thousand
yen, and operating income, ordinary income, and income before income taxes and minority interests
each increased 208,600 thousand yen in the current fiscal year. The balance of retained earnings at
the beginning of the current period increased by 71,213 thousand yen.
Due to the adoption of the revenue recognition accounting standard, "Notes and accounts
receivable," which were included in "Current assets" in the consolidated balance sheet in theprevious fiscal year, are included in "Notes and accounts receivable-trade and contract assets" in thecurrent fiscal year, and "Unearned revenue," which were included in "Current liabilities" and "Other
current liabilities" in the Advance received," which had been included in "Current liabilities," is now
included in "Contract liabilities," respectively, from this consolidated fiscal year.
(2) Application of accounting standards for calculation of fair value
The "Accounting Standard for Calculation of Fair Value" (ASBJ Statement No. 30, July 4, 2019.
("Accounting Standard for Fair Value Calculation"). The new accounting policy prescribed by the
Accounting Standard for Fair Value Calculation, etc. is applied from the beginning of the current
fiscal year, in accordance with the transitional treatment prescribed in Paragraph 19 of the
Accounting Standard for Fair Value Calculation and Paragraph 44-2 of the Accounting Standard for
Financial Instruments (ASBJ Statement No. 10, July 4, 2019). In accordance with the treatment, the
new accounting policy stipulated by the fair value accounting standard is to be applied prospectively.
There was no effect of this change on the consolidated financial statements for the fiscal year ended
March 31, 2012.
In addition, in "Notes to Consolidated Financial Statements, 7. Notes on Financial Instruments,"
the Company has decided to provide notes on items such as the breakdown of the market value offinancial instruments by level.
3. Notes to Accounting Estimates
Not applicable.
4. Notes to Consolidated Balance Sheets(1) Receivables arising from contracts with customers and contract assets
The balances of receivables and contract assets arising from contracts with customers arepresented in "Notes to Consolidated Financial Statements, 8. Notes to Revenue Recognition (3)Information for understanding the amount of revenue in the current and subsequent fiscal years (i)Balance of contract assets and contract liabilities, etc.".
(2) Loan commitment contracts
The Company has entered into loan commitment contracts with three correspondent banks for theefficient procurement of working capital.
The following are unused lines of credit related to loan commitments as of the end of the current
fiscal year.

-8-Total amount of loan commitments
Loan balancebalance (of an account)

3,500,000
3,500,000

thousand yen
thousand yen
thousand yen

5. Notes to Consolidated Statements of Income(1) Revenue from contracts with customers
The amount of revenue from contracts with customers is presented in "Notes to Consolidated
Financial Statements, 8. Revenue Recognition, (1) Information disaggregating revenue fromcontracts with customers".
(2) Impairment loss on equity method investments
Regarding the goodwill amount of 181,221 thousand yen related to Metapraxis, an equity-method
affiliate, the entire unamortized balance of the goodwill amount is recorded as "Equity in losses ofaffiliates" because the excess earning capacity is no longer expected as projected in the businessplan at the time of acquisition.
6. Notes to Consolidated Statement of Changes in Net Assets(1) Matters related to the total number of shares issued and outstanding

Type of shares

Decrease in the
Number of shares
Number of shares atnumber of shares Number of shares atincreased in thethe beginning of theduring the current the end of the current
current consolidated
current fiscal year
consolidated fiscal
fiscal year
fiscal year
year

Common stock

37,603,203 shares

22,298 shares- shares37,625,501 shares(Note) The increase of 22,298 shares in the current consolidated fiscal year is due to the increase of 8,705 shares from the issuance of new sharesas performance-linked stock-based compensation and the increase of 13,593 shares from the issuance of new shares as restricted stockcompensation.

(2) Number of treasury stock

Decrease in the
Number of shares at
Number of shares
number of shares Number of shares atthe beginning of the increased in the current during the current the end of the current
Type of shares
current fiscal year consolidated fiscal year consolidated fiscal
fiscal year
year
Common stock

2,951 shares

47 shares- shares

2,998 shares(3) Matters related to dividends from surplus(i) Dividends paid, etc.
Resolution

Type ofshares

September 28, 2021
Ordinary General
Meeting of
Shareholders

Commonstock

Total amount
Dividend perof dividends
share (yen)(Thousandyen)
413,602

11.00

-9-

Base date

Effective dateJune 30, 2021

September 29, 2021

(ii) Dividends with a record date in the current fiscal year but an effective date in the following
fiscal year
Resolution

Type ofshares

September 27, 2022
Ordinary General Common
Meeting ofstock
Shareholders

T o t a l
Dividend
amount ofSource ofper share
dividen ds
dividends(yen)(Thousandyen)
Retainedearnings

489,092

13.00

Base date

Effective dateJune 30, 2022

September 28,
2022(Note) The dividend amount per share at the Ordinary General Meeting of Shareholders held on September 27, 2022 includes acommemorative dividend of 1.00 yen per share for the 25th anniversary of the Company's founding.

7. Notes to Financial Instruments(1) Matters Concerning the Status of Financial Instruments(i) Policy for financial instruments
The Group raises necessary funds (mainly through bank loans and bond issues) based on
management policies and business plans. Temporary surplus funds are invested in financial
assets with high liquidity and safety in accordance with internal investment rules, and short-termworking capital is procured through bank loans. In addition, the Company uses foreign currency
deposits to avoid foreign exchange fluctuation risks. For details on hedging instruments andhedged items, hedging policy, and methods for evaluating the effectiveness of hedging activities,
please refer to the aforementioned section "(4) Matters Concerning Accounting Policies, 4) Other
Important Matters that Form the Basis for Preparing Consolidated Financial Statements, 2)
Important Hedge Accounting Methods. Please refer to "2) Hedge accounting methods" in "(4)Other significant matters underlying the preparation of consolidated financial statements.
(ii) Description of financial instruments, their risks and risk management systems
Trade notes and accounts receivable, which are operating receivables, are exposed to customer
credit risk. However, the Company manages this risk by strictly managing credit for eachcustomer and regularly monitoring collection due dates and balances in order to early identify
and mitigate concerns about collection due to deterioration of financial conditions and otherfactors.
Held-to-maturity debt securities are exposed to foreign exchange and interest rate risk,
although credit risk is minimal because only highly rated debt securities are included in theinvestment securities. Available-for-sale securities are exposed to market price fluctuation risk
and foreign exchange fluctuation risk, but the Company reviews its holdings on an ongoing basis,taking into account market prices and other factors. Investments in limited liability investment
partnerships are exposed to the risk of a decline in the principal amount invested due to changes
in the business and financial conditions of the issuer of the incorporated shares. However, theCompany manages this risk by periodically obtaining the financial statements of the partnerships
and monitoring their financial conditions and operations.
Lease and guarantee deposits are security deposits under lease contracts for head office, branch
offices, and subsidiaries, and are exposed to credit risk of the lessee. However, the Company
confirms the credit risk at the time of contract to mitigate such risk.
Trade payables, such as notes and accounts payable and accounts payable-other, are mostly
due within one year. Lease obligations related to finance lease transactions are mainly for the
purpose of financing capital investment, and the longest term of payment is 2 years and 9 months
after the balance sheet date. These are exposed to liquidity risk (risk of being unable to makepayments when due), but the Group manages this risk by confirming and managing cash

-10-

schedules and payment account balances on a monthly basis.
(iii) Supplementary Explanation on Matters Concerning Fair Value, etc. of Financial Instruments
Since variable factors are incorporated in the calculation of the fair value of financial
instruments, such values may change due to the adoption of different assumptions and otherfactors.
(2) Fair value of financial instruments
Consolidated balance sheet amount, fair value and their differences as of June 30, 2022 are as
follows. Stocks and other securities with no market price are not included in the following table(please refer to Note 1). (See Note 1.) (1). Cash and deposits," "notes and accounts receivable,""marketable securities," "notes and accounts payable," "accounts payable and accrued expenses,"and "income taxes payable" are omitted because the fair values approximate their book values due
to cash and short term settlements.

(1) Investment securities
Available-for-sale securities(2) Lease and guarantee deposits (including
current portion)
Total Assets(1) Lease obligations (including current
portion)Total liabilities

Consolidated
Balance Sheet
A m o u n t(Thousand yen)

Market value
Difference（Thousands of （Thousands of
yen)
yen)

430,143

430,143-594,259

593,970-289

1,024,403

1,024,114-289

30,75230,757530,75230,757

5(Notes) 1. Non-marketable equity securities, etc.
classification Consolidated Balance Sheet Amountunlisted stocks

0 thousand yen

These are not included in "(1) Investment securities.
2. Investments in partnerships and other similar entities in which the net amount of equity interest is recorded on the consolidatedbalance sheets are omitted. The amount of the said investment on the consolidated balance sheet is 80,989 thousand yen.

(3) Matters concerning the breakdown of the fair value of financial instruments by level
The fair value of financial instruments is classified into the following three levels based on theobservability and materiality of the inputs used to calculate fair value.
Level 1 fair value: Fair value calculated based on quoted market prices for assets or liabilities forwhich such fair value is calculated that are formed in an active market among the
inputs for the calculation of observable fair value.
Level 2 fair value: Fair value calculated using inputs other than Level 1 inputs for the calculationof observable fair value
Level 3 fair value: Fair value calculated using inputs for calculating unobservable fair value
When multiple inputs that have a significant impact on the calculation of fair value are used, fairvalue is classified to the level with the lowest priority in the calculation of fair value among thelevels to which each of those inputs belongs.

-11-

(i) Financial instruments carried on the consolidated balance sheet at fair valueMarket value (Thousands of yen)
Level 1
Level 2
Level 3
Total amountClassification
Investments in securities
Available-for-sale securities
stock (company)
Other
total assets

245,268
245,268

184,875
184,875-

245,268
184,875
430,143(ii) Financial instruments other than those recorded on the consolidated balance sheets at fair
value
Classification
Lease and guarantee deposits(including current portion)
total assets
Lease obligations (including current
portion)Total liabilities

Market value (Thousands of yen)
Level 2
Level 3
total amount

Level 1-

593,970-

593,970-

593,970-

593,970-

30,757-30,757-30,757-30,757(Note) Explanation of valuation techniques used in the calculation of fair value and inputs related tothe calculation of fair value
Investments in securities
Listed stocks are valued using quoted market prices. Since listed stocks are traded in active
markets, their fair value is classified as Level 1 fair value.
On the other hand, the Company's holdings of mutual funds, etc., are classified as Level 2 fairvalue because they are not frequently traded in the market and are not considered quoted prices
in active markets.
Lease and guarantee deposits
The fair value of security deposits and guarantee money is classified as Level 2 fair value,
which is calculated based on the present value of future cash flows discounted by an appropriate
index such as the yield of government bonds, classified by a certain period of time.
Lease obligations
The fair value of lease obligations is determined using the discounted present value method
based on the total amount of principal and interest and an interest rate that takes into account theremaining term of the obligation and credit risk, and is classified as Level 2 fair value.

-12-8. Notes to Revenue Recognition(1) Information that disaggregates revenue from contracts with customers
Reportable Segment
DigitalTransformation
Promotion
BusinessGroup
GovernanceBusinessGoods
orservicestransferred at a point in
time
Goods
or
servicestransferred over a periodof time
Revenue from contracts
with customers
Other income
Salestoexternalcustomers(Unit: thousand yen)

Outsourcing
Business

Total amount

577,390

86,456

153,377

817,224

8,754,217

6,902,673

2,229,272

17,886,162

9,331,607

6,989,129

2,382,650

18,703,387

-

-

-

-

9,331,607

6,989,129

2,382,650

18,703,387(2) Information that provides a basis for understanding revenues arising from contracts withcustomers
Basis for understanding revenues is as described in "1. Basis of Presenting Consolidated
Financial Statements, (4) Accounting Policies, 4) Other Significant Accounting Policies, 3) Basisfor Reporting Significant Revenues and Expenses.
(3) Information to understand the amount of revenue in the current and subsequent fiscal years(i) Balance of contract assets and contract liabilities, etc.
Receivables arising from contracts with customers (beginningbalance)
Receivables arising from contracts with customers (endingbalance)
Contract assets (beginning balance)
Contract assets at end of period
Contract liabilities (beginning balance)
Contract liabilities at end of period(Unit: thousand yen)
Current Consolidated Fiscal Year2,586,194
2,512,036
169,951
512,0132,328,731
2,355,344

Contract assets mainly relate to the Group's rights to unclaimed consideration in revenues
recognized as it progresses in satisfying its performance obligations. Contract assets aretransferred to receivables arising from contracts with customers when the Group's rights tothe consideration become unconditional.
Contract liabilities primarily relate to unearned revenues from customers. Contract
liabilities are reversed upon recognition of revenue. The amount of revenue recognized in thecurrent fiscal year that was included in contract liabilities at the beginning of the period was
2,057,917 thousand yen.

(ii) Transaction price allocated to remaining performance obligations
The aggregate transaction price allocated to the remaining performance obligations and theperiod over which revenue is expected to be recognized are as follows-13-

(Unit: thousand yen)
Current Consolidated Fiscal Year2,309,274
46,0702,355,344

Within 1 year
More than 1 year
total amount

9. Notes to Per Share Information(1) Net assets per share

281.68 yen(2) Net income per share

54.37 yen

10. Notes to Significant Subsequent Events
Not applicable.
11. Other notes
Amounts are rounded down to the nearest unit.

-14-

Notes to Parent Company Financial Statements
1. Matters Related to Significant Accounting Policies(1) Valuation standards and methods for assets(i) Valuation standards and methods for securities
Held-to-maturity debt securitiesAmortized cost method (straight-line method)
Shares of subsidiaries andCost method based on the moving average method
affiliated companies
Other marketable securities
Other than stocks and otherMarket value method (unrealized gains and losses are accounted for
securities with no marketas a component of net assets, and the cost of securities sold is
pricedetermined by the moving-average method)
Non-marketablesecurities, etc.

equityCost method based on the moving average method(ii) Valuation standards and methods for inventories
SuppliesStated at cost determined by the specific identification method (the amount stated in thebalance sheet was calculated by writing down the book value of assets which decreased in
profitability)(2) Accounting for significant deferred assets
Share grant expenses The entire amount is expensed at the time of expenditure.
(3) Depreciation method for fixed assets(i) Property, plant and equipment Declining-balance method However, the straight-line method isused for buildings and accompanying facilities acquired on or after
April 1, 2016. (Principal useful life)(ii) Intangible fixed assets
Software for internal use

Building
3 to 10 years
Tools, furniture and fixtures
2 to 8 years
Straight-line method
The useful life is the period of internal use (5 years).

(4) Basis for reserves(i) Allowance for bonuses toTo provide for bonuses to employees, an amount accrued for theemployees
current fiscal year is recorded based on the estimated amount of
payment.
(ii) Allowance for bonuses toTo provide for bonuses to directors and corporate auditors, an amountdirectors
andcorporateaccrued for the current fiscal year is recorded based on the estimatedauditors
amount of payment.
(5) Basis for recording revenues and expenses
The Company's revenues consist of management guidance fees and outsourcing fees fromsubsidiaries.
The performance obligation is to provide contracted services to the subsidiary in accordance with-15-

the terms of the contract, and the Company's performance obligation is fulfilled when the services
are provided, and thus revenue and expenses are recognized at that time.
(6) Other basic items for the preparation of financial statements(i) Significant hedge accounting methods
Hedge
accountingDeferred hedge accounting is adopted.
methodHedging instrumentsHedging instrument...Foreign currency deposits
and hedged items
Hedged items...Anticipated transactions denominated in foreign currencies
Hedging policy
Foreign currency deposits are used to hedge the risk of exchange rate
fluctuations. The Company's policy is to use such transactions within the scopeof actual demand and not to conduct transactions for speculative purposes.
Methods of evaluatingSince the material terms of the hedging instruments and hedged items are thethe effectiveness ofsame and the cash flow fluctuations can be offset after the inception of thehedging
hedge, the assessment of effectiveness at the balance sheet date is omitted.
(ii) Standards for translation of significant assets and liabilities denominated in foreign currencies
into Japanese yen
Monetary receivables and payables denominated in foreign currencies are translated into
Japanese yen at the spot exchange rates prevailing on the balance sheet date, with translationdifferences recognized as gains or losses.
(iii) Application of consolidated tax payment system
The Company and its domestic consolidated subsidiaries apply the consolidated tax payment
system.
(iv) Application of tax effect accounting for the transition from a consolidated tax payment system
to a group totalization system
The Company will transition from a consolidated tax payment system to a group totalization
system from the following fiscal year. However, with respect to the transition to the group
totalization system established by the "Act for Partial Revision of the Income Tax Act, etc." (ActNo. 8 of 2020) and items for which the non-consolidated tax payment system was revised inconjunction with the transition to the group totalization system, the treatment is as follows The
items which were revised in accordance with the transition to the group-totaling system and thetransition to the non-consolidated tax payment system along with the transition to the grouptotaling system are treated in accordance with the treatment in Paragraph 3 of "Treatment ofApplication of Tax Effect Accounting for Transition from Consolidated Taxation System toGroup Titling System" (PITF No. 39, March 31, 2020) and the "Guidance on AccountingStandard for Tax Effect Accounting" (ASBJ Guidance No. 28, February 2, 2018). Guidance No.
28, February 16, 2018), the provisions of Paragraph 44 are not applied, and the amounts ofdeferred tax assets and deferred tax liabilities are based on the provisions of the tax law before
the revision.
Effective from the beginning of the next fiscal year, the Company will apply the "Practical
Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements" (ASBJ Practical Issues Task Force No. 42, August 12, 2021), which
provides for accounting treatment and disclosure of corporate and local income taxes and tax
effect accounting in the case where a group totalization system is applied. The Company plans
to apply the "Practical Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements" (PITF No. 42, August 12, 2021).

-16-

2. Notes to Changes in Accounting Policies(1) Application of Accounting Standard for Revenue Recognition
The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020.
(hereinafter referred to as the "Accounting Standard for Revenue Recognition") The Company
adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31,2020) and others from the beginning of the current fiscal year, and recognizes revenue at the amount
expected to be received in exchange for the promised goods or services when control of the promised
goods or services is transferred to the customer.
The cumulative effect of retrospective application of the new accounting policy prior to thebeginning of the current fiscal year is added to or deducted from retained earnings brought forward
at the beginning of the current fiscal year, and the new accounting policy is applied from the balanceat the beginning of the current fiscal year. The new accounting policy is applied from the balance atthe beginning of the current fiscal year. However, the new accounting policy was not applied
retrospectively to contracts for which almost all revenue amounts were recognized in accordancewith the previous treatment prior to the beginning of the current fiscal year by applying the method
prescribed in Paragraph 86 of the Accounting Standard for Revenue Recognition.
As a result, there is no effect of this change on the financial statements for the current fiscal year.
(2) Application of accounting standards for calculation of fair value
The "Accounting Standard for Calculation of Fair Value" (ASBJ Statement No. 30, July 4, 2019.
("Accounting Standard for Fair Value Calculation"). The new accounting policy prescribed by the
Accounting Standard for Fair Value Calculation, etc. is applied from the beginning of the current
fiscal year, in accordance with the transitional treatment prescribed in Paragraph 19 of the
Accounting Standard for Fair Value Calculation and Paragraph 44-2 of the Accounting Standard for
Financial Instruments (ASBJ Statement No. 10, July 4, 2019). In accordance with the treatment, the
new accounting policy stipulated by the fair value accounting standard, etc., will be applied
prospectively. There was no impact of this change on the financial statements for the fiscal year
under review.
3. Notes to Accounting Estimates
Not applicable.
4. Notes to Balance Sheet(1) Monetary receivables from and monetary payables to subsidiaries and affiliates (excluding thosepresented separately)
Short-term monetary claims
1,426,018 thousand yen
Short-term monetary obligations 21,639 thousand yen
Long-term monetary claims
23,770 thousand yen(2) Loan commitment contracts
The Company has entered into loan commitment contracts with three correspondent banks for theefficient procurement of working capital.
The following are unused lines of credit related to loan commitments as of the end of the current
fiscal year.
Total amount of loan commitments3,500,000 thousand yen
Loan balance-Thousands of yenbalance (of an account)
3,500,000 thousand yen-17-5. Notes to Statements of Income
Transactions with subsidiaries and affiliates (excluding those shown separately)Transaction volume from business transactions987,154 thousand yen
Non-operating transactions
41 thousand yen

6. Notes to Non-consolidated Statement of Changes in Net Assets
Matters related to the number of treasury stock

Type of sharescommon stock

Number of shares at Number of shares Number of shares Number of shares atthe beginning of the increased in thedecreased in thethe end of thecurrent fiscal year current fiscal year current fiscal year current fiscal year
2,951 shares

47 shares-stock2,998 shares

7. Notes to Tax Effect Accounting(1) Significant components of deferred tax assets and liabilities
deferred tax asset
Tax loss carryforwards
100,564 thousand yen
Enterprise tax payable
407 thousand yen
Business office tax payable
498 thousand yen
Allowance for bonuses
14,989 thousand yen
Allowance for bonuses to directors and corporate auditors
10,747 thousand yen
Depreciation and amortization
15,752 thousand yen
Loss on valuation of investment securities
3,062 thousand yen
Loss on valuation of stocks of subsidiaries and affiliates
84,635 thousand yen
Asset retirement obligations
14,384 thousand yen
Net unrealized gains (losses) on available-for-sale securities, net of taxes
4,848 thousand yen
Other1,657 thousand yen
Subtotal of deferred tax assets
251,548 thousand yen
Valuation allowance for net operating loss carryforwards for tax purposes -100,564 thousand yen
Valuation allowance for total future deductible temporary differences, etc. -87,697 thousand yen
Total deferred tax assets
63,286 thousand yen
deferred tax liabilities
Buildings and accompanying facilities (asset retirement costs)
6,121 thousand yen
Net unrealized gains (losses) on available-for-sale securities, net of taxes 52,051 thousand yen
Other
104 thousand yen
Total deferred tax liabilities
58,277 thousand yen
Net deferred tax assets
5,009 thousand yen-18-

(2) Breakdown of the main causes for the difference between the statutory tax rate and the effective
tax rate after the application of tax effect accounting
Statutory effective tax rate
30.6%
(Adjustment)
Entertainment expenses and other items not permanently deductible for income tax purposes 1.1%
Dividends received and other items not permanently includable in income-95.0%
Valuation allowance
21.7%
Other
-0.6%
Effective tax rate after application of tax effect accounting-42.1%

8. Notes on Transactions with Related Parties(1) Subsidiaries
Percentage
Name ofof votingCompany, etc. rights, etc.
held

DIVA
Corporation

Internet
DisclosureCo., Ltd.

ZEAL
Corporation(Unit: thousand yen)
Relationship withrelated parties

Transaction
details

Amount oftransaction

Subject

Balance at
end of year

Management
services
accounts
426,243
39,173
outsourced
receivable
Management guidance(Note 1)and outsourced
Outsourced
administration Fund
accounting
accounts
2,362
400,307
management Guarantee
services (Notereceivableof debt Concurrently
1)
serving as director
100% direct
Deposit of(cash)
1,689,000
552,161
funds (Note 2)
advanceaffiliatedRepayment ofcompany
682,000
2,576,000
depositfunds (Note 2)
Outsourced accounting(received)
services
Interest
Long-term
payments
30 accounts
7,696(Note 2)
receivable
Management
services
accounts
2,000
550
outsourced
receivable(Note 1)
Management guidanceInterest
accounts
payments
3
38,410Fund management
receivable(Note 2)
Concurrently serving as
100% direct
affiliateddirectors
company
200,000
deposit(received)
Long-term
accounts
1,737
receivable
Management guidance Management
and outsourced
services
accounts
100% direct
304,828
28,195administrative services
outsourced
receivable
Loan of fund
(Note 1)-19-

management funds
Concurrent directors

Deposit offunds (Note 2)
Repayment offunds (Note 2)

FIERTE
Corporation

Outsourcing ofmanagement guidance
and outsourced
100% direct accounting services

Interest
payments(Note 2)
Management
servicesoutsourced(Note 1)
Outsourced
accounting
services (Note1)

accounts
receivableaffiliatedcompany
150,000
deposit(received)
Long-term
7 accounts
receivable
750,000

203,468
900,000

6,881

139,522accounts
receivable

13,044

88,626accounts
receivable

121,385arrears
Long-term
accounts
receivable

Concurrent directors

8,272
7,454

Transaction amounts do not include consumption taxes, and year-end balances include consumption
taxes.
Terms and conditions of transactions and policy for determining terms and conditions of transactions,etc.

(Notes) 1. Transaction terms and conditions for outsourcing administrative and accounting services are determined appropriately, taking into
consideration incurred costs and other factors.
2. Interest rates for loans in the loan of funds and deposits in the group fund management are determined rationally, taking market
interest rates into consideration.

(2) Directors and principal individual shareholders, etc.

type

officer

identity

NaoyoshiKasugaPercentage
Relationshipof votingAmount ofwith related
rights, etc.
Transaction details
transaction
partiesheld (held)

Owned
directly
0.0%

Delivery of common
stock in connection
Director of with contribution in
the Company kind of monetarycompensation claims(Unit: thousand yen)(school)
subject

Balance at
end of year

long vowel long vowel
mark
mark
13,710 (usually(usually
only used in only used in
katakana)
katakana)(Note) Contribution in kind of monetary compensation receivable in connection with the medium- to long-term performance-linked stockcompensation plan. The delivery of such common stock will be made with the monetary claims provided to the allottee as the invested
assets, and the payment price is set at 1,575 yen, which is the closing price of our common stock on the Tokyo Stock Exchange on
October 14, 2021 (the business day before the date of resolution by the Board of Directors), in order to make the price arbitrary. The
price was set at 1,575 yen, which is the closing price of the Company's common stock on the Tokyo Stock Exchange on October 14,
2021 (the business day immediately preceding the date of the Board of Directors resolution).

9. Notes to Revenue Recognition
Notes have been omitted because the same information that forms the basis for understanding
revenue is presented in "Notes to Non-Consolidated Financial Statements, 1. Significant
Accounting Policies, (5) Basis for Recognition of Revenue and Expenses.

-20-10. Notes to Per Share Information(1) Net assets per share

173.63 yen(2) Net income per share

17.18 yen

11. Notes to Significant Subsequent Events
Not applicable.
12. Other Notes
Amounts are rounded down to the nearest unit.

-21-