Note: This document has been translated from the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.

May 11, 2023

Consolidated Financial Results
for the Fiscal Year Ended March 31, 2023
(Under Japanese GAAP)
Company name:
Systena Corporation
Listing:
Tokyo Stock Exchange
Securities code:
2317
URL:
https://www.systena.co.jp/
Representative:
Kenji Miura, Representative Director and President
Inquiries:
Hiroshi Kotani, Director
Telephone:+81-3-6367-3840
Scheduled date of annual general meeting of shareholders:June 21, 2023
Scheduled date to commence dividend payments:
June 7, 2023
Scheduled date to file annual securities report:
June 21, 2023
Preparation of supplementary material on financial results:
Yes
Holding of financial results briefing:
Yes (for institutional investors and analysts)(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the fiscal year ended March 31, 2023 (from April 1, 2022 to March 31,
2023)(1) Consolidated operating results(Percentages indicate year-on-year changes.)

Net sales

Operating profit

Profit attributable toowners of parent

Ordinary profit

Fiscal year ended

Millions of yen

March 31, 2023

74,526

14.2

9,844

8.1

9,955

16.1

7,317

22.1

March 31, 2022

65,272

7.2

9,106

13.7

8,578

14.3

5,992

20.5

Note: Comprehensive income%%

Millions of yen

For the fiscal year ended March 31, 2023:
For the fiscal year ended March 31, 2022:

Basic earnings
per share
Fiscal year ended

Millions of yen

Diluted earnings
per shareYen%¥7,340 million¥6,089 million

Return on equity

Yen

Millions of yen[20.5%][21.3%]

Ratio of ordinary
profit to total assets%%

Ratio of operating
profit to net sales%%

March 31, 2023

18.89

–

22.9

21.6

13.2

March 31, 2022

15.47

–

21.6

20.8

14.0

Reference:

Share of profit (loss) of entities accounted for using equity method
For the fiscal year ended March 31, 2023:¥35 million
For the fiscal year ended March 31, 2022:¥(144) million
Note: The Company implemented a four-for-one common stock split effective December 1, 2021. Basic earnings per share has been
calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

(2) Consolidated financial position
Total assets
As of

Net assets

Equity-to-asset ratio

Net assets per share

Millions of yen

Millions of yen

March 31, 2023

48,87934,650

69.9

%

88.19

Yen

March 31, 2022

43,47730,173

68.5

76.83

Reference:

EquityAs of March 31, 2023:¥34,168 million
As of March 31, 2022:¥29,762 million
Note: The Company implemented a four-for-one common stock split effective December 1, 2021. Net assets per share has been
calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash and cash
equivalents at end of
periodCash flows fromfinancing activities

Fiscal year ended

Millions of yen

Millions of yen

Millions of yen

Millions of yen

March 31, 2023

7,648

(2,016)(2,854)

24,792

March 31, 2022

5,544

(559)

(1,905)21,964

2. Cash dividends
Annual dividends per share
First
SecondThird
quarter-end quarter-end quarter-end
Yen
Fiscal year ended

March 31, 2022
Fiscal year ended

March 31, 2023

Yen

Fiscalyear-end

Yen

Total

Yen

Total cash
dividends(Total)Ratio of
Payout ratio dividends to(Consolidated) net assets(Consolidated)

Yen Millions of yen

%

%

–

10.00

–

3.50

–

2,334

38.8

8.4

–

4.00

–

4.00

8.00

3,112

42.4

9.7

–

5.00

–

5.00

10.00

Fiscal year ending

March 31, 2024

53.6

(Forecast)

Note: The Company implemented a four-for-one common stock split effective December 1, 2021. The stated year-end dividend pershare for the fiscal year ended March 31, 2022 takes the said stock split into account. The total annual dividend for the fiscal
year ended March 31, 2022 is not shown because a simple total cannot be calculated due to the implementation of the stock
split. The annual dividend per share for the fiscal year ended March 31, 2022 that does not take the stock split into account is
24 yen (the interim dividend of 10 yen per share and year-end dividend of 14 yen per share).

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2024 (from April 1, 2023 to March
31, 2024)
Net sales
Millionsof yenFiscal year ending

March 31, 2024

80,386

Operating profit(Percentages indicate year-on-year changes.)
Profit attributable to Basic earnings
Ordinary profit
owners of parent
per share%

Millionsof yen%Millionsof yen%Millionsof yen

%

Yen

7.9

10,6107.8

10,644

6.9

7,233

(1.1)

18.67

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change
in scope of consolidation): None
(2) Changes in accounting policies, changes in accounting estimates, and restatement(i) Changes in accounting policies due to revisions to accounting standards and other regulations: Yes(ii) Changes in accounting policies due to other reasons: None(iii) Changes in accounting estimates: None(iv) Restatement: None
(3) Number of issued shares (common shares)(i)

Total number of issued shares at the end of the period (including treasury shares)
As of March 31, 2023

450,880,000 shares

As of March 31, 2022

450,880,000 shares(ii) Number of treasury shares at the end of the period
As of March 31, 2023

63,439,188 shares

As of March 31, 2022

63,483,788 shares(iii) Average number of shares outstanding during the period
Fiscal year ended March 31, 2023

387,422,095 sharesFiscal year ended March 31, 2022

387,386,464 shares

Notes: 1. The Company has introduced a stock compensation plan, and in calculating the number of common treasury shares at theend of the period and the average number of shares outstanding during the period, the number of treasury shares includes
shares of the Company held by Japan Custody Bank, Ltd. (the Trust Account) as trust assets for the “Trust for Granting
Shares to Directors and Executive Officers” and the “Trust for Granting Shares to Executive Officers.” The number oftreasury shares held by the Trust Account included in the number of treasury shares at the end of the fiscal years ended
March 31, 2023 and March 31, 2022 was 1,567,700 shares and 1,612,300 shares, respectively, and the number of treasury
shares held by the Trust Account excluded from the calculation of the average number of shares outstanding during the
fiscal years ended March 31, 2023 and March 31, 2022 is as follows: the average number of common treasury shares heldby the Trust Account for the years ended March 31, 2023 and March 31, 2022 were 1,586,417 shares and 1,622,086 shares,
respectively.
2. The Company implemented a four-for-one common stock split effective December 1, 2021. Number of shares has been
calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

[Reference] Overview of non-consolidated financial results
1. Non-consolidated financial results for the fiscal year ended March 31, 2023 (from April 1, 2022 to March
31, 2023)(1) Non-consolidated operating results(Percentages indicate year-on-year changes.)
Net sales

Operating profit

Ordinary profit

ProfitFiscal year ended

Millions of yen

March 31, 2023

65,855

13.3

8,936

5.1

8,979

6.2

6,641

19.3

March 31, 2022

58,110

6.1

8,500

13.6

8,455

9.7

5,566

23.4

%

Basic earnings
per share
Fiscal year ended

Millions of yen%

Millions of yen%

Millions of yen%

Diluted earnings
per share
Yen

Yen

March 31, 2023

17.14

–

March 31, 2022

14.37

–

Note: The Company implemented a four-for-one common stock split effective December 1, 2021. Basic earnings per share has been
calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

(2) Non-consolidated financial position
Total assets
As of

Net assets

Equity-to-asset ratio

Net assets per share

Millions of yen

Millions of yen

March 31, 2023

44,13031,362

71.1

%

80.95

Yen

March 31, 2022

39,797

27,684

69.6

71.46

Reference:

EquityAs of March 31, 2023:¥31,362 million
As of March 31, 2022:¥27,684 million
Note: The Company implemented a four-for-one common stock split effective December 1, 2021. Net assets per share has been
calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

* Financial results reports are exempt from audit conducted by certified public accountants or an audit
corporation.
* Proper use of earnings forecasts, and other special matters
Forward-looking statements in this material, including earnings forecasts, are based on information currently
available to the Company and on certain assumptions deemed reasonable. Actual results may differ significantly
due to various factors. For assumptions underlying the forecast and cautions regarding the use of earnings
forecasts, please refer to “1. Overview of operating results, etc., (1) Overview of operating results for the period
under review, (ii) Forecast for the next fiscal year” on page 5 of the Attached Materials.

Attached Materials Table of Contents
1.

2.

Overview of operating results, etc. ................................................................................................................................................. 2(1) Overview of operating results for the period under review .................................................................................................. 2(2) Overview of financial position for the period under review .................................................................................................. 7(3) Basic policy on profit distribution and dividends for the fiscal year under review and the next fiscal year..................... 8(4) Business and other risks ........................................................................................................................................................... 8(5) Issues to be addressed .............................................................................................................................................................. 9
Corporate group ............................................................................................................................................................................ 11

Basic approach to the selection of accounting standards ............................................................................................................ 11
Consolidated financial statements ................................................................................................................................................ 12(1) Consolidated balance sheet .................................................................................................................................................... 12(2) Consolidated statement of income and consolidated statement of comprehensive income .............................................. 14
Consolidated statement of income ......................................................................................................................................... 14
Consolidated statement of comprehensive income............................................................................................................... 15(3) Consolidated statement of changes in equity ........................................................................................................................ 16(4) Consolidated statement of cash flows.................................................................................................................................... 18(5) Notes to the consolidated financial statements ..................................................................................................................... 20(Notes on premise of going concern)........................................................................................................................................ 20(Significant matters that serve as the basis for preparing consolidated financial statements) ................................................... 20(Significant accounting estimates) ............................................................................................................................................ 22(Changes in accounting policies) .............................................................................................................................................. 23(Additional information) .......................................................................................................................................................... 23(On the consolidated balance sheet) ......................................................................................................................................... 24(On the consolidated statements of income) ............................................................................................................................. 24(On the consolidated statement of comprehensive income)...................................................................................................... 25(On the consolidated statement of changes in equity) .............................................................................................................. 26(On the consolidated statement of cash flows) ......................................................................................................................... 28(Lease transactions) .................................................................................................................................................................. 28(Financial instruments) ............................................................................................................................................................. 28(Securities) ............................................................................................................................................................................... 31(Retirement benefits) ................................................................................................................................................................ 32(Tax effect accounting)............................................................................................................................................................. 33(Revenue recognition) .............................................................................................................................................................. 34(Segment information, etc.) ...................................................................................................................................................... 35(Information on related parties) ................................................................................................................................................ 38(Per share information) ............................................................................................................................................................. 39(Significant subsequent events) ................................................................................................................................................ 39
5. Non-consolidated financial statements............................................................................................................................................. 40(1) Non-consolidated balance sheet ............................................................................................................................................. 40(2) Non-consolidated statement of income.................................................................................................................................. 43(3) Non-consolidated statement of changes in equity ................................................................................................................ 45(4) Notes to the non-consolidated financial statements ............................................................................................................. 47(Notes on premise of going concern)........................................................................................................................................ 47(Significant accounting policies) .............................................................................................................................................. 47(Significant accounting estimates) ............................................................................................................................................ 48(Changes in accounting policies) .............................................................................................................................................. 49(Additional information) .......................................................................................................................................................... 49(On the non-consolidated balance sheet) .................................................................................................................................. 49(On the non-consolidated statements of income) ...................................................................................................................... 49(Securities) ............................................................................................................................................................................... 50(Tax effect accounting)............................................................................................................................................................. 50(Revenue recognition) .............................................................................................................................................................. 50(Significant subsequent events) ................................................................................................................................................ 50
6. Other .................................................................................................................................................................................................. 51
3.
4.

The Company will hold a briefing session for investors as follows. The materials distributed at the briefing will be posted on the
Company’s website immediately after the briefing.
・May 16, 2023 (Tuesday) Company Information Briefing for Institutional Investors and Analysts-1-1. Overview of operating results, etc.
Matters discussed here that are not historical fact reflect judgments made as of the end of the fiscal year underreview.
(1) Overview of operating results for the period under review(i) Operating results for the period under review
During the fiscal year under review (April 1, 2022 to March 31, 2023), the Japanese economy saw amoderate recovery centered on personal consumption, as economic and social activities normalized after the
COVID-19 pandemic. However, rapid interest rate hikes by central banks in various countries in response to
global inflation due to high resource and raw material prices have raised concerns about a global economic
recession.
At the same time, the Group further accelerated its “scrap and build” business activities, management’s
core policy, and even in growth fields, the Group quickly introduced management resources into markets thatcan be won by leveraging its strengths.
In addition to strengthening its own sales capabilities, the Group actively promoted alliances with salescapable partners to strengthen sales of its own products and services. The Group made investments to expand
the size of its businesses, including continuing to actively recruit new college graduates and increasing officefloor space.
In the Solution Design Business, the Group continued to focus on expansion in the in-vehicle, internet
business, products, and DX areas, where significant growth is expected. Here, the Group worked to further
increase orders and improve profitability.
In the Framework Design Business, the Group deployed its system development expertise from thefinancial sector to customers in the public and distribution/services sectors, and worked to increase orders inthe business application development and infrastructure (cloud) architecture operations.
In the IT Service Business, the Group focused on providing PMO services related to the introduction ofvarious tools and business process improvements in response to IT outsourcing demand from companies
creating new business models and companies working on reform of work styles.
In the Business Solution Business, the Group focused on service businesses, not product-oriented
businesses, and strove to further strengthen its recurring revenue businesses, centered on the subscription
business and system development and support.
In the Cloud Business, which is responsible for promoting the subscription business model, the Group
released new functionality of its in-house products Canbus.1 and Cloudstep1 and actively promoted sales
through web marketing.
As a result of the above, consolidated results for the period under review were net sales of ¥74,526 million(up 14.2% year-on-year), operating profit of ¥9,844 million (up 8.1% year-on-year), ordinary profit of¥9,955 million (up 16.1% year-on-year), and profit attributable to owners of parent of ¥7,317 million (up22.1% year-on-year).
1. Canbus. and Cloudstep are Systena’s original services.
The following describes performance by segment. Note that net sales for each segment include intersegment net sales or transfers.
a. Solution Design Business
The Solution Design Business is divided into five categories: in-vehicle, social infrastructure, internet
business, products, and DX services. The number of employees in this business as a whole increased
during the fiscal year under review due to the hiring of a large number of new graduates. However, theincrease in the number of mid-career engineers who retired led to a shortage of profitable new projects
launched, and fixed costs increased due to office space expansion. As a result, net sales were ¥22,375
million (up 8.3% year-on-year) and operating profit was ¥3,926 million (down 5.0% year-on-year).
(In-Vehicle)
In the in-vehicle category, which primarily involves the development of elements related to mobility as aservice (MaaS), autonomous driving, in-vehicle infotainment, telematics,2 and electronic control units(ECUs), performance was steady in the in-vehicle infotainment business, in which the Group excels,
including receiving orders for large-scale projects. The Group’s track record in large-scale projects incombination with its experience in the telecommunications business resulted in winning further orders.
Demand related to MaaS is expected to expand in the future, and through its participation in the MONET
Consortium,3 the Group aims to further enhance its business value in the mobility field.

-2-2. Telematics is a term created from the combination of “telecommunication” and “informatics.” It is a
generic term for the provision of services using mobile communication systems, such as mobile phones,
to automobiles and other mobile objects.
3. MONET Consortium is a consortium established by MONET Technologies Inc., a joint venture
between SoftBank Corp. and Toyota Motor Corporation, to promote next-generation mobility services,solve social issues in mobility, and create new value.
(Social Infrastructure)
In the social infrastructure category, which supports the mechanisms of society, including
telecommunications infrastructure, payment infrastructure, transportation infrastructure, power grids, andmore, and enriches people’s lives, the Group won smart-city related orders by leveraging its experience
with MaaS acquired in the in-vehicle field.
(Internet Business)
In fields related to the Internet business category, such as Internet services and e-commerce, the Group
took advantage of 5G Internet services, and orders were brisk in recognition of its experience andtechnical capabilities in the telecommunications business, which, including the development of services
that handle large volumes of information, is one of the Group’s strengths. The Group made strong
progress with system development and quality verification services related to cashless payments in ecommerce and the utilization of data. Furthermore, orders received for IT consulting and IT services
remained positive, and the Group will focus on its strengths in total solutions.
(Products)
In fields related to product development, including smartphones, home appliances, robotics, PCs,
payment terminals, and factory automation equipment, the Group received recognition for its ability toprovide one-stop support throughout the product lifecycle, including not only product development andquality verification, but also environment construction and support that takes advantage of its strengths in
AI, IoT, cloud computing, and mobile devices, and orders are expanding. The Group will continue toexpand orders received while striving to differentiate itself from its competitors.
(DX Services)
In the DX Services field, as the lifecycle of core systems in companies is changing, the Group is receiving
more orders by understanding the lifecycle of these systems and offering solutions to the emergent andlatent issues of its customers. There has also been an increase in inquiries for IT consulting and PMO
projects due to human resource shortages, due in part to the impact of the COVID-19 pandemic. In
addition, the Group will continue to actively promote the development of its in-house services, such as
Remo-oTe, which utilizes the Group’s business experience and total solution strengths cultivated invarious fields, TimeTapps, a cloud attendance management system, and Palette.Link, a groupware thatenhances the quality of relationships, as they have been receiving many inquiries.
b. Framework Design BusinessIn this business, the Group harnessed its track record in application development in the financial sector to
expand the scope of its offerings to businesses in the public sector, distribution/services, and in social
infrastructure, leading to an increase in orders for system development projects.
In the financial sector, the Group provides core system development services for customers in thebanking industry and life and non-life insurance industries. In addition to long-term development work inareas such as contract management systems and accounts systems, the Group achieved greater sales by
increasing inquiries for DX projects such as migration of core systems to the cloud and host migration.
In the public sector, orders were received for new projects, primarily related to central government
ministries and agencies. The respective business areas of system development, infrastructure construction,and operation and maintenance remain firm. Moving forward, the Group intends to actively roll-out
business to local governments and public organizations and further expand this area as one of the pillarsof this business.
In addition, for general corporate clients, the Group is moving forward with proposals for system
migration and business improvement projects using DX solutions. The Group’s “laboratory system” fortotal system support proposals, from proof of concept support in the system planning stages to operations
after system development, have led to an increase in orders.
As a result, net sales in this business amounted to ¥6,095 million (up 18.5% year-on-year) and operating
profit was ¥1,279 million (up 26.1% year-on-year).

-3-

c. IT Service BusinessIn this business, which mainly operates a variety of IT-related outsourcing services, including system
operation and maintenance, helpdesk and user support services, and quality evaluation, to respond to IT
outsourcing demand from companies that are creating new business models and working on work stylereform, in addition to the IT business services providing helpdesk and IT asset management support, theGroup focused on provision of PMO services to provide project management support for implementing avariety of tools and improving business processes.
In the software testing services business, the Group worked to increase orders and improve profitability
based on its service track record in each process, from upstream quality control process consulting todownstream debugging, not only for customers who provide consumers with web content, apps, andmobile games but also customers who provide business systems to companies.
In addition, regarding the engagement of persons with disabilities, the Group moved forward withplacing the right person in the right position to take advantage of their strengths by focusing on building asystem and environment that allows them to experience growth. This led to orders for a wide range ofservice projects, primarily in business process outsourcing (BPO).
As a result, net sales in this business amounted to ¥17,753 million (up 13.1% year-on-year) andoperating profit was ¥2,521 million (up 14.7% year-on-year).
d. Business Solution Business
For this business, where the Group is primarily engaged in B2B sales of IT-related products and system
integration services mainly for foreign-affiliated and medium-sized companies, the outlook is uncertain
because of the high prices of resources and commodities. Even so, the number of projects related to newwork style reforms to implement a “with corona virus” mindset since the relaxation of restrictions on
movement, and the use of DX to increase productivity, reduce costs, and increase competitiveness aregradually trending upward.
Specifically, the Group was able to win a number of orders in the system integration business forvarious services including lift and shift, which is a type of cloud migration, and server relocations.
In addition, the Group successfully won orders for not only system development but also maintenanceand operation projects to digitalize corporations’ businesses by making use of RPA and data linkage tools.
Furthermore, the Group received many inquiries relating to security diagnosis and category-specificsecurity services released this period, and the number of orders received is also gradually increasing.
As a result, net sales in this business amounted to ¥26,510 million (up 18.9% year-on-year) andoperating profit was ¥1,760 million (up 22.5% year-on-year).
e. Cloud BusinessIn this business, where the Group provides cloud solutions and original services to companies and otherentities, and which is responsible for promoting the subscription business model, the Group received
many inquiries regarding its Canbus. DX platform from companies urgently seeking to implement
telecommuting and other types of work style reforms. In particular, the Group not only sold licenses tocompanies seeking to shift to data-driven operations, but also received many orders for integration
projects, including operational system replacement and system integration. Taking this into consideration,
the Group offered new function releases and a “DX Design Lab” for easy access to PMO for DX
promotion, which tends to be expensive, in order that even more companies can implement DX. This has
resulted in an increase in inquiries. Going forward, the Group will continue to promote aggressive
investment and sales reinforcement in this priority offering area.
In addition, regarding the Cloudstep groupware, integrated with Google Workspace and Microsoft 365,
inquiries have been increasing for rebuilding groupware architecture suited to today’s work styles. At thesame time, system integration, an area of strength for the Group, differentiates the Group from its
competitors and results in orders.
As a result, net sales in this business amounted to ¥2,007 million (up 11.2% year-on-year) and operating
profit was ¥386 million (down 4.9% year-on-year).
MINGAL inc., which was established on June 1, 2022, is included in the Cloud Business reporting
segment.
f. Overseas BusinessIn the U.S., large-scale layoffs and the bankruptcy of Silicon Valley Bank and others has made theenvironment surrounding technology-related industries more difficult, but the U.S. subsidiary is steadily
continuing with existing projects and winning new projects. The Group enjoys a high level of trust fromits customers in the quality of its engineering, and orders received for system development andverification services from the manufacturing industry, particularly automotive industry-related, have-4-

remained stable. Referrals from existing customers have led to the start of system development
transactions with new companies. The subsidiary has received repeat orders from Japanese-affiliatedfirms located in Silicon Valley for proof of concept development and verification services, which checks
the effectiveness of elemental technologies of Silicon Valley start-up companies. In addition, an
increasing number of U.S. companies are adopting Canbus., which has a proven track record in Japan, toimprove operational efficiency.
ONE Tech, Inc., a U.S. company the subsidiary has invested in, focused on sales of its proprietary AI
MicroAITM.
StrongKey, Inc., another U.S.-based company the subsidiary has invested in, is rolling out its security
support services based on data encryption and FIDO authentication to major companies around the worldand has released the Public Key Infrastructure (PKI) service for secure internet communications, which iscompatible with the new “Matter” communication standard for smart homes. Inquiries from smart home
IoT device and other related companies are increasing rapidly.
In this business, which is still in the investment stage, net sales amounted to ¥134 million (down 23.8%
year-on-year) and operating loss was ¥29 million (versus operating loss of ¥9 million in the previous
fiscal year).
g. Investment & Incubation Business
GaYa Co., Ltd., which operates SNS games developed in-house and designs and develops businessapplications for smartphones and tablets, released the horse racing game Keiba Densetsu PRIDE at theend of June 2022, after which it held in-game events and conducted additional development. In addition,in the contracted development of business applications, the Company has migrated from the development
process to the operation process, and will move forward with horizontal development in the future.
As a result, net sales in this business amounted to ¥309 million (up 80.2% year-on-year) and operating
loss was ¥0 million (versus operating loss of ¥72 million in the previous fiscal year).
(ii) Forecast for the next fiscal year
The outlook for the next fiscal year by segment is as follows.
Within the Solution Design Business, the Group will focus on the in-vehicle, social infrastructure, internet
business, products, and DX services areas, making greater efforts to promote near-shore development using
regional bases and off-shore development in Vietnam and working to further expand orders and improve
profitability.
In the in-vehicle area, the Group will actively work on accelerating the shift to EVs in the automotive
industry focus on expanding its mobility services business by strengthening relationships with automotiverelated companies and leveraging its track record in telematics and electronic control units (ECUs) centeredon in-vehicle infotainment, an area of particular strength.
In the social infrastructure area, in addition to development and quality verification related to 5G
infrastructure equipment, the Group will extend and enhance its services to include maintenance andoperation ahead of 5G coverage area expansion. The Group will also actively engage in proof of concept
testing for smart cities and other projects by utilizing its expertise in IoT and AI.
In the internet business area, the market for telecommunications carrier services, e-commerce, e-books,
and other Internet services, as well as cashless payments, is expected to expand as 5G enters the phase offull-scale penetration. Here, as the market expands, the Group is receiving many inquiries not only fortechnical support services, like development and quality verification, but also for service support such as
project management, service direction, and operations. Going forward, the Group will actively work notonly on development but also on PMO and services overall.
In the products area, the Group will harness its strong track record in smartphone development services toaggressively develop quality verification services related to 5G, IoT, AI, and more amid increasing inquiries
about web services and IoT-related work, in addition to development and quality verification for various
products such as smartphones, game consoles, robots, and payment terminals.
In the DX services area, enterprises are urgently tasked with improving productivity and operational
efficiency, partly due to soaring raw material prices. In response to this increasing demand, the Group will
provide project management and other IT consulting services to major companies advancing with DX byleveraging the experience it has accumulated over the years. Furthermore, by developing a wider range of
in-house services and products to address the emergent and latent issues of customers, the Group willachieve differentiation from its competitors, increase orders and improve profitability.
In the Framework Design Business, the Group is expanding business in the public and corporate sectors bydeploying business system development expertise it has cultivated in the financial sector. Going forward, the-5-Group will continue to maximize its current services and aggressively develop business, promoting sales
activities and human resource development in line with market trends.
In the System Development business, the Group will expand business targeting retail, distribution, andother general corporate customers, in addition to existing financial (life and non-life insurance) customers
and public-sector clients. Combining its development expertise with cutting-edge solutions such as low-code
development, the Group will actively advance business operations to strengthen its competitiveness.
In the Infrastructure Business, the Group is expanding business with a focus on technical support for cloud
migration and virtual terminal renewals. The Group expects the strong need for cloud-related technicalsupport to continue, and will continue to actively cultivate personnel for further business expansion.
In the IT Services Business, the Group aims to further expand its business field by deploying IT outsourcing
services such as IT support operations and software testing services to meet the DX demand of the market.
IT support operations will focus on providing services that are more directly linked to the growth ofcustomers’ businesses by developing PMO services for improving operations and implementing cloud
solutions for customers who are considering cost optimization. To this end, the Group will enhance client
analysis and develop more proposal-based IT support services by understanding client IT investment plans
and IT events ahead of time.
With regard to software testing services, the Group expanded orders by offering testing services across allprocesses, from quality control process consulting to debugging, to customers who provide web/applicationrelated solutions in a B2C model. The Group also worked to expand orders and improve profitability byproviding software testing services to customers who provide B2B business system services that supportsocial infrastructure. The Group will continue to provide software testing services to companies offering
B2C and B2B services and actively pursue further orders.
With regard to promoting engagement of persons with disabilities, the Group will further expand its
solution services to realize the diversity and inclusion required by society by proactively disseminating its
internal initiatives and expertise in areas such as environment construction and growth mechanisms.
The Group will also expand its new services and the scope of support through alliances with Group
companies and partner companies, and strengthen inside sales to develop new customers that will support
continued growth.
In the Business Solution Business, the outlook is uncertain because of the high prices of resources andcommodities. Even so, enterprises are expected to maintain steady investment in IT, tackling new work
styles in the COVID era after the relaxation of restrictions on movement, and using DX to increase
productivity, reduce costs, and increase competitiveness.
In this business, the Group will expand its solution services to solve these customer issues.
Specifically, the Group will shift its focus from product-oriented businesses to service businesses, andfurther strengthen its recurring revenue businesses, centered on subscription businesses and support services.
As an area of particular focus, the Group will expand the services to ensure total security, not only at
endpoints, that it brought in last fiscal year, and enhance its support structure.
In addition, since robust growth is expected in the infrastructure business, the Group will work to provide
higher value-added services, such as modernizing legacy infrastructure and providing hybrid environments
integrated with the cloud.
In addition, the DX Promotion Department (system development division), which handles RPA and data
linkage tools, will conduct reconstruction of applications in multi-cloud environments in addition toconventional system development to further promote expansion.
This will allow the Department to continue to improve the services it offers to customers, transforming it
into a system integrator and improving profitability.
In the Cloud Business, the Group is working to strengthen sales of Canbus., a solution realizing data-driven
operations by creating databases of various operations, including customer relationship management (CRM),
recruitment management, and human and other resource management. This solution is designed to help drivechanges in corporate management, in which DX is progressing rapidly. Demand for DX promotion isincreasing against a backdrop of higher productivity requirements due to soaring raw material prices, etc.
The Group will therefore provide DX consulting and PMO services that combine DX promotion and data
management in conjunction with Canbus. In addition, as generative and other forms of AI enter a period offull-scale penetration, the Group will work to strengthen Canbus. services and provide new services with theaim of actively utilizing AI in this business.
In the Overseas Business, the U.S. subsidiary will work to grow its mainstay software development andverification business and expand Canbus. in the cloud business in the U.S. market. In addition, the-6-subsidiary will deepen collaboration on sales with ONE Tech, Inc., and StrongKey, Inc., both U.S.-based
companies in which the subsidiary has invested, to promote sales of the main services of both companies
and other services to companies around the world. The subsidiary intends to operate in the black thanks toexpansion of collaborative projects with these investees and robust demand for technical support fromJapanese-affiliated companies.
In the Investment & Incubation Business, GaYa Co., Ltd. is focusing on the stable operation of the horse
racing game Keiba Densetsu PRIDE. In non-game application development utilizing game development
technology, the Group will promote a full stack of services, from design and development to support.
Based on the above, the Group forecasts consolidated results for the next fiscal year of net sales of ¥80,386
million, operating profit of ¥10,610 million, ordinary profit of ¥10,644 million, and profit attributable toowners of parent of ¥7,233 million.
(2) Overview of financial position for the period under review(i) Analysis of assets, liabilities and net assets
Total assets at the end of the fiscal year under review amounted to ¥48,879 million (versus ¥43,477 million
at the end of the previous fiscal year), an increase of ¥5,401 million from the end of the previous fiscal year.
Current assets amounted to ¥42,275 million (versus ¥38,002 million at the end of the previous fiscal year),an increase of ¥4,273 million from the end of the previous fiscal year. This was mainly due to a ¥3,375
million increase in cash and deposits, a ¥738 million increase in accounts receivable - trade, and a ¥349
million increase in merchandise.
Non-current assets amounted to ¥6,603 million (versus ¥5,475 million at the end of the previous fiscal
year), an increase of ¥1,128 million from the end of the previous fiscal year. Property, plant and equipment
amounted to ¥1,622 million (versus ¥1,058 million at the end of the previous fiscal year), an increase of¥563 million from the end of the previous fiscal year. Intangible assets amounted to ¥317 million (versus¥278 million at the end of the previous fiscal year), an increase of ¥39 million from the end of the previous
fiscal year. Investments and other assets amounted to ¥4,663 million (versus ¥4,138 million at the end of theprevious fiscal year), an increase of ¥525 million from the end of the previous fiscal year. This was mainly
due to a ¥360 million increase in investment securities.
Total liabilities amounted to ¥14,228 million (versus ¥13,303 million at the end of the previous fiscal
year), an increase of ¥925 million from the end of the previous fiscal year. This was mainly due to a ¥399
million increase in accounts payable - trade and a ¥382 million increase in accounts payable - other, andaccrued expenses.
Net assets amounted to ¥34,650 million (versus ¥30,173 million at the end of the previous fiscal year), an
increase of ¥4,476 million from the end of the previous fiscal year. This was mainly due to profit attributableto owners of parent of ¥7,317 million and dividends of surplus of ¥2,917 million.
As a result, the equity-to-asset ratio increased 1.4 percentage points from the end of the previous fiscal
year to 69.9%.
(ii) Analysis of cash flows
Cash and cash equivalents (“net cash”) at the end of the fiscal year under review amounted to ¥24,792
million, up ¥2,827 million from the end of the previous fiscal year.
The following outlines the status and underlying change factors of each classification of cash flows for the
fiscal year under review.
(Cash flows from operating activities)
Net cash provided by operating activities amounted to ¥7,648 million (versus ¥5,544 million provided in
the previous fiscal year). The main inflows were profit before income taxes of ¥9,955 million, depreciationof ¥478 million, an increase in accounts payable - other, and accrued expenses of ¥418 million, and anincrease in trade payables of ¥398 million. The main outflows were income taxes paid of ¥2,683 million andan increase in trade receivables of ¥672 million.
(Cash flows from investing activities)
Net cash used in investing activities amounted to ¥2,016 million (versus ¥559 million used in the previous
fiscal year). The main outflows were ¥19,745 million for purchase of investment securities, ¥1,158 million
for purchase of property, plant and equipment and intangible assets, and ¥386 million for payments into time
deposits. The main inflows were ¥19,300 million in proceeds from sale of investment securities-7-

(Cash flows from financing activities)
Net cash used in financing activities amounted to ¥2,854 million (versus ¥1,905 million used in the previous
fiscal year). The main outflow was dividends paid of ¥2,908 million.
Trends in the Group’s cash flow indicators are shown below.
Equity-to-asset ratio (%)

Fiscal year ended March Fiscal year ended March Fiscal year ended March
31, 2021
31, 2022
31, 2023
65.9
68.5
69.9

Equity-to-asset ratio on a market value basis (%)

550.9

384.0

229.9

Ratio of interest-bearing debt to cash flows (%)

21.5

28.0

20.3

1,022.4

777.6

1,077.8

Interest coverage ratio (times)

Equity-to-asset ratio: Shareholders’ equity/Total assets
Equity-to-asset ratio on a market value basis: Market capitalization/Total assets
Ratio of interest-bearing debt to cash flows: Interest-bearing debt/Cash flows
Interest coverage ratio: Cash flows/Interest payments* For each indicator, all calculations are based on consolidated financial figures.
* Market capitalization is calculated by multiplying the number of shares outstanding minus the numberof treasury shares by the closing stock price, both as of the end of the fiscal year.
* Interest-bearing debt is all debt on the consolidated balance sheet for which interest is paid.
* Cash flows and interest payments refer to “Cash flows from operating activities” and “Interest paid”
as reported in the consolidated statement of cash flows.
(3) Basic policy on profit distribution and dividends for the fiscal year under review and the next fiscal year
The Company recognizes that returning profits to shareholders is an important management issue, and its basic
policy is to distribute profits in accordance with business performance, with a foundation of ongoing, stabledividends.
The Company will be proactive in targeting a consolidated dividend payout ratio of 40% or more, taking into
consideration its business performance and financial position for each fiscal year, as well as the strengtheningof its management base and future business development.
The Company will also flexibly implement share repurchases as part of its profit return policy, taking into
consideration such factors as its financial condition and stock price trends.
For the fiscal year under review, the Company plans to pay an annual dividend of ¥8 per share, consisting ofa year-end dividend of ¥4 per share and an interim dividend of ¥4 per share.
Retained earnings will be effectively used for investment in business fields where growth is expected,
research and development of in-house products, and strengthening of recruitment and training of humanresources in line with business expansion.
For the next fiscal year, the Company plans to pay an annual dividend of ¥10 per share (consisting of aninterim dividend of ¥5 per share and a year-end dividend of ¥5 per share).
Note that the Company’s Articles of Incorporation stipulate that the Company may pay dividends fromsurplus, etc. by resolution of the Board of Directors pursuant to Article 459, Paragraph 1 of the Companies
Act.
(4) Business and other risks
The following is a list of major risk factors that may affect the Group’s business development. While it is theGroup’s policy to recognize the possibility of the occurrence of these risks and to make every effort to avoid
their occurrence and to address any that may occur, the Group believes that investment decisions regarding thisstock should be made after careful consideration of the following content provided in this section as well asother matters listed.
This section includes forward-looking statements reflecting judgments made as of the end of the fiscal year
under review.
(i) Management of confidential information
Since many of the Company’s operations require a high degree of confidentiality in terms of both technology
and sales strategy and information security is becoming increasingly important, the Company has obtained
ISO 27001 certification, the international standard for information security management, and is taking
rigorous action to ensure this certification is applied and enforced.
If, despite these actions, information leaks were to occur, the Company could face compensation for-8-damages, decreasing business orders due to loss of trust, and other significant effects on the business, which
could affect the Group’s performance and financial position.
(ii) Legal regulations
The legal regulations surrounding the Group’s business are as follows.
a. Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors
This law specifies the obligation to deliver an order form, to prepare and preserve documents, to specify adue date for payment of subcontract proceeds (the obligation to pay within 60 days after delivery orprovision of services), to pay interest on late payment, etc., when a corporation with capital of over ¥300
million subcontracts to a corporation with capital of ¥300 million or less.
The law was amended in June 2003 (effective April 1, 2004) to add subcontracting for the creation of
information-based products (programs, broadcast programs, etc.), provision of services, and manufactureof metal dies to the scope of the law. As a result, subcontracting transactions for the creation of
information-based products (programs) related to the Group are covered and subject to legal regulations.
b. Act on Securing the Proper Operation of Worker Dispatching Businesses and Protecting Dispatched
Workers (“Worker Dispatching Act”)
The purpose of this act is “to take measures for securing proper operation of a worker dispatchingbusiness for the proper adjustment of labor demand and supply, in conjunction with the Employment
Security Act, as well as measures for protecting dispatched workers, and thereby to contribute to thestability of employment and otherwise to the promotion of the welfare of dispatched workers” (Article 1).
In accordance with this act, the Group has been licensed for general worker dispatching business. Reasonsfor disqualification of license for general worker dispatching are stipulated in the items of Article 6 of thisact. Furthermore, Article 14 of this act stipulates that if a general worker dispatching business operator(including its officers) falls under any of the items of Article 6 of the act after license registration, theMinister of Health, Labour and Welfare may rescind the license granted to said general worker
dispatching business operator. Article 14 also stipulates that, when a general worker dispatching business
operator violates the provisions of the act or the Employment Security Act, or any orders or dispositions
based on these provisions, the Minister of Health, Labour and Welfare may order the operator to suspend
all or part of the relevant worker dispatching business for a designated period of time.
In addition, the Group submits business reports and settlements of accounts associated with worker
dispatching to the Minister of Health, Labour and Welfare in accordance with this act.
Since the Group has established a system that complies with laws and regulations, and its officers arealso committed to compliance with laws and regulations, there are currently no factors present that could
hinder business activities. Although the Group will continue to make every effort to comply with laws andregulations, any violation of laws and regulations may lead to restrictions on its business, which could
affect the Group’s performance.
(5) Issues to be addressed
Although the COVID-19 pandemic has subsided, the global economy has been drastically altered by the
inflation triggered by the containment process.
Initially, the Group had planned aggressive management assuming inflation accompanying strong demand
after the pandemic was brought under control. However, due to heightened geopolitical risk and the delay inthe end of the epidemic, inflation is in fact clearly taking place amid an economic downturn. Stagflation is
finally becoming a reality and having a negative impact on the global economy.
Stagflation means an increase in costs amid declining demand. Under these circumstances, the Group
believes improving the productivity of its management resources to be the lifeline for securing earnings, andit has embarked on various measures to this end.
Specifically, the Systena Group will make a concerted effort in reforms to move away from business thatgenerates income in proportion to the number of man-hours.
“Scrap and build” is the basic management policy of the Systena Group, and its corporate culture enables
it to demonstrate its true value in the face of adversity.
The Company is currently implementing its medium-term management plan (net sales of ¥101.0 billion,
operating profit of ¥15.2 billion), which concludes in the fiscal year ending March 31, 2025. The businessenvironment has changed drastically, but the Company will position this period as a year of reforms, aiming-9-

for a V-shaped recovery after the reforms without changing its goals, and using the concerted strengths of the
Systena Group to contribute to the revitalization of the Japanese economy damaged by COVID-19.

- 10 -

2. Corporate group

3. Basic approach to the selection of accounting standards
Since most of the Group’s stakeholders are domestic shareholders, creditors, business partners, etc., and there islittle need to raise funds from overseas, the Group applies accounting standards that are generally accepted inJapan (J-GAAP).

- 11 -

4. Consolidated financial statements(1) Consolidated balance sheet(Millions of yen)
As of March 31, 2022
AssetsCurrent assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Contract assets
Merchandise
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
VehiclesAccumulated depreciation
Vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable from subsidiaries andassociates
Leasehold and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets*1- 12 -

As of March 31, 2023

21,657766
12,861
695
1,151
880
(11)
38,00225,033799
13,600
599
1,501
743
(2)
42,275

741
(343)
398
95
(26)
68
1,898
(1,408)
489
97
11
(8)
3
1,058

1,143
(399)
743
67
(33)
33
2,416
(1,671)
745
97
11
(9)
1
1,622

270
5
2
278

310
4
3
317

1,775

*1

2,136

575

538

1,513
817
30
(575)
4,138
5,475
43,477

1,588
905
33
(538)
4,663
6,603
48,879(Millions of yen)
As of March 31, 2022
Liabilities
Current liabilities
Accounts payable - trade
Short-term borrowings
Accounts payable - other, and accrued expenses
Income taxes payable
Accrued consumption taxes
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term accounts payable - other
Provision for share-based payments
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets*2- 13 -

5,696
1,550
2,076
1,525
791
1,348
186
13,175

As of March 31, 2023

*2

6,096
1,550
2,459
1,524
794
1,460
203
14,088

16
97
14
128
13,303

16
114
10
140
14,2281,513
6,025
27,309(5,042)29,8061,513
6,023
31,709(5,022)
34,223

(25)
(18)
(43)
411
30,17343,477

(91)
36
(54)
481
34,65048,879(2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income(Millions of yen)
Fiscal year ended
March 31, 2022
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Gain on sale of investment securities
Share of profit of entities accounted for using equity
methodSubsidy income
Gain on investments in investment partnerships
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on sale of investment securities
Share of loss of entities accounted for using equity
methodProvision of allowance for doubtful accounts
Loss on investments in investment partnerships
Office relocation expenses
Other
Total non-operating expenses
Ordinary profit
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent*1*2, *3- 14 -

Fiscal year ended
March 31, 2023

65,27249,144
16,127
7,020
9,106

*1

*2, *374,52656,132
18,393
8,549
9,844

15
15
–

28
5
31

–

35

31
58
23
145

35
–
54
190

7
47

7
–

144

–

450
–
–
23
673
8,578
8,578
2,650
(103)
2,547
6,030
38
5,992

–
28
17
27
80
9,955
9,955
2,661
(58)
2,603
7,351
34
7,317

Consolidated statement of comprehensive income(Millions of yen)
Fiscal year ended
March 31, 2022
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests*1- 15 -

Fiscal year ended
March 31, 2023

6,030

7,351

(9)
82

(66)
72

(15)

(16)

58
6,089

*1

(11)
7,340

6,050

7,306

38

34

(3) Consolidated statement of changes in equity
Fiscal year ended March 31, 2022
(Millions of yen)
Shareholders’ equity

Balance at beginning of period

Share capital

Capital surplus

Retained earnings

Treasury shares

1,513

6,010

23,261(5,052)

Total shareholders’equity25,734

Changes during period
Dividends of surplus(1,945)(1,945)

Profit attributable to owners ofparent

5,992

5,992

Purchase of treasury shares

(0)

(0)

Disposal of treasury shares

99Sale of shares of consolidated
subsidiaries

15

15

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period

–

15

4,047

9

4,072

1,513

6,025

27,309(5,042)29,806

Non-controllinginterests

Total net assets

364

25,996

Accumulated other comprehensive income
Valuation difference
on available-for-salesecurities
Balance at beginning of period(16)

Foreign currencytranslation adjustment(85)

Total accumulated
other comprehensive
income(102)

Changes during period
Dividends of surplus(1,945)

Profit attributable to owners ofparent

5,992

Purchase of treasury shares(0)

Disposal of treasury shares

9

Sale of shares of consolidated
subsidiaries

15

Net changes in items other thanshareholders’ equity

(9)

67

58

46

104

Total changes during period

(9)

67

58

46

4,176

Balance at end of period

(25)

(18)

(43)

411

30,173- 16 -

Fiscal year ended March 31, 2023
(Millions of yen)
Shareholders’ equity

Balance at beginning of period

Share capital

Capital surplus

Retained earnings

Treasury shares

1,513

6,025

27,309(5,042)

Total shareholders’equity29,806

Changes during period
Dividends of surplus(2,917)(2,917)

Profit attributable to owners ofparent

7,317

7,317

Disposal of treasury shares

20

Change in ownership interestof parent due to transactions
with non-controlling interests

(2)

20
(2)

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period

–

(2)

4,399

20

4,417

1,513

6,023

31,709(5,022)

34,223

Non-controllinginterests

Total net assets

411

30,173

Accumulated other comprehensive income
Valuation difference
on available-for-salesecurities
Balance at beginning of period(25)

Foreign currencytranslation adjustment(18)

Total accumulated
other comprehensive
income(43)

Changes during period
Dividends of surplus(2,917)

Profit attributable to owners ofparent7,317

Disposal of treasury shares

20

Change in ownership interestof parent due to transactions
with non-controlling interests(2)

Net changes in items other thanshareholders’ equity

(66)

55

(11)

70

59

Total changes during period

(66)

55

(11)

70

4,476

Balance at end of period

(91)

36

(54)

481

34,650- 17 -

(4) Consolidated statement of cash flows(Millions of yen)
Fiscal year ended
March 31, 2022
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for share-based
payments
Increase (decrease) in long-term accounts payable other
Interest and dividend income
Interest expenses
Loss (gain) on investments in investment partnerships
Loss (gain) on sale of investment securities
Share of loss (profit) of entities accounted for using
equity method
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in advance payments to suppliers
Increase (decrease) in trade payables
Increase (decrease) in accounts payable - other, andaccrued expenses
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment andintangible assets
Proceeds from sale of property, plant and equipment
and intangible assets
Loan advances
Proceeds from collection of loans receivable
Purchase of investment securities
Proceeds from sale of investment securities
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee
deposits
Proceeds from distributions from investment
partnerships
Other payments
Other proceeds
Net cash provided by (used in) investing activities- 18 -

Fiscal year ended
March 31, 2023

8,578
429
460
120

9,955
478
(9)
112

31

16

(44)

(0)

(31)
7
(58)
47

(33)
7
28
(31)

144

(35)

(1,494)
(315)
(22)
438

(672)
(349)
25
398

141

418

(58)
(116)
71
8,328
39
(7)
(2,816)
5,544

2
1
(14)
10,29741(7)(2,683)
7,648

(0)
374

(386)
–

(519)

(1,158)

26

27

(2)
0
(17,158)
17,127(545)(2)
1(19,745)
19,300
(81)

18

6

122

27

(4)
0
(559)

(5)
0
(2,016)

(Millions of yen)
Fiscal year ended
March 31, 2022
Cash flows from financing activities
Proceeds from sale of shares of subsidiaries
Proceeds from share issuance to non-controllingshareholders
Purchase of treasury shares of subsidiaries
Purchase of treasury shares
Proceeds from sale of treasury shares
Dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period*1- 19 -

Fiscal year ended
March 31, 2023

22

–

–

40

–
(0)
9
(1,938)(1,905)(5)–
20(2,908)(2,854)

11

49

3,089
18,87521,964

2,827
21,964
24,792*1

(5) Notes to the consolidated financial statements(Notes on premise of going concern)
No items to report.
(Significant matters that serve as the basis for preparing consolidated financial statements)
1. Matters concerning scope of consolidation(1 ) Number of consolidated subsidiaries: 11 companies
Names of consolidated subsidiaries
ProVision Co., Ltd.
Tokyoto Business Service Co., Ltd.
GaYa Co., Ltd.
IDY Corporation
TBSOPERATION CO., LTD.
Systena America Inc.
Systena Vietnam Co., Ltd.
MINGAL inc.
and three other companies
MINGAL inc. was newly established on June 1, 2022, and is included in the scope of
consolidation as of the fiscal year under review.
(2) Names of unconsolidated subsidiaries
No items to report.
2. Matters concerning the application of the equity method(1) Number of associates accounted for by the equity method: 3 companies
HIS Holdings, Inc.
StrongKey, Inc.
ONE Tech, Inc.
(2) Names of significant associates not accounted for by the equity method
No items to report.
(3) Of the companies accounted for by the equity method, three companies (HIS Holdings, Inc.,
StrongKey, Inc. and ONE Tech, Inc.) have a different account closing date from the consolidated
account closing date. The fiscal year end for HIS Holdings, Inc. is August 31, and in preparing theconsolidated financial statements, the Company uses financial statements based on a provisional
settlement of accounts conducted as of February 28. Necessary adjustments are made forsignificant transactions that occurred between this date and the consolidated account closing date.
The fiscal year end for StrongKey, Inc. and ONE Tech, Inc. is June 30 and December 31,
respectively. In preparing the consolidated financial statements, the Company uses financial
statements based on a provisional settlement of accounts conducted on the consolidated accountclosing date.
(4) Treatment of amounts equivalent to goodwill
The amount of goodwill resulting from the application of the equity method for U.S. associates isamortized on a straight-line basis over a period not exceeding 10 years.
3. Matters concerning fiscal year, etc. of consolidated subsidiaries
The account closing date of consolidated subsidiaries is the same as the consolidated account closing
date.
4. Matters concerning accounting policies(1) Valuation standards and valuation methods for significant assets(i) Securities
Available-for-sale securities
Securities other than stocks and other securities with no market priceStated at fair value (All valuation differences are processed by the direct net assets method, andselling cost is calculated by the moving average method)- 20 -

Stocks and other securities with no market priceStated at cost determined by the moving average method
Investments in limited liability investment partnerships are accounted for based on the most recent
financial statements available according to the financial reporting date stipulated in the partnershipagreement, and the amount equivalent to the Company’s equity interest in the partnerships isincluded at the net amount.
(ii) Inventories
MerchandiseStated at cost determined by the moving average method (Calculated by writing down bookvalues based on decreased profitability)
Work in process
Stated at cost determined by the specific cost method (Calculated by writing down book values
based on decreased profitability)(2) Method of depreciation and amortization of significant depreciable assets(i) Property, plant and equipment (excluding leased assets)
Declining-balance method (However, the straight-line method is adopted for buildings (excluding
facilities attached to buildings) acquired on or after April 1, 1998, and facilities attached to buildings
and structures acquired on or after April 1, 2016)
The useful lives and residual values of assets are determined based on the standards stipulated in
the Corporation Tax Act. Assets with an acquisition cost of ¥100,000 or more but less than¥200,000 are amortized equally over three years.
(ii) Intangible assets (excluding leased assets)
Straight-line method
Software for internal use is amortized by the straight-line method over the estimated useful life (5years). Software intended for market sale is amortized by the larger of amortization based on theestimated sales revenue over the estimated sales period (within 3 years) or equal amortization over
the remaining salable period.
(iii) Long-term prepaid expenses
Amortized based on the straight-line method(3) Standards for recognition of significant allowances and provisions(i) Allowance for doubtful accounts
The estimated irrecoverable amount based on historical default rates for general receivables andindividual assessments of recoverability for doubtful and other specific receivables is posted toprovide for losses on default of receivables.
(ii) Provision for bonuses
To provide for payment of bonuses to employees, an amount is recorded based on the accrued
burden for the respective fiscal year in question that is the portion of the estimated amount ofbonuses to be paid.
(iii) Provision for share-based compensation
To provide for the future delivery of Company shares to Directors and Executive Officers inaccordance with the Company’s rules on share delivery, the estimated payment amount is recorded
based on the points allotted to Directors and Executive Officers as of the end of the fiscal year underreview.
(4) Standards for recognition of significant revenue and expenses
The following is a description of the major performance obligations related to revenue arising fromcontracts with customers of the Company and its consolidated subsidiaries in their major businesses,
and the normal point in time at which such performance obligations are satisfied (the normal point intime at which revenue is recognized).
(i) Software and system development, and IT services
In the Solution Design Business, Framework Design Business, Overseas Business, and Investment& Incubation Business, the Group mainly provides planning, design, development, and verification
support for software and system development.
In the IT Service Business, the Group mainly provides IT outsourcing services such as operation,
maintenance, and monitoring of systems and networks, as well as helpdesk services.
Contracts in this business involve transactions under contract or quasi-mandate contract, and- 21 -

performance obligations are recognized as follows depending on the contract.
For transactions entered into under contract, the Company recognizes revenue based on the degreeof progress made in satisfying the performance obligation over a specified period of time.
For transactions under quasi-mandate contract, the Company recognizes revenue as a prorated
portion of the amount promised in the contract with the customer over the period the services areprovided, based on the judgment that the performance obligation is satisfied over time, since theCompany generally provides a certain level of services over the term of the contract.
The consideration for performance obligations is received primarily within one year after
performance obligations are satisfied, and does not include significant financial components.
(ii) Sales of merchandise
In the Business Solution Business, the Group mainly sells servers, computers, peripherals, software,and other IT-related products to enterprises. For these sales of merchandise, revenue is recognizedwhen the merchandise is delivered to the customer or at the time the customer completed inspection.
For sales of merchandise deemed as revenue for which the Group and/or its consolidated
subsidiaries are an agent, revenue is recognized at the net amount received in exchange for goods
provided by the third party less the amount paid to said third party.
In addition, consideration for performance obligations is received primarily within one year after
performance obligations are satisfied, and does not include significant financial components.
(iii) License sales
In the Cloud Business, the Group mainly sells licenses for its in-house services, Canbus., Cloudstep,and Web Shelter, as well as for cloud-based services such as Google Workspace and Microsoft 365.
For sales of licenses for in-house services, the Company recognizes revenue over the license period
specified in the contract, based on the judgment that the performance obligation will be satisfied
over a certain period of time. For other license sales, revenue is recognized when the license is
granted to the customer.
The consideration for performance obligations is received primarily within one year after
performance obligations are satisfied, and does not include significant financial components.
(5) Standards for translating significant foreign currency denominated assets or liabilities into Japanesecurrency
Receivables and payables denominated in foreign currencies are converted into yen at the spot
exchange rate on the consolidated account closing date and translation differences are posted as profit
or loss. Note that the assets and liabilities of overseas subsidiaries, etc. are converted to yen at the spot
exchange rate on the day of the consolidated account closing, while related revenues and expenses areconverted to yen at the average rate during the period. These translation differences are posted as
foreign currency translation adjustments and non-controlling interests under net assets.
(6) Scope of funds in the consolidated statement of cash flows
Cash and cash equivalents comprise cash on hand and demand deposits, and short-term investmentswith a maturity of 3 months or less from the date of acquisition that are readily convertible to cash andthat are subject to an insignificant risk of changes in value.
(Significant accounting estimates)
Progress-based revenue recognition(1) Amounts recorded in the consolidated financial statements for the fiscal year under review(Millions of yen)Previous fiscal year
Net sales (Portion not completed)

632

Fiscal year under review
545(2) Details regarding significant accounting estimates for the identified item(i) Calculation method
For performance obligations within software and system development and IT services to be satisfied
over a certain period of time, the Company estimates the degree of progress in satisfying theperformance obligation and recognizes revenue over a certain period of time based on this degree ofprogress in satisfying the performance obligation. The method of estimating the degree of progressin satisfying performance obligations is based on the ratio of the cost incurred (man-hours) to thetotal project cost (total man-hours) (input method).

- 22 -

(ii) Primary underlying assumptions
Recording sales revenue recognized in accordance with the measured degree of progress insatisfying a performance obligation affects the amount of revenue and profit or loss, depending on
the estimate of the total project cost (total man-hours). The total project cost (total man-hours) is
initially estimated in the working budget. When preparing a working budget, the total project cost(total man-hours) is estimated by setting assumptions for specifications and work content based on
information available at the time of preparation and by estimating in detail the cost (man-hours) ofeach process required to complete the development plan. After development has begun, the actual
cost incurred is managed for each project, and the total project cost (total man-hours) is reviewed ina timely and appropriate manner for changes in work content due to changes in circumstances,including additional development.
(iii) Impact on the consolidated financial statements for the following fiscal year
If the degree of work progress changes due to the occurrence of costs (man-hours) that were notforeseen in the assumptions used to estimate the total project cost, net sales and cost of sales maychange in the consolidated financial statements in the following fiscal year or later.
(Changes in accounting policies)(Application of Implementation Guidance on Accounting Standard for Fair Value Measurement)
The Company has applied the “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, June 17, 2021) (hereinafter, “Fair Value Measurement AccountingStandard Implementation Guidance”) from the beginning of the fiscal year under review, and it will apply
new accounting policies provided for by the Fair Value Measurement Accounting Standard Implementation
Guidance prospectively in accordance with transitional measures provided for in paragraph 27-2 of the
Fair Value Measurement Accounting Standard Implementation Guidance. This change has no impact on
the consolidated financial statements.
(Additional information)
Stock compensation plan
The Company has introduced a stock compensation plan for the Company’s Directors (excluding
Outside Directors) and Executive Officers (hereinafter collectively referred to as “Directors, etc.”).
1. Outline of transactions
This is a stock compensation plan under which the Company’s shares, acquired by a trust using
money contributed by the Company, are delivered to Directors, etc. in accordance with the number ofpoints granted in accordance with rules on share delivery established by the Company.
2. Company shares remaining in trust
Company shares remaining in trust are recorded as treasury shares under net assets at the carrying
value in trust (excluding the amount of incidental expenses). The book value and number of thesetreasury shares amounted to ¥726 million and 1,612,300 shares at the end of the previous fiscal year,and ¥706 million and 1,567,700 shares at the end of the fiscal year under review.

- 23 -

(On the consolidated balance sheet)
1. Items pertaining to subsidiaries and associates are as follows.
Previous fiscal year
(March 31, 2022)(Millions of yen)
Fiscal year under review(March 31, 2023)

Investment securities
456
492(shares)
2. Overdraft agreement
The Company and its consolidated subsidiaries have overdraft agreements with six transacting
banks in order to raise working capital efficiently.
The unused portion of the lines of credit based on these agreements is as follows.
(Millions of yen)Previous fiscal year
Fiscal year under review(March 31, 2022)(March 31, 2023)
Maximum amount of
8,260
8,260
overdraft
Outstanding balance of
1,550
1,550
overdraft
Unused amount
6,710
6,710
(On the consolidated statements of income)
1. Revenue arising from contracts with customers
Net sales are not separately presented for revenue from contracts with customers and other revenue.
The amount of revenue from contracts with customers is presented in “Information on breakdown ofrevenue from contracts with customers” under the revenue recognition section of notes to theconsolidated financial statements.
2. Significant items and amounts of selling, general and administrative expenses are as follows.
(Millions of yen)Previous fiscal year
Fiscal year under review(From April 1, 2021 to (From April 1, 2022 toMarch 31, 2022)
March 31, 2023)
Payroll and allowances
2,312
2,775
Rent expenses
850
1,147
Provision for bonuses
111
158
Retirement benefit expenses
208
243
Provision for share-based
41
36
compensation
3. Research and development expenses included in general and administrative expenses(Millions of yen)Previous fiscal year
Fiscal year under review(From April 1, 2021 to(From April 1, 2022 toMarch 31, 2022)
March 31, 2023)
105

51- 24 -

(On the consolidated statement of comprehensive income)
1. Reclassification adjustments and tax effects for other comprehensive income
Previous fiscal year
(From April 1, 2021 toMarch 31, 2022)
Unrealized gain and loss on availablefor-sale securities
Incurred during the period
Reclassification adjustments
Before tax effect adjustment
Tax effect amount
Unrealized gain and loss onavailable-for-sale securities
Foreign currency translation adjustment
Incurred during the period
Foreign currency translation
adjustment
Share of other comprehensive income ofentities accounted for using equity
methodIncurred during the period
Share of other comprehensive
income of entities accounted forusing equity method
Total other comprehensive income- 25 -(Millions of yen)
Fiscal year under review(From April 1, 2022 toMarch 31, 2023)

(60)
47
(13)
4

(64)
(31)
(95)
(29)

(9)

(66)

82
82

72
72

(15)
(15)

(16)
(16)

58

(11)

(On the consolidated statement of changes in equity)
Previous fiscal year (From April 1, 2021 to March 31, 2022)
1. Type and number of shares issued and treasury shares(Shares)Number of
Increase in
Decrease in
Number ofshares at theshares during the shares during the shares at the end
beginning of theperiodperiodof the period
periodIssued shares
Common shares1

112,720,000

338,160,000–

450,880,000

Total

112,720,000

338,160,000–

450,880,000

15,876,339

47,629,149

21,70063,483,788

Treasury shares
Common shares2, 3, 4

Total
15,876,339
47,629,149
21,70063,483,788(Notes) 1. The increase of 338,160,000 issued shares of common stock during the period was due
to a four-for-one stock split of common stock, effective December 1, 2021.
2. The increase of 47,629,149 shares in treasury shares in the period was due to an increaseof 47,629,017 shares as a result of a four-for-one stock split of common stock, effective
December 1, 2021, and an increase of 132 shares as a result of purchase of shares lessthan one unit.
3. The 21,700 common shares in treasury shares decreased in the period were deliveredfrom trust to eligible persons under the stock compensation plan for Directors and thestock compensation plan for Executive Officers.
4. The 63,483,788 common shares in treasury shares at the end of the period include
1,612,300 shares of the Company’s stock held by Custody Bank of Japan, Ltd. (Trust
Account) as trust assets for the Trust for Granting Shares to Directors and Executive
Officers and the Trust for Granting Shares to Executive Officers.
2. Matters concerning dividends(1) Dividends paid
Total dividend
Class of
Dividend per
Resolution
amountDate of record
Effective datesharesshare (Yen)(Millions of yen)
May 18, 2021
CommonBoard of Directors
972
10.0 March 31, 2021
June 9, 2021
sharesmeeting
October 28, 2021
September 30,
December 7,
Common972
10.0
Board of Directors
2021
2021
sharesmeeting(Notes) 1. The total dividend amount includes ¥4 million in dividends paid to shares of theCompany’s stock held by Custody Bank of Japan, Ltd. (Trust Account) as trust assets for
the Trust for Granting Shares to Directors and Executive Officers and the Trust for Granting
Shares to Executive Officers.
2. The Company implemented a four-for-one common stock split effective December 1, 2021,
and the dividend per share represents the amount prior to the stock split.
(2) Dividends with a date of record during the fiscal year under review, but an effective date in thefollowing fiscal year
Resolution

Class ofsharesMay 18, 2022
Board of Directors

Commonmeeting

sharesTotal dividend
amount(Millions of
yen)
1,361

Source ofdividend
Retainedearnings- 26 -

Dividend pershare (Yen)

3.5

Date of record

Effective date

March 31, 2022

June 9, 2022

(Notes) 1. The total dividend amount includes ¥5 million in dividends paid to shares of theCompany’s stock held by Custody Bank of Japan, Ltd. (Trust Account) as trust assets for
the Trust for Granting Shares to Directors and Executive Officers and the Trust for Granting
Shares to Executive Officers.
2. The Company implemented a four-for-one stock split of common shares, with an effective
date of December 1, 2021. The above shows dividend amounts after the stock split.
Fiscal year under review (From April 1, 2022 to March 31, 2023)
1. Type and number of shares issued and treasury shares(Shares)Number of
Increase in
Decrease in
Number ofshares at theshares during the shares during the shares at the end
beginning of theperiodperiodof the period
periodIssued shares
Common shares

450,880,000––

450,880,000

Total

450,880,000––

450,880,000

Common shares1, 2

63,483,788–

44,60063,439,188

Total

63,483,788–

44,60063,439,188

Treasury shares(Notes) 1. The 44,600 common shares in treasury shares decreased in the period were deliveredfrom trust to eligible persons under the stock compensation plan for Directors and thestock compensation plan for Executive Officers.
2. The 63,439,188 common shares in treasury shares at the end of the period include
1,567,700 shares of the Company’s stock held by Custody Bank of Japan, Ltd. (Trust
Account) as trust assets for the Trust for Granting Shares to Directors and Executive
Officers and the Trust for Granting Shares to Executive Officers.
2. Matters concerning dividends(1)Dividends paid
Resolution

Class ofsharesTotal dividend
Dividend peramountshare (Yen)(Millions of yen)

Date of record

Effective date

May 18, 2022
Common1,361
3.5 March 31, 2022
June 9, 2022
Board of Directors
sharesmeeting
October 27, 2022
CommonSeptember 30,
December 6,
Board of Directors
1,556
4.0
shares2022
2022
meeting(Notes) 1. The total dividend amount resolved by the Board of Directors meeting on May 18, 2022
includes ¥5 million in dividends paid to shares of the Company’s stock held by Custody
Bank of Japan, Ltd. (Trust Account) as trust assets for the Trust for Granting Shares to
Directors and Executive Officers and the Trust for Granting Shares to Executive Officers.
2. The total dividend amount resolved by the Board of Directors meeting on October 27, 2022
includes ¥6 million in dividends paid to shares of the Company’s stock held by Custody
Bank of Japan, Ltd. (Trust Account) as trust assets for the Trust for Granting Shares to
Directors and Executive Officers and the Trust for Granting Shares to Executive Officers.

- 27 -

(2) Dividends with a date of record during the fiscal year under review, but an effective date in thefollowing fiscal year
Total
dividend
Dividend
Class of
Source of
Resolution
amountper share Date of record
Effective datesharesdividend(Millions of
(Yen)
yen)
May 18, 2023
Retained
Common4.0 March 31, 2023
June 7, 2023
1,556
Board ofearnings
sharesDirectors meeting(Note) The total dividend amount includes ¥6 million in dividends paid to shares of the Company’s
stock held by Custody Bank of Japan, Ltd. (Trust Account) as trust assets for the Trust for
Granting Shares to Directors and Executive Officers and the Trust for Granting Shares to
Executive Officers.
(On the consolidated statement of cash flows)
1. Relationship between cash and cash equivalents at end of period and the amount of items shown on
the consolidated balance sheets(Millions of yen)Previous fiscal year
(From April 1, 2021 toMarch 31, 2022)
Cash and deposits accountTime deposits with maturities
longer than three months
Deposits paid accountCash and cash equivalents

Fiscal year under review(From April 1, 2022 toMarch 31, 2023)

21,65725,033

(100)

(481)

407
21,964240
24,792(Lease transactions)
Previous fiscal year (From April 1, 2021 to March 31, 2022)
Notes are omitted due to immateriality.
Fiscal year under review (From April 1, 2022 to March 31, 2023)
Notes are omitted due to immateriality.
(Financial instruments)
1. Matters concerning status of financial instruments(1) Policy for financial instrument transactions
The Group raises short-term working capital and capital for equipment, etc. as needed throughborrowings from banks. Derivative transactions are strictly managed in accordance with internalmanagement rules governing transactions, and the Company’s fundamental policy is not to engage
in high-risk speculative transactions.
(2) Nature and extent of risks arising from financial instruments and risk management
Notes and accounts receivable - trade, which are trade receivables, are exposed to credit risk from
customers. With respect to this risk, the Company conducts credit checks when beginningtransactions with customers, continuously monitors collection status, and periodically reviews
credit limits in accordance with the Company’s credit management rules. Consolidated subsidiaries
conduct similar management as in the Company.
The Company periodically monitors the fair value of investment securities and financial
condition of their issuers, etc., and continuously reviews its holdings in consideration of market
conditions and other factors.
Short-term borrowings and long-term borrowings are mainly used as funding for working capitaland capital investment. Although borrowings with floating interest rates are exposed to interest rate
fluctuation risk, the Company is able to respond flexibly to interest rate fluctuations by maintaining
short borrowing periods.

- 28 -

(3) Supplementary information on fair value, etc. of financial instruments
The fair value of financial instruments reflects variable factors, and is therefore subject to change
depending on different assumptions used.
2. Matters concerning fair value, etc. of financial instruments
The amounts recorded on the consolidated balance sheet, fair values, and the differences between them
are shown below.
Previous fiscal year (As of March 31, 2022)(Millions of yen)
Carrying value on the
consolidated balance
sheet

Fair value

Difference

Investment securities2

727

727

–

Total assets

727

727

–

Fiscal year under review (As of March 31, 2023)(Millions of yen)
Carrying value on the
consolidated balance
sheet

Fair value

Difference

Investment securities2

796

796

–

Total assets

796

796

–

(Notes) 1. “Cash and deposits,” “Notes receivable - trade,” “Accounts receivable - trade,”“Accounts payable - trade,” “Short-term borrowings,” and “Accounts payable other, and accrued expenses” are omitted as their fair values approximate their bookvalues. This is due to their nature as cash and as accounts settled over the short term.
2. Stocks and other securities with no market price are not included in “Investment
securities.” The carrying values of these financial instruments on the consolidatedbalance sheet were as follows.
(Millions of yen)Classification

Previous fiscal year

Unlisted stocks, etc.

464

Fiscal year under review
500

3. Investments in partnerships and similar entities recorded at the net amount of equity
interest on the consolidated balance sheet are omitted. The amount of these investmentson the consolidated balance sheet is as follows.
(Millions of yen)Previous fiscal year
Investment securities

584

Fiscal year under review
840

4. Scheduled amount of redemption of monetary claims due after the consolidated accountclosing datePrevious fiscal year (As of March 31, 2022)(Millions of yen)
Over
1
year
but
Over
5
years
but
Within 1 year within 5 years within 10 years Over 10 years
Notes receivable 766
–
–
–
trade
Accounts receivable
12,861–––- trade- 29 -

Fiscal year under review (As of March 31, 2023)
Within 1 year
Notes receivable trade
Accounts receivable- trade(Millions of yen)Over 1 year but Over 5 years but Over 10 years
within 5 years within 10 years

799

–

–

–

13,600–––5. Scheduled amount of repayment of short-term borrowings and long-term borrowings
after the consolidated account closing datePrevious fiscal year (As of March 31, 2022)(Millions of yen)Over 1
Over 2
Over 3
Over 4
Within 1
year but
years but years but years but
Over 5year
within 2
within 3
within 4
within 5
years
years
years
years
years
Short-term
1,550
–
–
–
–
–
borrowings
Fiscal year under review (As of March 31, 2023)(Millions of yen)Over 2
Over 3
Over 4
Over 1years but years but years but
Over 5
Within 1
year butwithin 3
within 4
within 5
years
year
within 2
years
years
years
years
Short-term
1,550
–
–
–
–
–
borrowings
3. Matters concerning breakdown per level of fair value, etc. of financial instruments
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 with observable inputs which are quoted prices for identicalassets or liabilities for calculation of fair value in active markets.
Level 2 fair value: Fair value calculated with observable inputs other than in Level 1.
Level 3 fair value: Fair value calculated using unobservable inputs.
When multiple inputs that have a significant impact on the calculation of fair value are used, fair value
is assigned to the level with the lowest applicable priority among the relevant levels.
(1) Financial instruments recorded on the consolidated balance sheet at fair value
Previous fiscal year (As of March 31, 2022)(Millions of yen)Classification

Fair value
Level 1

Level 2

Level 3

Total

Investment
securities
Available-for-salesecurities
Stocks

67

–

–

67

Other

659

–

–

659

Total assets

727

–

–

727

- 30 -

Fiscal year under review (As of March 31, 2023)(Millions of yen)
Fair value

Classification

Level 1

Investment
securities
Available-for-salesecurities
StocksLevel 2

Level 3

Total

208

–

–

208

Other

587

–

–

587

Total assets

796

–

–

796

(2) Financial instruments other than those recorded on the consolidated balance sheet at fair value
Previous fiscal year (As of March 31, 2022)
No items to report.
Fiscal year under review (As of March 31, 2023)
No items to report.
(Securities)
Previous fiscal year (As of March 31, 2022)
1. Available-for-sale securities(Millions of yen)
Carrying valueon theconsolidatedbalance sheet–

Type

Acquisition cost

Difference

Securities whose
Stocks––carrying values on the
consolidated balance
Other
–
–
–
sheet exceed
acquisition cost
Securities whose
Stocks67
69(1)
carrying values on the
consolidated balance
Other
659
697
(38)
sheet do not exceed
acquisition cost
727
766
(39)
Total
(Note) Unlisted stocks, etc. (carrying value of ¥7 million on the consolidated balance sheet) are notincluded in “Available-for-sale securities” above because they are stocks, etc. withoutmarket prices.
2. Available-for-sale securities sold during the fiscal year under review (From April 1, 2021 to March
31, 2022)(Millions of yen)Type

Amount of sales

Total gain on sale

Total loss on sale

Stocks

7,355

89

64

Other

9,772

0

72

17,127

89

137

Total

- 31 -

Fiscal year under review (As of March 31, 2023)
1. Available-for-sale securities(Millions of yen)

Carrying valueon theconsolidatedbalance sheet–

Type

Acquisition cost

Difference

Securities whose
Stocks––carrying values on the
consolidated balance
Other
–
–
–
sheet exceed
acquisition cost
Securities whose
Stocks
208
315
(106)
carrying values on the
consolidated balance
Other
587
647
(60)
sheet do not exceed
acquisition cost
796
963
(167)
Total
(Note) Unlisted stocks, etc. (carrying value of ¥7 million on the consolidated balance sheet) are notincluded in “Available-for-sale securities” above because they are stocks, etc. withoutmarket prices.
2. Available-for-sale securities sold during the fiscal year under review (From April 1, 2022 to March
31, 2023)(Millions of yen)Type

Amount of sales

Total gain on sale

Total loss on sale

Stocks

4,613

91

141

Other

14,687246

165

19,300

338

307

Total

(Retirement benefits)
Previous fiscal year (From April 1, 2021 to March 31, 2022)
1. Outline of retirement benefit plans adopted
The Company and some of its consolidated subsidiaries have both a defined contribution pension
plan and a prepaid retirement benefit plan.
2. Matters on retirement benefit obligations
Due to adoption of a defined contribution pension plan, there are no retirement benefit obligations.
3. Matters on retirement benefit expenses(1) Contributions to defined contribution pension plan(2) Prepaid retirement benefits
Retirement benefit expenses(Millions of yen)
264
1,101
1,365

Fiscal year under review (From April 1, 2022 to March 31, 2023)
1. Outline of retirement benefit plans adopted
The Company and some of its consolidated subsidiaries have both a defined contribution pension
plan and a prepaid retirement benefit plan.
2. Matters on retirement benefit obligations
Due to adoption of a defined contribution pension plan, there are no retirement benefit obligations.

- 32 -

3. Matters on retirement benefit expenses(1) Contributions to defined contribution pension plan(2) Prepaid retirement benefits(Millions of yen)
269
1,254

Retirement benefit expenses

1,524(Tax effect accounting)
1. Deferred tax assets and deferred tax liabilities by major classification

Deferred tax assets
Accrued enterprise tax
Accrued business office tax
Provision for bonuses
Provision for share-based compensation
Loss on valuation of membership
Unrealized profit
Loss carried forward
Unrealized gain and loss on available-forsale securities
Allowance for doubtful accounts
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax assets

Previous fiscal year
(March 31, 2022)(Millions of yen)
Fiscal year underreview(March 31, 2023)

117
17
420
29
24
–
360

127
19
457
34
24
10
362

11

40

286
53
1,321
(503)
817

287
46
1,410
(505)
905

2. Major components of significant differences arising between the effective statutory tax rate andeffective income tax rate after application of tax effect accounting
Previous fiscal year
Fiscal year under review(March 31, 2022)(March 31, 2023)
Effective statutory tax rate
30.6%
Notes are omitted(Adjustments)
because theShare of loss of entities accounted for using difference between(0.1%)
equity method
the effective
statutory tax rate
0.4%
Inhabitant tax on per capita basis
and the effective
Change in valuation allowance(0.2%)
income tax rate isTax credits for wage increases(4.9%)
5% or less of the
Other
0.4%
Effective income tax rate after application of effective statutory
26.2%
tax rate.
tax effect accounting- 33 -

(Revenue recognition)
1. Information on breakdown of revenue from contracts with customers
Previous fiscal year (From April 1, 2021 to March 31, 2022)(Millions of yen)
Reportable segment
Solution
DesignBusiness

Goods or services
transferred over a
period of time
Goods or services
transferred at asingle point in time
Revenue arisingfrom contracts withcustomers
Net sales toexternal customers

Framework
IT Service
DesignBusiness
Business

Business
Solution
Business

Cloud
Business

Overseas
Business

Investment&
Incubation
Business

Total

20,607

5,143

15,313

608

443

104

98

42,319–––21,620

1,331

–

–

22,952

20,607

5,143

15,31322,229

1,775

104

98

65,272

20,607

5,143

15,31322,229

1,775

104

98

65,272

Fiscal year under review (From April 1, 2022 to March 31, 2023)(Millions of yen)
Reportable segment
Solution
DesignBusiness

Framework
IT Service
DesignBusiness
Business

Business
Solution
Business

Cloud
Business

Overseas
Business

Investment&
Incubation
Business

Total

Goods or services
22,3006,095
17,357
702
534
71
282
47,345transferred over a
period of time
Goods or services–––
25,773
1,407––
27,180transferred at asingle point in time
Revenue arisingfrom contracts with
22,3006,095
17,357
26,475
1,942
71
282
74,526customers
Net sales to22,3006,095
17,357
26,475
1,942
71
282
74,526
external customers
2. Fundamental explanation of revenue arising from contracts with customers
The fundamental explanation for revenue is as described in “(Significant matters that serve as the basis for
preparing consolidated financial statements) 4. Matters concerning accounting policies (4) Standards forrecognition of significant revenue and expenses”
3. Information about the relationship between the satisfaction of performance obligations under contracts withcustomers and cash flows from these contracts, and the amount and timing of revenue expected to berecognized in subsequent fiscal years from contracts with customers that exist at the end of the fiscal year
under review.
(1) Balance of contract assets and contract liabilities, etc.
Previous fiscal year

(Millions of yen)
Fiscal year underreview

Contract assets (Balance at beginning of
period)524

695

Contract assets (Balance at end of period)

695

599

Contract liabilities (Balance at beginning of
period)198

81

Contract liabilities (Balance at end of period)

81

83- 34 -

Contract assets relate to the rights of the Company and its consolidated subsidiaries to consideration not
yet billed, though their contractual performance obligations have been satisfied as of the end of the
fiscal year. Contract assets are reclassified to receivables arising from contracts with customers when
the Company and its consolidated subsidiaries’ rights to the consideration are unconditional.
Contract liabilities mainly relate to advance payments for customer order-based contracts andsuspense payments for ongoing orders. Contract liabilities are reversed upon recognition of revenue.
(2) Transaction price allocated to remaining performance obligations
The Company and its consolidated subsidiaries apply the practical expedient method in the notes totransaction prices allocated to remaining performance obligations. Contracts with an initial expected
contract term of one year or less are not included in these notes.
(Segment information, etc.)
Segment information
1. Overview of reportable segments
The Company’s reportable segments are those components of the Group for which separate
financial information is available and are subject to periodic review by the Board of Directors todetermine the allocation of management resources and evaluate their performance.
The Group has established business divisions by product and service. These divisions formulatecomprehensive strategies for their respective products and services and carry out business activities.
Therefore, the Group consists of segments that are separated by products and services based on
business divisions, and the business activities of each are as follows.
Business segment

Businesses

Planning, design, development, and verification support forautonomous driving and in-vehicle systems, various products, andSolution Design
telecommunications carrier services. Planning, design, development,
and verification support for Internet businesses, business applications,
Business
web services, social infrastructure-related systems, IoT, artificial
intelligence, and robotics-related services.
Development of core systems in the areas of finance (non-life
Framework Design
insurance, life insurance, and banking), industry, public sector, andBusinessothers. Development of infrastructure systems.
Provision of IT outsourcing services such as operation, maintenance,
IT Service Businessand monitoring of systems and networks, helpdesk services and user
support, data entry, and high-volume output.
Sale of servers, computers, peripherals, software, and other IT-related
products to enterprises. Provision of services related to IT equipment,
Business Solution
including building infrastructure and virtualization. Planning,
Businessdevelopment, and provision of product implementation services suchas RPA and business intelligence (BI) tools.
Provision of in-house services Canbus., Cloudstep, and Web Shelter.
Provision and implementation support of cloud-based services such as
Cloud Business
Google Workspace and Microsoft 365.
Provision of mobile communications-related technical support,
Overseas Businessdevelopment and verification support, and various solutions; trend
research and commercialization of the latest technologies and services.
Investment & Incubation New businesses, and planning, development, and sale of game content
for smartphones and tablets by subsidiaries.
Business
2. Calculation method of net sales, profit or loss, assets, and other items by reportable segment
Accounting methods for reported business segments are the same as those described in “Significant
matters that serve as the basis for preparing consolidated financial statements.”
Profit by reportable segment is based on operating profit.
Inter-segment net sales and transfers are based on prevailing market prices.

- 35 -

3. Information on net sales, profit or loss, assets, and other items by reportable segment
I. Previous fiscal year (From April 1, 2021 to March 31, 2022)(Millions of yen)
Reportable segment
Investment Adjustment&
2, 3Incubation
Business

Solution Framework
IT Service
DesignDesignBusiness
Business BusinessBusiness
Solution
Business

Cloud
Business

Overseas
Business

20,607

5,143

15,31322,229

1,775

104

98

–

65,272

56

–

376

60

29

71

72

(668)

–

Total

20,663

5,143

15,69022,290

1,804

176

171

(668)

65,272

Segment profit(loss)

4,132

1,014

2,197

1,436

406

(9)

(72)

–

9,106

Segment assets

5,200

841

5,239

7,303

452

632

343

23,46343,477

222

35

128

33

6

3

0

–

429

208

22

195

14

1

–

–

136

578

361

–

–

–

–

95

–

–

456

Total1

Net sales
Net sales toexternalcustomers
Intersegment net
sales andtransfers

Other items
Depreciation
Increase inproperty,plant andequipment
andintangible
assetsInvestmentsin equity
methodassociates(Notes) 1.

Segment profit (loss) is consistent with operating profit in the consolidated statement ofincome.
2. The ¥23,463 million adjustment to segment assets consists wholly of corporate assets that do
not belong to any reportable segment, and is mainly cash and deposits and investment
securities. Depreciation of property, plant and equipment and intangible assets included incorporate assets is allocated to reportable segments.
3. The adjustment of ¥136 million for increase in property, plant and equipment and intangible
assets under other items is corporate assets, mainly capital investment for replacement ofinternal systems and company vehicles.

- 36 -

II. Fiscal year under review (From April 1, 2022 to March 31, 2023)(Millions of yen)

Reportable segment
Investment Adjustment&
2, 3Incubation
Business

Solution Framework
IT Service
DesignDesignBusiness
Business BusinessBusiness
Solution
Business

Cloud
Business

Overseas
Business

22,3006,095

17,357

26,475

1,942

71

282

–

74,526

74

–

396

34

65

62

27

(660)

–

Total

22,375

6,095

17,753

26,510

2,007

134

309

(660)

74,526

Segment profit(loss)

3,926

1,279

2,521

1,760

386

(29)

(0)

–

9,844

Segment assets

5,799

908

6,149

7,977

257

677

293

26,81548,879

229

38

161

39

7

1

0

–

478

187

16

200

105

1

–

–

555

1,067

387

–

–

–

–

105

–

–

492

Net sales
Net sales toexternalcustomers
Intersegment net
sales andtransfers

Total1Other items
Depreciation
Increase inproperty,plant andequipment
andintangible
assetsInvestmentsin equity
methodassociates(Notes) 1.

Segment profit (loss) is consistent with operating profit in the consolidated statement ofincome.
2. The ¥26,815 million adjustment to segment assets consists wholly of corporate assets that do
not belong to any reportable segment, and is mainly cash and deposits and investment
securities. Depreciation of property, plant and equipment and intangible assets included incorporate assets is allocated to reportable segments.
3. The adjustment of ¥555 million for increase in property, plant and equipment and intangible
assets under other items is mainly capital investment to enlarge Company floor space.

Related information
Previous fiscal year (From April 1, 2021 to March 31, 2022)
1. Information by product and service
This information is omitted because the same information is disclosed as segment information.
2. Information by geographic area
(1) Net sales
This information is omitted because net sales to external customers in Japan are in excess of
90% of net sales on the consolidated statement of income.
(2) Property, plant and equipment
This information is omitted because the amount of property, plant and equipment located in- 37 -

Japan exceeds 90% of the amount of property, plant and equipment on the consolidatedbalance sheet.
3. Information by major customer
This information is omitted because there are no customers that account for 10% or more of net
sales on the consolidated statement of income.
Fiscal year under review (From April 1, 2022 to March 31, 2023)
1. Information by product and service
This information is omitted because the same information is disclosed as segment information.
2. Information by geographic area
(1) Net sales
This information is omitted because net sales to external customers in Japan are in excess of
90% of net sales on the consolidated statement of income.
(2) Property, plant and equipment
This information is omitted because the amount of property, plant and equipment located inJapan exceeds 90% of the amount of property, plant and equipment on the consolidatedbalance sheet.
3. Information by major customer
This information is omitted because there are no customers that account for 10% or more of net
sales on the consolidated statement of income.
Information about impairment loss on non-current assets by reportable segment
Previous fiscal year (From April 1, 2021 to March 31, 2022)
No items to report.
Fiscal year under review (From April 1, 2022 to March 31, 2023)
No items to report.
Information about amortization and unamortized balance of goodwill by reportable segment
Previous fiscal year (From April 1, 2021 to March 31, 2022)
No items to report.
Fiscal year under review (From April 1, 2022 to March 31, 2023)
No items to report.
Information about gain on bargain purchase by reportable segment
Previous fiscal year (From April 1, 2021 to March 31, 2022)
No items to report.
Fiscal year under review (From April 1, 2022 to March 31, 2023)
No items to report.
(Information on related parties)
Previous fiscal year (From April 1, 2021 to March 31, 2022)
1. Transactions with related parties
No items to report.
2. Notes on parent company and significant associates
No items to report.
Fiscal year under review (From April 1, 2022 to March 31, 2023)
1. Transactions with related parties
No items to report.

- 38 -

2. Notes on parent company and significant associates
No items to report.
(Per share information)(Yen)
Previous fiscal year
(From April 1, 2021 to March 31,
2022)

Fiscal year under review(From April 1, 2022 to March 31,
2023)

Net assets per share
76.83
88.19
Basic earnings per share
15.47
18.89
(Notes) 1. Diluted earnings per share is not shown in the above table, as there are no residual shareswith dilutive effects.
2. The basis for calculation of basic earnings per share is as follows.
Previous fiscal year
(From April 1, 2021 toMarch 31, 2022)

Fiscal year under review(From April 1, 2022 toMarch 31, 2023)

Basic earnings per share
Profit attributable to owners ofparent5,992
7,317(Millions of yen)Amount not attributable to common––shareholders (Millions of yen)
Profit attributable to owners ofparent available to common shares
5,992
7,317
(Millions of yen)
Average number of shares during the387,386,464
387,422,095
period (Shares)
3. The Company has introduced a stock compensation plan, and in calculating the average
number of common treasury shares during the period, the number of treasury shares
includes shares of the Company held by Custody Bank of Japan, Ltd. (Trust Account) as
trust assets for the Trust for Granting Shares to Directors and Executive Officers and theTrust for Granting Shares to Executive Officers.
The number of treasury shares held by the trust account included in the number of treasury
shares at the end of the fiscal year under review and previous fiscal year was 1,567,700
shares and 1,612,300 shares, respectively. The average number of treasury shares held by
the trust account excluded from the calculation of the average number of shares during the
fiscal year under review and previous fiscal year were 1,586,417 shares and 1,622,086
shares, respectively.
4. The Company implemented a four-for-one common stock split effective December 1, 2021.
Net assets per share and basic earnings per share have been calculated as if this stock split
had taken place at the beginning of the previous fiscal year.
(Significant subsequent events)
No items to report.

- 39 -

5. Non-consolidated financial statements(1) Non-consolidated balance sheet(Millions of yen)
As of March 31, 2022
AssetsCurrent assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Contract assets
Merchandise
Advance payments to suppliers
Prepaid expenses
Short-term loans receivable
Short-term loans receivable from subsidiaries andassociates
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
VehiclesAccumulated depreciation
Vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Total property, plant and equipment
Intangible assets
Software
Software in progress
Other
Total intangible assets- 40 -

As of March 31, 2023

18,553765
11,960
671
1,104
4
295
0

21,361798
12,619
572
1,438
1
321
0

106

0

438
(9)
33,890281–
37,396

554
(283)
271
0
(0)
0
85
(16)
68
1,454
(1,112)
342
92
774

872
(326)
545
0
(0)
0
60
(27)
33
1,884
(1,314)
569
92
1,240

247
2
0
250

256
4
1
262

(Millions of yen)
As of March 31, 2022
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Investments in capital
Long-term prepaid expenses
Long-term loans receivable
Long-term loans receivable from subsidiaries andassociates
Leasehold and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable - trade
Short-term borrowings
Accounts payable - other
Income taxes payable
Accrued consumption taxes
Accrued expenses
Advances received
Deposits received
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term lease and guarantee deposited
Provision for share-based payments
Total non-current liabilities
Total liabilities

*1

1,318
1,369
0
4
0

1,535
1,429
0
2
0

433

432

1,297
713
0
(255)
4,881
5,906
39,797

1,323
766
0
(259)
5,231
6,733
44,130

5,554
1,550
1,580
1,389
636
27
79
76
1,100
8
12,00312
97
110
12,113- 41 -

As of March 31, 2023

*1

5,974
1,550
1,824
1,326
619
32
52
80
1,169
15
12,6449
114
123
12,768(Millions of yen)
As of March 31, 2022
Net assets
Shareholders’ equity
Share capital
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surplus
Retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 42 -

As of March 31, 2023

1,513

1,513

1,428
4,623
6,051

1,428
4,623
6,051

0
25,18625,186(5,042)
27,7090
28,91028,910(5,022)
31,454(25)(25)
27,68439,797(91)(91)
31,362
44,130(2) Non-consolidated statement of income(Millions of yen)
Fiscal year ended
March 31, 2022
Net sales
Service sales
Net sales of goods
Total net sales
Cost of sales
Cost of service sales
Cost of goods soldBeginning merchandise inventory
Cost of purchased goods
Total
Ending merchandise inventory
Cost of goods soldTotal cost of sales
Gross profit
Selling, general and administrative expenses
Remuneration for directors (and other officers)
Payroll and allowances
Provision for share-based payments
Retirement benefit expenses
Bonuses
Provision for bonuses
Legal welfare expenses
Travel and transportation expenses
Recruiting expenses
Advertising expenses
Supplies expenses
Taxes and dues
Commission expenses
Rent expenses
Depreciation
Research and development expenses
Provision of allowance for doubtful accounts
Other
Total selling, general and administrative expenses
Operating profit- 43 -

Fiscal year ended
March 31, 2023

34,741
23,368
58,11038,51827,33665,85524,252

26,844798
19,887
20,686
1,104
19,582
43,835
14,275

1,104
23,45024,554
1,438
23,11549,95915,895

308
1,835
41
165
65
92
360
85
185
301
55
369
403
785
325
1
9
383
5,774
8,500

323
2,158
36
196
56
124
389
107
150
266
35
399
870
1,057
361
22
(9)
413
6,959
8,936

(Millions of yen)
Fiscal year ended
March 31, 2022
Non-operating income
Interest income
Dividend income
Gain on sale of investment securities
Gain on investments in investment partnerships
Compensation income for damage
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on sale of investment securities
Loss on investments in investment partnerships
Provision of allowance for doubtful accounts
Consumption tax difference
Office relocation expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of shares of subsidiaries
Total extraordinary income
Extraordinary losses
Loss on valuation of shares of subsidiaries andassociates
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit*1*1*2- 44 -

Fiscal year ended
March 31, 2023

3
24
–
58
–
19
105
7
47
–
76
7
–
11
150
8,455

*1

*1

4
13
31
–
16
31
96
7
–
16
4
8
11
6
53
8,979

22
22

–
–

555

–

555
7,922
2,444
(88)
2,355
5,566

–
8,979
2,361
(23)
2,337
6,641

(3) Non-consolidated statement of changes in equity
Fiscal year ended March 31, 2022
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Share capital

Legal capitalsurplus

OthercapitalsurplusTotal
capitalsurplus

1,428

4,623

6,051

Total
retainedearnings

TreasurysharesTotalshareholders’equity(5,052)

24,078Generalreserve

Retainedearnings
brought
forward0

21,565

21,565

Dividends of surplus(1,945)(1,945)(1,945)

Profit

5,566

5,566

5,566

Balance at beginning of period

1,513

Changes during period

Purchase of treasury shares

(0)

(0)

Disposal of treasury shares

99Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period

Balance at beginning of period

–

–

–

–

–

3,621

3,621

9

3,630

1,513

1,428

4,623

6,051

0

25,18625,186(5,042)

27,709Valuation and translation
adjustments
Valuation
Total
difference valuationonandavailable- translation
for-saleadjustsecurities
ments

Total net
assets(16)(16)

24,062

Changes during period
Dividends of surplus(1,945)

Profit

5,566

Purchase of treasury shares(0)

Disposal of treasury shares

9

Net changes in items other thanshareholders’ equity

(9)

(9)

(9)

Total changes during period

(9)

(9)

3,621

Balance at end of period

(25)

(25)

27,684- 45 -

Fiscal year ended March 31, 2023
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Share capital

Legal capitalsurplus

OthercapitalsurplusTotal
capitalsurplus

1,428

4,623

6,051

Total
retainedearnings

TreasurysharesTotalshareholders’equity(5,042)

27,709Generalreserve

Retainedearnings
brought
forward025,18625,186

Dividends of surplus(2,917)(2,917)(2,917)

Profit

6,641

6,641

6,641

Balance at beginning of period

1,513

Changes during period

Disposal of treasury shares

20

20

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period

Balance at beginning of period

–

–

–

–

–

3,724

3,724

20

3,744

1,513

1,428

4,623

6,051

0

28,91028,910(5,022)

31,454

Valuation and translation
adjustments
Valuation
Total
difference valuationonandavailable- translation
for-saleadjustsecurities
ments

Total net
assets(25)(25)

27,684

Changes during period
Dividends of surplus(2,917)

Profit6,641

Disposal of treasury shares
Net changes in items other thanshareholders’ equity

20
(66)

(66)

(66)

Total changes during period

(66)

(66)

3,678

Balance at end of period

(91)

(91)

31,362- 46 -

(4) Notes to the non-consolidated financial statements(Notes on premise of going concern)
No items to report.
(Significant accounting policies)
1. Valuation standards and valuation methods for securities(1) Shares of subsidiaries and associates
Stated at cost determined by the moving average method(2) Available-for-sale securities
Securities other than stocks and other securities with no market priceStated at fair value (All valuation differences are processed by the direct net assets method,and selling cost is calculated by the moving average method)
Stocks and other securities with no market priceStated at cost determined by the moving average method
Investments in limited liability investment partnerships are accounted for based on the most recent
financial statements available according to the financial reporting date stipulated in the partnershipagreement, and the amount equivalent to the Company’s equity interest in the partnerships isincluded at the net amount.
2. Valuation standards and methods for inventories
MerchandiseStated at cost determined by the moving average method (Writing down book values based on
decreased profitability)
3. Method of depreciation of non-current assets(1) Property, plant and equipment (excluding leased assets)
Declining-balance method (However, the straight-line method is adopted for buildings (excluding
facilities attached to buildings) acquired on or after April 1, 1998, and facilities attached tobuildings and structures acquired on or after April 1, 2016)
The useful lives and residual values of assets are determined based on the standards stipulated in
the Corporation Tax Act.
Assets with an acquisition cost of ¥100,000 or more but less than ¥200,000 are amortized equally
over three years.
(2) Intangible assets (excluding leased assets)
Straight-line method
Software for internal use is amortized using the straight-line method over the estimated internal
useful life (5 years).
(3) Long-term prepaid expenses
Amortized based on the straight-line method
4. Standards for recognition of allowances and provisions(1) Allowance for doubtful accounts
The estimated irrecoverable amount based on historical default rates for general receivables andindividual assessments of recoverability for doubtful and other specific receivables is posted toprovide for losses on default of receivables.
(2) Provision for bonuses
To provide for the payment of bonuses to employees, the amount accrued for the fiscal year underreview is recorded based on the estimated amount of bonus payments.
(3) Provision for share-based compensation
To provide for the future delivery of Company shares to Directors and Executive Officers inaccordance with the Company’s rules on share delivery, the estimated payment amount isrecorded based on the points allotted to Directors and Executive Officers as of the end of the fiscal
year under review.

- 47 -

5. Standards for recognition of revenue and expenses
The following is a description of the major performance obligations related to revenue arising fromcontracts with the customers in the Company’s major businesses, and the normal point in time atwhich such performance obligations are satisfied (the normal point in time at which revenue isrecognized).
(1)Software and system development, and IT services
In the Solution Design Business and Framework Design Business, the Group mainly provides
planning, design, development, and verification support for software and system development.
In the IT Service Business, the Group mainly provides IT outsourcing services such as
operation, maintenance, and monitoring of systems and networks, as well as helpdesk services.
Contracts in this business involve transactions under contract or quasi-mandate contract, andperformance obligations are recognized as follows depending on the contract.
For transactions entered into under contract, the Company recognizes revenue based on the
degree of progress made in satisfying the performance obligation over a specified period of time.
For transactions under quasi-mandate contract, the Company recognizes revenue as a prorated
portion of the amount promised in the contract with the customer over the period the services areprovided, based on the judgment that the performance obligation is satisfied over time, since theCompany generally provides a certain level of services over the term of the contract.
The consideration for performance obligations is received primarily within one year after
performance obligations are satisfied, and does not include significant financial components.
(2) Sales of merchandise
In the Business Solution Business, the Group mainly sells servers, computers, peripherals,
software, and other IT-related products to enterprises. For these sales of merchandise, revenue isrecognized when the merchandise is delivered to the customer or at the time the customer
completed inspection.
For sales of merchandise deemed as revenue for which the Company is an agent, revenue isrecognized at the net amount received in exchange for goods provided by the third party less theamount paid to said third party.
In addition, consideration for performance obligations is received primarily within one year after
performance obligations are satisfied, and does not include significant financial components.
(3) License sales
In the Cloud Business, the Group mainly sells licenses for its in-house services, Canbus.,
Cloudstep, and Web Shelter, as well as for cloud-based services such as Google Workspace andMicrosoft 365. For sales of licenses for in-house services, the Company recognizes revenue overthe license period specified in the contract, based on the judgment that the performance obligation
will be satisfied over a certain period of time. For other license sales, revenue is recognized when
the license is granted to the customer.
The consideration for performance obligations is received primarily within one year after
performance obligations are satisfied, and does not include significant financial components.
6. Standards for translating significant foreign currency denominated assets or liabilities into Japanesecurrency
Receivables and payables denominated in foreign currencies are converted into yen at the spot
exchange rate at the end of the fiscal year and translation differences are posted as profit or loss.

(Significant accounting estimates)
Progress-based revenue recognition(1) Amounts recorded in the non-consolidated financial statements for the fiscal year under review(Millions of yen)

Net sales (Portion notcompleted)

Previous fiscal year

Fiscal year under review

610

520

(2) Details regarding significant accounting estimates for the identified item
The method of calculating the amounts in (1) is the same as that described in under “(2) Details- 48 -

regarding significant accounting estimates for the identified item” in the progress-based revenue
recognition section of notes (significant accounting estimates) to the consolidated financial
statements.
(Changes in accounting policies)(Application of Implementation Guidance on Accounting Standard for Fair Value Measurement)
The Company has applied the “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, June 17, 2021) (hereinafter, “Fair Value Measurement
Accounting Standard Implementation Guidance”) from the beginning of the fiscal year under review, andit will apply new accounting policies provided for by the Fair Value Measurement Accounting Standard
Implementation Guidance prospectively in accordance with transitional measures provided for inparagraph 27-2 of the Fair Value Measurement Accounting Standard Implementation Guidance. Thischange has no impact on the financial statements.
(Additional information)
Stock compensation plan
The Company has introduced a stock compensation plan for the Company’s Directors (excluding
Outside Directors) and Executive Officers (hereinafter collectively referred to as “Directors, etc.”).
1. Outline of transactions
This is a stock compensation plan under which the Company’s shares, acquired by a trust using
money contributed by the Company, are delivered to Directors, etc. in accordance with the number ofpoints granted in accordance with rules on share delivery established by the Company.
2. Company shares remaining in trust
Company shares remaining in trust are recorded as treasury shares under net assets at the carrying
value in trust (excluding the amount of incidental expenses). The book value and number of thesetreasury shares amounted to ¥726 million and 1,612,300 shares at the end of the previous fiscal year,and ¥706 million and 1,567,700 shares at the end of the fiscal year under review.
(On the non-consolidated balance sheet)
1. Overdraft agreement
The Company has overdraft agreements with six transacting banks in order to raise working capitalefficiently.
The unused portion of the lines of credit based on these agreements is as follows.
(Millions of yen)Previous fiscal year
(March 31, 2022)

Fiscal year under review(March 31, 2023)

8,100

8,100

1,550

1,550

6,550

6,550

Maximum amount of
overdraft
Outstanding balance of
overdraft
Unused amount(On the non-consolidated statements of income)1. The following items related to transactions with subsidiaries and associates are included.
(Millions of yen)
Fiscal year under review
Previous fiscal year
(From April 1, 2021 to (From April 1, 2022 toMarch 31, 2023)
March 31, 2022)
Provision of allowance for76
4
doubtful accounts
The total amount of non-operating income for subsidiaries and associates was ¥11 million for theprevious fiscal year and ¥12 million for the fiscal year under review, exceeding 10% of the total
amount of non-operating income.
2. Loss on valuation of shares of subsidiaries and associates- 49 -

Previous fiscal year (From April 1, 2021 to March 31, 2022)
Loss on valuation of shares of subsidiaries and associates is ¥555 million related to shares of
Systena America Inc.
Fiscal year under review (From April 1, 2022 to March 31, 2023)
No items to report.
(Securities)
Previous fiscal year (From April 1, 2021 to March 31, 2022)
Shares of subsidiaries and associates (carrying value of ¥1,263 million and ¥105 million on the nonconsolidated balance sheet, respectively) are stocks, etc. with no market prices. Accordingly, they areomitted.
Fiscal year under review (From April 1, 2022 to March 31, 2023)
Shares of subsidiaries and associates (carrying value of ¥1,323 million and ¥105 million on the nonconsolidated balance sheet, respectively) are stocks, etc. with no market prices. Accordingly, they areomitted.
(Tax effect accounting)
1. Deferred tax assets and deferred tax liabilities by major classification

Deferred tax assets
Accrued enterprise tax
Accrued business office tax
Provision for bonuses
Allowance for doubtful accounts
Provision for share-based compensation
Loss on valuation of membership
Loss on valuation of shares of subsidiaries
and associates
Unrealized gain and loss on available-forsale securities
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax assets

Previous fiscal year
(March 31, 2022)(Millions of yen)
Fiscal year underreview(March 31, 2023)

103
13
337
146
29
24

108
14
358
144
34
24

869

869

11

40

42
1,579
(865)
713

36
1,632
(865)
766

2. Major components of significant differences arising between the effective statutory tax rate andeffective income tax rate after application of tax effect accounting
Previous fiscal year
Fiscal year under review(March 31, 2022)(March 31, 2023)
30.6%
Effective statutory tax rate
Notes are omitted
becausethe(Adjustments)
difference between
Tax credits for wage increases(5.0%)
the effective statutory
0.4%
Other
Effective income tax rate after application of tax rate and the
26.0%
effective income tax
tax effect accounting
rate is 5% or less ofthe effective statutory
tax rate.
(Revenue recognition)
Notes have been omitted because the fundamental explanation of revenue arising from contracts withcustomers is identical to “(Revenue recognition)” under “4. Consolidated financial statements and notes, Notes
to the consolidated financial statements.”(Significant subsequent events)
No items to report.

- 50 -

6. Other
Production, orders, and sales results
MINGAL inc., which was established on June 1, 2022, is included in the Cloud Business reporting segment.
(1) Production results
Production results per business segment for the fiscal year under review are as follows.
Fiscal year under review(From April 1, 2022 to March 31, 2023)(Millions of yen)

Year-on-year change (%)

Solution Design Business

15,004

109.4

Framework Design Business

4,236

117.5

IT Service Business

12,479110.5

Business Solution Business

1,248

156.0

32,968112.1

Business segment

Total(Notes) 1. Within the Group, only segments that involve made-to-order activities are shown due to the nature ofservices.
2. The above amounts are stated at production cost.
(2) Order results
Order results per segment for the fiscal year under review are as follows.
Order value
Year-on-year
Backlog of orders
Business segmentchange (%)(Millions of yen)
(Millions of yen)
Solution Design Business
22,770106.9
7,849

Year-on-yearchange (%)
106.4

Framework Design Business

6,755

123.3

3,113

126.9

IT Service Business

17,900

112.1

6,525

109.1

Business Solution Business

1,581

115.4

504

108.1

49,009111.1

17,992

110.5

Total

(Note) Within the Group, only segments that involve made-to-order activities are shown due to the nature ofservices.
(3) Sales results
Sales results per business segment for the fiscal year under review are as follows.
Fiscal year under review(From April 1, 2022 to March 31, 2023)(Millions of yen)

Year-on-year change (%)

Solution Design Business

22,300

108.2

Framework Design Business

6,095

118.5

IT Service Business

17,357

113.3

Business Solution Business

26,475

119.1

Cloud Business

1,942

109.4

Overseas Business

71

69.0

Investment & Incubation Business

282

285.7

74,526

114.2

Business segment

Total(Note) Inter-segment transactions are offset and eliminated.

- 51 -