August 9, 2019

Summary of Consolidated Financial Results
for the First Quarter of Fiscal Year Ending March 31, 2020(Three Months Ended June 30, 2019)[Japanese GAAP]
Company name: Japan System Techniques Co., Ltd.
Listing: Tokyo Stock Exchange, First Section
Stock code:
4323
URL: http://www.jast.jp
Representative:
Takeaki Hirabayashi, President and CEO
Contact:
Noriaki Okado, Managing Director and CFO
Tel: +81-6-4560-1000
Scheduled date of filing of Quarterly Report:
August 13, 2019
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results: None
Holding of quarterly financial results meeting:
None
Note: The original disclosure in Japanese was released on August 9, 2019 at 16:00 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter Ended June 30, 2019
(April 1, 2019 – June 30, 2019)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent
Million yen%
Million yen%
Million yen% Million yen%
Three months ended Jun. 30, 2019
3,770 (8.2)
(308)
(299)
(223)
Three months ended Jun. 30, 2018
4,106 27.6
154
162
99
Note: Comprehensive income (million yen) Three months ended Jun. 30, 2019: (165) (-%)
Three months ended Jun. 30, 2018:
92 (up 772.6%)
Diluted net income per
share
Yen
Yen
(42.14)
18.93-

Net income per share
Three months ended Jun. 30, 2019
Three months ended Jun. 30, 2018
(2) Consolidated financial position

Total assets
Net assets
Equity ratio
Net assets per share
Million yen
Million yen%
Yen
As of Jun. 30, 201913,506
6,103
44.9
1,143.65
As of Mar. 31, 201913,636
6,418
46.8
1,202.34
Reference: Shareholders’ equity (million yen)
As of Jun. 30, 2019:
6,069
As of Mar. 31, 2019:
6,381
Note: The provisional accounting treatment for a business combination has been finalized in the first quarter of the current fiscal year.
Significant business indicators, etc. related to the previous fiscal year reflect the finalized figures.

2. Dividends
1Q-endYen-

Fiscal year ended Mar. 31, 2019
Fiscal year ending Mar. 31, 2020
Fiscal year ending Mar. 31, 2020 (forecasts)
Note: Revisions to the most recently announced dividend forecast: None

Dividend per share
2Q-end3Q-endYear-end
Yen
Yen
Yen
0.00
28.00
0.00

-

28.00

Total
Yen
28.00
28.00

3. Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2020 (April 1, 2019 – March 31, 2020)
Net sales

Operating income

Ordinary income

Million yen% Million yen% Million yen%
Full year
18,650
10.6
1,085
26.7
1,100
26.4
Note: Revisions to the most recently announced consolidated earnings forecasts: None

(Percentages represent year-on-year changes)
Profit attributable to
Net income perowners of parent
shareMillion yen
%
Yen
670
110.7
126.24

* Notes(1) Changes in consolidated subsidiaries during the period (changes in scope of consolidation): None
Newly added: -Excluded: -(2) Application of special accounting methods for presenting quarterly consolidated financial statements: None
(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others:None2) Changes in accounting policies other than 1) above:None3) Changes in accounting-based estimates:

None4) Restatements:

None(4) Number of outstanding shares (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
As of Jun. 30, 2019:

5,612,230 shares

As of Mar. 31, 2019:

5,612,230 shares

As of Mar. 31, 2019:

304,710 shares

2) Number of treasury shares at the end of the period
As of Jun. 30, 2019:

304,761 shares

3) Average number of shares outstanding during the period
Three months ended Jun. 30, 2019:

5,307,501 shares

Three months ended Jun. 30, 2018:

5,248,020 shares

Note 1: The current quarterly summary report is not subject to quarterly review by certified public accountants or auditing firms.
Note 2: Cautionary statement with respect to forward-looking statements
Forecasts of future performance in these materials are based on assumption judged to be valid and information available to theCompany’s management at the time the materials were prepared, but are not promises by the Company regarding future
performance. Actual results may differ materially from the forecasts. Please refer to “1. Qualitative Information on Quarterly
Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts and Other Forward-looking Statements” on page 3
for forecast assumptions and notes of caution for usage.

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheet

4(2) Quarterly Consolidated Statements of Income and Comprehensive Income

6

Quarterly Consolidated Statement of Income
For the Three-month Period

6

Quarterly Consolidated Statement of Comprehensive Income
For the Three-month Period7(3) Quarterly Consolidated Statement of Cash Flows

8(4) Notes to Quarterly Consolidated Financial Statements

9

Going Concern Assumption

9

Significant Changes in Shareholders’ Equity

9

Additional Information

9

Segment and Other Information

10

Business Combinations

11

1

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first quarter of the current fiscal year, the Japanese economy continued to recover at a moderate pacedespite the continuation of geopolitical risk in eastern Asia. The recovery was supported by improvements incorporate profits, the number of jobs and personal income due to the benefits of economic initiatives by theJapanese government.
In the IT industry in Japan, according to the latest statistics in the “Survey of Selected Service Industries” by the
Ministry of Economy, Trade and Industry (the final May figures), net sales continued to climb, rising 1.5% year
on year in Fiscal 2018 (compared with 2.5% annual growth in Fiscal 2017). However, the outlook for the IT
industry is uncertain because the sales growth rate was reduced compared with the Fiscal 2018 and there weresome months in Fiscal 2018 when sales were lower than one year earlier.
In the first quarter, the Japan System Techniques Group (Japan System Techniques Co., Ltd. (JAST) and its
consolidated subsidiaries, hereafter “the JAST Group”) posted net sales of 3,770 million yen (down 8.2% year onyear), operating loss of 308 million yen (vs. operating income of 154 million yen in the same period of theprevious fiscal year), ordinary loss of 299 million yen (vs. ordinary income of 162 million yen in the same periodof the previous fiscal year), and loss attributable to owners of parent of 223 million yen (vs. profit attributable toowners of parent of 99 million yen in the same period of the previous fiscal year). The business indicators for the
first quarter of the current fiscal year are largely on target, although they are relatively weak compared to the firstquarter of the previous fiscal year, which showed strong performance. Results by segment were as follows.
In the software business (individualized contracted software development), net sales increased but profits
decreased. Sales remained strong because orders from the manufacturing industry, service/retail industry,finance/insurance/brokerage industry, and public sector increased while there was a decrease in orders from thetelecommunications industry. There was an increase in outsourced processing and other costs. As a result, net
sales in this business totaled 2,765 million yen (up 4.6% year on year) and operating loss was 183 million yen (vs.
operating income of 154 million yen in the same period of the previous fiscal year).
In the GAKUEN business (development, sale and related services of operational reform packages for schools),
there were increases in sales of program products (PP) to universities and IT equipment sales. However, there
were decreases in end user computing (EUC: individualized contracted development of related systems) sales andimplementation support sales. Net sales in this business totaled 456 million yen (up 0.0% year on year) andoperating loss was 42 million yen (vs. operating loss of 43 million yen in the same period of the previous fiscal
year).
In the system sales business (IT equipment sales and IT/telecom infrastructure construction), sales to universities
and the public sector decreased. Net sales in this business totaled 353 million yen (down 57.3% year on year) andoperating loss was 29 million yen (vs. operating income of 103 million yen in the same period of the previous
fiscal year).
Lastly, in the medical big data business (inspection, analysis and related services of medical information data),
sales of automated inspection services for health insurance claims and analysis services were strong. Net sales inthis business totaled 194 million yen (up 9.3% year on year) and operating loss totaled 53 million yen (vs.
operating loss of 65 million yen in the same period of the previous fiscal year).
Features of the JAST Group’s quarterly results
A feature of the JAST Group’s businesses is that the delivery inspection period of most customers concentrates inMarch, the last month of the fiscal year for most companies, and then in September, th e last month of the second
quarter. This means that the Group’s earnings in the first and third quarters tend to be much smaller than in thesecond and fourth quarters.

2

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20(2) Explanation of Financial Position
1) Balance sheet position
The balance of current assets at the end of the first quarter of the current fiscal year was 8,941 million yen, down
668 million yen from the end of the previous fiscal year. This was mainly due to an increase in cash and deposits
resulting from the collection of accounts receivable-trade and advances received, and an increase in work inprocess. The balance of non-current assets was 4,564 million yen at the end of the first quarter, up 538 million
yen from the end of the previous fiscal year. This was mainly due to an increase in goodwill resulting from theconsolidation of AG NET PTE. LTD.
The balance of current liabilities at the end of the first quarter was 5,766 million yen, up 179 million yen from theend of the previous fiscal year. This was mainly due to increases in short-term borrowings and advances received,and decreases in provision for bonuses and notes and accounts payable-trade. The balance of non-current
liabilities was 1,635 million yen at the end of the first quarter, up 5 million yen from the end of the previous fiscal
year.
The balance of net assets was 6,103 million yen at the end of the first quarter, down 315 million yen from the endof the previous fiscal year. This was mainly due to the payment of dividends and loss attributable to owners ofparent in the first three months.
2) Cash flows
Cash and cash equivalents increased 794 million yen from 4,204 million yen at the beginning of the current fiscal
year to 4,999 million yen at the end of the first three months of the current fiscal year.
Cash flows by category were as follows.
Cash flows provided by operating activities totaled 911 million yen, a decrease of 973 million yen from 1,885
million yen provided in the same period of the previous fiscal year. This decrease was mainly due to decreases inproceeds from collection of trade receivables, advances received, profit before income taxes and trade payables.
Cash flows used in investing activities totaled 421 million yen, a decrease of 633 million yen from 211 million
yen provided in the same period of the previous fiscal year. This decrease was mainly due to an increase in thepayment for purchases of shares of subsidiaries and a decrease in proceeds from cancellation of time deposits.
Cash flows provided by financing activities totaled 292 million yen, an increase of 347 million yen from 55
million yen used in the same period of the previous fiscal year. This increase was mainly due to an increase in
short-term borrowings.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
We maintain the May 14, 2019 forecasts for the fiscal year ending March 31, 2020: net sales of 18,650 million
yen (up 10.6% year on year), operating income of 1,085 million yen (up 26.7% year on year), ordinary income of
1,100 million yen (up 26.4% year on year), and profit attributable to owners of parent of 670 million yen (up110.7% year on year).

3Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet
FY3/19(As of Mar. 31, 2019)(Thousands of yen)First quarter of FY3/20(As of Jun. 30, 2019)

AssetsCurrent assets
Cash and deposits

4,260,305

5,039,143

Notes and accounts receivable-trade

4,341,029

2,776,583

Merchandise and finished goods

129,795

139,701

Work in process

569,537

785,078

2,695

3,001

Other

345,249

238,342

Allowance for doubtful accounts(38,272)(40,314)9,610,340

8,941,537

Raw materials and supplies

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

720,814766,614

Accumulated depreciation(419,276)(444,938)

Buildings and structures, net

301,538

321,675Land

142,361

142,361

Other

451,991

466,433

Accumulated depreciation(337,562)(342,146)

Other, net

114,428

124,286

558,328

588,323

Goodwill

619,660

1,066,270

Customer-related assets

484,589

478,984

Software

68,396

66,076

Other

7,626

7,626

1,180,273

1,618,957

Investment securities

688,789

701,120

Retirement benefit asset

542,920

548,094

Deferred tax assets

502,531557,699

Guarantee deposits

414,231

416,415

Other

151,359

149,444

Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets

Allowance for doubtful accounts(12,209)(15,437)

Total investments and other assets

2,287,621

2,357,336

4,026,223

4,564,618

13,636,564

13,506,155

Total non-current assets
Total assets

4Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20

FY3/19(As of Mar. 31, 2019)(Thousands of yen)First quarter of FY3/20(As of Jun. 30, 2019)

Liabilities
Current liabilities
Notes and accounts payable-trade

1,128,311

857,153

Short-term borrowings

1,543,696

2,000,000

Current portion of long-term borrowings

8,400

8,400

Income taxes payable

234,023

18,475

Advances received

648,746

1,038,297

Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Provision for loss on construction contracts

722,520335,992

27,465

6,946

37,264

11,721Other

1,237,384

1,489,913

Total current liabilities

5,587,812

5,766,899

11,90038,712

20,051

23,844

13,978

4,643

957,672

960,241

Non-current liabilities
Long-term borrowings
Provision for share-based remuneration for directors(and other officers)
Provision for retirement benefits for directors (andother officers)
Retirement benefit liability
Deferred tax liabilities

116,888

115,144

Other

509,788493,349

1,630,279

1,635,936

7,218,091

7,402,835

Share capital

1,076,669

1,076,669

Capital surplus

1,085,695

1,084,690

Retained earnings

4,359,161

3,985,503

Treasury shares(277,050)(277,131)

Total shareholders’ equity

6,244,476

5,869,732

Valuation difference on available-for-sale securities

114,167

122,484

Foreign currency translation adjustment(37,345)

21,066

Remeasurements of defined benefit plans

60,16356,598

Total accumulated other comprehensive income

136,986

200,149

37,01033,4386,418,472

6,103,319

13,636,564

13,506,155

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income

Non-controlling interests
Total net assets
Total liabilities and net assets

5Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Three-month Period)First three months of FY3/19(Apr. 1, 2018 – Jun. 30, 2018)(Thousands of yen)First three months of FY3/20(Apr. 1, 2019 – Jun. 30, 2019)

Net sales

4,106,450

3,770,217

Cost of sales

3,209,531

3,154,602

Gross profit

896,919615,614Selling, general and administrative expenses

742,842924,077

Operating income (loss)

154,077(308,463)

Interest income

2,801

3,152

Dividend income

2,831

2,838

Rental income

1,363

1,578

Subsidy income

2,825

11,596

Other

1,860

943

Total non-operating income

11,681

20,109Interest expenses

615

765

Foreign exchange losses

949

9,870

Rental expenses

973

128

Other

469

282

Non-operating income

Non-operating expenses

3,007

11,047

Ordinary income (loss)

Total non-operating expenses

162,751(299,400)

Profit (loss) before income taxes

162,751(299,400)

Income taxes

63,302(70,361)

Profit (loss)

99,449(229,039)

123(5,363)99,326(223,676)

Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent

6

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)First three months of FY3/19(Apr. 1, 2018 – Jun. 30, 2018)(Thousands of yen)First three months of FY3/20(Apr. 1, 2019 – Jun. 30, 2019)

99,449(229,039)

Profit (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income(3,322)

8,316

818

59,205(4,722)(3,564)(7,227)

63,956

92,222(165,082)

92,880(160,513)(658)(4,569)Comprehensive income attributable to:Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

7

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20(3) Quarterly Consolidated Statement of Cash FlowsFirst three months of FY3/19(Apr. 1, 2018 – Jun. 30, 2018)(Thousands of yen)First three months of FY3/20(Apr. 1, 2019 – Jun. 30, 2019)

Profit (loss) before income taxes

162,751(299,400)

Depreciation

15,48014,144

Amortization of software

10,795

6,714

Amortization of goodwill

2,264

22,009Cash flows from operating activities

Amortization of customer-related assets
Increase (decrease) in provision for bonuses-

15,966(339,267)(386,757)

Increase (decrease) in retirement benefit liability

11,5782,058

Decrease (increase) in retirement benefit asset(5,026)(5,173)

Interest and dividend income(5,632)(5,990)615

765

Decrease (increase) in trade receivables

2,201,499

1,588,636

Increase (decrease) in advances received

620,143

389,430

Decrease (increase) in inventories(73,013)(225,196)

Increase (decrease) in trade payables(1,035,713)(273,864)

Other, net

563,215

238,098

Subtotal

2,129,692

1,081,439

5,883

6,233

Interest expenses

Interest and dividends received
Interest paid

(613)

(577)

Income taxes paid

(249,890)(175,586)

Net cash provided by (used in) operating activities

1,885,073

911,508

153,108

17,450Purchase of property, plant and equipment(11,945)(16,041)

Proceeds from sales of real estate for rent

109,183-

Purchase of software

Cash flows from investing activities
Decrease (increase) in time deposits(19,777)(2,633)Purchase of investment securities
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Proceeds from cancellation of insurance funds

(452)

(450)

-

(416,822)

162-

Proceeds from refund of guarantee deposits

377

186

(18,186)(2,194)

(721)

(807)

211,748(421,314)

Net increase (decrease) in short-term borrowings

104,765

455,779

Repayments of lease obligations(10,892)(11,131)

Repayments of long-term borrowings(2,100)(2,100)

Payments of guarantee deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities

Purchase of treasury shares

-

(80)

Dividends paid

(146,944)(149,982)

Net cash provided by (used in) financing activities(55,171)

292,485

Effect of exchange rate change on cash and cash equivalents(1,037)

12,303

Net increase (decrease) in cash and cash equivalents

2,040,612

794,983

Cash and cash equivalents at beginning of period

2,785,193

4,204,722

Cash and cash equivalents at end of period

4,825,806

4,999,706

8

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20(4) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.

Significant Changes in Shareholders’ Equity
Not applicable.

Additional Information
Board Benefit Trust (BBT)
Based on the resolution of the 46th Annual General Meeting of Shareholders, JAST on June 26, 2018 terminated the
directors’ retirement benefit system and introduced a Board Benefit Trust (BBT, hereafter, “the Plan”) for the purpose ofincreasing motivation for contributing to medium to long-term improvement in sales and earnings and an increase incorporate value. The Plan clearly links the compensation of directors with the JAST stock price. Furthermore, directors sharewith shareholders the benefits of a higher stock price as well as the risk of a lower stock price.
1) Overview of transaction
This is a stock compensation plan under which directors receive stock compensation through a trust (a trust established under
the current system, hereafter “the Trust”). The Trust acquires JAST stock using cash contributions from JAST as the source offunds. Directors (excluding external directors; hereafter same unless indicated otherwise) receive stock compensation or amonetary amount equivalent to the market value of the stock in lieu of stock compensation (hereafter “JAST stock”) in
accordance with the rules on the stock compensation plan for directors. In principle, a director becomes eligible for stockcompensation only upon retirement.
2) JAST stock held by the trust
The book value (excluding associated expenses) of JAST stock held by the trust is shown as treasury shares in the net assets
section of the consolidated balance sheet. As of the end of the first quarter, the BBT held 49,000 shares of JAST with a bookvalue of 89.915 million yen.

9

Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20

Segment and Other Information
Segment information
I. First three months of FY3/19 (Apr. 1, 2018 – Jun. 30, 2018)
1. Information related to net sales and profit or loss for each reportable segment(Thousands of yen)Amounts shown onquarterly
Adjustment
consolidated(Note 1)statement of income(Note 2)

Softwarebusiness

GAKUENbusiness

Systemsales
business

Medicalbig data
business

Total

2,644,387

456,119

827,513

178,429

4,106,450-

4,106,450

15,691

3,421

1,537

-

20,649(20,649)-

2,660,079

459,541

829,050

178,429

4,127,100(20,649)

4,106,450

Net sales
1. External sales
2. Inter-segment sales
and transfers
Total

Segment profit (loss)
154,743(43,147)
103,215(65,668)
149,143
4,934
Notes: 1. Segment profit (loss) in the above adjustment represents eliminations for inter -segment transactions.

154,077

2. Segment profit (loss) is consistent with operating income shown on the quarterly consolidated statement of income.
2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment
Not applicable.
II. First three months of FY3/20 (Apr. 1, 2019 – Jun. 30, 2019)
1. Information related to net sales and profit or loss for each reportable segment
System(Thousands of yen)Amounts shown onquarterly
Adjustment
consolidated(Note 1)statement of income(Note 2)

Total

business

Medicalbig data
business

456,157

353,670

194,957

3,770,217-

3,770,217

14,453

2,049

7,254

-

23,757(23,757)-

2,779,885

458,207360,925

194,957

3,793,974(23,757)

3,770,217

Softwarebusiness

GAKUENbusiness

2,765,431

sales

Net sales
1. External sales
2. Inter-segment sales
and transfers
Total

Segment profit (loss)(183,731)(42,932)(29,397)(53,623)(309,684)
1,221
Notes: 1. Segment profit (loss) in the above adjustment represents eliminations for inter -segment transactions.

(308,463)

2. Segment profit (loss) is consistent with operating loss shown on the quarterly consolidated statement of income.
2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment
Significant change in goodwill
In the software business, the Company purchased the stock of AG NET PTE. LTD. (AG NET) located in Singapore andmade it a consolidated subsidiary in the first quarter of FY3/20. Goodwill of 455.805 million yen emerged related to thepurchases.
The amount of goodwill is calculated provisionally because the allocation of the acquisition cost is incomplete at the end of
the first quarter.

10Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20

Business Combinations
Business combination through acquisition
1. Summary of business combination(1) Acquired companies and their business activities
AG NET PTE. LTD.
Business activities: Software development and consultation services(2) Reasons for acquisition
The JAST Group has been active in the ASEAN region, primarily at JAST TECHNIQUES PTE. LTD. in Singapore, JASTEC(THAILAND) CO., LTD. in Thailand, and the Virtual Calibre Group (Malaysia). JAST believes this region is a highly
attractive market because of the outlook for a continuation of rapid economic expansion and a growing middle class that will
create a large consumer market.
This inclusion of AG NET in the JAST Group will add new HRM products currently not covered in our Group’s brand lineup,
enabling multi-directional coverage of personnel, vacation requests, expense reimbursement workflows, sala ry computations,
telework support, and employee performance management. We believe that adding AG NET to the JAST Group will
strengthen our business foundation not only in Singapore but throughout the ASEAN region and lead to business expansion of
our subsidiaries throughout the ASEAN region, thereby further enhancing the JAST Group’s growth potential. Due to thisoutlook, the decision was made to acquire AG NET.
(3) Acquisition date
May 31, 2019 (stock acquisition date)June 30, 2019 (assumed acquisition date)(4) Legal form of acquisition
Acquisition of shares with cash(5) Company’s name after acquisition
There is no change in the company’s name.
(6) Percentage of voting rights acquired
100%(7) Basis for choosing the company to acquire
JAST acquired the shares in exchange for consideration in cash.
2. Period of the acquired companies’ performance included in the consolidated financial statements
The quarterly consolidated statement of income for the first three months of the current fiscal year doe s not reflect theperformance of the acquired companies since JAST has consolidated only the balance sheet. This is because the assumed
acquisition date of June 30, 2019 does not exceed three months from the consolidation closing date of the first quarter.
3. Acquisition cost of acquired companies and breakdown by type of consideration
Payment for the acquisition:

Cash

Acquisition cost:

486.526 million yen
486.526 million yen

4. Details of major acquisition-related costs
Remuneration for advisory members and other related fees: 27.466 million yen

11Japan System Techniques Co., Ltd. (4323) Financial Results for the First Quarter of FY3/20

5. Goodwill resulting from the acquisition(1) Value of goodwill
455.805 million yen
The amount of goodwill is calculated provisionally because the allocation of the acquisition cost is incomplete at the end of
the first quarter.
(2) Source of goodwill
The source is primarily the expectation of excess earnings power emerging from business development in the future.
(3) Amortization method and amortization period
Goodwill is amortized over ten years by the straight-line method.
Finalization of provisional accounting treatment for business combinations
A provisional accounting treatment was used in the previous fiscal year for the JAST Group’s acquisition of Virtual Calibre
SDN. BHD.,Virtual Calibre MSC SDN. BHD. and Virtual Calibre Consulting SDN. BHD. on October 11, 2018 andNovember 26, 2018. It was finalized in the first quarter of the current fiscal year.
In line with the finalization of this provisional accounting treatment, a material review has been re flected in the allocatedamount of the acquisition cost in the comparative information included in the quarterly consolidated financial statements forthe first quarter of the current fiscal year.
As a result, the value of goodwill decreased by 390.863 million yen from the provisionally calculated value of 999.538
million yen to 608.675 million yen. The decrease of goodwill was due to increases of 514.293 million yen in customer-related
assets and 123.430 million yen in deferred tax liabilities. At the end of the previous fiscal year, goodwill decreased by
368.288 million yen, and customer-related assets and deferred tax liabilities increased by 484.589 million yen and 116.301
million yen, respectively.

This financial report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been
prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers
who prefer an English translation.

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