Annual Securities Report
The 51st period

From April 1, 2022 to March 31, 2023

Japan System Techniques Co., Ltd.

Annual Securities Report
1 This document is a printed version of the Annual Securities Report filed in accordancewith Article 24, paragraph (1) of the Financial Instruments and Exchange Act via theElectronic Data Processing System for Disclosure (Electronic Disclosure for Investors’
NETwork [EDINET]) as set forth in Article 27-30-2 of the same act, with a table ofcontents and page numbers added.
2 This document includes, at the end, the audit report attached to the Annual Securities
Report submitted in the manner described above, and the internal control report andconfirmation letter submitted in conjunction with the Annual Securities Report.

Contents
Page
Annual Securities Report for the 51st period
Cover
Section 1.
Company Information..........................................................................................................................
1
1
I. Company Overview................................................................................................................................
1. Transition of Significant Business Indicators, etc. ..........................................................................
3
2. The Company’s History ......................................................................................................................
3
3. Description of Businesses ...................................................................................................................
5
4. Affiliated Companies ...........................................................................................................................
9
5. Employees .............................................................................................................................................
11
II. Business Overview ................................................................................................................................ 12
1. Management Policy, Business Environment and Issues to be Addressed....................................
12
2. Approach to Sustainability and Initiatives.........................................................................................
13
3. Business Risks .......................................................................................................................................
16
4. Management’s Analysis of Financial Status, Operating Results and Cash Flows....................... 19
5. Important Contracts, etc., in Operations ...........................................................................................
24
6. Research and Development Activities..............................................................................................
24
III. Information about Facilities.................................................................................................................
25
1. Capital Expenditures Overview...........................................................................................................
25
2. Major Facilities ...................................................................................................................................... 25
3. Plans for Capital Investment and Disposals of Facility .................................................................. 27
IV. Information about Reporting Company.............................................................................................. 28
1. Shares, etc. ……………........................................................................................................................... 28
2. Acquisition and Disposal of Treasury Shares.................................................................................... 31
3. Dividend Policy ....................................................................................................................................
32
4. Corporate Governance…….................................................................................................................. 33
V. Financial Information............................................................................................................................. 49
1. Consolidated Financial Statements, etc. ............................................................................................ 50
2. Non-consolidated Financial Statements, etc. .................................................................................... 86
VI. Outline of Share-related Administration of Reporting Company..................................................
98
VII. Reference Information of Reporting Company ..............................................................................
99
1. Information about Parent of Reporting Company............................................................................. 99
2. Other Reference Information................................................................................................................ 99
Section 2.

Information about Reporting Company’s Guarantor, etc.......................................................

Independent Auditor’s Reports
Internal Control Report
Confirmation Letter100

CoverSubmitted document

Annual Securities Report

Statutory basis

Article 24, paragraph (1) of the Financial Instruments and Exchange Act of Japan

Agency receiving submission

Director-General of the Kinki Local Finance Bureau

Submission dateJune 29, 2023

Fiscal year

51st period (from April 1, 2022 through March 31, 2023)

Corporate name

Japan System Techniques Kabushiki-gaisha

Name in English

Japan System Techniques Co., Ltd.

Name and position of representative

Takeaki Hirabayashi, President

Location of headquarters

2-3-18 Nakanoshima, Kita-ku, OsakaPhone+81-6-4560-1000 (main switchboard)

Name of contact person

Noriaki Okado, Executive Director and Officer

Closest contact address

2-3-18 Nakanoshima, Kita-ku, OsakaPhone+81-6-4560-1000

Name of contact person

Noriaki Okado, Executive Director and Officer

Place available for public inspection

Tokyo Stock Exchange, Inc.
(2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Section 1. Company Information
I. Company Overview
1. Transition of Significant Business Indicators, etc.
(1) Consolidated Business Indicators, etc.
Term

47th Period

48th Period

49th Period

50th Period

51st Period

Fiscal year ended

March 2019

March 2020

March 2021

March 2022

March 2023

Net sales(Thousand yen)

16,868,799

18,019,792

18,789,152

21,399,553

23,519,516

Ordinary income(Thousand yen)

866,613

1,021,581

1,310,486

2,052,512

2,450,148

Profit (loss) attributable toowners of parent(Thousand yen)

317,986(30,675)

578,879

1,330,558

1,772,210

Comprehensive income(Thousand yen)

238,291(119,317)

749,216

1,342,203

1,868,410

Net assets(Thousand yen)

6,418,472

6,218,217

6,850,375

9,194,483

10,816,240

Total assets(Thousand yen)

13,636,564

12,988,341

12,861,561

15,539,989

17,413,797

Net assets per share(Yen)

601.17577.03632.98746.86878.07

Net income (loss) per share

(Yen)

30.29

(2.88)

53.98

112.32144.50

Diluted net income per share

(Yen)

-

-

53.95

-

-

Ratio of shareholders’ equity

(%)

46.8

47.7

53.0

58.9

61.8

Ratio of net income toshareholders’ equity

(%)

5.1

(0.5)

8.9

16.7

17.8

Price-earnings ratio(Times)23.3(175.3)

14.1

11.4

12.5

(Thousand yen)

1,342,285

417,265

2,131,466

1,162,919

1,073,916(Thousand yen)

(1,063,857)(527,162)

87,030(80,912)(541,656)(Thousand yen)

1,157,122(185,027)(1,247,242)

486,858(280,816)(Thousand yen)

4,204,722

3,908,254

4,853,695

6,463,823

6,793,050

1,111

1,164

1,320

1,448

1,687

Net cash from operating
activities
Net cash from investing
activities
Net cash from financing
activities
Cash and cash equivalents at
the end of fiscal year
Number of employees(Persons)

Notes: 1. The number of employees represents the number of full-time employees.
2. Diluted net income per share for the 48th fiscal year and before and for the 50th fiscal year and after is not presented
since Japan System Techniques Co., Ltd. (“JAST” or the “Company”) had no outstanding dilutive securities.
3. The business combination with Virtual Calibre SDN. BHD., Virtual Calibre MSC SDN. BHD., and Virtual Calibre
Consulting SDN. BHD. in the 47th fiscal year was accounted for on a provisional basis but was finalized in the 48th
fiscal year. Therefore, the consolidated financial figures for the 47th fiscal year have been retroactively adjusted.
4. JAST established a new Board Benefit Trust (BBT) in the 47th fiscal year. The company’s stock remaining in the BBT(31,146 shares for the 47th, 96,354 shares for the 48th, 95,600 shares for the 49th, 149,200 shares for the 50th, and149,200 shares for the 51st) is included in treasury shares in shareholders’ equity and deducted from the number ofshares issued to calculate the average number of shares outstanding during the period that for the calculation of net
income (loss) per share.
5. JAST conducted a 2-for-1 common stock split on October 1, 2022. Net assets per share, net income (loss) per share, anddiluted net income per share have been calculated as if this stock split has taken place at the beginning of the 47th fiscal
year.
6. Beginning with the 50th fiscal year, JAST has applied Accounting Standard for Revenue Recognition (AccountingStandards Board of Japan (ASBJ) Statement No. 29, March 31, 2020). All figures for the 50th fiscal year and beyond
incorporate this accounting standard.

-1-

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(2) Non-consolidated Business Indicators, etc., of the Company
Term

47th Period

48th Period

49th Period

50th Period

51st Period

Fiscal year ended

March 2019

March 2020

March 2021

March 2022

March 2023

Net sales(Thousand yen)

13,796,908

14,427,659

15,203,765

17,082,806

18,552,222

Ordinary income(Thousand yen)

779,590

1,121,163

1,106,164

1,751,066

2,134,219

Profit(Thousand yen)

330,491

21,658401,246

999,643

1,630,462

Share capital(Thousand yen)

1,076,669

1,076,669

1,076,669

1,535,409

1,535,409(Shares)

5,612,230

5,612,230

5,612,230

6,209,230

12,418,460

Net assets(Thousand yen)

6,596,273

6,539,989

6,897,566

8,805,037

10,202,132

Total assets(Thousand yen)

12,439,142

12,109,632

11,785,585

13,974,559

15,504,289

621.41609.70640.31

717.93831.86

28.00

28.00

28.00

40.00

32.00

(-)

(-)

(-)

(-)

(-)

(Yen)

31.48

2.03

37.41

84.39

132.94

(Yen)

-

-

37.40

-

-

(%)

53.0

54.0

58.5

63.0

65.8

(%)

5.1

0.3

6.0

12.7

17.2

Price-earnings ratio(Times)

22.4

248.3

20.3

15.1

13.5

Dividend payout ratio

(%)

44.5

688.4

37.4

23.7

24.1

Number of employees(Persons)

712

753

827

871

926

Shareholder return

(%)

108.8

80.6

121.2

202.1

286.3

[Comparison with TOPIX](%)(92.7)(81.7)(113.8)(113.4)(116.7)Highest share price

(Yen)

2,600

1,878

2,150

3,255

Lowest share price

(Yen)

1,264

696

1,016

1,417

Number of issued shares

Net assets per share(Yen)

Dividend per share(Yen)[Interim dividend per share]
Net income per share
Diluted net income per
share
Ratio of shareholders’equityRatio of net income toshareholders’ equity

1,826(2,820)1,153(2,111)

Notes: 1. The number of employees represents the number of full-time employees.
2. Diluted net income per share for the 48th fiscal year and before and for the 50th fiscal year and after is not presented
since JAST had no outstanding dilutive securities.
3. JAST established a new Board Benefit Trust (BBT) in the 47th fiscal year. The company’s stock remaining in the BBT(31,146 shares for the 47th, 96,354 shares for the 48th, 95,600 shares for the 49th, 149,200 shares for the 50th, and149,200 shares for the 51st) is included in treasury shares in shareholders’ equity and deducted from the number ofshares issued to calculate the average number of shares outstanding during the period that for the calculation of net
income per share.
4．JAST conducted a 2-for-1 common stock split on October 1, 2022. Net assets per share, net income per share, diluted
net income per share, and shareholder return have been calculated as if this stock split has taken place at the beginningof the 47th fiscal year. As for the 51st fiscal year, the highest and lowest share prices are those after the stock split, andthe figures before the stock split are shown in parentheses.
5. The highest and lowest share prices are those on the Tokyo Stock Exchange Prime Market on and after April 4, 2022,
and those on the First Section of the Tokyo Stock Exchange before that date.
6．Beginning with the 50th fiscal year, JAST has applied Accounting Standard for Revenue Recognition (AccountingStandards Board of Japan (ASBJ) Statement No. 29, March 31, 2020). All figures for the 50th fiscal year and beyond
incorporate this accounting standard.
7. The dividend per share of 32.00 yen for the 51st fiscal year includes a commemorative dividend of 5.00 yen.

-2-

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

2. The Company’s History
Month & Year
March 1973
July 1977
February 1980
September 1982
April 1987
February 1991
March 1993

October 1994
March 1997
August 1998
April 1999
February 2000
March 2000
May 2001
November 2001
March 2002
February 2003
April 2003
December 2003
April 2004
August 2005
August 2006
September 2006
March 2007
June 2008
October 2008
February 2010
August 2010
December 2010
January 2012
July 2012

February 2013
March 2014
April 2014
November 2014
September 2015
May 2016
June 2017
November 2017
April 2018

EventsFounded Japan System Techniques Co., Ltd. for the purpose of software development at 55, Uchihonmachi
Hashizumecho, Higashi-ku (currently Chuo-ku), Osaka
Established the Tokyo Branch Office in Minato-ku, Tokyo
Relocated the Head Office to Sumitomo Nakanoshima Building, 2-18 Nakanoshima 3-chome, Kita-ku, Osaka
Established JAST TECHNIQUES PTE. LTD., a system development company in Singapore
Established a dual head office system, with headquarters in both Osaka and Tokyo
Registered as a systems integrator with the Ministry of International Trade and Industry (Currently Ministry of
Economy, Trade and Industry)
Relocated the Head Office to Dojima Axcis Building, 2-28 Dojimahama 2-chome, Kita-ku, Osaka
Relocated the Tokyo Branch Office to Koishikawa MI Building, 10-20 Koishikawa 5-chome, Bunkyo-ku,
Tokyo
Launched software package "GAKUEN" series, a school office work support integrated system
Certified as a systems integrator by the Ministry of International Trade and Industry (Currently Ministry of
Economy, Trade and Industry)
Launched "GAKUEN REVOLUTION (school business)," a large-scale integrated school office work support
system for universities
Started to provide outsourcing services
Launched UNIVERSAL PASSPORT, a software package that enables university staff and students to
exchange information over a web-based environment.
Acquired all shares of JASTEC (THAILAND) CO., LTD., a system development company in Thailand owned
by JAST TECHNIQUES PTE. LTD.
Obtained the PrivacyMark certification from the Japan Information Technology Services Industry Association
Listed on the JASDAQ market
Launched "GAKUEN REVOLUTION (corporations)," a large-scale integrated school office work support
system for universities
Listed on the Second Section of the Tokyo Stock Exchange
Relocated the Tokyo Head Office to Taiyo Seimei Shinagawa Building, 16-2 Konan 2-chome, Minato-ku,
TokyoCommunication Business Division obtained ISO14001 certification
Solutions Division No. 1 at Tokyo Head Office obtained ISMS certification
Relocated the Osaka Head Office to Nakanoshima Central Tower, 2-7 Nakanoshima 2-chome, Kita-ku, Osaka
Acquired all shares in Alpha Computer Co., Ltd. (marketer of IT systems to educational institutions) and madeit into a subsidiary
Launched "GAKUEN UNIVERSAL PASSPORT EX"
Launched "GAKUEN REVOLUTION EX series (school business)" and "GAKUEN EX series (school
business)"
Launched "GAKUEN REVOLUTION EX (accounting and finance)"
Tokyo Systems Headquarters obtained ISO27001 (ISMS) certification
Launched "GAKUEN EX series (corporations: accounting and finance)"
Launched JMICS, automated electronic health insurance claims checking system service
Entire Tokyo Head Office obtained ISO27001 (ISMS) certification
Medical Information Service Division obtained ISO9001 and ISO27001 certifications
Acquired shares of NewNeeds Co., Ltd., SafeNeeds Co., Ltd. and GuiLin Anxin Software Co., Ltd. and madethem into subsidiaries
Entire Osaka Head Office obtained ISO9001, ISO14001 and ISO27001 certifications
Relocated the Osaka Head Office to Nakanoshima Festival Tower, 3-18 Nakanoshima 2-chome, Kita-ku,
Osaka.
The whole company obtained ISO9001, ISO14001 and ISO27001 certifications
Launched "GAKUEN EduTrack" an integrated e-learning system
Relocated and expanded the Tokyo Head Office to the upper floors in the same building
Investment in Shanghai Jiafeng Information Technology Co., Ltd. completed and made it into subsidiaries
Acquired shares of ISR Co., Ltd. and made it into subsidiaries
Stock listing moved to the First Section of the Tokyo Stock Exchange
Had a stake in CO-WELL Co., Ltd. Strengthened the collaboration
Established JAST Asia Pacific Co., Ltd. , a system development company as ASEAN regional headquarters in
Thailand-3-

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Month & Year
July 2018
August 2018
November 2018
January 2019
May 2019
September 2019
April 2020
September 2020
October 2020
October 2020
May 2021
July 2021
July 2021
October 2021
April 2022
August 2022
December 2022

EventsLaunched “GAKUEN UNIVERSAL PASSPORT RX”
Healthcare Innovation Business Division Western Japan Region obtained ISO20000 (ITSMS) certification
Acquired shares of Virtual Calibre Group and made it into subsidiaries
Entire Healthcare Innovation Business Division Region obtained ISO20000 (ITSMS) certification
Acquired shares of AG NET PTE.LTD. and made it into subsidiaries
Established a capital and business alliance with TerraSky Co., Ltd.
Launched “GAKUEN RX”
Launched “GAKUEN Subscription”
Launched “mieHR,” a human resource management service
Launched “iBss,” a business support system for insurers in the JMICS Service of Medical big data business
Launched “SMART BankNeo”
Established JAST Health Insurance Association
Released Coromiru, a coronavirus information application service through the joint development
Launched “Office DX,” a facial recognition product
Moved to the Prime Market with regard to the restructuring of the market classification of the Tokyo Stock
Exchange
Established Bright & Better Co., Ltd., a system development company in Thailand
Established Virtual Calibre Consulting India Pvt. Ltd., a system development company in India-4-

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

3. Description of Businesses
JAST and its 13 consolidated subsidiaries (collectively, the “JAST Group” or the “Group”) engages in four businesses:
the digital transformation and system integration (DX&SI) business, package business, medical big data business, andglobal business. The DX&SI business uses its distinctive strengths to supply a diverse array of information systems andservices in a large number of business sectors. The package business develops and sells products that use JAST’s own
brands and provides associated environment and system development services, chiefly consulting for the use of theseproducts. The medical big data business has several healthcare businesses that make it a one-stop source of services forthe use of medical data and business process reform at health insurance organizations. The global business develops
and sells enterprise resource planning (ERP) and human resource management (HRM) products outside Japan, provides
consulting for the use of these products, and develops IT systems.
The following is the classification by business segment.
Effective from the current fiscal year, the Company has reclassified its reportable segments. Details are provided in “V
Financial Information, 1. Consolidated Financial Statements, etc., (1) Consolidated Financial Statements, Notes toConsolidated Financial Statements, Segment and Other Information.”
Segment

SectorMain BusinessCompany NameBusiness applications (office
work processing system)

Systems for the manufacturing industry
including production management, logistics
management, and order management
Systems for the retail and service industries
including store information, procurement,
shipment management, virtual shopping malls,
area marketing analysis using GIS (Geographic
Information System), Vehicle dispatch and sales
support systems
Systems for financial institutions including
accounts, information, global operations,business administration, and card loans
Systems for the securities industry including
equity trading, investment trusts, dealing, andInternet securities trading
Systems for the insurance industry including
contract management and non-life new reserves
Systems for the public sector including phonebilling, tax revenue management, resident
information, postal accounts, and highway ETC(electronic toll collection)
Systems for application and acceptance of tests
and education support services
Systems for website production, smartphone app
development, and related network businesses
Accounting, personnel, ERP package
introduction support, customer relations
management (CRM) systems, data warehousing
construction, data analysis services, and otheroffice work processing systems
Office DX solutions using facial recognition
technology (reception system, marketing system,
work attendance record-keeping system)
Cashless system for internal use
Human resource management service “mieHR”
Oil and gas related business support systems
Cloud-based order and inventory management
system for retailers

Japan System Techniques
Co., Ltd.
Alpha Computer Co., Ltd.
NewNeeds Co., Ltd.
ISR Co.,Ltd.











DX&SI
business











-5-

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Segment

SectorEngineering applications(communications, control,
technology systems)

DX&SI
business

Strategic university
management system

Packagebusiness

Information systems
integration package forfinancial institutions

Main BusinessCompany Name Embedded software for smart devices, digitalaudio-visual equipment, and car mounted
systems
 IT/telecom systems for terrestrial digital
broadcasts, mobile communications, carnavigation, and simulators
 Driving support system, Home Energy
Management System (HEMS), IoT-based
system, and other systems
 School office work support integrated system“GAKUEN RX” series development, sales,
maintenance, introduction support, and contractdevelopment of related systems
 University integrated web service system“GAKUEN UNIVERSAL PASSPORT UX”
development, sales, maintenance, introduction
support, and contract development of related
systems
 School operations system consultation, end-user
computing (EUC) support, and business process
reengineering (BPR) support and operation
services Provision of GAKUEN QlikView, a decision
support system for university management
 Development, sales, maintenance, andintroduction support for “GAKUEN EduTrack,”
an online educational support system, andcontracted development of related systems
 Provision of UNIPAPay, an electronic money
issuance and settlement platform and related
services and hardware, including ticket vending
machines and POS registers
 Development, sale, and maintenance ofhardware products such as Certificate-Issuing
Kiosk and IC attendance management terminals
 Provision of cloud-based infrastructure services
for universities
 Provision of software services to universities by
subscription
 Development, sales, maintenance, andintroduction support for “BankNeo,” a data
integration package for financial institutions,and contracted development of related systems
 Cloud BankNeo Management System using apublic cloud platform for the management byfinancial institutions of goods and cash received
from customers

Japan System Techniques
Co., Ltd.
Alpha Computer Co., Ltd.
NewNeeds Co., Ltd.
ISR Co.,Ltd.

-6-

Japan System Techniques
Co., Ltd.
Alpha Computer Co., Ltd.
Shanghai Jiafeng
Information Technology
Co., Ltd.

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Segment

SectorInspections, analysis andrelated services for medical
information data

Medicalbig data
business

IT services for overseas
officesGlobalbusiness

Main BusinessCompany Name Provision of automated inspection services forhealth insurance claims “JMICS”(JAST Medical
Insurance Checking System) Cloud services for checking service providers
 Medical cost optimization services such as
generic drug price difference notification andappropriate drug guide Data health plan implementation support
services, including medical expenditure analysis
and analysis-based consulting
 Support for health business for health insurance
associations using systems and business process
outsourcing (BPO) Provision of one-stop Insurers Business Support
System (iBss)
 Service planning & development and help deskfor RezeptPlus*1, a cloud-based health insurance
claims management system for welfare public
assistance Services utilizing anonymously processed healthinsurance claims and special medical
examination data Development of a model for predicting the riskof severe COVID-19 symptoms in collaboration
with academia, provision of Coromiru *2, an app
for predicting COVID-19 infection risk

Japan System Techniques
Co., Ltd.
NewNeeds Co., Ltd.

*1 RezeptPlus is a joint venture with Fujitsu Japan
Limited*2 Coromiru was jointly developed with Data4cs
K.K.
 Consulting and related services for integrated
ERP implementation
 Consulting and related services for accounting
ERP implementation
 Development, sale, maintenance, andimplementation support of HRM solution,
AFHRM
 Implementation of settlement-related systems
and development of related services for the
manufacturing industry
 Provision of offshore development services atoverseas development sites
 Contracted development of various businessapplications-7-

JASTEC（THAILAND）
CO., LTD.
JAST Asia Pacific Co., Ltd.
Bright ＆ Better Co.,Ltd.
GuiLin Anxin Software Co.,Ltd.
Virtual Calibre SDN. BHD.
Virtual Calibre MSC SDN.
BHD.
Virtual Calibre Consulting
SDN. BHD.
Virtual Calibre Consulting
India Pvt. Ltd.
AG NET PTE.LTD.

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

The diagram below provides a visual representation of the positioning and relationships of businesses within the Group.

-8-Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

4. Affiliated Companies
Name of Company

Location

Main Line ofBusiness

Share Capital

Holding/Held
Ratio of Voting
Rights (%)

Relationship

Million yen(Consolidated subsidiary)
Alpha Computer Co., Ltd.
(Note 4)

Shinagawa-ku,
Tokyo

80

DX&SI business(Sales of computer
systems)

Client of our packages
100 and other products
Concurrent directors

DX&SI business(Development andsales of software)

Subcontractor of
100 software development
Debt guarantee

DX&SI business(Development andsales of software)

100

Global business(Development andsales of software)

49

Million yen(Consolidated subsidiary)
NewNeeds Co., Ltd.

Kita-ku,
Osaka

10Million yen(Consolidated subsidiary)
ISR Co., Ltd.

Chiyoda-ku,
Tokyo

24

Subcontractor ofsoftware development

1,000 Thai Baht
(Consolidated subsidiary)
JASTEC(THAILAND)
CO.,LTD. (Note 1)

Thailand

3,000
1,000 Thai Baht

(Consolidated subsidiary)
JAST Asia PacificCO., Ltd.

Thailand

10,000Global business(Development andsales of software)

99.97 Concurrent directors

Global business(Development andsales of software)

48.90

Concurrent directors

Global business(Development andsales of software)90

Subcontractor ofsoftware development

1,000 Thai Baht
(Consolidated subsidiary)
Bright & Better Co., Ltd.
(Note 2)Thailand

2,000
10,000 yuan(Consolidated subsidiary)
GuiLin Anxin SoftwareCo., Ltd.

China

210
10,000 yuan(Consolidated subsidiary)
Shanghai Jiafeng
Information Technology
Co., Ltd.

China

440

Package business(Sales anddevelopment ofsoftware)94.45 Concurrent directors

Global business(Development andsales of software)

100 Concurrent directors

Global business(Development andsales of software)

100 Concurrent directors

Global business(Development andsales of software)

30 Secondment of[30] directors

1,000 Malaysian
Ringgit(Consolidated subsidiary)
Virtual Calibre SDN. BHD. Malaysia

1,000
1,000 Malaysian
Ringgit(Consolidated subsidiary)
Virtual Calibre MSC
SDN.BHD.

Malaysia

3,000
1,000 Malaysian
Ringgit(Consolidated subsidiary)
Virtual Calibre Consulting
SDN.BHD. (Note 3)

Malaysia

1,500

-9-

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Name of Company

Location

Share Capital

Main Line ofBusiness

Holding/Held
Ratio of Voting
Rights (%)

Relationship

1,000 Indian rupees(Consolidated subsidiary)
Virtual Calibre Consulting
India Pvt. Ltd.

India

20,000Global business(Development andsales of software)

100
[100]

Global business(Development andsales of software)

100 Concurrent directors

1,000 Singapore
dollars(Consolidated subsidiary)
AG NET PTE.LTD.
(Note 4)Singapore

2,774
Million yen

Held(Related company)
Nishi-ku,
Real estate50(23.36) Concurrent directors
Sakai, Osaka
management
Although the Company's voting rights are less than 50/100, it is considered a JAST’s subsidiary because it issubstantially controlled by JAST due to secondment of directors and concurrent directors.
Although the Company's voting rights are less than 50/100, it is considered a JAST’s subsidiary because it issubstantially controlled by JAST due to concurrent directors.
Although the Company's voting rights are less than 50/100, it is considered a JAST’s subsidiary because Virtual Calibre
MSC SDN. BHD. owns 30/100 of the Company and substantially controls by JAST through secondment of directors.
The Company is specified subsidiaries.
There are no companies reporting securities filings or annual reports.
Figures of in parentheses in the holding ratio of voting rights represent the percentage of indirectly held votes.

JUST Co., Ltd.
Notes: 1.
2.
3.
4.
5.
6.

- 10 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

5. Employees(1) Consolidated basis
As of March 31, 2023
Number of employees (persons)Segment
DX&SI business

669

Package business

206

Medical big data business

107

Global business

587

Corporate (common)

118
Total

1,687

Notes: 1. The number of employees represents the number of full-time employees. The number of temporary employees(including seasonal workers, part-timers, and temporary workers from agencies, excluding permanent part-timers) isomitted because their total number is less than 10/100 of the number of employees.
2. The number of corporate (common) employees represents the number of employees belonging to administrative
departments, etc., which cannot be classified into any particular segment.

(2) Non-consolidated basis
Number of employees (persons)Average age

926

Average years of service
35.9

10.1

Segment

As of March 31, 2023
Average annual salary(Thousand yen)
6,194

Number of employees (persons)

DX&SI business

544

Package business200

Medical big data business82

Corporate

100
Total

926

Notes: 1. Average annual salaries are actual figures for the fiscal year ended March 31, 2023, and include bonuses and nonstandard wages.
2. The number of employees represents the number of full-time employees. The number of temporary employees(including seasonal workers, part-timers, and temporary workers from agencies, excluding permanent part-timers) isomitted because their total number is less than 10/100 of the number of employees.
3. The number of corporate (common) employees represents the number of employees belonging to administrative
departments, etc., which cannot be classified into any particular segment.

(3) Labor union
No labor union has been formed, but labor-management relations are amicable.
(4) Percentage of female workers in managerial positions, percentage of male workers taking childcare leave, andgender wage gap(i) Non-consolidated basis
FY3/23
Percentage of female
Percentage of male workers
workers in managerial
taking childcare leave (%)
positions (%) (Note 1)(Note 2)
8.1
36.4

Gender wage gap (%) (Note1)
All workers
74.0

Permanent full-timeworkers

Part-time and fixedterm workers

73.8

67.2

Notes: 1. Gender wage gap is calculated in accordance with the Act on the Promotion of Women's Active Engagement inProfessional Life (Act No. 64 of 2015)
2. Percentage of workers taking childcare leave is stipulated in Article 71-4, paragraph (1) of the Ordinance for Enforcementof the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or
Other Family Members (Ordinance of the Ministry of Labor No.25, 1991), and calculated in accordance with the Act onChildcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family
Members (Act No. 76, 1991)- 11 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

II. Business Overview
1. Management Policy, Business Environment and Issues to be Addressed(1) Management policy
JAST, since its founding, has guarded its complete independence, keeping itself unaffiliated with other corporategroups, based on the corporate philosophy of “making society a better place by creating and providing new types ofIT services.” While consistently pursuing the latest technologies, JAST has remained free to take on development
projects in a wide variety of areas, unconstrained by industry, technology, or platform. We have achieved long-term,
stable growth in business performance by combining unchanging principles that never cease being true even as theyears pass and flexible management that is adapted to match the times or surroundings.
(2) Management strategies, etc.
The business climate for the JAST Group is expected to remain uncertain because of concerns about the economic
outlook due to the Ukraine crisis and other sources of geopolitical risk, rising prices of raw materials and energy,
foreign exchange rate movements, and other reasons. In the IT industry, where the business climate is extremely
volatile, JAST understands that it will be difficult to achieve growth if it remains overly dependent on outsourced
development projects, the IT industry’s mainstay source of earnings to date.
Consequently, to define the medium to long-term basic policies for the management of the JAST Group, we establish
a new three-year medium-term plan every year. Each new plan starts with the fiscal year in which the plan wasestablished. The plan includes the type of organization we want to become, our brand image, our business fields, thesize of our operations, and other goals. In the fiscal year ending in March 2024, we will continue to take many actions
in order to accomplish the goals of the current medium-term plan.
The central theme of the JAST Group in the fiscal year ending in March 2024 is “use JAST’s strengths to create newvalue backed by speedy and bold initiatives underpinned by sound thinking and by using the co-creation process at
all group companies.” In the digital transformation and system integration (DX&SI) business, our goal is to enlarge
business domains as our largest core business as we increase earnings by using alliances and further improving our
proposal and negotiation skills. In the package, medical big data and other businesses using our own brands, we willfurther upgrade the quality of every flagship product and move faster for the creation and utilization of newtechnologies and products. The objectives are making our brands more powerful and capturing the largest market
share in every business sector where we operate. Furthermore, in the global business, our goal is consistent growth
by further upgrading products, targeting broader spectrums of customer segments and markets, and strengthening
governance.
(3) Objective indicators used to assess if management targets have been achieved
The Company understands the importance of achieving the sales and profit targets it discloses every fiscal year. Fromthe standpoint of improving enterprise value by seeking returns on shareholders’ equity, the Company’s basic
dividend policy is to aim for stable, long-term growth in line with operating performance, taking the payout ratio into
consideration. Return on equity (consolidated), which had declined in recent years due to extraordinary losses andother factors, has also improved significantly to 17.8% in the fiscal year ended March 31, 2023. This was attributableto new business development and improved project quality through the strengthening of sales and management
promotion departments, as well as to the strengthening of management systems at overseas subsidiaries.
(4) Business climate
Although restrictions on economic activity decreased due to progress with COVID-19 vaccinations during the fiscal
year ended March 31, 2023, the outlook for the Japanese economy remained uncertain because of worries aboutanother wave of infections, the Ukraine crisis, and other reasons.
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 March 2023 figures), net sales continued to climb, rising 3.8%

- 12 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

year on year for 2022 compared with 3.5% annual growth in 2021. Despite this growth, the outlook for the IT industry
is extremely uncertain.
(5) Business and financial issues to be prioritizedFirst, as for the DX&SI business, we define our business portfolio into the following three areas and will increase
earnings by using alliances and further improving our proposal and negotiation skills to expand the scale as a corebusiness: “SI” to expand high-value-added business domain by promoting proposal-based “DX collaborative
development,” “Solution” to propose solutions based on high technologies to meet customers’ issues; and “Service”
to provide a wide range of digital services, from operation and maintenance to data science and consulting.
Second, the package business deal in the GAKUEN series package—with the mainstays of GAKUEN, an integrated
school office work support system and UNIVERSAL PASSPORT, an integrated web service system for universities—
and the BankNeo, a data integration package that provides total support for financial institution operations. We will
expand sales of the current business by leveraging the brand power of GAKUEN that we have cultivated to date, andat the same time, provide and expand new learning environments by developing comprehensive services for education
DX that go beyond the education big data business and IT services. With the BankNeo package, we will promote
cloud computing, continuously release niche solutions, and boldly take on challenges such as creation of new
products and collaborations with other companies to expand into the regional DX market and increase businessperformance.
Next, in the medical big data business, we aim to increase earnings by promoting the automation of the healthinsurance claim checking process, increasing the market share of inspection services by cultivating new insurer
markets, enhancing expertise through active recruitment of qualified personnel, and developing high value-added
businesses such as consulting. We will also aim to become the leader in insurer DX by enhancing our business models,such as expanding into new areas of medical cost optimization, data health, and others; creating seeds throughcollaboration with academia; and strengthening the business of utilizing health insurance claim data throughdeveloping advanced commercial products.
Finally, in the global business, we have development and sales bases in major regions of ASEAN countries and China,
where economic growth is remarkable, backed by more than 40 years of experience in Asian countries. The Groupwill provide one-stop support for global business development and DX promotion for ASEAN and Japanesecompanies expanding their business in multiple countries. Specifically, we will support customers’ DX promotion
through consultation on the introduction of ERP products such as mcframe*1 and SAP*2, and the wide deployment ofcloud-based human resource management solution AGHRM in each country.
*1. mcframe is a registered trademark of Business Engineering Corporation and a generic name for a product group consisting
mainly of SCM/ERP software.
*2. SAP is a registered trademark of SAP SE, and is a group of business applications that are typical of enterprise core system
packages consisting of an accounting system, logistics system, sales system, human resource system, etc. in a company.

2. Approach to Sustainability and Initiatives
The Group’s approach to sustainability and its initiatives are as follows. Forward-looking statements are based on the
judgment of the Group as of the end of the current fiscal year.
(1) Governance
Based on the corporate philosophy of “making society a better place by creating and providing new types of IT services,”the Group aims for what is best for our four key stakeholders: our customers, our shareholders, our employees andsociety. We hope to maximize value for each and realize a medium- and long-term increase in corporate value together
with the sustainable growth of the company.
As a longstanding corporate social responsibility (CSR) initiative, we have incorporated the Seven Key Principles andSeven Core Subjects of the ISO 26000, an international standard that defines the principles and subjects of social
responsibility of organizations through their core business, into our business operations. Moreover, we have obtained
environmental management system-related ISO 14001 certification (international standard for environmental- 13 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

management systems) and are, thus, continually running through the PDCA cycle.
In addition, in July 2021, we announced the SDGs Declaration, and view the achievement of the sustainable
development goals (SDGs) as a shared challenge for all Japan System Techniques employees. We are also working toensure the continuation and improvement of sustainability priority issue initiatives within the PDCA cycle.
The Group has designated these core subjects and priority issues as materialities (material issues) relating tosustainability, and is organizing a structure and implementing specific initiatives in order to integrate such issues withits business activities.
ISO 26000 Core subjects

JAST Group Initiatives

Organizational governance

Strengthening of corporate governanceContinuous operation and improvement of internal control systems
Establishment of a risk management system
Dialog with stakeholders

Human rights

Respect for human rights and prohibition of discrimination

Environment

Management activities conforming to ISO 14001
Promotion of energy-saving efforts in offices

Labor practices

Promotion of work-life balance
Promotion of diversity
Regular improvement activities by the Occupational Safety and Health Committee
Health and productivity management initiatives

Fair operating practices

Fostering a compliance-oriented mindset (regular awareness-raising training)

Consumer issues

Obtaining ISO 9001 and personal information protection management system (P mark)certification

Community involvement and development

Community cleanup activities
Bell mark, eco-cap collection activities
Donations (money and materials)
Volunteer activities (support for disaster-affected areas)

Sustainability priority issues

Initiatives

Industry and ICT innovation

Making society a better place by creating and providing new types of IT services
Supporting structure transformation of industry with ITC
Contribution to co-creation and collaboration system establishment and ecosystemtransformation
Working in solidarity with Group and partner companies

Support for ICT-driven learning
activities

Providing a comprehensive solution in building the future of universities
ICT-driven, high-quality classroom support and technology-based education
Facilitating improved educational quality through the use of educational big data
Realization of recurrent education (lifelong learning) environment
AI and IoT research development aimed at the digitalization of education
Providing new services for the Generation Z

Contribution to health care cost
optimization and health promotion

Information systems integration
package-based efficiency
enhancement of financial
operations

Using big data to contribute to health care cost optimization for insurers and promotionof the health of the insured
Joint research efforts with academia and others to help find solutions to address disease,including infectious diseases, and medical challenges
Open-sourcing medical big data

Contributing to society via information systems integration package business aimed atfinancial institutions- 14 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Contribution to enterprisetransformation via digitalization
promotion

Cashless service for employee cafeterias and offices“mieHR” human resources data platform
Office DX—Facial recognition-based attendance recording

Health and productivity
management initiatives

Health and productivity management promotion
Promotion of regular health examinations and multiphasic health screenings
Elimination of long working hours
Communication promotion initiatives (e.g., events)
Physical and mental health promotion

Provision of learning
opportunities

A robust in-house training system (e.g., in-house professional certification programs)
Internships (providing students with systems engineering work experience)
Supporting education and learning through systems development

Diversity initiatives

Hiring and fair treatment without consideration of race, nationality, gender, etc.
A variety of in-house systems for supporting a variety of work styles
Contract with “Work Happiness Farm” run by S-POOL Plus Inc.

Environmental load mitigation

Initiatives to promote paperless offices via DX promotion
Initiatives to address environmental issues in our offices, data centers and elsewhere(2) Strategies
Regarding the various strategies related to the Group’s materialities stated in “(1) Governance” above, the divisions
in charge of each theme have established policies and plans to resolve the issues and are continuously implementing
the PDCA cycle. Among the Group’s materialities, the policy on human resource development, which includes
ensuring diversity in human resources, and the policy on internal environment improvement are shown below.
Policies on human resource development and internal environment improvement:
Through the JCPL (JAST Certified Project Leader) system, an in-house certification system, we develop IT engineers
with the knowledge and skills necessary for project management and provide a training curriculum aimed atdeveloping DX personnel, as well as conduct working group activities with selected management-level personnel.
In order to improve employee engagement, wellbeing, and employee retention, we strive to establish a system thatallows each employee to fully demonstrate their abilities with a sense of fulfillment in their work while maintaining
a good work-life balance, a comfortable work environment where employees can continue working with peace ofmind, and settings that enable employees to work without restrictions on time and place. Specific measures are as
follows.
(i) Measures to improve engagement
Aiming to maintain and improve organizational strength over the medium term, we conduct surveys to objectively
identify organizational issues. Based on the understanding of engagement levels through this survey, we implement
engagement improvement activities.
(ii) Health and productivity management promotion and perspectives on well-being- 15 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

We are strategically and systematically working on health and productivity management , positioning efforts tounderstand and continuously improve the health status of employees as an essential investment in enhancing individualand organizational performance.
(iii) Telework program
We have developed operational rules and realized a location-independent work style by digitization, paperless work,or other measures with the aim of maintaining and improving organizational and individual productivity, thereby
achieving both diversification of work styles and a favorable work-life balance.
(3) Risk management
The Group is making company-wide efforts to manage risk related to sustainability activities by comprehensively
identifying and responding to issues and assessments from CSR activities and SDGs promotion activities, as well as
requests and expectations from stakeholders. The Group is striving to enhance its risk management system and has
established a system to report the status and results of its efforts to the Board of Directors as appropriate. For detailsof risk management, please refer to “3. Business Risks.”(4) Indicators and targets
Among the indicators and targets relating to the Group’s materialities stated in “(1) Governance” above, the policy
on human resource development, which includes securing diversity in human resources, and the policy on internal
environment improvement are shown below.
With regard to the indicators relating to the policy on human resource development, which includes securing diversity
in human resources, and the policy on internal environment improvement stated in “(2) Strategies” above, althoughspecific efforts are being made at the Company, along with data management of related indicators, it is difficult topresent them on a consolidated basis because not all companies in the consolidated group are doing so. For this reason,
the targets and results for the following indicators are those of the reporting company, which operates the main
business in the consolidated group.
Indicators relating to policies on human resource development and internal environment improvement, and targets andresults thereof:
Indicator
Percentage of female workers inmanagerial positions
Percentage of male workers taking
childcare leave
Gender wage gap
Note:

TargetResult (FY3/23)

20% by March 2028

8.1%

80% by March 2028

36.4%

85% by March 2028

74.0%

The actual figures of the percentage of female workers in managerial positions, percentage of male workers taking childcare
leave, and gender wage gap are disclosed in “I. Company Overview, 5. Employees, (4) Percentage of female workers inmanagerial positions, percentage of male workers taking childcare leave, and gender wage gap.”

3. Business Risks
Of the matters related to Business Overview and Financial Information stated in this Annual Securities Report, themanagement has recognized that the items listed below constitute major risk factors that may have a material impact on
the financial position, operating results, and cash flows of consolidated companies. This document contains forwardlooking statements, which are based on the Group’s estimates and assumptions made as of the filing date of this Annual
Securities Report.
(i) Risks related to unprofitable projects and defects in products and services
The progress of digital technologies, including AI, blockchain, fintech, biometric and image authentication,
diversification of development methods, and the rapid spread and transition of new information processing
technologies represented by the cloud in recent years, have made the information systems we are involved indeveloping more and more complex. Under these circumstances, the risk of unprofitable projects due to rework- 16 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

caused by insufficient consideration of system specifications or inaccurate estimates is increasing. Moreover, thedemands of clients regarding quality have become stricter as society shows increased interest in quality and defectissues related to IT products and services, given the growing impact of such defects on society. Against this backdrop,
the Group is very careful in thoroughly educating employees about improving and stabilizing the quality of products
and services, strengthening screening functions during the quote and order process, improving quote technology, andenhancing project management. Nevertheless, the Group cannot rule out the possibility of unprofitable projects anddefects which could cause increased costs due to client indemnities and product repairs, and together with credit
deterioration, result in a material impact on the Group’s business performance.
(ii) Risks related to information management, misuse, and negligence
Because the Group handles essential information, including medical data, it has formulated internal guidelines,
trained employees, and holds regular inspections conducted by professional organizations to thoroughly prevent theleak of confidential or personal information relating to clients or employees, as well as accidents due to negligenceof all kinds, and misuse. Besides, cyber-security risks have become a serious management issue as cyber-attacks are
becoming increasingly sophisticated day by day. For this reason, we have established the “JAST-SIRT” as a CSIRT*1
to monitor and analyze cyber security threats and strengthen our response capabilities. In addition, we have purchased
information leak liability insurance in preparation for worst-case scenarios. However, accidents and fraud may occur
because no preventive measures are absolutely reliable, and the materialization of such problems could lower theGroup’s creditworthiness, require indemnities, and have a material impact on the Group’s business performance.
*1. Stands for Computer Security Incident Response Team, which is a generic name for a group of professionals that responds
to computer security incidents.

(iii) Risks related to litigation
The Group is subject to the risk of litigation related to its operations in each business area. If litigation or other legal
action is brought against us, we may be ordered to pay an unexpectedly large amount of damages as a result, which,depending on the amount, could have a significant impact on our group’s performance and financial position.
(iv) Risks related to securing the development system
Due to factors such as the diversification of digital technology and the increasing sophistication of expertise, theindustry faces difficulties in securing excellent human resources. Our group has ensured a development system byhiring new graduates and mid-career employees and procuring from subcontractors. However, if the order situation
changes and we are unable to secure sufficient personnel, the Group’s operations may be disrupted. Furthermore, if
the unit price of outsourcing orders rises due to a breakdown in the supply-demand relationship or other factors, theGroup’s business performance may be affected. We are striving to reduce the risk by strengthening our internal
structure to secure excellent partner companies and procuring engineers through overseas offshoring and domestic
nearshoring.
(v) Risks in technological innovation and new product development
The Group actively invests in R&D to develop products and discover new business seeds. However, in a rapidlychanging industry, it is not always possible to accurately forecast future demand and constantly develop and supply
new products and services that lead to appropriate earnings. If there is a significant difference between the scale ofprior investment and the subsequent monetization of such investment, the forecast of future performance and growthof the Group may be affected.
(vi) Risks of corporate acquisitions, etc.
When conducting corporate acquisitions, etc., the Group conducts detailed preliminary assessments of the financial
position and business of the target company and collects and examines the necessary and sufficient information for
decision-making. However, it is not always possible to identify and resolve all concerns in each project through thispreliminary research. If, after the acquisition or other transaction is completed, issues that the Group is not aware of- 17 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

become apparent, or if the expected results are not achieved due to changes in the business environment or businessconditions, the business performance of the Group and the Company may be affected by an impairment on goodwill
or other intangible assets in the consolidated financial statements or a decrease in the valuation of shares of affiliatedcompanies in the non-consolidated financial statements. Besides, although we are working to strengthen thedevelopment and sales systems and governance of each subsidiary in order to contribute to the enhancement of thecorporate value of the Group as a whole, a downturn in the business performance of a subsidiary or deterioration ingeopolitical conditions could affect the business performance and financial position of the Group.
(vii) Risks associated with large-scale disasters and pandemics
In preparation for the event of a natural disaster, such as a major earthquake or a global outbreak of an infectious
disease epidemic (pandemic) that would make it difficult to conduct business, the Group has established a business
continuity plan and guidelines and has put in place a system and environment to enable initial response and rapid
restoration of business operations. The main offices occupied by the Group have advanced disaster preventionfunctions to ensure business continuity, and the data center used by the Group has high standards regarding security
measures and disaster countermeasures such as earthquake resistance. In addition, we have established the necessaryplans and systems to ensure business continuity amid a pandemic and are taking thorough measures to prevent
infection. Thus, at this point in time, these risks do not have a significant impact on the Group’s business. However,
if a special event or situation beyond a company’s control were to occur and business interruption became inevitable,
the Group’s business performance and financial position could be affected.
(viii) Risk of economic downturn
The Group has taken full advantage of having no affiliations with other companies to operate business without
depending on specific industries, technology fields, or manufacturers. This characteristic makes the Group relatively
unaffected by economic trends. However, if the domestic or overseas economy slumps for a prolonged period of time,
the Group’s performance may be affected as client companies curtail system development investment due todeteriorating profitability.
(ix) Risks associated with the concentration of earnings towards the fiscal yearend
A unique feature of the Group’s businesses is that customers’ inspections of SI development, solutions, services,
packaged products, etc., tend to concentrate in March, the last month of the fiscal year for most clients. Under the
Accounting Standard for Revenue Recognition, etc. (hereinafter the “Standard”), which we began applying in theprevious fiscal year, most of our orders received are now recognized as revenue based on the progress of fulfilling
the performance obligation. As a result, quarterly sales and operating income tend to level off compared to those
before the application of the Standard. However, for some projects not subject to revenue recognition based on the
degree of completion, the results still tend to be concentrated at the end of the accounting period.
Quarterly sales and operating income for the fiscal years ended March 31, 2022 and 2023:(Million yen)
FY3/22
Q1
Sales
Operating income

Q2

Q3

Q4

Total

4,900

5,142

4,943

6,415

21,399

342

650

304

704

2,000
(Million yen)

FY3/23
Q1
Sales
Operating income

Q2

Q3

Q4

Total

5,119

5,884

5,631

6,884

23,519

261

742

556

825

2,385

- 18 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(x) Risk of product obsolescence
The products handled by the Group are procured from manufacturers and distributors, but some products have large
minimum order quantities and are subject to the risk of inventory obsolescence. The Group strives to accurately
project required quantities while monitoring sales conditions. However, if procured products become obsolete or if
procurement is delayed due to stagnation in the supply chain caused by raw material shortages or other factors,
resulting in the inability to supply customers promptly and the loss of business opportunities, the Group’s businessresults may be adversely affected. In addition, if product defects or other problems occur, the Group’s business results
may be affected due to compensation to customers, product repairs, and other expenditures.
(xi) Risks associated with the valuation of assets
The Group owns marketable securities and other investment assets. The balance of these assets is considerably
smaller than its current assets, which can be easily converted to cash. Still, unpredictable or rapid changes in market
prices or the bankruptcy of issuers, while difficult to forecast, could reduce the value of these assets, impacting theGroup’s business performance.
(xii) Risks associated with the global business
The Group has several subsidiaries in China, ASEAN, and South Asia. Modifications in policies and laws andregulations, changes in economic conditions, and fluctuations in foreign exchange rates in the countries and regionsin which each subsidiary operates may affect the financial position and operating results of the Group.
(xiii) Risks related to revenue recognition
Revenues from contracts with customers of the Company and its consolidated subsidiaries mainly consist of software
made-to-order. For contracts where the performance obligation is fulfilled over a specified period, the progress offulfilling the performance obligation is estimated, except when the period is extremely short, and revenue based on
the progress is recognized for that period. When estimating the total cost of construction, which is the basis for therecognition of revenue based on the progress of fulfilling the performance obligation, the Company takes the utmost
care and secures project management. However, errors in estimating the total cost of construction in a timely andappropriate manner could result in the misrecognition of revenues based on the progress of fulfilling the performanceobligation. For projects where the estimated cost exceeds the estimated revenue, the Company strictly assesses therecoverable amount and recognizes a loss for the unrecoverable amount. If costs increase in the future, additional
losses may be recognized.

4. Management’s Analysis of Financial Status, Operating Results and Cash Flows(1) Overview of Operating Results
Financial status, operating results and cash flows (hereafter “Operating Results”) of JAST and its consolidated subsidiaries,
hereafter “the Group”) in the current fiscal year are as follows.
(i) Financial Status
Balance sheet of the JAST Group at the end of the current fiscal year in as follows.
(Assets)
The balance of current assets at the end of the current fiscal year was 14,187 million yen, up 14.5% over the end of theprevious fiscal year. This was mainly due to increases in cash and deposits, and accounts receivable-trade and contract
assets. The balance of non-current assets were 3,226 million yen at the end of the current fiscal year, up 2.4% over theend of the previous fiscal year.
(Liabilities)
The balance of current liabilities at the end of the current fiscal year was 4,703 million yen, up 1.8% over the end of theprevious fiscal year. This was mainly due to increases in accounts payable-trade and provision for bonuses, and adecrease in income taxes payable. The balance of non-current liabilities was 1,893 million yen at the end of the current
fiscal year, up 9.8% over the end of the previous year.

- 19 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(Net assets)
The balance of total net assets was 10,816 million yen at the end of the current fiscal year, up 17.6% over the end of theprevious fiscal year.
(ii) Status of Operating Results
Consolidated sales of the JAST Group were 23,519 million yen (up 9.9% year on year). Operating income was 2,385
million yen (up 19.3% year on year), ordinary income was 2,450 million yen (up 19.4% year on year), and profit
attributable to owners of parent was 1,772 million yen (up 33.2% year on year). Business segment performance was asfollows.
In the current fiscal year, JAST revised its reportable segments and the method used for calculating segment profit andloss. Fiscal year comparisons and analysis of results of operations are based on the revised segments and profit and loss
calculation method.
(Digital transformation and system integration (DX&SI) business)
Segment sales increased 11.1% from one year earlier to 14,335 million yen and the operating income increased 33.3%
to 2,078 million yen. The number of large orders received directly from existing and new customers was higher than
one year earlier. As a result, the overall profitability of the business increased.
(Package business)
Segment sales decreased 2.4% from one year earlier to 4,489 million yen and the operating income was down 18.2% to1,250 million yen. Sales of program products for BankNeo, an information systems integration package for financial
institutions, were higher. However, there was a decline in sales, installation and support services, and other activities
involving the GAKUEN Series, a strategic university management system consisting of GAKUEN RX and GAKUENUNIVERSAL PASSPORT RX. Overall, this segment is performing well, with a larger volume of orders than at the endof the previous fiscal year.
(Medical big data business)
Segment sales increased 11.9% from one year earlier to 2,021 million yen and the operating income was up 19.9% to457 million yen. The profitability of this business improved mainly because of the growth of analysis services, support
services for insurance organizations and other highly profitable services.
(Global business)
Sales increased 28.1% from one year earlier to 2,673 million yen and the operating income increased 448.5% to 271
million yen. This was primarily the result of the growth in Malaysia of support services at new and existing customers
for the use of SAP software and the positive effect of foreign exchange rate movements on the performance of thisbusiness, mainly at subsidiaries outside Japan with strong sales and earnings.
(General and administrative expenses not allocated to a reportable segment)
Corporate general and administrative expenses increased 10.0% from one year earlier to 1,671 million yen mainly
because of higher personnel expenses as more people were hired.
(iii) Status of Cash Flows
Cash and cash equivalents increased 329 million yen from 6,463 million yen at the beginning of the current fiscal year
to 6,793 million yen at the end of the current fiscal year.
Cash flows by category were as follows.
(Cash Flows from Operating Activities)
Net cash provided by operating activities totaled 1,073 million yen, compared with 1,162 million yen provided in theprevious fiscal year. This difference was mainly due to an increase in trade payables.

- 20 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(Cash Flows from Investing Activities)
Net cash used in investing activities totaled 541 million yen, compared with 80 million yen used in the previous fiscal
year. This difference was mainly due to an increase in payments into time deposits.
(Cash Flows from Financing Activities)
Net cash used in financing activities totaled 280 million yen, compared with 486 million yen provided in the previous
fiscal year. This difference was mainly due to decreases in proceeds from issuance of shares and proceeds from disposalof treasury shares.
(iv) Production, Order Entry and Sales
a. Production
Production performance in each segment in the current consolidated fiscal year is as follows:
FY3/23(Apr. 1, 2022 – Mar. 31, 2023)

Name of Segment

Year-on-Year
Comparison (%)

DX&SI business (Thousand yen)

11,529,927

108.9

Package business (Thousand yen)

2,534,264102.0

Medical big data business (Thousand yen)

1,222,536

108.1

Global business (Thousand yen)

1,909,468

125.2

Total (Thousand yen)
17,196,196
The amounts are based on cost of sales and transactions between segments are eliminated by offsets.

Note:

109.4

b. Orders Received
The status of orders received in each segment in the current consolidated fiscal year is as follows:
Year-on-Year
Comparison (%)

Year-on-Year
Comparison (%)

105.5

Balance ofOrders Received
4,098,135

108.9

2,187,157

115.0

DX&SI business (Thousand yen)Amount of Orders
Received
14,576,485

Package business (Thousand yen)

4,774,086

Medical big data business (Thousand yen)

2,108,946

114.6

814,737

112.1

Global business (Thousand yen)

2,673,452

128.1

-

-

Total (Thousand yen)
24,132,971
109.1
7,100,029
The amounts are based on sales price and transactions between segments are eliminated by offsets.

109.5

Name of Segment

Note:

106.2

c. Sales Performance
The sales performance in each segment in the current consolidated fiscal year is as follows:
FY3/23(Apr. 1, 2022 – Mar. 31, 2023)

Name of Segment

Year-on-Year
Comparison (%)

DX&SI business (Thousand yen)

14,335,487

111.1

Package business (Thousand yen)

4,489,345

97.6

Medical big data business (Thousand yen)

2,021,231

111.9

Global business (Thousand yen)

2,673,452

128.1

Total (Thousand yen)

23,519,516

109.9

Notes: 1. Transactions between segments are eliminated by offsets.
2. The following table indicates sales amounts to major customers and their ratios to total sales amount.

Customers

FY3/22(Apr. 1, 2021 – Mar. 31, 2022)
Amount(%)(Thousand yen)

Customers

FY3/23(Apr. 1, 2022 – Mar. 31, 2023)
Amount(%)(Thousand yen)

TIS Inc.

1,520,224

7.1

NTT COMWARECORPORATION

2,102,664

8.9

NTT COMWARECORPORATION

1,266,698

5.9

TIS Inc.

1,371,510

5.8

Honda Motor Co., Ltd.

1,038,499

4.9

Honda Motor Co., Ltd.

1,083,936

4.6- 21 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(2) Views and issues analyzed/discussed with regard to the status of operating results, etc. from the management’s
perspective
Views and issues analyzed/discussed with regard to the status of operating results, etc., from the management’s
perspective are as follows.
Forward-looking statements are based on the judgment as of the end of the current fiscal year.
(i) Significant accounting estimates and assumptions thereof
The Group’s consolidated ﬁnancial statements are prepared based on accounting principles generally accepted in Japan.
In preparing these consolidated financial statements, accounting estimates are made based on reasonable criteria formatters requiring estimation.
The information on signiﬁcant accounting estimates and assumptions used for preparing consolidated ﬁnancial
statements is disclosed in “V. Financial Information, 1. Consolidated Financial Statements, etc., (1) Consolidated
Financial Statements, Notes to Consolidated Financial Statements, Signiﬁcant Accounting Estimates .”(ii) Recognition, analysis and discussions of the status of financial position and operating resultsa. Financial position
Recognition, analysis and discussions of financial status is stated in “II. Business Overview, 4. Management’s
Analysis of Financial Status, Operating Results and Cash Flows, (1) Overview of Operating Results, (i) Financial
Status.”b. Operating results
Recognition, analysis and discussions of the status of operating results is stated in “II. Business Overview, 4.
Management’s Analysis of Financial Status, Operating Results and Cash Flows, (1) Overview of Operating Results,(ii) Status of Operating Results.”
c. Cash flows
Recognition, analysis and discussions of the status of cash flows is stated in “II. Business Overview, 4.
Management’s Analysis of Financial Status, Operating Results and Cash Flows, (1) Overview of Operating Results,(iii) Status of Cash Flows.” Trends of cash flow-related indicators are as follows:
Reference: Cash flow indicators
FY3/1946.8

FY3/2047.7

FY3/21
53.0

FY3/22
58.9

FY3/2361.8

Equity ratio based on market value (%)

55.5

42.1

64.2

101.9

128.3

Interest-bearing debt to cash flow ratio (years)

1.2

3.6

0.2

0.0

0.0

Equity ratio (%)

Interest coverage ratio (times)
478.5
94.1
615.0
1,009.9
1,730.2
Note:
1. The above figures are calculated as follows.
Equity ratio: Shareholders’ equity / Total assets
Equity ratio based on market value: Market capitalization / Total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest payments* Market capitalization is calculated by multiplying the closing share price at the end of the period by the number ofshares outstanding at the end of the period, excluding treasury shares.
* Interest-bearing debt is calculated using total loans-payable on the consolidated balance sheet.
* Interest payments use the amount of interest expenses paid stated on the consolidated statement of cash flows.

(iii) Capital resources and funds’ liquidity
a. Cash flows
Analysis of cash flows for the current fiscal year is stated in “II. Business Overview, 4. Management’s Analysis ofFinancial Status, Operating Results and Cash Flows, (1) Overview of Operating Results, (iii) Status of Cash Flows.”- 22 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

b. Financial policy
The basic policy of the Group is to keep the liquidity needed for operating business and funds resources consistently.
Short-term working capital is basically financed by internal funds or short-term loans from financial institutions, while
capital investment funds and long-term working capital are basically financed by long-term loans from financial
institutions.
The Company has commitment line contracts with four banks, totaling 500 million yen as of the end of the current fiscal
year (no outstanding balance of facilities drawn).
(iv) Factors that have material impacts on operating results
Factors that have material impacts on operating results are presented in “II. Business Overview, 3. Business Risks.”(v) Analysis of capital resources and the funds’ liquidity
The Group raises funds necessary for its business activities, including working capital and capital investment, throughits funds and loans from financial institutions.
We plan to finance future needs through cash flows from operating activities and loans.
(vi) Awareness of the issues by management and future policies
Issues for future growth are presented in “II. Business Overview, 1. Management Policy, Business Environment andIssues to be Addressed.”(vii) Management policy, management strategies, and objective indicators used to assess if management targets havebeen achieved
The Group recognizes net sales, target for profit of each type, dividend payout ratio, and return on equity (consolidated)as key management indicators.
The respective indicators for the current consolidated fiscal year were as follows: Net sales was 23,519 million yen, an
increase of 19 million yen from the consolidated net sales forecast of 23,500 million yen announced on May 10, 2023;
operating income was 2,385 million yen, an increase of 15 million yen from 2,370 million yen of the same forecast;ordinary income was 2,450 million yen, an increase of 10 million yen from 2,440 million yen of the same forecast; andprofit attributable to owners of parent was 1,772 million yen, an increase of 12 million yen from 1,760 million yen of
the same forecast. The dividend payout ratio was 22.15%, and return on equity (consolidated) was 17.8%.
We have set the consolidated earnings forecast announced on May 13, 2023 (net sales of 25,300 million yen, operating
income of 2,540 million yen, ordinary income of 2,600 million yen, and profit attributable to owners of parent of 1,880
million yen) as key management indicators for the fiscal year ending March 31, 2024, and are striving to achieve thesetargets. We are also working on maintaining a stable dividend payout ratio and return on equity (consolidated) to further
enhance corporate value by pursuing returns on shareholders’ equity.

- 23 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

5. Important Contracts, etc., in Operations
Not applicable.

6. Research and Development Activities
Total research and development expenses for the current fiscal year amounted to 469 million yen. Research anddevelopment activities by segment are as follows:
In the DX&SI business, research and development expenses totaled 108 million yen as a result of research anddevelopment for the creation of new businesses and the development of next-generation products for financial
institutions.
In the package business, research and development expenses totaled 179 million yen as a result of efforts to develop a
new integrated operations package for universities.
In the medical big data business, research and development expenses totaled 73 million yen mainly due to efforts toimprove the performance of automated check of health insurance claims and expanding services.
Research and development expenses that do not belong to a specific business totaled 107 million yen.

- 24 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

III. Information about Facilities
1. Capital Expenditures Overview
Capital investment of 122,793 thousand yen was made in the current fiscal year. Details in each segment are as follows:
In the DX&SI business, capital investment of 41,635 thousand yen was made to install equipment for stabilizing theinternal system environment and the latest server computers.
In the package business, capital investment of 19,034 thousand yen was made to enhance facilities and equipment for
improving work efficiency.
In the medical big data business, a capital investment of 29,855 thousand yen was made to install equipment for
automated inspection of health insurance claims and for handling the increased volume of analytical data processing.
In the global business, a capital investment of 32,268 thousand yen was made to improve work efficiency.
Note: Capital expenditures include investments in intangible assets as well as property, plant and equipment.

2. Major Facilities
Major facilities of the Group are as follows:(1) Reporting company
As of March 31, 2023
Book value (Thousand yen)
Office (location)

Segment

Osaka Head Office(Kita-ku, Osaka-shi)

DX&SI business,package business,
medical big data businessOsaka Head Office(Kita-ku, Osaka-shi)

Not part of a specificbusiness

Tokyo Head Office(Minato-ku, Tokyo)

DX&SI business,package business,
medical big data businessTokyo Head Office(Minato-ku, Tokyo)

Not part of a specificbusiness

Description offacilities
Offices anddevelopment
facilities
Offices andofficeequipment
Offices anddevelopment
facilities
Offices andofficeequipment

Buildings
andstructures

Land area(m2)

48,577

Number of
employees(persons)

Other

Total

-

109,030

157,607372

83,764-

15,07998,84471

64,066-18,10382,170412

38,495-

5,984

44,48025

Kitashinagawa
Offices andOfficeMedical big data
development
19,932
10,46830,40046(Shinagawa-ku,
businessfacilities
Tokyo)
Kitashinagawa
Offices andOfficeNot part of a specificoffice39,022
1,051
40,074(Shinagawa-ku,
business
equipment
Tokyo)
Training facility and
Employeecompany dormitory
Not part of a specific142,361
welfare40,621
744
183,727(Hirakata-shi,business[1,579,92]
facilities
Osaka)
Notes: 1. The Osaka Head Office, Tokyo Head Office, and Kitashinagawa Office are rented offices in buildings. The annual rent
is 532,464 thousand yen.
2. “Other” under book value mainly includes tools, furniture and fixtures such as computers for development andsoftware.

- 25 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(2) Domestic subsidiaries
As of March 31, 2023
Book value (Thousand yen)
Number of
Description of Buildings
Company name
Segment
employees
Land area
facilities
and
Other
Total
2
(persons)(m )structures
Alpha Computer
Head Office
Offices andDX&SI business,
Co., Ltd.
(Shinagawadevelopment
4,180
1,993
6,173
49
package business(Notes 1, 2)
ku, Tokyo)
facilities
Head office
DX&SI business,
Offices and
NewNeeds Co.,
(Kita-ku,
medical big data
development
457
457
85
Ltd. (Notes 1, 3)
Osaka-shi)businessfacilities
Head office
Offices and
ISR Co., Ltd.
(Chiyoda-ku, DX&SI businessdevelopment
4,135
7,926
12,061
39(Notes 1, 4)
Tokyo)
facilities
Notes: 1. The head office is a rented office in a building.
2. The number of employees includes 2 employees on loan from the Company.
3. The number of employees includes 4 employees on loan from the Company.
4. The number of employees includes 1 employee on loan from the Company.
Office(location)(3) Overseas subsidiaries
As of March 31, 2023

Company name
JASTEC(THAILAND)
CO.,LTD.
(Note 1)
GuiLin Anxin
Software Co., Ltd.
(Note 1)
Shanghai Jiafeng
Information
Technology Co.,
Ltd. (Note 1)
JAST Asia PacificCo.,
Ltd. (Thailand)(Notes 1, 2)
Virtual Calibre
SDN. BHD. (Note1)
Virtual Calibre
MSC SDN.BHD.
(Note 1)
Virtual Calibre
Consulting SDN.
BHD. (Notes 1, 2)

Book value (Thousand yen)
Description of Buildings
Land area
facilities
and
Other
Total
(m2)
structures

Number of
employees(persons)

Office(location)

Segment

Head Office(Thailand)

Global business

Offices anddevelopment
facilities

6,559

-

4,417

10,97618

Head Office(China)Global business

Offices anddevelopment
facilities

-

-

2,869

2,869

36

Head Office(China)Package business Offices

6,590

-

-

6,590

1

Head Office(Thailand)

Global business

-

-

223

223

1

-

7,079

9,613

237

-

20,31625,215

115

-

56

748

154

-

839

5,184

18

-

136

136

8

Offices anddevelopment
facilities

Offices anddevelopment
2,533
facilities
Offices andHead Office
Global businessdevelopment
4,898(Malaysia)
facilities
Offices andHead Office
Global businessdevelopment
691(Malaysia)
facilities
Offices and
AG NET PTE.LTD. Head Office
Global businessdevelopment
4,345(Notes 1, 3)(Singapore)
facilities
Offices andBright & Better
Head Office
Global businessdevelopment
Co., Ltd. (Note 1)(Thailand)facilities
Notes: 1. The head office is a rented office in a building.
2. The number of employees includes 1 employee on loan from the Company.
3. The number of employees includes 2 employees on loan from the Company.
Head Office(Malaysia)

Global business- 26 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

3. Plans for Capital Investment and Disposals of Facility
The Group formulates capital investment plans based on comprehensive consideration of economic forecasts, industry
trends, investment efficiency, and other factors. In principle, each group company develops its capital expenditure plan
individually, and the reporting company plays a central role in coordinating the plans.
As of March 31, 2023, significant capital investment plans (new construction and renovation) totaled 472 million yen,and the breakdown by segment is as follows:(1) New construction of major facilities
Company
name(Office)

Location

Segment

JAST(TokyoHead
Office)Minato-ku,
Tokyo

Medical big
databusiness

Planned investment
Schedule
amountImprovements
Description ofAmount Financing
after
Total
facilities
already paid method(ThousandCommencement Completion completion(Thousandyen)yen)
Big data
infrastructuredevelopment

20,950-Selffinancing

April, 2023

March,
2024

In-housesystemMinato-ku,
SelfMarch,
integration
4,347
April, 2023
Tokyofinancing2024
and officefacilities
In-house
JAST
Not part ofsystem(OsakaKita-ku,
SelfMarch,a specificintegration
447,237
April, 2023
Head
Osaka-shi
financing2024
businessand office
Office)facilities
Note: There are no material plans of retirement or sale of major facilities, except those for recurring facility renewal.
JAST(TokyoHead
Office)Not part ofa specificbusiness(2) Major renovation
Not applicable.

- 27 -

Analysisservices
qualityWorkefficiencyWorkefficiency

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

IV. Information about Reporting Company
1. Shares, etc.
(1) Total number of shares, etc.
(i) Total number of shares
Class

Total number of shares authorized to be issued (Shares)

Common stock

32,000,000

Total

32,000,000(ii) Issued shares

Class

Name of stock
exchange on which the
Number of issued
company is listed or
Number of issued
shares as of the filing name of authorizedshares as of March 31,
date (June 29, 2023) financial instruments
2023 (Shares)(Shares)firms association withwhich the Company isregistered

Description

Common stock

12,418,460

Standard stock of thePrime Market ofCompany with no restrictions on
12,418,460
Tokyo Stock Exchange rights. The number of shares
per one unit is 100 shares

Total

12,418,460

12,418,460--(2) Share acquisition rights(i) Stock option plans
Not applicable.
(ii) Right plans
Not applicable.
(iii) Share acquisition rights for other uses
Not applicable.
(3) Exercises of moving strike convertible bonds, etc.
Not applicable.
(4) Changes in number of issued shares, share capital, and legal capital surplus(Thousand yen, unless otherwise stated)

Date

Increase
Balance of total(decrease) in
number of
total number ofissued sharesissued shares(Shares)(Shares)

Increase(decrease) inshare capital

Balance ofshare capita

Increase(decrease) inlegal capitalsurplus

Balance oflegal capitalsurplus

April 1, 2021 through597,000
6,209,230
458,739
1,535,409
458,739
1,497,047
March 31, 2022 (Note 1)
April 1, 2022 through6,209,230
12,418,460
1,535,409
1,497,047
March 31, 2023 (Note 2)
Notes: 1. During the period from June 2, 2021 to September 22, 2021, upon the exercise of share acquisition rights, the total
number of issued shares, the amount of share capital, and the amount of legal capital surplus increased by 597,000
shares, 458 million yen and 458 million yen, respectively.
2. The Company conducted a 2-for-1 stock split effective on October 1, 2022.

- 28 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(5) Shareholding by shareholder category
As of March 31, 2023
Shareholding status (Number of shares constituting one unit: 100 shares)
Category

Foreign corporations,
Financial
National andetc.
Financial instruments
Other
Individuals
local
institutions business corporations
and others
Nongovernments
Individuals
operators
individuals

Total

Odd-lotshares(Shares)Number ofshareholders
10
20
12
60
6
2,060
2,168
(persons)
Number ofshares held
12,432
2,232
30,83537,09724
41,524 124,144
4,060(units)Percentage ofshareholdings
10.01
1.80
24.84
29.88
0.02
33.45
100.00(%)
Note: Out of 5,068 treasury shares, XX units are included in “Individuals and others,” and 68 shares are included in “Odd-lot
shares.”(6) Major shareholders

Name

JUST Corporation
BNYM AS AGT/CLTS NON
TREATY JASDEC(Standing proxy: MUFG Bank, Ltd.)JAST’s Employee Shareholding
Association
The Master Trust Bank of Japan, Ltd.
(Trust Account)
Interactive Brokers LLC(Standing proxy: Interactive Brokers
Securities Japan Inc.)
Custody Bank of Japan, Ltd. (Trust
Account)
Taku Hirabayashi
Takeaki Hirabayashi
The Bank of New York Mellon
140040(Standing proxy: Settlement &Clearing Services Department,
Mizuho Bank, Ltd.)
Goldman, Sachs & Co. Regular
Account(Standing proxy: Goldman Sachs
Japan Co., Ltd.
Total

Address
5-601-1, Hamadera Showacho, Nishi-ku,
Sakai-shi, Osaka
240 Greenwich Street, New York, New York
10286 U.S.A.
(2-7-1 Marunouchi, Chiyoda-ku, Tokyo)

As of March 31, 2023
Shareholding ratio
Number of shares(excluding
heldtreasury shares)(Shares)(%)
2,900,200

23.36

2,023,300

16.30

1,165,380

9.39

2-11-3 Hamamatsucho, Minato-ku, Tokyo

709,500

5.72

One Pickwick Plaza Greenwich,
Connecticut 06830 USA(3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo)

701,600

5.65

1-8-12 Harumi, Chuo-ku, Tokyo

326,000

2.63

Nishi-ku, Sakai-shi, Osaka

278,640

2.24

Nishi-ku, Sakai-shi, Osaka

193,800

1.56

240 Greenwich Street, New York, NY
10286 U.S.A.
(2-15-1 Konan, Minato-ku, Tokyo)

179,800

1.45

200 West Street New York, NY, USA(Roppongi Hills Mori Tower, 6-10-1
Roppongi, Minato-ku, Tokyo)

164,800

1.33

8,643,020

69.62

2-3-18 Nakanoshima, Kita-ku, Osaka-

Notes: 1. The Company holds 5,068 treasury shares but is excluded from the above major shareholders. The Company has
established a Board Benefit Trust (BBT), and the 149,200 shares of the Company’s stock held by Japan Custody Bank,
Ltd. (Trust Account E) are not included in treasury shares above.
2. According to the Change Report that was made available for public inspection on January 24, 2023, the shares of theCompany were held by Miri Capital Management LLC as of January 17, 2023 with the detail shown below. However,
the Company did not include such information in the table above because it could not confirm the number of shareseffectively held by these companies as of March 31, 2023. The detail of the Change Report is as follows:- 29 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Number ofshare certificates held
(thousand shares)

Name

Address

Miri Capital Management LLC

745 Boylston Street, Suite 301,
Boston, MA 02116, USA

Shareholding ratio (%)

2,626

21.15

(7) Voting rights(i) Issued shares
As of March 31, 2023
Category

Number of shares(Shares)Number of voting rights(Units)Description

-

-

-

-

-

-

-

-

-

-

-

Shares with no voting rights
Shares with restricted voting rights(treasury shares, etc.)
Shares with restricted voting rights(other)Shares with full voting rights(treasury shares, etc.)

Common stock
5,000

Shares with full voting rights (other)
Odd-lot shares

Common stock
12,409,400

124,094

Common stock
4,060

Total number of issued shares

12,418,460

-

-

-

-

-

Voting rights held by all
124,094
shareholders
Notes: 1. “Shares with full voting rights (other)” of common stock includes 149,200 shares (1,492 voting rights) of the Company
held by the Board Benefit Trust (BBT).
2. “Odd-lot shares” includes 68 treasury shares held by the Company.

(ii) Treasury shares, etc.
As of March 31, 2023
Name of shareholder

Address of shareholder

Number ofshares held in
own name(Shares)

Japan System Techniques
Co., Ltd.

2-3-18 Nakanoshima, Kitaku, Osaka-shi

5,000

-

5,000

0.04

-

5,000

-

5,000

0.04

Total

Number of
Total number of Ratio against
shares held inshares held
total shares
others’ name(Shares)issued (%)(Shares)

Notes: 1. The Company’s stock held by the BBT (149,200 shares) is included in the number of treasury shares in consolidated
and non-consolidated financial statements.
2. In addition to the above, the Company holds 68 odd-lot shares.

(8) Details of the Director and Employee Stock Ownership Plan
Based on the resolution of the 46th Annual General Meeting of Shareholders, JAST on June 26, 2018 terminated the
directors’ retirement benefit system and established a Board Benefit Trust (BBT) for the purpose of increasing
motivation for contributing to the medium to long-term growth of sales and earnings and an increase in corporate
value. The BBT plan clearly links the compensation of directors with the JAST stock price. Furthermore, directors
share with shareholders the benefits of a higher stock price as well as the risk of a lower stock price.
i. Overview
This is a stock compensation plan in which directors receive stock compensation through a BBT. The BBT acquires
JAST stock using cash contributions from JAST as the source of funds. Directors (excluding external directors; sameafterward unless indicated otherwise) receive stock compensation or a monetary amount equivalent to the market
value of the stock in lieu of stock compensation in accordance with the rules on the stock compensation plan for
directors (and other officers). In principle, a director becomes eligible for stock compensation only after the individual
is no longer a JAST director.

- 30 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

BBT Structure(a) Establishment of the rules on the stock compensation plan for directors

Trustor:(d) Granting points

Directors

JAST(c) Stockacquisition

Trustee:

Trust
Directions for
non-exercise of
voting rights

Mizuho Trust & Banking Co., Ltd.

Beneficiaries:(Re-trust: Custody Bank of Japan, Ltd.)JAST stock

(a)

(b)
(c)
(d)
(e)
(f)

ii.

administrator(f) Granting
stock

Meeting the beneficiary
requirements(e) Non-exercise
of voting rights(b) Entrusting money

Retired directors whomeet the beneficiary
requirements

At the General Meeting of Shareholders, JAST will approve a resolution on directors’ compensations for this plan,
and within the framework approved by the General Meeting of Shareholders, JAST will establish the rules on thestock compensation plan for directors (and other officers).
JAST will entrust money within the scope of the approval by the resolution of this General Meeting of Shareholdersin (a) above.
The Trust will acquire JAST stock using the money entrusted in (b) as the source of funds, either through the stock
exchange market or by subscribing to the disposal of treasury shares.
JAST grants points to directors in accordance with the rules on the stock compensation plan for directors (and otherofficers).
The Trust shall not exercise voting rights with respect to JAST stock in the Trust Account in accordance with the
instructions of the trust administrator, which is independent from JAST.
The Trust will grant JAST stock to retired directors who meet the requirements for beneficiaries set forth in the ruleson the stock compensation plan for directors (and other officers) (hereinafter “beneficiaries”) in accordance with thenumber of points granted to such beneficiaries. However, if a director meets the requirements set forth in the rules, amonetary amount equivalent to the market value of the JAST stock will be made for a certain percentage of the points.

Total number of shares acquired by the Trust
The total number of shares acquired by the Trust is 149,200. The number of shares to be acquired by the Trust is
not determined yet.

iii.

Scope of beneficiaries and other persons entitled to rights under this plan
Retired directors who meet the requirements for beneficiaries set forth in the rules on the stock compensation
plan for directors (and other officers)

2. Acquisition and Disposal of Treasury SharesClass of shares, etc.:
Acquisition of common stock under Article 155, item (vii) of the Companies Act(1) Acquisition by resolution of Annual General Meeting of Shareholders
Not applicable.
(2) Acquisition by resolution of the Board of Directors
Not applicable.

- 31 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(3) Acquisition not based on resolution at Annual Shareholders meeting or the Board of Directors
Category

Number of shares (Shares)

Treasury shares acquired during the fiscal year ended
March 31, 2023 (Note)

Total amount (Yen)186

439,076

Treasury shares acquired during the period for
77
157,944acquisition
Note: Treasury shares acquired during the fiscal year ended March 31, 2023 were due to acquisition of odd-lot shares.

(4) Disposal of acquired treasury shares and number of shares held
FY3/23Category

Number of shares(Shares)Acquired treasury shares for which
subscribers were solicited
Acquired treasury shares that were
disposed ofAcquired treasury shares that weretransferred for merger, shareexchange, share issuance andcompany split
Other
Treasury shares held (Note)

Period for Acquisition

Total amount ofdisposal(Thousand yen)

Total amount ofdisposal(Thousand yen)

Number of shares(Shares)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

5,068

-

5,145

-

Note: The Company’s stock held by the BBT (149,200 shares) is included in the number of treasury shares in consolidated andnon-consolidated financial statements.

3. Dividend policy
Our basic policy for dividends is to achieve stable growth over the long term. We will decide on specific policies andamounts based on earnings trends, financial conditions and other environmental factors, while taking into
consideration the payout ratio. Additionally, in regard to retained earnings, we hope to invest effectively in things
like development of professional human resources, creation of new businesses, promotion of various alliances andR&D on new products.
We will continue our basic policy of treating record dates for paying dividends to shareholders of record as March
31 and September 30 but leave open the option of paying out dividends on other dates as well. Regarding the decisionmaking body for these dividends, the Articles of Incorporation stipulate that dividends may be paid by a resolutionof the Board of Directors.
Taking into consideration earnings for FY3/23, JAST decided to pay a dividend of 32 yen (commemorative dividendof 5 yen and ordinary dividend of 27 yen) on June 9, 2023, based on a resolution by JAST Board of Directors on
April 28, 2023.
JAST stipulate in the Articles of Incorporation that JAST may pay interim dividends as stipulated in Article 454,
Paragraph 5 of the Companies Act of Japan.
The date of resolution by the Board of Directors meeting, total dividend amount and dividend per share for thedividends whose record date belongs to FY3/23 are as follows.
Date of resolution
Board of Directors held on April 28, 2023

Total dividend amount(Thousand yen)
397,228- 32 -

Dividend per share
(Yen)
32

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

4. Corporate Governance(1) Overview of corporate governance(i) Fundamental approach to corporate governance
At JAST, our focus is on achieving management which is ideally suited to the current economic environment whilereflecting the fundamental principles of corporate governance. Towards this end, and in line with a philosophy
which emphasizes what is best for our four key stakeholders—customers, shareholders, employees and society—we pursue win-win relationships with buyers, vendors, and investors, as well as with the public at large, in orderto maximize value for each and realize a medium and long-term increase in corporate value together with thesustainable growth of the company. Moving forward, our corporate officers will sincerely consider all essential
input as they boldly challenge the status quo and continue seeking out corporate transformation.
(ii) Overview of our corporate governance structure and reasons for its adoption
A. Overview of our corporate governance structure
The Company’s corporate governance structure is shown in the following diagram.

At JAST, the members of the Audit & Supervisory Board encompass a broad range of specializations and arechosen with the aim of ensuring multifaceted oversight of Directors in the performance of their overall duties.
JAST has the Board of Directors, the Audit & Supervisory Board Members, the Audit & Supervisory Board, and
the Accounting Auditor, in addition to the General Meeting of Shareholders and Directors. Moreover, it hasestablished the Management Meeting as a decision-making body based on the policies of the Board of Directors.
The Board of Directors meetings are held monthly to make important management decisions. The Audit &Supervisory Board meetings are held regularly to determine audit policies and the responsibilities of each Audit& Supervisory Board Member. These meetings also discuss the Audit & Supervisory Board Members’ audit
results of the status of the execution of duties by Directors and the status of development and operation of theinternal control system. The Management Meeting meetings are held monthly in principle to discuss importantmanagement issues. In order to separate management decision-making and supervisory functions from businessexecution, JAST has introduced an officer system to strengthen the supervisory function of the Board of Directors
and to enable more flexible business execution by officers. Furthermore, we have established an Internal Control
Committee to evaluate the status of development and operation of the internal control system, identify issues,
and report to the Board of Directors. The committee has performed activities on an ongoing basis.

- 33 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

The number and members of each function are as follows. (The ◎ symbol denotes the chairperson.)
Name

Board of Directors(13 members)

President

Takeaki Hirabayashi◎◎

Senior Executive Director

Hiroaki Ban○○

Executive Director

Noriaki Okado○○

Director

Yuji Tsuchiya○○

Director

Chiharu Muguruma○○

External Director

Yutaka Hosoe○

External Director

Mitsugi Hanai○

External Director

Toshiyuki Akiba○

Full-time Audit &Katsuro Sonoda
Supervisory Board Member
External Audit & Supervisory
Shigeki Taenaka
Board Member
External Audit & Supervisory
Jiro Mogami
Board Member

○

◎

○

○

○

○

Position

Audit & Supervisory
Board (3 members)

Management Meeting(13 members)○

Officer

Keiji Koike○

Officer

Kotaro Yamaki○

Officer

Satoshi Ochiai○

Officer

Masanori Kitafuku○

Officer

Mitsunobu Hayashi○

B. Reasons for adopting the structure
We believe that we can respond to changes quickly by each Director, who is familiar with the Company’sbusiness, being able to clarify their respective business responsibilities and manage business under the structure
described in A. above. The Audit & Supervisory Board Members, including External Audit & Supervisory Board
Members, attend meetings of the Board of Directors and other important internal meetings to audit the legality
and appropriateness of overall management activities and business execution, thereby enhancing themanagement monitoring function. From this perspective of corporate governance, we have adopted the current
structure.
(iii) Other matters concerning corporate governance
A. Development status of the internal control system
The Company has been working in a timely manner to develop internal control system mainly by developing
internal regulations, structuring organizations so that mutual checks and balances function effectively, andevaluating and improving the internal control system through internal audits. In accounting audits, the status ofinternal control and its operation are reviewed as part of ordinary audit procedures. The Company aims to be
fully compliant with the systems related to internal control evaluation and audit. These initiatives include
documentation of related business processes, inspection of control status, and evaluation through verification ininternal audits. The Board of Directors reviews the internal control system from time to time by evaluating its
operation status and discussing the policy for maintenance of the system.
B. Risk management system
In the event of an emergency, in accordance with our risk management rules, we will promptly perform a seriesof procedures for fact-checking, investigation, the establishment of a task force, and recovery from the situation.
In addition, the Board of Directors and the Management Meeting discuss risks to the Company and the Group to
take necessary actions.

- 34 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

C. Development status of the system to ensure the appropriateness of business operations at subsidiaries
The Company has established a system to provide guidance and support to subsidiaries, while respecting theirautonomy in management. At the same time, subsidiaries regularly submit business and financial reports to theCompany’s Management Meeting and other related bodies so that the Company can monitor the management
status of each company. The Company’s internal audit department also conducts audits of subsidiaries.
D. Overview of the liability limitation agreement
In accordance with Article 427, Paragraph 1 of the Companies Act, the Company has concluded an agreementwith three External Directors and two External Audit & Supervisory Board Members limiting liability fordamages as stipulated in Article 423, Paragraph 1 of the Companies Act. The limit of the amount of liability fordamages under the agreement shall be the amount stipulated by laws and regulations. Such limitation of liability
is limited to cases where any External Director or Audit & Supervisory Board Member who has performed duties
that led to the liability executed his or her duties in good faith and without gross negligence.
The Company’s Articles of Incorporation stipulate that, pursuant to the provisions of Article 426, Paragraph 1 of
the Companies Act, the Company may, by resolution of the Board of Directors, exempt Directors (including
former Directors) and Audit & Supervisory Board Members (including former Audit & Supervisory Board
Members) from liability for damages to the extent legally allowed. This is to ensure that Directors and Audit &Supervisory Board Members can fully exercise the roles expected of them in performing their duties.
E. Overview of the directors and officers liability insurance contract
The Company has concluded a directors and officers liability insurance contract with AIG General Insurance
Company, Ltd., as stipulated in Article 430-3, Paragraph 1 of the Companies Act, with Directors and Audit &Supervisory Board Members as the insured. The insured parties of the insurance contract are Directors (including
external Directors) and Audit & Supervisory Board Members (including External Audit & Supervisory Board
Members) of the Company and the Company’s subsidiaries. This insurance contract covers damages that may
arise when an officer, the insured, assumes liability for the execution of his or her duties or receives a claim
related to the pursuit of such liability. The insurance premiums will be fully paid by the Company. The Company
plans to renew the said insurance contract with the same contents at the next renewal.
F. Maximum number of Directors
The Company’s Articles of Incorporation stipulate that the number of Directors shall be no more than 10.
G. Resolution requirements for election and dismissal of Directors
The Company’s Articles of Incorporation stipulate that resolutions for the election of Directors shall be adopted
by a majority of the voting rights held by shareholders present at the meeting who represent not less than onethird of the voting rights of shareholders entitled to vote, and that resolutions for the dismissal of Directors shallbe adopted by two-thirds or more of the voting rights held by shareholders present at the meeting who represent
a majority of the voting rights of shareholders entitled to vote.
H. Authority for making decisions on dividends of surplus, etc.
The Company’s Articles of Incorporation stipulate that the matters stipulated in each item of Article 459,
Paragraph 1 of the Companies Act, such as dividends of surplus, shall be determined by a resolution of the Boardof Directors, unless otherwise provided by laws and regulations. The purpose of this provision is to return profits
to shareholders in a flexible manner by giving the Board of Directors the authority to distribute dividends ofsurplus, etc.
I. Requirements for special resolutions at General Meetings of Shareholders
The Company’s Articles of Incorporation stipulate that the special resolutions at General Meetings ofShareholders provided in Article 309, Paragraph 2 of the Companies Act shall be adopted by two-thirds or moreof the voting rights held by shareholders present at the meeting who represent not less than one-third of thevoting rights of shareholders entitled to vote. The purpose of this provision is to facilitate the smooth operation- 35 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

of General Meetings of Shareholders by easing the quorum for special resolutions at General Meetings ofShareholders.
(iv) Activities of the Board of Directors
The Company held 13 meetings of the Board of Directors during the fiscal year under review. The attendance ofindividual Directors and Audit & Supervisory Board Members is as follows.
Position

Name

Number ofmeetings held

AttendancePresident

Takeaki Hirabayashi

13

13

Senior Executive Director

Hiroaki Ban

13

13

Executive Director

Noriaki Okado

13

13

Director

Yuji Tsuchiya

13

13

Director

Chiharu Muguruma

13

13

External Director

Yutaka Hosoe

13

12

External Director

Mitsugi Hanai

13

13

External Director

Toshiyuki Akiba

13

13

Katsuro Sonoda

13

13

Shigeki Taenaka

13

13

Jiro Mogami

13

13

Full-time Audit & Supervisory
Board Member
External Audit & Supervisory
Board Member
External Audit & Supervisory
Board Member

The Board of Directors mainly discusses the following matters at meetings.
- Management policies and annual and medium-term management plans of the Group- Next-generation management structure and management succession- Leadership development for the next generation- Selection of the Representative Director- Organizational structure policy- Amount of remuneration, bonuses, etc. paid to directors (and other officers)- Shareholder return (dividend) policy- M&A strategies- Financial strategies- Annual budget in financial accounting and earnings forecast disclosed- Appropriation of surplus- Corporate governance- Evaluation of cross-shareholdings- Establishment of and investment in group companies and capital increase to group companies- Administration of General Meetings of Shareholders- Establishment of important rules and regulations- 36 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023(v) Activities of the Nomination and Remuneration Committee
The Company established a Nomination and Remuneration Committee (hereinafter, the “Committee”) on August22, 2022.
The Company held four meetings of the Committee. The attendance of individual members is as follows.
External Director

Yutaka Hosoe

Number ofmeetings held
4

External Director
External Audit & Supervisory
Board Member
External Audit & Supervisory
Board Member

Toshiyuki Akiba

4

4

Shigeki Taenaka

44

Jiro Mogami

44Position

Name

Attendance
4

The Committee deliberates mainly on the following matters, in response to inquiries from Directors, and makes
recommendations to the Board of Directors.
- Matters on the election and dismissal of the Representative Director- Matters on the election and dismissal of Directors- Matters on remuneration for Directors (including the maximum amount of remuneration for Directors)- Other material management matters deemed necessary by the Board of Directors(vi) Basic policy on the control over the Company
The Company believes that people who make decisions on the Company’s business and financial policies shouldbe able to maintain relationships with various stakeholders including shareholders and client companies, as well as
to secure and enhance the Company’s corporate value and the common interests of shareholders over the medium
to long term.
On the other hand, as a company whose shares are listed on a financial instruments exchange, we respect free
trading of our shares in the market and will not generally reject large-scale purchases of our shares by specificparties, as long as such purchases contribute to securing and enhancing our corporate value and the common
interests of our shareholders. We also deem that the decision as to whether or not to accept a proposal for a largescale purchase of our shares should ultimately be left to the judgment of our shareholders.
Nevertheless, among proposals for large-scale share acquisitions, there may be those that undermine our corporate
value and the common interests of our shareholders mainly due to a possibility that we may not be able to maintain
good relationships with our stakeholders; those that do not give our shareholders and the Board of Directors thetime and information reasonably necessary for them to consider the details of the proposal and for the Board of
Directors to present an alternative proposal, and those that do not fully reflect the Company’s corporate value. For
such a proposal, the Company’s Board of Directors believes that it is necessary to protect the corporate value of
the Group and the common interests of shareholders by securing the necessary time and information for its
shareholders and negotiating with the proposer of a large-scale acquisition of the Company’s shares, as the
responsibility of those who are entrusted by shareholders.

- 37 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(2) Directors and Audit & Supervisory Board Membersi.

Directors

13 males, - female (Pct. of female officers: -%)Official Title

Name

President

Takeaki
Hirabayashi

Senior Executive
Director

Hiroaki Ban

Date of Birth

Brief Career History
March 1973

Executive Director Noriaki Okado

Established the Company,
Representative Director
April 23, 1938
April 2005
President and CEO
June 2020
President (current)
January 1981 Joined the Company
October 2006 Managing Executive Officer, Alpha
Computer Co.,
Ltd. (secondment)
Director and Managing Executive
June 2010
Officer, Alpha Computer Co., Ltd.
(secondment)
Officer in Charge of Tokyo Software;
April 2011
and General
Manager, Eastern Japan Software
Division, the Company
Director in Charge of Tokyo
June 2012
Software; and General
Manager, Eastern Japan Software
Division, the Company
April 2013
Director in Charge of Tokyo Region,
January 13,
the Company
1961
Director in Charge of Eastern Japan
April 2014
Region, Medical Big Data Business,and Special Projects, the Company
Executive Director in Charge ofJune 2019
Eastern Japan Region, Medical Big
Data Business, and Tokyo New
Business Promotion, the Company
Senior Executive Director in Charge
June 2021
of Eastern Japan Region, Medical Big
Data Business, Tokyo New Business
Promotion, and Global Business, theCompany
Senior Executive Director in Charge
April 2023
of Medical Big Data Business, Tokyo
New Business Promotion, Global
Business, and Tokyo Management
Office, the Company (current)
February
Joined the Company
1999
Director; and General Manager,
June 2007
Finance Department, the Company
Director in Charge of Headquarter
June 2010
Departments; and General Manager,
Finance Department, theCompany
Director in Charge of Headquarter
April 2014
Departments and Global
February 11,
Management, the Company
1960
Director in Charge of Headquarter
April 2017
Departments, the Company
Director in Charge of Headquarter
April 2019
Departments and International
Operations, the Company
Executive Director in Charge ofJune 2019
Headquarter Departments andInternational Operations, theCompany
Executive Director in Charge ofApril 2023
Finance & IR (current)

Number ofTerm of the Company
Office Shares Held(Thousands)- 38 -

Note 4193.80Note 441.80

Note 427.30

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Official Title

Name

Date of Birth

Brief Career History

March 1983
April 2012

Director

Yuji TsuchiyaJune 8, 1962

Director

Chiharu
Muguruma

October 22,
1964

Director

Katsuro Sonoda

June 13, 1958

Joined the Company
Officer; and General Manager,
GAKUEN Division, the Company
Officer in Charge of GAKUEN
April 2014
Business, the Company
Director in Charge of GAKUEN
June 2016
Business, the Company
Director in Charge of GAKUEN
April 2017
Business and New Business
Promotion, the Company
Director in Charge of GAKUEN
April 2019
Business, New Business Promotion,
and BankNeo Business, the Company
Director in Charge of GAKUEN
April 2021
Business, New Business Promotion,
BankNeo Business, and WesternJapan System Integration Business,
the Company
Director in Charge of Western Japan
June 2021
Region, GAKUEN Business, New
Business Promotion, and BankNeo
Business, the Company
Director in Charge of GAKUEN
April 2022
Business, New Business Promotion,
BankNeo Business, and WesternJapan System Integration Business,
the Company (current)
April 1988
Joined the Company
Officer; and General Manager,
April 2014
Eastern Japan Software Business
Department, the Company
Officer in Charge of Eastern Japan
April 2018
System Integration Business, theCompany
Director in Charge of Eastern Japan
June 2019
System Integration Business, theCompany
January 2020 Director in Charge of Eastern Japan
System Integration Business; andVice General Manager, Overseas
Business Division, the Company
January 2021 Director in Charge of Eastern Japan
System Integration Business; andGeneral Manager, ASEAN Business
Division, the Company
Director in Charge of Eastern Japan
April 2023
System Integration Business; Digital
Transformation Promotion; andGeneral Manager, ASEAN Business
Division, the Company (current)
General Manager, GAKUEN
DecemberBusiness Department, the Company
1978
General Manager, GAKUEN
April 1995
Business Department, the Company
General Manager, Package Business
April 1997
Department, the Company
April 2000
General Manager, CS Division, theCompany
General Manager, Solution
April 2004
Department 3, the Company
Full-time Audit & Supervisory Board
June 2014
Member, the Company
June 2023
Director in Charge of Personnel &General Affairs Division, theCompany (current)

Number oftheTerm ofCompany
OfficeShares Held(Thousands)- 39 -

Note 435.60

Note 418.20

Note 442.20

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Official Title

Name

Date of Birth

Brief Career History

April 1998
April 2017

Director

Taku Hirabayashi June 7, 1969

Director

Yutaka Hosoe

August 16,
1959

Director

Mitsugi Hanai

June 29, 1953

Director

Toshiyuki Akiba June 18, 1956

Joined the Company
General Manager, Finance andAccounting Department, theCompany
General Manager, Tokyo
April 2021
Administrative Department, Tokyo
Administration Division, theCompany
Officer in Charge of Management
April 2023
Planning & Business Administration;
and General Manager, Management
Planning Department, the Company
June 2023
Director in Charge of Management
Planning & Business Administration;
and General Manager, Management
Planning Department, the Company(current)
April 1983
Joined Toyota Industries Corporation
Director/Consultant, Admix Partners
June 2004
YK (current)
January 2006 Executive Vice-President, BNI
Systems Corp.
April 2007
President, BNI Systems Corp.
Executive Vice-President, NTT Data
July 2011
China Outsourcing Co., Ltd.
Chief Executive Officer, Innovative
July 2014
Solutions Inc. (current)
June 2017
External Director, the Company(current)
Joined Nippon Univac Kaisha, Ltd.
April 1977
(now BIPROGY Inc.)
August 1982 Joined IBM Japan, Ltd.
February
President, T&I Solution Co. Ltd.
2005
August 2008 Senior Vice President, Nippon
Information and Communication
Corporation
Adviser, DAIICHI COMPUTER
April 2015
RESOURCE CO., LTD.
DecemberAdviser, S2I Co., Ltd.
2017
June 2019
External Director, the Company(current position)
Joined Canon Sales Co., Inc. (nowApril 1980
Canon Marketing Japan Inc.)
March 2004 President, Canon Supercomputing S.I.
Inc.; and President, Canon Solutions
Service Inc., a subsidiary of Canon
Supercomputing S.I. Inc. (serving
concurrently)
January 2012 Director (part-time), Canon
BizAttenda Inc. Director (part-time),
Qualysite Technologies Inc.
July 2013
Director, Ftime Corporation
June 2015
Managing Director, Ftime
Corporation
June 2021
External Director, the Company(current)

Number oftheTerm ofCompany
OfficeShares Held(Thousands)- 40 -

Note 4278.64Note 4-Note 4-Note 4-

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Official Title

Name

Date of Birth

Brief Career History

April 1989
April 2014
Full-time Audit &Supervisory Board
Member

Masami
Yabushita

June 3, 1965

April 2015
June 2023
August1985
October
1989
June 1995

January
Audit &
September 10,
Supervisory Board Shigeki Taenaka
2006
1961
MemberJune 2009
January
2018
June 2019

Audit &
Supervisory Board
MemberJiro Mogami

January2022
November
2007
February
2011
August 2, 1978
July 2013
June 2014
Total

Joined the Company
General Manager, Logistics Business
Division, the Company
General Manager, Eastern Japan
System Integration Business Division
2, the Company
Full-time Audit & Supervisory Board
Member, the Company (current)
Joined the Osaka office of Aoyama
Audit Firm
Joined TAENAKA Mikio Certified
Public Accountant Office
External Audit & Supervisory Board
Member, Nishimoto Trading Co., Ltd.
(now CANON MEDTECH SUPPLYCORPORATION)
Principal, Taenaka Certified Public
Accountant Office (current)
External Audit & Supervisory Board
Member, the Company (current)
External Audit & Supervisory Board
Member, Denkyo Group Holdings
Co.,Ltd. (current)
External Audit & Supervisory Board
Member, DAIBIRU CORPORATION
Representative Partner, Taenaka
Accounting Firm (current)
Joined LEGAL PROFESSIONALCORPORATION HONRYU
Joined Yamashita Kawazoe Law
OfficeJoined the Kanon Law Office(current)
External Audit & Supervisory Board
Member, the Company (current)

Number oftheTerm ofCompany
OfficeShares Held(Thousands)

Note 50.20

Note 6-Note 5-637.74

Notes: 1. The Company has introduced the executive officer system to separate the management decision-making andsupervisory functions from the execution of operations.
2. Mr. Yutaka Hosoe, Mr. Mitsugi Hanai, and Mr. Toshiyuki Akiba are candidates for External Director.
3. Mr. Shigeki Taenaka and Mr. Jiro Mogami are candidates for External Audit & Supervisory Board Member.
4. The term of office will be one year from the conclusion of the Annual General Meeting of Shareholders held on June
28, 2023.
5. The term of office will be four years from the conclusion of the Annual General Meeting of Shareholders held on June
28, 2023.
6. The term of office will be four years from the conclusion of the Annual General Meeting of Shareholders held on June24, 2020.

- 41 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023(ii) External directors (and other officers)
The Company has three External Directors and two Audit & Supervisory Board Members.
Mr. Yutaka Hosoe, External Director, is the Director and Consultant of Admix Partners YK, and the Chief Executive
Officer of Innovative Solutions Inc., and has abundant experience and a broad range of knowledge in the leadingedge IT consulting business and business model reconstruction, including global business. He has made usefulstatements on matters such as the realization of the Group’s growth strategies, evaluation and review of theexecution of strategies, and approaches to risks.
Mr. Mitsugi Hanai, External Director, has abundant experience and a broad range of knowledge in areas including
the sales of IT solutions to mainly automobile manufacturers and the management of sales teams as well as thebranding of products and services, which he obtained while working at major IT companies. He has made usefulstatements on matters such as organizational framework and rules for internal control for the stable operation of
the Group’s business.
Mr. Toshiyuki Akiba, External Director, has a large network of contacts including IT vendors, abundant experience,
and a broad range of knowledge in the information and communication industry, as he held multiple important
positions including Representative Director at other companies. He has provided useful comments and advice onmatters such as the improvement of the Group’s presence in the market and stock market, as well as businesssuccession to the next generation.
Mr. Shigeki Taenaka, External Audit & Supervisory Board Member, is the principal of Taenaka Certified Public
Accountant Office, the representative partner of Taenaka Accounting Firm, and the Outside Corporate Auditor of
Denkyo Group Holdings Co., Ltd. From his professional perspective as a certified public accountant and certified
public tax accountant, he has asked questions and provided advice on accounting and tax matters as well as
presented his views on the stock market and other advice and recommendations to ensure the validity andappropriateness of the decision-making of the Board of Directors. In addition, at meetings of the Audit &Supervisory Board, he has made necessary comments on the Company’s accounting system, accounting policies,
internal controls, and other matters as appropriate.
Jiro Mogami, External Audit & Supervisory Board Member, is an attorney at law of Kanon Law Office. From his
professional perspective as an attorney at law, he has provided advice and recommendations on corporate
governance and internal control to ensure the validity and appropriateness of the decision-making of the Board of
Directors. In addition, at meetings of the Audit & Supervisory Board, he has made necessary comments on the
Company’s overall legal affairs as appropriate.
There are no personal, business, or other interests between the Company and External Directors, External Audit &Supervisory Board Members, and the entities where they hold concurrent positions.
In appointing External Directors and External Audit & Supervisory Board Members, the Company refers to thecriteria for determining the independence of independent officers stipulated by the Tokyo Stock Exchange andother relevant standards. The Company’s basic policy is to select candidates who can contribute to the sustainablegrowth of the Company and the enhancement of its corporate value over the medium to long term, in accordancewith the independence criteria stipulated in the “Practical Considerations in Electing Independent Officer”
established by the Tokyo Stock Exchange.
(iii) Mutual coordination among supervision or audits by External Directors or External Audit & Supervisory Board
Members and internal audits, audits by the Audit & Supervisory Board Members, and accounting audits, as wellas their relationship with internal control departments
External Directors and External Audit & Supervisory Board Members exchange opinions at meetings of the Audit& Supervisory Board upon receiving information shared by the full-time Audit & Supervisory Board Member thatis not brought up for discussion at the Board of Directors meetings. They supervise or audit Directors and the Boardof Directors by asking questions and making statements based on their respective areas of expertise and knowledge
at the Board of Directors meetings.
To enhance the Company’s audit systems including internal audits, audits by the Audit & Supervisory Board
Members, and accounting audits, the Internal Audit Department, the Accounting Auditor, and the Audit &- 42 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Supervisory Board share information on their audit plans and the status of audits, and exchange opinions on matters
including audit findings as necessary during each fiscal year. The Internal Audit Department, as the secretariat for
the internal control evaluation and reporting, oversees the evaluation of internal control departments and reports
its status and results to the Management Meeting.
(3) Audits(i) Audits by the Audit & Supervisory Board Members
The Audit & Supervisory Board of the Company consists of three members: one full-time Audit & Supervisory
Board Member and two External Audit & Supervisory Board Members. Audits by the Audit & Supervisory Board
Members are conducted in accordance with the Rules of the Audit & Supervisory Board and plans of audits by the
Audit & Supervisory Board Members, as well as in response to changes in the circumstances surrounding thecompany.
Mr. Shigeki Taenaka, Audit & Supervisory Board Member, is a certified public accountant and certified public tax
accountant, and Mr. Jiro Mogami, External Audit & Supervisory Board Member, is an attorney at law. They haveabundant experience and knowledge in areas including corporate finance and internal control, using theirprofessional expertise to audits by the Audit & Supervisory Board Members.
Mr. Katsuro Sonoda, full-time Audit & Supervisory Board Member, participates in important meetings such as
those of the Management Meeting and asks questions of directors and employees to grasp the status of the entire
Group, shares information with External Audit & Supervisory Board Members as appropriate, and exchanges
opinions with all Audit & Supervisory Board Members at monthly meetings of the Audit & Supervisory Board.
The status of audits by the Audit & Supervisory Board Members is regularly reported to the Board of Directors
and recommendations are made as necessary.
The Audit & Supervisory Board held a total of 12 meetings during the fiscal year under review, all of which wereattended by all Audit & Supervisory Board Members. The Audit & Supervisory Board Members review the overall
execution of duties of the Board of Directors through questions and confirmations at meetings of the Board of
Directors, based on the information shared and opinions exchanged at the Audit & Supervisory Board meetings.
The Company aims to enhance its audit systems including internal audits, audits by the Audit & Supervisory Board
Members, and accounting audits. To this end, at the beginning of each fiscal year, the Accounting Auditor, theInternal Audit Department, and the Audit & Supervisory Board explain their respective audit plans and exchange
opinions under the leadership of the Audit & Supervisory Board. The Audit & Supervisory Board receives reportson the status of reviews and audits from the Accounting Auditor during the period and exchanges opinions. During
the fiscal year under review, opinions were exchanged on risks and internal controls of the Group, other statementsin the business report, and key audit matters (KAM).
The full-time Audit & Supervisory Board Member receives regular reports from the Internal Audit Department on
the status of audits and exchanges opinions, and reports the status of internal audits and results to the Audit &Supervisory Board.
In addition, External Directors attend meetings of the Audit & Supervisory Board as necessary when the full-time
Audit & Supervisory Board Member reports so that the information that is not brought up for discussion at theBoard of Directors meetings is shared with External Directors.
(ii) Internal audits
Internal audits of the Company are conducted by the Internal Audit Department (consisting of three full-time
employees), which reports directly to the President. For internal audits, the Internal Audit Department conducts
operational audits by selecting departments to be audited based on the Internal Audit Rules and audit plans, andalso conducts audits on important themes. The results of these audits are reported to the President and theManagement Meeting to be discussed as management issues.
For the fiscal year under review, audits were conducted from the perspective of organizational management andhuman resource development in each department in addition to operational audits. The Internal Audit Department
conducted audits of subsidiaries through on-site visits to check the status of internal control for the entire Group.

- 43 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

The Internal Audit Department, as the secretariat for the internal control evaluation and reporting, summarizedevaluation of all internal control departments and shared the results with the auditing firm, confirming that there
were no significant problems with the internal control of the Company and its key subsidiaries with respect to theinternal control evaluation for the fiscal year under review.
The status and results of operational audits and internal control evaluations conducted by the Internal Audit
Department are reported to the full-time Audit & Supervisory Board Member as appropriate. Following
confirmation by the full-time Audit & Supervisory Board Member and approval by the Representative Director,
the status and results are notified to the audited departments. The status and results are also reported to theManagement Meeting.
(iii) Accounting audits
A. Name of the auditing firm
Deloitte Touche Tohmatsu LLC
B. Continuous audit period
Since 2000
C. Certified public accountants who executed the audit duties
Designated Limited Liability Partner, Engagement Partner, Certified Public Accountant: Ikutoshi Senzaki
Designated Limited Liability Partner, Engagement Partner, Certified Public Accountant: Masaru Fujikawa
D. Other personnel engaged in assisting the accounting audit
Eleven certified public accountants and other twelve personnel engage in assisting the accounting audit of theCompany.
E. Policy and reasons for selecting the auditing firm
When selecting an Accounting Auditor, the Company chooses an appropriate auditing firm after it obtains written
information on matters including audit implementation systems and estimated audit fees, and holds interviews
with the firm.
The Company appointed Deloitte Touche Tohmatsu LLC as its Accounting Auditor because it has a wealth ofaudit experience and an examination system that is in line with the Company’s diversified and global business,in addition to the fact that the audit period and audit fees are reasonable and appropriate.
F. Evaluation of the auditing firm by the Audit & Supervisory Board Members and the Audit & Supervisory Board
The Audit & Supervisory Board Members and the Audit & Supervisory Board evaluate the auditing firm.
Through evaluation, they have concluded that Deloitte Touche Tohmatsu LLC is capable of performing
appropriate audits as no events have occurred that would impair the eligibility or independence of the Accounting
Auditor.
(iv) Details of audit fees, etc.
A. Fees paid to auditing certified public accountants, etc.
(Million yen)
FY3/22
Classification

Fees for audit
certification work

FY3/23
Fees for non-audit
services

Fees for audit
certification work

Fees for non-audit
services

Reporting company

39

1

40

-

Consolidated subsidiaries

-

-

-

-

Total

39

1

40

-

Note: Non-audit services provided to the Company are advice and guidance on the adoption of the Accounting Standard for
Revenue Recognition.

- 44 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

B. Fees paid to entities in the same network (the Deloitte group) as the auditing certified public accountants, etc.
(excluding A.)(Fiscal years ended March 31, 2022 and 2023)
There are no matters to be noted.
C. Other important details of fees for audit certification work
(Fiscal years ended March 31, 2022 and 2023)
There are no matters to be noted.
D. Policy for determining audit fees
Fees to be paid to auditing certified public accountants, etc. are determined, with reference to the actual numberof auditing staff and the number of working days in the previous fiscal year and with consideration of thecharacteristics of the work in the relevant fiscal year, through the approval procedures stipulated in the internal
rules after obtaining the consent of the Audit & Supervisory Board.
E. Reasons for the Audit & Supervisory Board’s consent to the fees, etc., of the Accounting Auditor
The Audit & Supervisory Board reviewed the fees, etc. to be paid to the Accounting Auditor presented by the
Board of Directors by taking into account matters including the audit plan, the number of audit days, and thesize and characteristics of the Company and verifying the validity of them. As a result, the Audit & Supervisory
Board determined that it was appropriate to give its consent under Article 399, Paragraph 1 of the Companies
Act.
(4) Remuneration, etc. for directors (and other officers)(i) Policy for determining amount or calculation method of remuneration, etc. for directors (and other officers)
The Company has a policy for determining amount or calculation method of remuneration, etc. for directors (andother officers). The Company has adopted a performance-based remuneration system. Remuneration, etc. isdetermined based on the evaluation of each director (and other officer) by the President, in accordance with aremuneration table by position and by performance evaluation rank of directors (and other officers), which was
designed to avoid excessive discrepancies with the level of employee wages.
The resolution for remuneration, etc. for the Company’s directors (and other officers) was passed at the General
Meeting of Shareholders on June 20, 2008. At the meeting, the total annual remuneration for Directors was resolved
to up to 300,000 thousand yen (excluding the portion of employee salaries for Directors concurrently serving as
employees) and the total annual remuneration for Audit & Supervisory Board Members was resolved to up to
60,000 thousand yen.
The person who has the authority to determine the policy for determining amount or calculation method of
remuneration, etc., for the Company’ Directors is the Representative Director delegated by the Board of Directors,
who determines the amount of individual remuneration within the scope of the total amount of remuneration
resolved at the General Meeting of Shareholders. Remuneration, etc. for Audit & Supervisory Board Members isdetermined through discussions by the Audit & Supervisory Board Members within the scope of the total amountof remuneration resolved at the General Meeting of Shareholders.
Remuneration for the Company’s directors (and other officers) consists of performance-linked remuneration andnon-performance-linked remuneration. The payment ratio of remuneration is determined as stipulated by theCompany’s remuneration rules for directors (and other officers) and rules on the stock compensation plan for
directors (and other officers), with comprehensive consideration of the relevant director or other officer’s
contribution to the Company, social status, and the value of the Company’s shares.
The Company introduced the “Board Benefit Trust (BBT),” a stock compensation plan, as performance-linked
remuneration at the 46th Annual General Meeting of Shareholders held on June 26, 2018. The Company uses its
stock price as the index for performance-linked remuneration so that Directors can share with shareholders boththe benefits of an increase in the stock price and the risks of a decline in the stock price. Furthermore, in accordance- 45 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

with the Act Partially Amending the Companies Act (Act No. 70 of 2019) came into effect on March 1, 2021, theCompany determined the upper limit of the number of points per fiscal year to be granted to Directors (50,000
points) at the 49th Annual General Meeting of Shareholders held on June 25, 2021. This was determined withcomprehensive consideration of aspects including the current level of compensation paid to directors (and otherofficers), the trend in the number of Directors and future prospects, and is judged to be appropriate.
A summary of the Company’s method of determining performance-linked remuneration is as follows.
1) Granting of points
For each fiscal year, Directors (excluding External Directors; the same shall apply hereinafter) shall be granted
the number of points determined in accordance with the rules on the stock compensation plan for directors(and other officers) as remuneration for the performance of their duties.
2) Distribution of the Company’s shares, etc.
When a Director retires and satisfies the requirements for beneficiaries stipulated in the rules on the stockcompensation plan for directors (and other officers), each point granted to the Director is converted into one
common share of the Company in principle, and the common shares of the Company are distributed to the
Director at the time of his/her retirement.
The Company’s targets and results for indicators related to performance goals for the fiscal year under review are
as follows.
1) Indicator targets
No target was set because the stock price was used as the indicator.
2) Indicator results
1,571 yen (average closing price of the Company’s stock on the last day of each month from July 2022 toMarch 2023)(ii) Total amount of remuneration, etc. by officer category, total amount of remuneration, etc. by type of remuneration,and the number of recipients

Officer category

Total amount of
remuneration,
etc.
(Thousand yen)

Total amount of remuneration, etc. by type of remuneration(Thousand yen)
Number of
Performance- Of items left, non- recipients
Fixed(Persons)Bonuslinkedmonetary
remuneration
remuneration remuneration, etc.

Directors (excluding
195,083
145,141
28,72921,212
21,2125
External Directors)
Audit & Supervisory
Board Members(excluding External
21,23017,726
3,504
1
Audit & Supervisory
Board Members)
External directors (and17,04014,2482,792
5other officers)
Note: All non-monetary remuneration, etc. is performance-linked remuneration and is stock-based remuneration under the Board
Benefit Trust (BBT).

(iii) Total amount of remuneration, etc. of persons whose total amount of remuneration, etc. is 100 million yen or
more
Not applicable.
(iv) Significant employee salaries of directors (and other officers) concurrently serving as employees
Not applicable.
(5) Stocks held(i) Criteria for and approach to investment stocks
The Company classifies stocks as investment stocks held for pure investment if they are held for the purpose of- 46 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

making profit from changes in the value of stocks or dividends on stocks, and other stocks as investment stocks
held for purposes other than pure investment.
(ii) Investment stocks held for purposes other than pure investment
A. Holding policy, method for verifying holding rationale, and verification details of suitability of individual stock
holdings by the Board of Director and others
The Company holds stocks of companies that are expected to maintain and expand the Company’s products andservices, and that the Company deems necessary and important for the smooth promotion of its business. The
Board of Directors verifies the rationale for acquiring and holding such stocks through regular examination andverification of matters including the appropriateness of the purpose of holding and whether the benefits and risks
associated with holding such stocks are commensurate with the cost of capital.
B. Number of stocks and carrying amount on the balance sheet
Number of stocks(Issues)

Total carrying amount(Thousand yen)

Unlisted stocks

1

464

Stocks other than unlisted stocks

1

53,070(Stocks with increased number of shares in the fiscal year under review)Not applicable.
(Stocks with decreased number of shares in the fiscal year under review)Not applicable.
C. Number of specified investment shares and deemed stockholdings per issue and the carrying amount on thebalance sheet
Specified investment shares

Issue

FY3/23
Number of shares(Shares)
Carrying amount on
the balance sheet(Thousand yen)
29,000TerraSky Co.,Ltd.

FY3/22
Number of shares Purpose of holding, outline of business alliance, etc., Whether or
not shares of(Shares)quantitative effects of holding, and the reason for an
the Company
Carrying amount on
increase in the number of sharesare heldthe balance sheet(Thousand yen)
29,000 (Purpose of holding)Strengthen business relationships and enhance
corporate value(Outline of business alliance, etc.)
Yes
Development and human resource education in thebusiness related to BankNeo, our branded product,
project creation and human resource development
in cloud-related business, and others
Note: Quantitative holding effects are difficult to describe but the Company verifies the rationale of holdings based on the
purpose of holding, economic rationale, transaction status, and other factors.
53,07045,472(iii) Investment stocks held for pure investment
Classification
Unlisted stocks
Stocks other than unlisted stocks

FY3/23
Number of stocks Total carrying amount(Issues)on the balance sheet
5389,239- 47 -(Thousand yen, unless otherwise stated)
FY3/22
Number of stocks
Total carrying amount(Issues)on the balance sheet
5368,968

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Classification
Unlisted stocks

FY3/23
Total gains (losses)
on salesTotal dividends received-

Total valuation
gains (losses)--

Stocks other than unlisted stocks
8,937
193,496
Note: Total valuation gains (losses) for unlisted stocks are not shown because they are stocks with no market price, etc.

(iv) Investment stocks whose purpose of holding was reclassified from pure investment to other than pure investment
during the fiscal year under review
Not applicable.
(v) Investment stocks whose purpose of holding was reclassified from other than pure investment to pure investment
during the fiscal year under review
Not applicable.

- 48 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Ⅴ. Financial Information
1. Basis for preparation of consolidated and non-consolidated financial statements(1) The consolidated financial statements of the Company are prepared in accordance with the Ordinance on
Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of
Finance No. 28 of 1976).
(2) The non-consolidated financial statements of the Company are prepared in accordance with the Regulation on
Terminology, Forms, and Preparation Methods of Financial Statements (Ministry of Finance Order No. 59 of 1963;
hereinafter the “Regulation on Financial Statements”).
The Company falls under a company allowed to file specified financial statements and prepares the non-consolidated
financial statements pursuant to the provision of Article 127 of the Regulation on Financial Statements.
2. Audit certificate
The Company’s consolidated and non-consolidated financial statements for the fiscal year from April 1, 2022 to March
31, 2023 were audited by Deloitte Touche Tohmatsu LLC, in accordance with the provisions of Article 193-2, Paragraph
1 of the Financial Instruments and Exchange Act.
3. Special measures to ensure the appropriateness of consolidated financial statements, etc.
The Company has taken special measures to ensure the appropriateness of its consolidated financial statements, etc.
Specifically, to establish a system that allows the Company to understand accounting standards properly and adapt tochanges in accounting standards appropriately, the Company strives to collect necessary information by joining the
Financial Accounting Standards Foundation (FASF), referring to materials disclosed by the FASF, participating inseminars, and other means.

- 49 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

1. Consolidated Financial Statements, etc.
(1) Consolidated Financial Statements
i. Consolidated Balance Sheet
FY3/22(As of Mar. 31, 2022)(Thousand yen)
FY3/23(As of Mar. 31, 2023)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade, and contract
assetsMerchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts

6,464,852

7,206,690*2 5,533,330*2 6,532,385

147,538

172,554

99,301

100,612

5,761

8,239

144,293

174,586(5,875)(7,924)

12,389,203

14,187,144

842,406

958,056

Accumulated depreciation(548,763)(589,641)

Buildings and structures, net

293,643

368,415

142,361

142,361

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

Land
Other
Accumulated depreciation
Other, net

565,150

607,152(454,587)(485,935)

110,562

121,216

546,567

631,994

Goodwill

102,785

88,499Customer-related assets

83,11371,561

Software80,90974,913

Other

7,626

7,626

274,435

242,601

Investment securities

542,531

612,807

Retirement benefit asset

705,144674,681Deferred tax assets

536,929539,732

Guarantee deposits

457,167

435,927

Other

89,934

93,485

Allowance for doubtful accounts(1,925)(4,577)

Total investments and other assets

2,329,781

2,352,057

3,150,785

3,226,652

15,539,989

17,413,797

Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets

Total non-current assets
Total assets- 50 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(Thousand yen)
FY3/23(As of Mar. 31, 2023)

FY3/22(As of Mar. 31, 2022)
Liabilities
Current liabilities
Notes and accounts payable-trade

1,380,056

1,495,532

Short-term borrowings

8,518

-

Income taxes payable

563,468

498,990

Contract liabilities

430,851

354,018

1,194,536

1,270,424

77,530110,250

52,9606,801

913,152

967,961

4,621,074

4,703,978120,728

141,759

6,646-

1,058,791

1,110,713

132,613

239,628

Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Provision for loss on construction contracts
Other
Total current liabilities
Non-current liabilities
Provision for share awards for directors (and otherofficers)
Provision for retirement benefits for directors (andother officers)
Retirement benefit liability
Asset retirement obligations
Deferred tax liabilities

24,65528,464

Other

380,995

373,011

1,724,430

1,893,578

6,345,505

6,597,556

Share capital

1,535,409

1,535,409

Capital surplus

1,703,991

1,702,732

Retained earnings

5,865,484

7,389,420

Treasury shares(175,264)(175,703)

Total shareholders’ equity

8,929,621

10,451,859

121,768

137,114

Foreign currency translation adjustment(2,240)119,184

Remeasurements of defined benefit plans

110,706

60,618

Total accumulated other comprehensive income

230,234

316,917

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

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

Non-controlling interests
Total net assets
Total liabilities and net assets- 51 -

34,62847,4639,194,483

10,816,240

15,539,989

17,413,797

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

ii. Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY3/22(Apr. 1, 2021 – Mar. 31, 2022)
Net sales(Thousand yen)
FY3/23(Apr. 1, 2022 – Mar. 31, 2023)*1 21,399,553*1

23,519,516

Cost of sales*4, *6 15,711,508*4, *617,143,676

Gross profit

5,688,045

6,375,839*2, *3 3,687,543*2, *3 3,990,171

2,000,501

2,385,668

Interest income

12,02016,012

Dividend income

6,391

8,937

Rental income

2,483

3,086

Commission income

1,971

2,100

Foreign exchange gains

14,225

12,286

Subsidy income

14,937

20,792

Selling, general and administrative expenses
Operating income
Non-operating income

Other

9,268

5,535

Total non-operating income

61,29868,752Non-operating expenses
Interest expenses

1,199

620

-

2,345

Commission expenses

1,899

758

Share issuance costs

5,773

-

415

547

Provision of allowance for doubtful accounts

Other
Total non-operating expenses

9,287

4,271

2,052,512

2,450,148*5 87,398-

87,398-

1,965,114

2,450,148

Income taxes-current

773,626

658,607

Income taxes-deferred(140,936)

13,513

Ordinary income
Extraordinary losses
Impairment losses
Total extraordinary losses
Profit before income taxes

Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent- 52 -

632,689

672,121

1,332,424

1,778,027

1,866

5,816

1,330,558

1,772,210

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Consolidated Statement of Comprehensive Income
FY3/22(Apr. 1, 2021 – Mar. 31, 2022)
Profit(Thousand yen)
FY3/23(Apr. 1, 2022 – Mar. 31, 2023)

1,332,424

1,778,027

Valuation difference on available-for-sale securities(65,007)

15,346

Foreign currency translation adjustment

79,646125,124

Remeasurements of defined benefit plans, net of tax(4,860)(50,087)*1 9,779*1 90,382

1,342,203

1,868,410

1,339,796

1,858,894

2,407

9,516

Other comprehensive income

Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests- 53 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

iii. Consolidated Statement of Changes in Equity
FY3/22 (Apr. 1, 2021 – Mar. 31, 2022)(Thousand yen)
Shareholders’ equity

Share capital
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus

Retained earnings

1,128,115

4,605,874

1,076,669

Treasury shares

Total shareholders’equity(218,515)

6,592,143

81,0801,076,669

1,128,115

458,739458,739

4,686,954

81,080(218,515)

6,673,223

Changes during period
Issuance of new shares
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury shares
Disposal of treasury shares
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

917,479(152,028)(152,028)

1,330,558

1,330,558

116,125(87,750)(87,750)

131,002247,127

1,011

1,011

458,739575,876

1,178,529

43,251

2,256,397

1,535,409

1,703,991

5,865,484(175,264)

8,929,621

Accumulated other comprehensive income

Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Valuationdifference on
available-forsale securities

Foreigncurrencytranslation
adjustment

Remeasurementsof defined benefit
plans

Total
accumulated
othercomprehensive
income186,775(81,346)

115,566

220,996

Share
acquisitionrights

Noncontrollinginterests

Total net
assets

5,530

31,7056,850,375
81,080186,775(81,346)

115,566

220,996

5,530

31,705

6,931,456

Changes during period
Issuance of new shares

917,479

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury shares(152,028)

Disposal of treasury shares
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

1,330,558(87,750)
247,127
1,011(65,007)

79,105(4,860)9,238(5,530)

2,923

6,630

(65,007)

79,105(4,860)9,238(5,530)2,923

2,263,027

121,768(2,240)110,706

230,234-

34,6289,194,483- 54 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

FY3/23 (Apr. 1, 2022 – Mar. 31, 2023)(Thousand yen)
Shareholders’ equity

Share capital
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus

Retained earnings

1,703,991

5,865,484

1,535,409

Treasury shares

Total shareholders’equity(175,264)

8,929,621-

1,535,409

1,703,991

5,865,484(175,264)

8,929,621

Changes during period
Issuance of new shares-

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury shares(248,274)

1,772,210

1,772,210(439)

Disposal of treasury shares
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period(248,274)(439)-(1,258)(1,258)-(1,258)

1,523,936(439)

1,522,238

1,535,409

1,702,732

7,389,420(175,703)

10,451,859

Accumulated other comprehensive income

Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Valuationdifference on
available-forsale securities

Foreigncurrencytranslation
adjustment

Remeasurementsof defined benefit
plans

Total
accumulated
othercomprehensive
income121,768(2,240)110,706

230,234

Share
acquisitionrights

Noncontrollinginterests

Total net
assets-34,6289,194,483-

121,768(2,240)110,706

230,234-

34,6289,194,483

Changes during period
Issuance of new shares-

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury shares
Disposal of treasury shares
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period(248,274)
1,772,210(439)(1,258)15,346

121,425(50,087)

86,683-

12,83599,51815,346

121,425(50,087)

86,683-

12,835

1,621,756

137,114

119,184

60,618316,917-47,463

10,816,240- 55 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

iv. Consolidated Statement of Cash Flows(Thousand yen)
FY3/22(Apr. 1, 2021 – Mar. 31, 2022)

FY3/23(Apr. 1, 2022 – Mar. 31, 2023)

1,965,114

2,450,148

Depreciation

114,387

118,347

Amortization of software

23,215

25,110

Amortization of goodwill

31,361

23,599Amortization of customer-related assets

20,27919,083

Cash flows from operating activities
Profit before income taxes

Amortization of trademark

976-

Amortization of technology assets

1,733

-

Impairment loss

87,398-

Increase (decrease) in provision for bonuses

308,751

74,896

Decrease (increase) in retirement benefit asset(38,329)

30,463

Increase (decrease) in retirement benefit liability

41,363

48,816

Interest and dividend income(18,411)(24,950)

Interest expenses

1,199

620

(1,316,502)(937,570)

Increase (decrease) in contract liabilities

35,117(79,016)

Decrease (increase) in inventories

309,800(28,805)

Increase (decrease) in trade payables

339,136

101,276

Other, net(72,578)(52,232)

Subtotal

1,834,014

1,769,788

Interest and dividends received

38,51924,950Interest paid

(1,151)(620)

Decrease (increase) in trade receivables and contract assets

Income taxes paid

(708,462)(720,202)

Net cash provided by (used in) operating activities

1,162,919

1,073,916

Cash flows from investing activities
Proceeds from sale of membership
Payments into time deposits

690

-

-

(415,785)

Proceeds from withdrawal of time deposits

-

3,291

Purchase of property, plant and equipment(51,486)(80,953)

Proceeds from sale of property, plant and equipment

6,483

1,481

(32,391)(16,724)

Purchase of investment securities(1,532)(46,994)

Proceeds from sale of investment securities

22,601-

Loan advances(51,812)(15,906)

Proceeds from collection of loans receivable

45,405

8,571

Payments of guarantee deposits(19,111)(2,631)

Proceeds from refund of guarantee deposits

1,194

24,945

Other, net

(952)

(950)

(80,912)(541,656)

Purchase of software

Net cash provided by (used in) investing activities- 56 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(Thousand yen)
FY3/22(Apr. 1, 2021 – Mar. 31, 2022)

FY3/23(Apr. 1, 2022 – Mar. 31, 2023)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings(400,000)(9,047)

Repayments of lease liabilities(28,185)(25,115)

Repayments of long-term borrowings(2,800)-

Proceeds from issuance of shares

914,768-

Dividends paid

(152,028)(248,274)

Purchase of treasury shares
Proceeds from share issuance to non-controllingshareholders
Dividends paid to non-controlling interests(87,750)

(439)

-

3,740

-

(1,680)

Proceeds from disposal of treasury shares

242,854-

Net cash provided by (used in) financing activities

486,858(280,816)

41,26277,782

Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents

1,610,127

329,226

Cash and cash equivalents at beginning of period

4,853,695

6,463,823

Cash and cash equivalents at end of period*1- 57 -

6,463,823*1

6,793,050

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Notes to Consolidated Financial Statements
Significant Accounting Policies in the Preparation of Consolidated Financial Statements
1. Scope of consolidation(1) Number of consolidated subsidiaries: 13
Names of consolidated subsidiaries:
JASTEC (THAILAND) CO., LTD.
Alpha Computer Co., Ltd.
NewNeeds Co., Ltd.
GuiLin Anxin Software Co., Ltd.
Shanghai Jiafeng Information Technology Co., Ltd.
ISR Co., Ltd.
JAST Asia Pacific Co., Ltd.
Virtual Calibre SDN. BHD.
Virtual Calibre MSC SDN. BHD.
Virtual Calibre Consulting SDN. BHD.
AG NET PTE. LTD.
Bright & Better Co., Ltd.
Virtual Calibre Consulting India Pvt. Ltd.
Virtual Calibre Consulting India Pvt. Ltd. was included in the scope of consolidation because it was established as a
subsidiary of the Company during the current fiscal year.
(2) Name of unconsolidated subsidiary
AGHRM Malaysia SDN. BHD.
Reason for exclusion from scope of consolidation
This unconsolidated subsidiary is excluded from the scope of consolidation because it is a smaller company and thus
has no material impact on the consolidated financial statements in terms of total assets, net sales, net income or loss
(amount proportionate to the Company’s equity interest), retained earnings (amount proportionate to the Company’s
equity interest) and other items.
2. Application of equity method(1) Number of unconsolidated subsidiaries accounted for by the equity method
Not applicable.
(2) Name of unconsolidated subsidiary not accounted for by the equity method, etc.
AGHRM Malaysia SDN. BHD.
(Reason for not applying the equity method)
This unconsolidated subsidiary is not accounted for by the equity method because it has only an insignificant effecton the consolidated financial statements in terms of net income or loss (amount proportionate to the Company’s
equity interest), retained earnings (amount proportionate to the Company’s equity interest) and other items, and has
no significance as a whole in terms of the Company’s equity interest.
3. Fiscal year of consolidated subsidiaries
At the nine overseas consolidated subsidiaries, the fiscal year under review ended on December 31, 2022. The
consolidated financial statements include the financial statements of these consolidated subsidiaries as of December 31,
2022. Necessary adjustments have been made for the consolidation concerning material transactions arising between
January 1, 2023 and March 31, 2023.
The fiscal year of the three consolidated subsidiaries in Japan and one overseas consolidated subsidiary ends on the- 58 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

closing date of consolidated financial statements.
4. Accounting policies(1) Valuation standards and methods for principal assets
A. Marketable securities(ⅰ) Held-to-maturity debt securities
Stated at cost determined by the amortized cost method (straight-line method).
(ⅱ) Available-for-sale securities
Securities other than shares, etc. that do not have a market priceStated at fair value. (Unrealized gain or loss is included in net assets. Cost of securities sold is determined by themoving-average method.)
Shares, etc. that do not have a market priceStated at cost determined by the moving-average method.
B. Inventories(ⅰ) MerchandiseStated at cost determined by the specific identification method. (The carrying amount on the balance sheet iswritten down to reflect the effect of lower profit margins.)(ⅱ) Finished goods
Stated at cost determined by the periodic average method. (The carrying amount on the balance sheet is written
down to reflect the effect of lower profit margins.)(ⅲ) Work in process
Stated at cost determined by the specific identification method. (The carrying amount on the balance sheet iswritten down to reflect the effect of lower profit margins.)(ⅳ) Supplies
Valued by the last purchased price method.
(2) Depreciation and amortization of significant depreciable assets
A. Property, plant and equipment (excluding lease assets)
Depreciation of property, plant and equipment at the Company and its consolidated subsidiaries in Japan is
calculated by the declining-balance method, except for facilities attached to buildings and structures acquired on
or after April 1, 2016, on which depreciation is calculated by the straight-line method.
Depreciation of property, plant and equipment at the overseas consolidated subsidiaries is calculated by the straightline method.
Useful life of principle assets is as follows.
Buildings and structures: 10–35 years
Other:
4–10 years
B. Intangible assets (excluding lease assets)
Amortization of intangible assets is calculated by the straight-line method.
Software is amortized over an expected internal useful life of 3-5 years by the straight-line method.
C. Leased assets(ⅰ) Lease assets associated with finance lease transactions where there is transfer of ownership
Depreciated by the same method as depreciation method used for non-current assets held by the Company.
(ⅱ) Lease assets associated with finance lease transactions where there is no transfer of ownership
Depreciated by the straight-line method, assuming the lease period to be the useful life and a residual value ofzero.

- 59 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(3) Recognition of significant allowances
A. Allowance for doubtful accounts
To prepare for credit losses on accounts receivable, allowances equal to the estimated amount of uncollectible
receivables are provided for general receivables based on the historical write-off ratio, and bad receivables basedon case-by-case determination of collectibility.
B. Provision for bonuses
To provide for employee bonus obligation, the Company and its certain consolidated subsidiaries provide anallowance equal to the estimated bonus obligations.
C. Provision for retirement benefits for directors (and other officers)
To provide for retirement benefits for directors (and other officers), the Company’s certain consolidated
subsidiaries in Japan provide an allowance for the aggregate amount payable at the end of the current fiscal year
pursuant to the Company’s rules on retirement benefits for directors (and other officers).
D. Provision for bonuses for directors (and other officers)
To provide for bonuses for directors (and other officers), the Company and its certain consolidated subsidiaries
provide an allowance equal to the estimated bonus obligations in the current fiscal year.
E. Provision for share awards for directors (and other officers)
To provide for the payment of the Company’s shares to the Company’s directors (and other officers) in accordancewith the rules on the stock compensation plan for directors (and other officers), an allowance is provided based on
the estimated obligations for share awards in the current fiscal year.
F. Provision for loss on construction contracts
To prepare for future losses on construction contracts, such as contracted software production and development,
an allowance is provided for estimated losses on contracts for which losses are expected to be incurred in the next
fiscal year or later and the amount can be reasonably estimated.
(4) Accounting method for retirement benefits(ⅰ) Method of attributing estimated retirement benefit obligations to periods
In calculation of retirement benefit obligations, the Company uses the benefit formula standard as the method for
attributing estimated retirement benefit obligations to periods.
(ⅱ) Amortization of actuarial differences and prior service costs
Prior service cost is amortized by the declining-balance method over a certain period (10 years) within estimatedaverage remaining years of service of the eligible employees.
Actuarial differences are amortized and charged to expense in the year following the fiscal year in which such gainor loss is recognized by the declining-balance method over a certain period (10 years) which is within the estimatedaverage remaining years of service of the eligible employees.
(ⅲ) Accounting method for unrecognized actuarial gains and losses and unrecognized past service costs
Unrecognized actuarial gains and losses and unrecognized past service costs would be recorded as“Remeasurements of defined benefit plans” under “Accumulated other comprehensive income” in the net asset
section after adjusting for tax effects.
(ⅳ) Adoption of the simple method for smaller enterprises, etc.
Certain consolidated subsidiaries apply the simple method to calculate retirement benefit liability and retirement
benefit expenses, using the amount payable for voluntary retirement benefits at the end of the fiscal year as
retirement benefit obligations.
(5) Recognition of significant revenues and expenses
The nature of the main performance obligations related to revenue from contracts with customers in the major
businesses of the Company and its consolidated subsidiaries and the timing when those performance obligations are
typically satisfied (when revenue is typically recognized) are as follows.
The Company and its consolidated subsidiaries have four business segments: DX&SI business, Package business,
Medical big data business, and Global business. The Company and its consolidated subsidiaries recognize revenue- 60 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

from contracts with customers mainly for contracted software production, maintenance and relevant services. For
contracts where the performance obligation is fulfilled over a specified period, the progress of fulfilling theperformance obligation is estimated, except when the period is extremely short, and revenue based on the progress
is recognized for that period. The progress is determined mainly by the input method based on the ratio of the actual
costs incurred to the estimated total construction cost (the cost-to-cost basis). For contracts where the performanceobligation is fulfilled at a point in time, such as the sale of products related to system equipment, revenue is recognizedat the point in time when the customer accepts the products.
For transactions, such as the sale of products, where the Company and its consolidated subsidiaries function as agents,
the amount paid to the supplier of the product is deducted from the total payment received from the customer and theresulting net amount is recognized as revenue.
(6) Method and period of goodwill amortization
Goodwill is amortized over a period of 5 to 10 years by the straight-line method.
(7) Scope of cash and cash equivalents on consolidated statement of cash flows
Cash and cash equivalents consist of vault cash, deposits that can be withdrawn on demand, and time deposit withmaturities less than 3 months.
Significant Accounting Estimates
1. Estimate of total construction cost for revenue recognition over a specified period based on progress(1) Amounts recorded in the consolidated financial statements of the current fiscal year
(Thousand yen)
FY3/23

FY3/22
Net sales from revenue recognized overa specified period based on progress

1,185,650

1,856,776(2) Other information that contributes to the understanding of accounting estimates
For contracts where the performance obligation is fulfilled over a specified period, such as contracted software
production and relevant services, net sales are recorded by recognizing revenue based on the progress for that period.
Net sales from revenue recognized over a specified period based on progress are calculated by multiplying the total
construction revenue by the progress. The progress is determined by the input method based on the ratio of the actual
costs incurred by the end of the current fiscal year to the estimated total construction cost (the cost-to-cost basis). The
total construction cost based on incurred costs is estimated by estimating the number of man-hours required for thework in consideration of its individualized nature, such as the specifications and work period of contracted software
production and relevant services.
In the event that the estimate of man-hours requires a significant revision, the change in estimate of the total
construction cost due to the revision may have a material impact on the consolidated financial statements for thefollowing fiscal year.
Accounting Standards, Others That Have Not Yet Been Applied- Accounting Standard for Current Income Taxes (ASBJ Statement No. 27, October 28, 2022)- Accounting Standard for Presentation of Comprehensive Income (ASBJ Statement No. 25, October 28, 2022)- Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, October 28, 2022)(1) Outline
The above standards and guidance define the accounting classification of income taxes when other comprehensive
income is taxable and the treatment of tax effects on the sale of shares of subsidiaries, etc. when the group taxation
regime is adopted.
(2) Effective date
Scheduled to be effective from the beginning of the fiscal year ending March 31, 2025.

- 61 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(3) Effects of application of the accounting standards and guidance
The effects of the application are under assessment at the time of preparing these consolidated financial statements.
Reclassifications“Asset retirement obligations,” included in “Other” under non-current liabilities in the previous fiscal year, isreclassified and presented as a separate line item in the current fiscal year since it has increased materiality in the context
of financial statements. The prior-period consolidated financial statements are restated to conform to the current-period
presentation.
“Other” under non-current liabilities (513,608 thousand yen) shown in the prior-period consolidated balance sheet isreclassified and divided into “Asset retirement obligations” (132,613 thousand yen) and “Other” (380,995 thousandyen).
Changes in Accounting-based Estimates
In the current fiscal year, the Company restated asset retirement obligations, which had been recorded as obligations
for returning leased space to its original condition in association for real estate leasing contracts of the Company, toreflect a change in the estimate of restoration costs due to the availability of new information on restoration costs. The
increase of 100,582 thousand yen attributable to this change in estimate was added to the balance of asset retirement
obligations before the change.
In addition, as a result of this change in estimate, operating income, ordinary income, and profit before income taxes
for the current fiscal year each decreased by 9,781 thousand yen.
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 established a Board Benefit Trust (BBT) for the purpose of increasing motivation
for contributing to the medium to long-term growth of sales and earnings and an increase in corporate value. The BBT
plan clearly links the compensation of directors with the JAST stock price. Furthermore, directors share with shareholders
the benefits of a higher stock price as well as the risk of a lower stock price.
1) Overview
This is a stock compensation plan in which directors receive stock compensation through a BBT. The BBT acquires JAST
stock using cash contributions from JAST as the source of funds. Directors (excluding external directors; same afterward
unless indicated otherwise) receive stock compensation or a monetary amount equivalent to the market value of the stockin lieu of stock compensation in accordance with the rules on the stock compensation plan for directors (and other officers).
In principle, a director becomes eligible for stock compensation only after the individual is no longer a JAST director.
2) JAST stock held by the BBT
The book value (excluding associated expenses) of JAST stock held by the BBT is shown as treasury shares in the net
assets section of the consolidated balance sheet. The BBT held 149,200 shares of JAST with a book value of 171,700
thousand yen as of the end of the previous fiscal year, and the BBT held 149,200 shares with a book value of 171,700
thousand yen as of the end of the current fiscal year.
Note: JAST conducted a 2-for-1 common stock split on October 1, 2022. The number of shares has been calculated as if
this stock split has taken place at the beginning of the fiscal year ended March 31, 2022.

- 62 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Notes to Consolidated Balance Sheet*1 The Company has commitment line agreements with 4 banks, in order to raise funds efficiently. The balances ofcredit available as of the balance sheet date were as follows.

Commitment line

FY3/22(As of Mar. 31, 2022)
500,000

Credit used
Credit available(Thousand yen)
FY3/23(As of Mar. 31, 2023)
500,000--

500,000

500,000*2 Notes and accounts receivable-trade, and contract assets arising from contracts with customers were as follows.

4,827(Thousand yen)
FY3/23(As of Mar. 31, 2023)
22,826

4,599,320

5,073,898

929,182

1,435,660

FY3/22(As of Mar. 31, 2022)
Notes receivable-trade
Accounts receivable-trade
Contract assets

Notes to Consolidated Statement of Income*1 Revenue from contracts with customers
Net sales are not presented separately into revenues arising from contracts with customers and other revenues. The
amount of revenue from contracts with customers is presented in “(Revenue Recognition), 1. Information on
disaggregated revenue from contracts with customers” in the Notes to Consolidated Financial Statements.
*2 Major items of selling, general and administrative expenses(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)

FY3/22(Apr. 1, 2021–Mar. 31, 2022)
Compensations for directors (andother officers)
Wages, sales and other allowances

265,302

293,944

1,436,314

1,552,084

Provision for bonuses
Provision for bonuses for directors(and other officers)
Provision for retirement benefits for
directors (and other officers)
Stock compensation expenses for
directors (and other officers)
Retirement benefit expenses

226,470

216,50776,705

117,666

2,407

352

41,687

21,031

50,984

63,741

Research and development expenses

436,763469,246*3 Total amount of research and development expenses included in general and administrative expenses
FY3/22(Apr. 1, 2021–Mar. 31, 2022)
436,763(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)
469,246*4 Provision for loss on construction contracts included in cost of sales
FY3/22(Apr. 1, 2021–Mar. 31, 2022)
52,960- 63 -(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)
6,801

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

*5 Impairment losses
In the previous fiscal year, the Group recorded impairment losses on each of the following goodwill, customer-related
assets, trademark rights, and technology assets.
Impairment losses(Thousand yen)
55,939Location

Purpose of use

Class

Singapore

Other

Goodwill

Singapore

Business use

Customer-related assets

Singapore

Business use

Trademark rights

7,325

Singapore

Business use

Technology assets

13,004

11,129The Group’s assets, in principle, are grouped by business segment for assessing impairment losses.
Because it was no longer likely that AG NET PTE. LTD., a consolidated subsidiary of the Company, would generate
the expected earnings upon its stock acquisition, the book value of goodwill, customer-related assets, trademark rights,
and technology assets was reduced to their respective recoverable amount, and the total reduction of 87,398 thousand
yen was recorded as an impairment loss: 55,939 thousand yen for goodwill, 11,129 thousand yen for customer-related
assets, 7,325 thousand yen for trademark rights, and 13,004 thousand yen for technology assets.
The recoverable amount of the assets was measured by value in use, and assessed as zero.
*6 The balance of inventories at the end of the fiscal year is the amount after the write-down of book value due to theeffect of lower profit margins, and the following inventory write-down is included in cost of sales.
FY3/22(Apr. 1, 2021–Mar. 31, 2022)
22,929(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)
53,368Notes to Consolidated Statement of Comprehensive Income*1 Re-classification adjustments and tax effect with respect to other comprehensive income
FY3/22(Apr. 1, 2021–Mar. 31, 2022)
Valuation difference on available-for-salesecurities:
Amount incurred during the year

(93,651)

Re-classification adjustments(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)

22,118(46)-

Before tax effect adjustments(93,697)

22,118Tax effect
Valuation difference on availablefor-sale securities
Foreign currency translation adjustment:

28,690(6,772)(65,007)

15,346

Amount incurred during the year

79,646125,124

Amount incurred during the year

27,307(38,469)

Re-classification adjustments(34,313)(33,723)

Before tax effect adjustments(7,005)(72,193)

Tax effectRemeasurements of defined benefit
plans, net of tax
Total other comprehensive income

2,145

22,105(4,860)(50,087)

9,779

90,382Remeasurements of defined benefit plans:- 64 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Notes to Consolidated Statement of Changes in Equity
FY3/22 (Apr. 1, 2021–Mar. 31, 2022)
1. Type of share and the number of outstanding shares and treasury shares
Number of shares
as of Apr. 1, 2021

Increase(Shares)Number of shares
as of Mar. 31, 2022

Decrease

Outstanding shares
Common stock
Total
Treasury shares
Common stock(Note 1, 2)
Total
Notes: 1.
2.

3.

4.

5,612,230

597,000-

6,209,230

5,612,230

597,000-

6,209,230

230,423

30,543

184,000

76,966

230,423

30,543

184,000

76,966

Number of outstanding shares of common stock increased 597,000 shares due to exercise of share acquisition rights.
Number of treasury shares of common stock increased 30,543 shares:
Increase due to purchase by the Board Benefit Trust (BBT)
28,800 shares
Increase due to acquisition without contribution by the restricted stock compensation plan
1,700 shares
Increase due to acquisition of odd-lot shares
43 shares
Number of treasury shares of common stock decreased 184,000 shares:
Decrease due to disposal of treasury shares through exercise of share acquisition rights
182,000 shares
Decrease due to stock compensation for retired directors (and other officers) from the BBT 2,000 shares
Number of treasury shares of common stock includes the Company’s stock held by the BBT (47,800 shares as of April
1, 2021 and 74,600 shares as of March 31, 2022).

2. Items related to share acquisition rights and treasury share acquisition rights

Item
Reportingcompany(parent
company)

Number of shares under share acquisition rights
Balance
Type of shares(Shares)
as of Mar. 31,
Share acquisition rights under share2022(itemized)
acquisition
As of
As of
(ThousandIncrease
DecreaserightsApr. 1, 2021
Mar. 31, 2022
yen)
Share acquisitionrights (2021) (Note)
Total

Note:

Common stock

779,000-

779,000---

779,000-

779,000--

Number of share acquisition rights (2021) decreased due to the exercise of share acquisition rights.

3. Dividends(1) Dividend payment
Resolution

Type of share

Total dividends(Thousand yen)

Dividend per share(Yen)

Record date

Effective date

Board of Directors’
meeting on April 28,
Common stock
152,028
28
March 31, 2021
June 11, 2021
2021
Note: The amount of total dividends resolved by the Board of Directors’ meeting on April 28, 2021 includes dividends of 1,338
thousand yen for the Company’s stock held by the Board Benefit Trust (BBT).

(2) Dividends with a record date in FY3/22, but an effective date in FY3/23
Resolution

Type of share

Total dividends(Thousand yen)

Source offunds

Dividend pershare (Yen)Record date

Effective date

Board of Directors’CommonRetainedmeeting on April
248,274
40
March 31, 2022
June 9, 2022
stock
earnings
28, 2022
Note: The amount of total dividends resolved by the Board of Directors’ meeting on April 28, 2022 includes dividends of 2,984
thousand yen for the Company’s stock held by the Board Benefit Trust (BBT).

- 65 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

FY3/23 (Apr. 1, 2022–Mar. 31, 2023)
1. Type of share and the number of outstanding shares and treasury shares
Number of shares
as of Apr. 1, 2022

Increase(Shares)Number of shares
as of Mar. 31, 2023

Decrease

Outstanding shares
Common stock(Note 1)
Total

6,209,230

6,209,230-

12,418,460

6,209,230

6,209,230-

12,418,460

Treasury shares
Common stock(Note 2, 3)
Total

76,96677,302-

154,268

76,96677,302-

154,268

Notes: 1.
2.

3.

Number of outstanding shares of common stock increased 6,209,230 shares due to stock split.
Number of treasury shares of common stock increased 77,302 shares:
Increase due to acquisition of odd-lot shares before stock split
150 shares
Increase due to acquisition of odd-lot shares after stock split
36 shares
Increase due to stock split
77,116 shares
Number of treasury shares of common stock includes the Company’s stock held by the BBT (74,600 shares as of April
1, 2022 and 149,200 shares as of March 31, 2023).

2. Items related to share acquisition rights and treasury share acquisition rights
Not applicable.
3. Dividends(1) Dividend payment
Resolution

Type of share

Total dividends(Thousand yen)

Dividend per share(Yen)

Record date

Effective date

Board of Directors’
meeting on April 28,
Common stock
248,274
40
March 31, 2022
June 9, 2022
2022
Note: The amount of total dividends resolved by the Board of Directors’ meeting on April 28, 2022 includes dividends of 2,984
thousand yen for the Company’s stock held by the Board Benefit Trust (BBT).

(2) Dividends with a record date in FY3/23, but an effective date in FY3/24
Resolution

Type of share

Total dividends(Thousand yen)

Source offunds

Dividend pershare (Yen)Record date

Effective date

Board of Directors’CommonRetainedmeeting on April
397,22832
March 31, 2023
June 9, 2023
stock
earnings
28, 2023
Note: The amount of total dividends resolved by the Board of Directors’ meeting on April 28, 2023 includes dividends of 4,774
thousand yen for the Company’s stock held by the Board Benefit Trust (BBT).

Notes to Consolidated Statement of Cash Flows*1 Reconciliation of cash and cash equivalents at the end of the fiscal year and amount of balance sheet is made as
follows.

Cash and deposits
Time depositwith maturities over 3 months
Cash and cash equivalents

FY3/22(Apr. 1, 2021–Mar. 31, 2022)
6,464,852- 66 -(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)
7,206,690(1,029)(413,639)

6,463,823

6,793,050

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Financial Instruments
1. Status of financial instruments(1) Policies on financial instruments
The Group covers necessary funds mainly with its own funds, but also raises funds by borrowing from banks,
depending on the cash flow situation and financial conditions. Temporary surplus funds are invested only in highly
secure financial assets such as deposits with guaranteed principal and fixed interest rates. The Group does not engage
in derivative transactions.
(2) Nature and risks of financial instruments
Notes and accounts receivable-trade, which are trade receivables, are exposed to customers’ credit risk. Investment
securities mainly comprise held-to-maturity bonds and shares of companies with which we have business
relationships, and are exposed to the risk of market price fluctuations.
Accounts payable-trade, which are trade payables, are mostly due within two months. Borrowings are mainly for the
purpose of financing working capital and are exposed to liquidity risk.
(3) Risk management system for financial instruments(ⅰ) Management of credit risk (risk of non-performance by counterparties)
In accordance with the credit management rules, the department in charge regularly monitors the status of business
partners and manages due dates and outstanding balances by business partner in order to early identify and mitigate
concerns about collection due to deterioration of financial conditions and other reasons.
(ⅱ) Management of market risk (risk of exchange rate and interest rate fluctuations)
For investment securities, the Group assesses the fair value and financial conditions of the issuers (business
partners) regularly, and reviews its holdings of such securities on an ongoing basis, taking into consideration market
conditions and the relationship with the business partners.
(ⅲ) Management of liquidity risk in financing (risk of being unable to make payments on due dates)
The Group manages its liquidity risk by having the department in charge prepare and update cash management
plans in a timely manner, maintaining liquidity on hand, and other measures.
(4) Supplementary explanation on fair value of financial instruments
As certain assumptions are used in the calculation of the value of financial instruments, such value may vary if
different assumptions are applied.
2. Fair value of financial instruments
The carrying amount and fair value of financial instruments and their difference are as follows.
FY3/22 (As of Mar. 31, 2022)
Carrying amount

Fair value(Thousand yen)
Difference(1) Investment securities (*2)(ⅰ) Available-for-sale securities(2) Guarantee deposits
Total assets

520,240

520,240-

457,167

451,995(5,172)

977,408

972,236(5,172)(*1) “Cash and deposits,” “Notes and accounts receivable-trade, and contract assets,” “Accounts payable-trade,” “Short-termborrowings,” and “Income taxes payable” are omitted because they are cash, and their fair value approximates their carrying
amount since they are settled in a short period of time.
(*2) Shares, etc. that do not have a market price are not included in “(1) Investment securities.” The carrying amount of suchfinancial instruments are as follows.

- 67 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Item

FY3/22 (Thousand yen)

Unlisted shares

22,290FY3/23 (As of Mar. 31, 2023)
Carrying amount(Thousand yen)
Difference

Fair value(1) Investment securities (*2)(ⅰ) Available-for-sale securities

589,354(2) Guarantee deposits
Total assets

589,354-435,927

430,246(5,681)

1,025,282

1,019,601(5,681)(*1) “Cash and deposits,” “Notes and accounts receivable-trade, and contract assets,” “Accounts payable-trade,” and “Income
taxes payable” are omitted because they are cash, and their fair value approximates their carrying amount since they aresettled in a short period of time.
(*2) Shares, etc. that do not have a market price are not included in “(1) Investment securities.” The carrying amount of suchfinancial instruments are as follows.
Item

FY3/23 (Thousand yen)

Unlisted shares
Note 1:

23,452

Redemption schedule of monetary claims and securities with maturities after the consolidated balance sheet date
FY3/22 (As of Mar. 31, 2022)(Thousand yen)
Due after
Due after
Due within
Due after
1 year through 5 years through1 year10 years
5 years
10 years
6,464,852-

Cash and deposits
Notes and accounts receivable-trade, and contract assets

5,533,330

-

-

-

-

105,800--

11,998,183

105,800--

Investment securities
Available-for-sale securities with maturities
Bonds
Total
FY3/23 (As of Mar. 31, 2023)(Thousand yen)
Due after
Due after
Due within
Due after
1 year through 5 years through1 year10 years
5 years
10 years
7,206,690-

Cash and deposits
Notes and accounts receivable-trade, and contract assets

6,532,385

-

-

-

Bonds

-

101,910--

Negotiable certificates of deposit-

45,135--

13,739,075

147,045--

Investment securities
Available-for-sale securities with maturities

Total
Note 2:

Repayment schedule of short-term borrowings and long-term borrowings after the consolidated balance sheet date
FY3/22 (As of Mar. 31, 2022)
Due after
Due within
1 year through1 year
2 years
Short-term borrowings
Long-term borrowings
Total

Due after
2 years
through
3 years

Due after
3 years
through
4 years(Thousand yen)
Due after
4 years
Due after
through
5 years
5 years
-

8,518

-

-

-

-

-

-

-

-

-

8,518

-

-

-

-

-

- 68 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

FY3/23 (As of Mar. 31, 2023)
Not applicable.

3. Fair value information by level within the fair value hierarchy
The fair value of financial instruments is classified into the following three levels according to the observability andmateriality of inputs used to measure fair value.
Level 1 fair value: Fair value measured using observable inputs, i.e., quoted prices in active markets for assets or
liabilities that are the subject of the measurement.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs.
If multiple inputs are used that are significant to the fair value measurement, the fair value measurement is categorized inits entirety in the level of the lowest level input that is significant to the entire measurement.
(1) Financial instruments measured at fair value
FY3/22 (As of Mar. 31, 2022)
Item

Fair value (Thousand yen)
Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Shares414,440--

414,440-

105,800-

105,800

414,440

105,800-

520,240

Corporate bonds
Total assets

FY3/23 (As of Mar. 31, 2023)
Item

Fair value (Thousand yen)
Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Shares442,309--442,309

Corporate bonds-

101,910-

101,910

Negotiable certificates of deposit-

45,135-45,135442,309

147,045-589,354

Total assets(2) Financial instruments other than those measured at fair value
FY3/22 (As of Mar. 31, 2022)
Item

Fair value (Thousand yen)
Level 1

Guarantee deposits
Total assets

Level 2

Level 3

Total-

451,995-

451,995-

451,995-

451,995

FY3/23 (As of Mar. 31, 2023)
Item
Guarantee deposits
Total assets

Fair value (Thousand yen)
Level 1

Level 2

Level 3

Total-

430,246-

430,246-

430,246-

430,246

Note: A description of the valuation techniques and inputs used in the fair value measurements
Investment securities
Listed shares, corporate bonds and negotiable certificates of deposit are valued using quoted prices. As listed shares are traded in active
markets, their fair value is classified as Level 1. On the other hand, the fair value of corporate bonds and negotiable certificates ofdeposit held by the Company are classified as Level 2 because they are not traded frequently in the public market and not considered
to have quoted prices in active markets.

- 69 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Guarantee deposits
The fair value is calculated based on the present value of guarantee deposits, net of future non-refundable guarantee deposits, discounted
at the yield on government bonds, and is classified as Level 2.

Marketable Securities
1. Held-to-maturity debt securities
FY3/22 (As of Mar. 31, 2022)
Not applicable.
FY3/23 (As of Mar. 31, 2023)
Not applicable.
2. Available-for-sale securities
FY3/22 (As of Mar. 31, 2022)
Type
Securities withcarrying amountexceeding acquisition
costs
Securities withcarrying amount notexceeding acquisition
costs

Carrying amount(Thousand yen)
Unrealized gain (loss)

Acquisition costs

Shares368,968

193,883

175,085

Bonds

105,800

81,327

24,473

Others---Subtotal

474,768

275,210

199,558

Shares45,472

69,520(24,048)

Bonds

-

-

-

Others---Subtotal

Total

45,472

69,520(24,048)

520,240

344,731

175,509

Note: Shares of unconsolidated subsidiaries (carrying amount of 141 thousand yen) and unlisted shares (carrying amount of
22,148 thousand yen) are not included in “Available-for-sale securities” in the above table because they are shares, etc. that
do not have a market price.

FY3/23 (As of Mar. 31, 2023)
Type
Securities withcarrying amountexceeding acquisition
costs

Securities withcarrying amount notexceeding acquisition
costs

Total

Carrying amount(Thousand yen)
Unrealized gain (loss)

Acquisition costs

Shares389,239

195,743

193,496

Bonds

101,910

81,327

20,583

Others---Subtotal

491,149

277,070

214,079

Shares53,07069,520(16,450)

Bonds
Negotiablecertificates ofdeposit
Others---45,13545,135----

Subtotal

98,205

114,655(16,450)

589,354391,725

197,628

Note: Shares of unconsolidated subsidiaries (carrying amount of 164 thousand yen) and unlisted shares (carrying amount of
23,288 thousand yen) are not included in “Available-for-sale securities” in the above table because they are shares, etc. that
do not have a market price.

- 70 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

3. Sales of other securities
FY3/22 (Apr. 1, 2021–Mar. 31, 2022)
Type

Sales amount(1) Shares(2) Bonds(ⅰ) National and local
government bonds, etc.
(ⅱ) Corporate bonds(ⅲ) Others(3) Others
Total(Thousand yen)
Aggregate loss

Aggregate gain
105

46

-

-

-

-

-

-

-

-

-

-

-

-

-

105

46

-

FY3/23 (Apr. 1, 2022–Mar. 31, 2023)
Not applicable.
4. Other securities written down due to impairment
FY3/22 (Apr. 1, 2021–Mar. 31, 2022)
Not applicable.
FY3/23 (Apr. 1, 2022–Mar. 31, 2023)
Not applicable.
Derivative Transactions
Not applicable because the Group had no derivative transactions.
Retirement Benefits
1. Retirement benefit plans
The Company has adopted defined benefit plans, which are a lump-sum retirement benefit payment plan in line with
the Company’s regulation, and a defined benefit pension plan as well as a defined contribution pension plan. The
Company and ISR Co., Ltd. participate in the Japan Computer Information Service Employee’s Pension Fund. The
amount to be contributed to plan assets accounted for as retirement benefit expenses was 47,922 thousand yen in the
consolidated financial statements for FY3/23.
Alpha Computer Co., Ltd. has adopted a lump-sum retirement benefit payment plan as defined benefit plan, andparticipates in the Nihon IT Software Pension Fund. The amount to be contributed to plan assets accounted for as
retirement benefit expenses was 2,134 thousand yen in the consolidated financial statements for FY3/23.
NewNeeds Co., Ltd. participates in the Small Enterprise Retirement Allowance Mutual Aid Fund for retirement fund.
The amount to be contributed to plan assets accounted for as retirement benefit expenses was 4,981 thousand yen in
the consolidated financial statements for FY3/23.
An overseas consolidated subsidiary has a retirement benefit plan based on its local program.
Following is the information regarding the multi-employer pension plan under which the amount to be contributed toplan assets is accounted for as retirement benefit expenses.

- 71 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Japan Computer Information Service Employees’ Pension Fund
(1) Most recent funding status of the multi-employer pension plan(Thousand yen)
FY3/22 (As of Mar. 31, 2022)
Amount of plan assets
Total of actuarial obligations basedon pension finance accounting andthe minimum actuarial reserve
Difference

FY3/23 (As of Mar. 31, 2023)

262,373,998

273,942,108

206,858,224

221,054,258

55,515,774

52,887,849(2) The percentage of the Group’s contribution out of the total contribution to the multi-employer pension plan
FY3/22 (Apr. 1, 2021–Mar. 31, 2022):
0.74%
FY3/23 (Apr. 1, 2022–Mar. 31, 2023):
0.76%(3) Supplementary explanation
The main factors of the difference in (1) above are as follows.
(Thousand yen)
FY3/22 (As of Mar. 31, 2022)
Balance of prior service cost

FY3/23 (As of Mar. 31, 2023)(55,345)(54,275)

Surplus for the fiscal year

55,571,119

52,942,124

Total

55,515,774

52,887,849

The percentages in (2) above do not correspond to the actual share of the Group’s contribution.
Nihon IT Software Pension Fund
(1) Most recent funding status of the multi-employer pension plan(Thousand yen)
FY3/22 (As of Mar. 31, 2022)
Amount of plan assets
Total of actuarial obligations basedon pension finance accounting andthe minimum actuarial reserve
Difference

FY3/23 (As of Mar. 31, 2023)

54,166,754

56,574,025

52,445,038

54,852,309

1,721,716

1,721,716(2) The percentage of the Group’s contribution out of the total contribution to the multi-employer pension plan
FY3/22 (Apr. 1, 2021–Mar. 31, 2022):
0.11%
FY3/23 (Apr. 1, 2022–Mar. 31, 2023):
0.10%(3) Supplementary explanation
The main factors of the difference in (1) above are as follows.
(Thousand yen)
FY3/22 (As of Mar. 31, 2022)
General reserve

FY3/23 (As of Mar. 31, 2023)

1,721,716

Surplus for the fiscal year
Total

-

-

1,721,716

1,721,716

The percentages in (2) above do not correspond to the actual share of the Group’s contribution.

- 72 -

1,721,716

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

2. Defined benefit plans(1) Reconciliation of beginning and ending balances of retirement benefit obligation
FY3/22(Apr. 1, 2021–Mar. 31, 2022)(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)

1,796,476

1,846,523

148,573

157,659

18,33518,769Retirement benefit obligations at
beginning of period
Service cost
Interest cost
Actuarial differences

8,415

20,483(118,750)(112,218)(6,527)(6,780)1,846,523

1,924,437

Payment of retirement benefit
OthersRetirement benefit obligations at endof period
Note: Plans using the simple method are included.

(2) Reconciliation of beginning and ending balances of plan assets(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)
1,492,876

Plan assets at beginning of period

FY3/22(Apr. 1, 2021–Mar. 31, 2022)
1,445,785

Expected return on plan assets

14,457

14,928Actuarial differences

35,723(22,130)

Contributions by the employer

55,24157,292

Payment of retirement benefit
Plan assets at end of period(58,331)(54,563)

1,492,876

1,488,404(3) Reconciliation of ending balances of retirement benefit obligation and plan assets against retirement benefit liability
and retirement benefit asset recognized in the consolidated balance sheet(Thousand yen)
FY3/23(As of Mar. 31, 2023)

FY3/22(As of Mar. 31, 2022)
Retirement benefit obligation ofcontributory plan
Plan assets

787,732

813,723(1,492,876)(1,488,404)(705,144)(674,681)

1,058,791

1,110,713

353,647

436,032

Retirement benefit liability

1,058,791

1,110,713

Retirement benefit asset
Net liability / asset recognized in the
consolidated balance sheet
Note: Plans using the simple method are included.

(705,144)(674,681)

353,647

436,032

Retirement benefit obligation of noncontributory plan
Net liability / asset recognized in the
consolidated balance sheet(4) Components of retirement benefit expenses

Service cost

FY3/22(Apr. 1, 2021–Mar. 31, 2022)
148,573(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)
157,659

Interest cost

18,33518,769

Expected return on plan assets(14,457)(14,928)

Amortization of actuarial differences(34,236)(33,662)

(77)

(61)

118,138

127,776

Amortization of prior service cost
Retirement benefit expenses fordefined benefit plan
Note: Plans using the simple method are included.

- 73 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(5) Remeasurements of defined benefit plans
Components of remeasurements of defined benefit plans (before tax effect)
FY3/22(Apr. 1, 2021–Mar. 31, 2022)(77)(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)(61)

Actuarial differences(6,928)(76,275)

Total(7,005)(76,337)

Prior service costs(6) Remeasurements of defined benefit plans, cumulative
Components of accumulated remeasurements of defined benefit plans (before tax effect)297(Thousand yen)
FY3/23(As of Mar. 31, 2023)
236

Unrecognized actuarial differences

163,411

87,135

Total

163,708

87,371

FY3/22(As of Mar. 31, 2022)
Unrecognized prior service costs(7) Relevant information on plan assets(ⅰ) Major breakdown of plan assets
The allocation percentage by major investment category to the total amount of plan assets is presented as follows.
(%)
FY3/22(As of Mar. 31, 2022)

FY3/23(As of Mar. 31, 2023)

Bonds

56

57

Shares41

40

Cash and deposits

3

3

100

100

Total

(ⅱ) Method of determining expected long-term return on assets
The expected long-term return on plan assets is determined by considering the current and expected portfolio
structure of the plan assets as well as the current and expected future long-term rate of return on various investmentsthat comprise the plan assets.
(8) Relevant information on assumptions for actuarial calculation
Principal assumptions for actuarial calculation (presented by the weighted average)(%)
FY3/22(As of Mar. 31, 2022)

FY3/23(As of Mar. 31, 2023)

Discount rate

1.07

1.07

Expected long-term return on assets

1.0

1.0

Lump sum election rate

100

100

3. Defined contribution plan
The amounts to be contributed to the defined contribution plan for the Company and its consolidated subsidiaries forthe fiscal years ended March 31, 2022 and 2023 were 83,657 thousand yen and 88,326 thousand yen, respectively.

- 74 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Stock Options
Not applicable.

Tax Effect Accounting
1. Significant components of deferred tax assets and liabilities(Thousand yen)
FY3/23(As of Mar. 31, 2023)

FY3/22(As of Mar. 31, 2022)
Deferred tax assets
Provision for bonuses

365,190387,799

Accrued expenses

52,96754,944

Accounts payable-other

947

808

Accrued business office taxes

39,60338,034

Provision for loss on construction contracts

16,216

2,082

Inventories
Long-term accounts payable-other
Provision for retirement benefits for directors(and other officers)
Provision for share awards for directors (andother officers)
Retirement benefit liability

7,945

17,000105,099

104,942

2,231-

36,96743,406318,260

332,400

Allowance for doubtful accounts

1,890

2,821

Asset retirement obligations

40,464

76,612

Tax loss carryforwards (Note 1)

79,041

86,271

29,484

31,418Subtotal deferred tax assets
Less valuation allowance for tax loss
carryforwards (Note 1)
Less valuation allowance for future deductible
temporary differences
Subtotal valuation allowance

Other

1,096,312

1,178,544(79,041)(86,271)(192,417)(241,483)(271,459)(327,755)

Total

824,853

850,788

53,74160,513215,915

206,587

42,922

72,419312,579

339,520

512,274

511,268

Deferred tax liabilities
Valuation difference on available-for-salesecurities
Retirement benefit asset
Other
Total
Net deferred tax assets
Note: 1.

Expiration of tax loss carryforwards, the related valuation allowances, and the resulting net deferred tax assets
FY3/22 (As of Mar. 31, 2022)(Thousand yen)
Over
Over
Over
Over
1 year
2 years
3 years
4 years
to 2 years to 3 years to 4 years to 5 years
2,324
5,868
14,066
5,845
3,369

Within 1
year
Tax loss carryforwards (*1)
Less valuation allowancefor tax loss carryforwards
Deferred tax assetsOver
5 years

Total

47,566

79,041(2,324)(5,868)(14,066)(5,845)(3,369)(47,566)(79,041)

-

-

-

-

-

-

-

(*1) Tax loss carryforwards are calculated by applying the statutory tax rate.

- 75 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

FY3/23 (As of Mar. 31, 2023)(Thousand yen)Tax loss carryforwards (*1)
Less valuation allowancefor tax loss carryforwards
Deferred tax assets

Over
Over
Over
Over
Within 1
1 year
2 years
3 years
4 yearsyear
to 2 years to 3 years to 4 years to 5 years
4,918
13,139
6,312
3,552
427

Over
5 years

Total

57,92086,271(4,918)(13,139)(6,312)(3,552)(427)(57,920)(86,271)

-

-

-

-

-

-

-

(*1) Tax loss carryforwards are calculated by applying the statutory tax rate.

2. Significant sources of differences between the statutory tax and effective tax rate

Statutory tax rate

FY3/22(As of Mar. 31, 2022)
30.6(Adjustments)
Permanent difference of entertainment expenses
and other items
Residential tax for the period(%)
FY3/23(As of Mar. 31, 2023)
30.6

1.5

0.7

0.3

0.3

Increase (decrease) in valuation allowance

0.3

1.9

Tax credit

(2.1)

(5.5)

Amortization of goodwill

0.5

0.3

Impairment loss

0.9-

Tax effect of undistributed earnings
Tax rate difference between the Company and its
consolidated subsidiaries
Others

-

0.2

(0.2)

(0.6)

0.4

(0.4)

Effective tax rate

32.2

27.4

Business Combinations
This information is omitted due to immateriality.
Asset Retirement Obligations
Asset retirement obligations included in the consolidated balance sheet
A. Summary of balance sheet asset retirement obligations
Balance sheet asset retirement obligations are mainly for returning leased space to its original condition inassociation for real estate leasing contracts for Company business sites.
B. Method for calculation balance sheet asset retirement obligations
Balance sheet asset retirement obligations are calculated by using a period of 15 years starting from theacquisition date as the estimated expected period of use and a discount rate of mainly 0.212%.
C. Change in balance sheet asset retirement obligations
In the current fiscal year, the Company changed its estimate of restoration costs because it became clear, as aresult of obtaining new information, that the removal costs required at the time of asset retirement are expected
to significantly exceed the amount estimated at the time of acquisition of the non-current assets. The increaseof 100,582 thousand yen attributable to this change in estimate was added to the balance of asset retirement
obligations before the change. Changes in the balance of asset retirement obligations are as follows.

- 76 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Beginning balance
Purchase of property, plant andequipment
Accretion
Payments for asset retirement
obligations
Increase due to change in estimate

FY3/22(Apr. 1, 2021–Mar. 31, 2022)
131,001

Ending balance(Thousand yen)
FY3/23(Apr. 1, 2022–Mar. 31, 2023)
132,613-

18,960

1,612

1,933

-

(3,300)-100,582

132,613250,789

Rental and Other Properties
This information is omitted due to immateriality.
Revenue Recognition
1. Information on disaggregated revenue from contracts with customers
FY3/22 (Apr. 1, 2021–Mar. 31, 2022)(Thousand yen)

Telecommunications

Industry

Reportable segment
Medical big data
DX&SI business Package business
Global businessbusiness
2,685,876
677

Finance/insurance

2,245,376

Service/retail
Education
Manufacturing
Medical care

Total
2,686,553

766,588

3,000

812

3,015,777

3,466,333-

327,184

1,132,609

4,926,127

1,110,414

3,830,144

500

310

4,941,369

2,534,366

-

1,220

943,0133,478,600

45-

800,5121,293

801,851

Public sector and others
Revenue from contracts withcustomers
Other revenues

861,329

4,898

674,013

9,033

1,549,274

12,903,742

4,601,631

1,806,430

2,087,749

21,399,553

-

-

-

-

-

External sales

12,903,742

4,601,631

1,806,430

2,087,749

21,399,553- 77 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

FY3/23 (Apr. 1, 2022–Mar. 31, 2023)(Thousand yen)

Industry

Telecommunications

DX&SI
business
3,201,315

Finance/insurance

1,901,536

Service/retail
Education
Manufacturing
Medical care

Reportable segment
Package
Medical big
businessdata business
3,595
-

Total

Globalbusiness-

3,204,910

865,440

1,800

994

2,769,771

4,763,900-

383,229

1,999,236

7,146,366

1,290,839

3,598,525

2,665

3,455

4,895,485

2,457,389

-

2,443

667,553

3,127,386

47-

886,494251

886,793

Public sector and others
Revenue from contracts withcustomers
Other revenues

720,458

21,783

744,599

1,961

1,488,802

14,335,487

4,489,345

2,021,231

2,673,452

23,519,516

-

-

-

-

-

External sales

14,335,487

4,489,345

2,021,231

2,673,452

23,519,516

Note:

The Group started using new business segments for its reportable segments in FY3/23. Information on disaggregatedrevenue from contracts with customers for FY3/22 is based on the new reportable segments.

2. Basic information in understanding revenue from contracts with customers
This information is as described in “Significant Accounting Policies in the Preparation of Consolidated Financial
Statements, 4. Accounting policies, (5) Recognition of significant revenues and expenses.”
3. Reconciliation of satisfaction of performance obligations under contracts with customers and cash flows arising fromsuch contracts, and the amount and timing of revenue expected to be recognized in the next fiscal year and thereafterarising from contracts with customers that existed at the end of the current fiscal year
FY3/22 (Apr. 1, 2021–Mar. 31, 2022)(1) Balances of receivables from contracts with customers, contract assets, and contract liabilities(Thousand yen)
FY3/22Beginning balance
Receivables from contracts with customers

Ending balance
3,678,728

4,604,147

Contract assets

518,876

929,182

Contract liabilities

395,861

430,851

Contract assets primarily relate to the right of the Company and its consolidated subsidiaries to unbilled consideration
for contracts where the performance obligation is fulfilled over a specified period, such as contracted software
production and relevant services. Once the Company and its consolidated subsidiaries have an unconditional right toconsideration, contract assets are reclassified to receivables from contracts with customers.
Contract liabilities primarily relate to advances received from customers for contracts where the performanceobligation is fulfilled over a specified period, such as contracted software production, maintenance and relevant
services. Contract liabilities are reversed as revenue is recognized.
Revenue recognized in FY3/22 that was included in the beginning balance of contract liabilities was 329,813
thousand yen.
(2) Transaction price allocated to the remaining performance obligations
The description of the remaining performance obligations is omitted since the Company and its consolidated
subsidiaries have no significant contracts with an original expected contractual duration of one year or more at theend of FY3/22.

- 78 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

FY3/23 (Apr. 1, 2022–Mar. 31, 2023)(1) Balances of receivables from contracts with customers, contract assets, and contract liabilities(Thousand yen)
FY3/23
Beginning balance
Receivables from contracts with customers

Ending balance
4,604,147

5,096,724

Contract assets

929,182

1,435,660

Contract liabilities

430,851

354,018

Contract assets primarily relate to the right of the Company and its consolidated subsidiaries to unbilled consideration
for contracts where the performance obligation is fulfilled over a specified period, such as contracted software
production and relevant services. Once the Company and its consolidated subsidiaries have an unconditional rightto consideration, contract assets are reclassified to receivables from contracts with customers.
Contract liabilities primarily relate to advances received from customers for contracts where the performanceobligation is fulfilled over a specified period, such as contracted software production, maintenance and relevant
services. Contract liabilities are reversed as revenue is recognized.
Revenue recognized in FY3/23 that was included in the beginning balance of contract liabilities was 328,539
thousand yen.
(2) Transaction price allocated to the remaining performance obligations
The description of the remaining performance obligations is omitted since the Company and its consolidated
subsidiaries have no significant contracts with an original expected contractual duration of one year or more at theend of FY3/23.
Segment and Other Information
Segment information
1. Overview of reportable segment
Segments used for financial reporting are JAST and its subsidiaries for which separate financial information is available
and for which the Board of Directors performs periodic studies for the purposes of determining the allocation of resourcesand evaluating performance.
The Group has four reportable business segments: the digital transformation and system integration (DX&SI) business,package business, medical big data business and global business. Each segment conducts its business in line with thecomprehensive strategy it has devised for products and services in Japan and other countries.
The DX&SI business uses its distinctive strengths to supply a diverse array of information systems and services in a large
number of business sectors. The package business develops and sells products that use JAST’s own brands and provides
associated environment and system development services, chiefly consulting for the use of these products. The medical
big data business has several healthcare businesses that make it a one-stop source of services for the use of medical data
and business process reform at health insurance organizations. The global business develops and sells enterprise resource
planning (ERP) and human resource management (HRM) products outside Japan, provides consulting for the use of theseproducts and develops IT systems.
(Revisions to reportable segments)
During the past several years, the scale and composition of business operations of the JAST Group as well as the types ofservices provided have changed significantly along with dramatic shifts in the social and business environment. In
response to these changes, the JAST Group started using new business segments in the fiscal year ended in March 2023.
The purposes of the new segments are to facilitate more accurate and thorough management and decision-making
concerning growth strategies and other items and to disclose information to investors in a more suitable format. In
previous fiscal years, the reportable segments were the software business, GAKUEN business, system sales business andmedical big data business. The new segments are the digital transformation and system integration (DX&SI) business,package business, medical big data business and global business.
The former software business has been renamed the DX&SI business for the purpose of clearly expressing the- 79 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

commitment of this business to providing even more added value and creating seeds for new businesses. This businessaims to continue the steady growth of system integration, currently the largest source of JAST’s earnings, while shiftingemphasis to co-creation digital transformation activities. The goal of these activities with customers is to use digitaltechnologies for business process innovation and for making customers and the JAST Group more competitive. The
DX&SI business includes former system sales business. The former GAKUEN business has been renamed the package
business because this business uses package systems with JAST brands to provide comprehensive digital transformation
services and aim for growth. The package business includes the BankNeo financial institution information systems
integration package that was in the software business in prior years. The activities of the global business were includedin the former software business in prior years. Beginning with this fiscal year, global operations are a separate businesssegment to provide information more accurately about the distinctive characteristics and growth strategies of the JAST
Group’s businesses, such as solutions and wide-area activities in the ASEAN region and China.
Segment information for FY3/22 is based on the new reportable segments.
2. Calculation method for net sales, profit or loss, assets, liabilities, and other items for each reportable segment
The accounting method used for reportable business segments is generally the same as the methods listed in “Significant
Accounting Policies in the Preparation of Consolidated Financial Statements.”
Profits for reportable business segments are operating income figures.
Inter-segment sales and transfers are based on market prices.
(Change in method for calculating segment profit and loss)
In recent years, the scale and characteristics of the business activities of the JAST Group have changed and the importanceof properly managing these activities has increased. To more appropriately evaluate the performance of the group’sreportable segments, the allocation of expenses for head office functions has been reexamined. In prior years, general andadministrative expenses that could not be allocated to a reportable segment were allocated in accordance with expense
allocation standards. Beginning with the fiscal year that ended in March 2023, these expenses are instead recognized ascorporate expenses that are part of the adjustment to segment profit.
Segment profit and loss for FY3/22 is based on the new calculation method.

- 80 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

3. Information related to net sales, profit or loss, assets, liabilities, and other items for each reportable segment
FY3/22 (Apr. 1, 2021 – Mar. 31, 2022)
DX&SI
business

Packagebusiness

Medicalbig data
business

Globalbusiness

Total(Thousand yen)Amounts
shown onAdjustment
consolidated(Note 1)
financial(Note 2)statements(Note 3)

Net sales
1. External sales

12,903,742 4,601,631

2. Inter-segment sales and transfers
Total

71,8601,806,430 2,087,749

21,399,553-

21,399,553

15,966

94,166(94,166)-

1,806,430 2,103,716

21,493,719(94,166)

21,399,553

49,4083,519,939(1,519,437)

2,000,501

1,238,156 1,884,289

13,784,541

1,755,447

15,539,989

6,339

12,975,603 4,607,970

Segment profit

1,559,400 1,529,924

Segment assets

7,404,851 3,257,245

381,205

Other items
Depreciation
57,18627,937
15,93859,530160,593
160,593
Increase in property, plant and
36,284
23,214
12,69039,874
112,063
112,063
equipment and intangible assets
Notes:
1. Segment profit in the above adjustment represents includes corporate expenses. These corporate expenses mainly
include general and administration expenses that cannot be attributed to any of the reportable segments.
2. Segment assets in the above adjustment consist mainly of corporate assets that cannot be attributed to any of thereportable segments.
3. Segment profit is adjusted with operating income shown on the consolidated statement of income.
FY3/23 (Apr. 1, 2022 – Mar. 31, 2023)
DX&SI
business

Packagebusiness

Medicalbig data
business

Globalbusiness

Total(Thousand yen)Amounts
shown onAdjustment
consolidated(Note 1)
financial(Note 2)statements(Note 3)

Net sales
1. External sales

14,335,487 4,489,345

2. Inter-segment sales and transfers
Total

89,922

2,021,231 2,673,452

23,519,516-

23,519,516-

50,312

182,390(182,390)-

2,021,231 2,723,765

23,701,906(182,390)

23,519,516

271,017

4,057,641(1,671,973)

2,385,668

1,639,504 2,126,797

15,405,417

2,008,379

17,413,797

42,155

14,425,409 4,531,501

Segment profit

2,078,787 1,250,729

Segment assets

8,087,574 3,551,540

457,107

Other items
Depreciation
61,306
27,621
19,21454,400
162,541
162,541
Increase in property, plant and
41,63519,03429,85532,268
122,793
122,793equipment and intangible assets
Notes:
1. Segment profit in the above adjustment represents includes corporate expenses. These corporate expenses mainly
include general and administration expenses that cannot be attributed to any of the reportable segments.
2. Segment assets in the above adjustment consist mainly of corporate assets that cannot be attributed to any of thereportable segments.
3. Segment profit is adjusted with operating income shown on the consolidated statement of income.

- 81 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Related information
FY3/22 (Apr. 1, 2021 – Mar. 31, 2022)
1. Information by product or service
This information is omitted because the same information is presented segment information.
2. Information by region(1) Net sales
Geographical information concerning sales to external customers in Japan is not presented since sales to external customers exceeded
90% of net sales shown on the consolidated statement of income.
(2) Property, plant and equipment(Thousand yen)OverseasJapan
479,692

Total
66,875546,567

3. Information by major client(Thousand yen)
Business segment

Net sales

Company name

1,520,224

TIS Inc.

DX&SI business

FY3/23 (Apr. 1, 2022 – Mar. 31, 2023)
1. Information by product or service
This information is omitted because the same information is presented segment information.
2. Information by region(1) Net sales(Thousand yen)OverseasJapan
20,831,987

Total
2,687,528

23,519,516(2) Property, plant and equipment(Thousand yen)OverseasJapan
579,246

Total
52,747

631,994

3. Information by major client(Thousand yen)
Business segment

Net sales

Company name2,102,664

NTT COMWARE CORPORATION

DX&SI businessInformation related to impairment losses of non-current assets for each reportable segment
FY3/22 (Apr. 1, 2021 – Mar. 31, 2022)
DX&SI
business
Impairment losses-(Thousand yen)
Packagebusiness

Medical big
data business-Elimination or
Global businesscorporate
87,398-

Total
87,398

Note: In the software business, there were impairment losses of 55,939 thousand yen for goodwill, 11,129 thousand yen forcustomer-related assets, 7,325 thousand yen for trademark rights and 13,004 thousand yen for technology assets.
FY3/23 (Apr. 1, 2022 – Mar. 31, 2023)
Not applicable.
Information related to goodwill amortization and the unamortized balance for each reportable segment
FY3/22 (Apr. 1, 2021 – Mar. 31, 2022)
DX&SI
business
2,264
Amortization for the period(Thousand yen)
Packagebusiness

Medical big
data business-Elimination or
Global businesscorporate
29,097-102,785
Balance at end of period
Note: In the Global business, there was an impairment loss of 55,939 thousand yen for goodwill.

- 82 --

Total
31,361
102,785

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

FY3/23 (Apr. 1, 2022 – Mar. 31, 2023)
DX&SI
business
Amortization for the period
Balance at end of period(Thousand yen)
Packagebusiness-

Medical big
data business-Elimination or
Global businesscorporate
23,599---88,499-Total
23,59988,499

Information related to gain on bargain purchase for each reportable segment
Not applicable.
Related Party Information
Not applicable.

Per-share Information

Net assets per share

FY3/22(Apr. 1, 2021 – Mar. 31, 2022)
746.86(Yen)
FY3/23(Apr. 1, 2022 – Mar. 31, 2023)
878.07

Net income per share
112.32144.50Notes: 1. Diluted net income per share is not presented since the Company has no outstanding dilutive securities.
2. JAST conducted a 2-for-1 common stock split on October 1, 2022. Net assets per share and net income per share have been
calculated as if this stock split has taken place at the beginning of the fiscal year ended March 31, 2022.
3. The basis of calculation is as follows.
(Thousand yen)
FY3/22
FY3/23(As of Mar. 31, 2022)(As of Mar. 31, 2023)
Net assets per share
Total net assets on balance sheet
Deduction on total net assets(Non-controlling interests)
Net assets applicable to common shares
Number of common shares used in calculation of net
assets per share

9,194,483

10,816,240

34,62847,463(34,628)(47,463)

9,159,855

10,768,776

12,264,528 shares

12,264,192 shares

FY3/22(Apr. 1, 2021 – Mar. 31, 2022)(Thousand yen)
FY3/23(Apr. 1, 2022 – Mar. 31, 2023)

Net income per share
1,330,558

Profit attributable to owners of parent

1,772,210

Amount not available to common shareholders
Profit attributable to owners of parent applicable to1,330,558
1,772,210
common shares
Average number of shares outstanding during period
11,845,742 shares
12,264,292 shares
Note: JAST has established a new Board Benefit Trust (BBT). The Company’s stock remaining in the BBT (149,200 shares as ofMarch 31, 2022 and 149,200 as of March 31, 2023) is included in treasury shares in shareholders’ equity and deducted from thenumber of shares outstanding at the end of the period that is used to calculate net assets per share. Moreover, the BBT shares(149,200 shares in FY3/22 and 149,200 shares in FY3/23) are included in treasury shares deducted from the number of sharesused to calculate the average number of shares outstanding during the period that is used to calculate net income per share.

Subsequent Events
Not applicable.

- 83 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023(ⅴ) Annexed consolidated detailed schedules
Annexed consolidated detailed schedule of corporate bonds
Not applicable.
Annexed consolidated detailed schedule of borrowings

Item
Short-term borrowings
Current portion of long-termborrowings
Current portion of lease liabilities
Long-term borrowings (excluding
current portion)
Lease liabilities (excluding current
portion)
Other interest-bearing debt
Total

Balance as ofApr. 1, 2022

Balance as ofMar. 31, 2023

(Thousand yen, unless otherwise stated)
Average
Repayment dueinterest rate
(Year)
(%)
-

8,518

-

-

-

-

-

22,617

17,218

-

-

-

-

-

-

31,482

23,143-2025 to 2028

-

-

-

-

62,61840,362--

Notes: 1. The average interest rate on lease liabilities is not presented because lease liabilities are recorded on the consolidatedbalance sheet at the amount before deducting the amount equivalent to interest included in the total lease payments.
2. The repayment schedule within five years after the consolidated balance sheet date of lease liabilities (excluding current
portion) is as follows.

Lease liabilities

Over 1 year
to 2 years
11,695

Over 2 years
to 3 years
6,770Over 3 years
to 4 years
3,821(Thousand yen)Over 4 years
to 5 years
857

Annexed consolidated detailed schedule of asset retirement obligations
This information is omitted because the items to be presented in this schedule are presented as notes stipulated in
Article 15-23 of the Ordinance on Consolidated Financial Statements.

- 84 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(2) Other Information
Quarterly results for the fiscal year ended March 31, 2023
(Thousand yen, unless otherwise stated)(Cumulative period)
Net salesFirst three months First six months

First nine months Current fiscal year

5,119,276

11,004,040

16,635,219

23,519,516

Profit before income taxes

289,963

1,037,073

1,605,296

2,450,148

Profit attributable to owners of parent

223,888

737,825

1,167,103

1,772,210

18.26

60.16

95.16

144.50

Second Quarter

Third Quarter

Fourth Quarter

41.91

35.00

49.34

Net income per share (Yen)(Accounting period)
Net income per share (Yen)First Quarter
18.26

Note: The Company conducted a 2-for-1 common stock split on October 1, 2022. Net income per share has been calculated as if
this stock split has taken place at the beginning of the fiscal year ended March 31, 2023.

- 85 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

2. Non-consolidated Financial Statements, etc.
(1) Non-consolidated Financial Statements
i. Non-consolidated Balance Sheet(Thousand yen)
FY3/23(As of Mar. 31, 2023)

FY3/22(As of Mar. 31, 2022)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade, and contract
assetsMerchandise and finished goods
Work in process
Raw materials and supplies
Prepaid expenses

4,229,612

4,896,049*1 4,538,761*1 5,221,967

144,408

128,353

40,37644,662

5,635

8,118

*1 94,514*1 110,684

Accounts receivable-other*1 9,107*1 8,686

Other*1 12,503*1 12,638

Allowance for doubtful accounts
Total current assets(3,422)(3,655)

9,071,498

10,427,505

240,360

328,636

Non-current assets
Property, plant and equipment
Buildings
Structures

3,066

5,844

Tools, furniture and fixtures

82,482

84,341

Land

142,361

142,361-

1,066

468,270

562,250

81,78475,053

Construction in progress
Total property, plant and equipment
Intangible assets
SoftwareTelephone subscription right

6,180

6,180

Total intangible assets

87,964

81,233

Investments and other assets
Investment securities
Shares of subsidiaries and associates
Investments in capital of subsidiaries andassociates
Long-term loans receivable from subsidiaries
and associates
Prepaid pension cost

520,705

544,683

2,179,925

2,183,505

37,51575,953

171,343

142,567

531,812570,660

Deferred tax assets

511,471489,358

Guarantee deposits

420,913399,890

Insurance funds

68,09264,987

-

4,126

Other
Allowance for doubtful accounts(94,953)(42,435)

Total investments and other assets

4,346,826

4,433,299

4,903,061

5,076,783

13,974,559

15,504,289

Total non-current assets
Total assets- 86 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

FY3/22(As of Mar. 31, 2022)(Thousand yen)
FY3/23(As of Mar. 31, 2023)

Liabilities
Current liabilities
Accounts payable-trade*1 946,692*1 916,555

Accounts payable-other*1 130,595*1

Accrued expenses

166,452*1 286,978*1 296,437

Income taxes payable

497,847

439,120

Accrued consumption taxes

196,010

194,372

Contract liabilities

280,586

262,549

1,095,710

1,167,316

33,72735,02552,9606,801*1 93,541*1 104,555

3,614,649

3,589,185

120,728

141,759

Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Provision for loss on construction contracts
Other
Total current liabilities
Non-current liabilities
Provision for share awards for directors (andother officers)
Provision for retirement benefits

956,848

991,918

Asset retirement obligations

117,567

223,887

Long-term accounts payable-other342,216

343,188

Other

17,512

12,217

1,554,872

1,712,971

5,169,522

5,302,157

1,535,409

1,535,409

Legal capital surplus

1,497,047

1,497,047

Other capital surplus

250,404

250,404

Total capital surpluses

1,747,452

1,747,452

32,66532,665General reserve

4,313,000

5,207,000

Retained earnings brought forward

1,230,005

1,718,193

5,575,670

6,957,858

Treasury shares(175,264)(175,703)

Total shareholders’ equity

8,683,268

10,065,017

121,768

137,114

121,768

137,1148,805,037

10,202,132

13,974,559

15,504,289

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus

Retained earnings
Legal retained earnings
Other retained earnings

Total retained earnings

Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 87 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

ii. Non-consolidated Statements of Income(Thousand yen)
FY3/23(Apr. 1, 2022 – Mar. 31, 2023)

FY3/22(Apr. 1, 2021 – Mar. 31, 2022)
Net sales*2 17,082,806*2 18,552,222

Cost of sales*2 12,688,277*2 13,733,626

Gross profit

4,394,529

4,818,595*1, *2 2,774,477*1, *2 3,017,008

1,620,051

1,801,586*2 104,577*2 254,292

Rental income

2,483

3,086

Commission income

1,915

2,097

Interest on securities

2,400

2,400

-

61,988Selling, general and administrative expenses
Operating income
Non-operating income
Interest and dividend income

Reversal of allowance for doubtful accounts
Subsidy income

-

9,843

Foreign exchange gains

15,479

6,377

Other

12,031

2,770

Total non-operating income

138,887

342,856

Non-operating expenses
Interest expenses

121-

Provision of allowance for doubtful accounts

78

9,470

Commission expenses

1,899

753

Share issuance costs

5,773

-

0

0

Other
Total non-operating expenses
Ordinary income
Extraordinary losses
Loss on valuation of shares of subsidiaries andassociates
Loss on valuation of investments in capital ofsubsidiaries and associates
Total extraordinary losses

7,872

10,223

1,751,066

2,134,219*3 177,306-*4 34,412-

211,718-

1,539,348

2,134,219

Income taxes-current

653,340

488,416

Income taxes-deferred(113,635)

15,340Total income taxes

539,704

503,757

Profit999,643

1,630,462

Profit before income taxes- 88 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

iii. Non-consolidated Statement of Changes in Equity
FY3/22 (Apr. 1, 2021 – Mar. 31, 2022)(Thousand yen)
Shareholders’ equity
Capital surplus

Retained earnings

SharecapitalLegalcapitalsurplus

OthercapitalsurplusTotal
capitalsurplusLegalretainedearnings

Balance at beginning of period 1,076,669
Cumulative effects of changes
in accounting policies
1,076,669
Restated balance

1,038,308

134,279

1,172,587

32,665

Other retained earnings
GeneralRetained earnings
reservebrought forward

Total
retainedearnings

4,086,000

555,853

4,674,518

53,53753,537

4,086,000

609,391

4,728,056

227,000(227,000)-

Dividends of surplus(152,028)(152,028)

Profit999,643

999,643

1,038,308

134,279

1,172,587

32,665

Changes during period
Issuance of new shares

458,739458,739458,739

Provision of general reserve

Purchase of treasury shares
Disposal of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

116,125

116,125

458,739458,739

116,125

574,864-

227,000

620,614847,614

1,535,409

1,497,047

250,404

1,747,452

32,665

4,313,000

1,230,005

5,575,670

Shareholders’ equity

Valuation and translation adjustments
Valuation difference Total valuation
Total shareholders’
Treasury shareson available-for-sale and translation
equitysecurities
adjustments
Balance at beginning of period
Cumulative effects ofchanges in accounting
policies
Restated balance(218,515)

6,705,259

186,775

186,775

ShareacquisitionrightsTotal
net assets

5,530

6,897,566

53,537(218,515)

6,758,797

53,537
186,775

186,775

5,530

6,951,104

Changes during period
Issuance of new shares

917,479

917,479--

Dividends of surplus(152,028)(152,028)

Profit999,643

999,643

Provision of general reserve

Purchase of treasury shares(87,750)(87,750)(87,750)

Disposal of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period

131,002247,127

247,127

43,251

Balance at end of period(175,264)(65,007)(65,007)(5,530)(70,538)

1,924,470(65,007)(65,007)(5,530)1,853,932

8,683,268

121,768

121,768-

8,805,037- 89 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

FY3/23 (Apr. 1, 2022 – Mar. 31, 2023)(Thousand yen)
Shareholders’ equity
Capital surplus

SharecapitalRetained earnings
Other retained earnings

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurplusLegalretainedearnings

Balance at beginning of period 1,535,409 1,497,047

250,404

1,747,452

32,665

4,313,000

1,230,005

5,575,670

250,404

1,747,452

32,665

4,313,000

1,230,005

5,575,670

894,000(894,000)-

Generalreserve

Retained earnings
brought forward

Total
retainedearnings

Cumulative effects of changes
in accounting policies
Restated balance

1,535,409 1,497,047

Changes during period
Issuance of new shares
Provision of general reserve
Dividends of surplus(248,274)(248,274)

Profit1,630,462

1,630,462

Purchase of treasury shares
Disposal of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

-

-

-

-

-

894,000

488,187

1,382,187

1,535,409 1,497,047

250,404

1,747,452

32,6655,207,000

1,718,193

6,957,858

Shareholders’ equity

Valuation and translation adjustments

Valuation difference
Total shareholders’
Treasury shareson available-for-sale
equitysecurities
Balance at beginning of period
Cumulative effects ofchanges in accounting
policies
Restated balance(175,264)

8,683,268

121,768

Total valuationand translation
adjustments
121,768

Share
acquisitionrightsTotal
net assets-

8,805,037(175,264)

8,683,268

121,768

121,768-

8,805,037

Changes during period
Issuance of new shares--

Provision of general reserve--

Dividends of surplus(248,274)(248,274)

Profit1,630,462

1,630,462

(439)

(439)

-

-

Purchase of treasury shares
Disposal of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period(439)

15,346

15,346-

15,346(439)

1,381,748

15,346

15,346-

1,397,094(175,703)

10,065,017

137,114137,114-

10,202,132- 90 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Notes to Non-consolidated Financial Statements
Significant Accounting Policies
1. Valuation standards and methods for assets(1) Valuation standards and methods for marketable securities(ⅰ) Subsidiaries’ stocks
Stated at cost determined by the moving-average method.
(ⅱ) Held-to-maturity debt securities
Stated at cost determined by the amortized cost method (straight-line method).
(ⅲ) Available-for-sale securities- Securities other than shares, etc. that do not have a market priceStated at fair value. (Unrealized gain or loss is included in net assets. Cost of securities sold is determined by themoving-average method.)- Shares, etc. that do not have a market priceStated at cost determined by the moving-average method.
(2) Valuation standards and methods for inventories(ⅰ) MerchandiseStated at cost determined by the specific identification method. (The carrying amount on the balance sheet is written
down to reflect the effect of lower profit margins.)(ⅱ) Finished goods
Stated at cost determined by the periodic average method. (The carrying amount on the balance sheet is written
down to reflect the effect of lower profit margins.)(ⅲ) Work in process
Stated at cost determined by the specific identification method. (The carrying amount on the balance sheet is written
down to reflect the effect of lower profit margins.)(ⅳ) Supplies
Valued by the last purchased price method.
2. Depreciation and amortization of non-current assets(1) Property, plant and equipment (excluding leased assets)
The declining-balance method, except for facilities attached to buildings and structures acquired on or after April 1,
2016, on which depreciation is calculated by the straight-line method.
Useful life of principle assets is as follows.
Buildings:
10–35 years
Tools, furniture and fixtures: 4–10 years(2) Software (excluding leased assets)
Software for internal use is amortized over an expected useful life of 3-5 years by the straight-line method.
(3) Leased assets(ⅰ) Lease assets associated with finance lease transactions where there is transfer of ownership
Depreciated by the same method as depreciation method used for non-current assets held by the Company.
(ⅱ) Lease assets associated with finance lease transactions where there is no transfer of ownership
Depreciated by the straight-line method, assuming the lease period to be the useful life and a residual value of zero.
3. Recognition of allowances(1) Allowance for doubtful accounts
To prepare for credit losses on accounts receivable, allowances equal to the estimated amount of uncollectible
receivables are provided for general receivables based on the historical write-off ratio, and bad receivables based on- 91 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

case-by-case determination of collectibility.
(2) Provision for bonuses
To provide for employee bonus obligation, an allowance is provided in the amount equal to the estimated bonus
obligations.
(3) Provision for retirement benefits
To provide for accrued retirement benefits for employees, an allowance is provided based on projected benefit
obligations and plan assets at the end of the current fiscal year.
The actuarial difference is expensed in the following fiscal years using the declining-balance method based on acertain period (10 years) within the average length of remaining service period of employees.
The prior service cost is expensed using the declining-balance method based on a certain period (10 years) within the
average length of remaining service period of employees from the year when it is recognized.
(4) Provision for bonuses for directors (and other officers)
To provide for bonuses for directors (and other officers), an allowance is provided in the amount equal to the estimatedbonus obligations in the current fiscal year.
(5) Provision for share awards for directors (and other officers)
To provide for the payment of the Company’s shares to the Company’s directors (and other officers) in accordancewith the rules on the stock compensation plan for directors (and other officers), an allowance is provided based on
the estimated obligations for share awards in the current fiscal year.
(6) Provision for loss on construction contracts
To prepare for future losses on construction contracts, such as contracted software production and development, anallowance is provided for estimated losses on contracts for which losses are expected to be incurred in the next fiscal
year or later and the amount can be reasonably estimated.
4. Recognition of revenues and expenses
The nature of the main performance obligations related to revenue from contracts with customers in the major
businesses of the Company and the timing when those performance obligations are typically satisfied (when revenue
is typically recognized) are as follows.
The Company has four business segments: DX&SI business, Package business, Medical big data business, and Global
business. The Company recognizes revenue from contracts with customers mainly for contracted software production,
maintenance and relevant services. For contracts where the performance obligation is fulfilled over a specified period,
the progress of fulfilling the performance obligation is estimated, except when the period is extremely short, andrevenue based on the progress is recognized for that period. The progress is determined mainly by the input method
based on the ratio of the actual costs incurred to the estimated total construction cost (the cost-to-cost basis). For
contracts where the performance obligation is fulfilled at a point in time, such as the sale of products, revenue isrecognized at the point in time when the customer accepts the products.
For transactions, such as the sale of products, where the Company functions as an agent, the amount paid to the
supplier of the product is deducted from the total payment received from the customer and the resulting net amountis recognized as revenue.
5. Other significant accounting policies in the preparation of financial statements(1) Accounting method for retirement benefits
Accounting method for outstanding balance of unrecognized actuarial differences and unrecognized prior service
costs related to retirement benefit is different from those for the consolidated financial statements.

- 92 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Significant Accounting Estimates
1. Estimate of total construction cost for revenue recognition over a specified period based on progress(1) Amounts recorded in the non-consolidated financial statements of the current fiscal year
(Thousand yen)
FY3/22
Net sales from revenue recognized overa specified period based on progress

FY3/23
1,185,650

1,844,911(2) Other information that contributes to the understanding of accounting estimates
For contracts where the performance obligation is fulfilled over a specified period, such as contracted software
production and relevant services, net sales are recorded by recognizing revenue based on the progress for that period.
Net sales from revenue recognized over a specified period based on progress are calculated by multiplying the total
construction revenue by the progress. The progress is determined by the input method based on the ratio of the actual
costs incurred by the end of the current fiscal year to the estimated total construction cost (the cost-to-cost basis).
The total construction cost based on incurred costs is estimated by estimating the number of man-hours required forthe work in consideration of its individualized nature, such as the specifications and work period of contracted
software production and relevant services.
In the event that the estimate of man-hours requires a significant revision, the change in estimate of the total
construction cost due to the revision may have a material impact on the non-consolidated financial statements for thefollowing fiscal year.
Reclassifications“Asset retirement obligations,” included in “Other” under non-current liabilities in the previous fiscal year, is reclassified
and presented as a separate line item in the current fiscal year since it has increased materiality in the context of financial
statements. The prior-period non-consolidated financial statements are restated to conform to the current-period
presentation.
“Other” under non-current liabilities (135,079 thousand yen) shown in the prior-period non-consolidated balance sheet isreclassified and divided into “Asset retirement obligations” (117,567 thousand yen) and “Other” (17,512 thousand yen).
Changes in Accounting-based Estimates
In the current fiscal year, the Company restated asset retirement obligations, which had been recorded as obligations for
returning leased space to its original condition in association for real estate leasing contracts of the Company, to reflect achange in the estimate of restoration costs due to the availability of new information on restoration costs. The increase of
100,582 thousand yen attributable to this change in estimate was added to the balance of asset retirement obligations
before the change.
In addition, as a result of this change in estimate, operating income, ordinary income, and profit before income taxes forthe current fiscal year each decreased by 9,781 thousand yen.

- 93 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

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 established a Board Benefit Trust (BBT) for the purpose of increasing motivation
for contributing to the medium to long-term growth of sales and earnings and an increase in corporate value. The BBT
plan clearly links the compensation of directors with the JAST stock price. Furthermore, directors share with shareholders
the benefits of a higher stock price as well as the risk of a lower stock price.
1) Overview
This is a stock compensation plan in which directors receive stock compensation through a BBT. The BBT acquires JAST
stock using cash contributions from JAST as the source of funds. Directors (excluding external directors; same afterward
unless indicated otherwise) receive stock compensation or a monetary amount equivalent to the market value of the stockin lieu of stock compensation in accordance with the rules on the stock compensation plan for directors (and other officers).
In principle, a director becomes eligible for stock compensation only after the individual is no longer a JAST director.
2) JAST stock held by the BBT
The book value (excluding associated expenses) of JAST stock held by the BBT is shown as treasury shares in the net
assets section of the non-consolidated balance sheet. The BBT held 149,200 shares of JAST with a book value of 171,700
thousand yen as of the end of the previous fiscal year, and the BBT held 149,200 shares with a book value of 171,700
thousand yen as of the end of the current fiscal year.
Note: JAST conducted a 2-for-1 common stock split on October 1, 2022. The number of shares has been calculated as if
this stock split has taken place at the beginning of the fiscal year ended March 31, 2022.
Notes to Balance Sheet*1 Monetary claims and monetary liabilities to affiliates (excluding those separately presented)(Thousand yen)
FY3/23(As of Mar. 31, 2023)

FY3/22(As of Mar. 31, 2022)
Short-term monetary claims

72,41961,297

Short-term monetary liabilities

88,376130,927

2 Guarantee liabilities
Guarantees for affiliate’s bank loans(Thousand yen)
FY3/23(As of Mar. 31, 2023)

FY3/22(As of Mar. 31, 2022)
NewNeeds Co., Ltd.

70,00070,000

AG NET PTE. LTD.

45,235-

Foreign currency-denominated guarantees are translated into yen at the exchange rate in effect on the fiscal year
balance sheet date.
The Company guarantees the overdraft contract that NewNeeds Co., Ltd. has entered into with financial institutions,and the amount of the overdraft line of credit is shown in the above table.
3 The Company has commitment line agreements with 4 banks, in order to raise funds efficiently. The balances of credit
available as of the balance sheet date were as follows.
(Thousand yen)
FY3/23(As of Mar. 31, 2023)

FY3/22(As of Mar. 31, 2022)
Commitment line
Credit used
Credit available- 94 -

500,000

500,000--

500,000

500,000

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Notes to Statement of Income*1 Selling expenses represent approximately 24% of the total selling, general and administrative expenses, and generaland administrative expenses approximately 76% in FY3/22, and selling expenses represent approximately 26% of
the total selling, general and administrative expenses, and general and administrative expenses approximately 74%
in FY3/23.
Major items of selling, general and administrative expenses(Thousand yen)
FY3/22(Apr. 1, 2021–Mar. 31, 2022)
Compensations for directors (andother officers)
Wages, sales and other allowances

FY3/23(Apr. 1, 2022–Mar. 31, 2023)

169,866

177,115

1,001,870

1,090,069

Provision for bonuses
Provision for bonuses for directors(and other officers)
Retirement benefit expenses
Stock compensation expenses for
directors (and other officers)
Depreciation

187,714

184,630

33,72735,02542,15047,55841,687

21,03160,221

65,206

Research and development expenses

436,077

469,246

Rent expenses

122,046

135,554*2 Transactions with subsidiaries and affiliates(Thousand yen)
FY3/22(Apr. 1, 2021–Mar. 31, 2022)

FY3/23(Apr. 1, 2022–Mar. 31, 2023)

Amount of business transactions
Net sales

120,172

109,613

Operating expenses

510,940

749,592

98,177245,345

Amount of non-business transactions*3 Loss on valuation of shares of subsidiaries and associates
This is related to AG NET PTE. LTD., a consolidated subsidiary of the Company.
*4 Loss on valuation of investments in capital of subsidiaries and associates
This is related to GuiLin Anxin Software Co., Ltd., a consolidated subsidiary of the Company.
Marketable Securities
Shares of subsidiaries (carrying amount of 2,179,925 thousand yen and 2,183,505 thousand yen in FY3/22 and FY3/23,
respectively) are not presented because they are shares, etc. that do not have a market price.

- 95 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Tax Effect Accounting
1. Significant components of deferred tax assets and liabilities(Thousand yen)
FY3/23(As of Mar. 31, 2023)

FY3/22(As of Mar. 31, 2022)
Deferred tax assets
Provision for bonuses

335,506

357,432

Accrued expenses

48,37850,467947

808

Accrued business office taxes

34,84935,310

Provision for loss on construction contracts

16,216

2,082

Long-term accounts payable-other
Provision for share awards for directors (andother officers)
Provision for retirement benefits

104,786

104,786

36,96743,406292,987

303,725

Allowance for doubtful accounts

30,122

14,112

Asset retirement obligations

35,99971,971

Shares of subsidiaries and associates

463,427

463,427

Accounts payable-other

18,541

32,178Subtotal deferred tax assets

Other

1,418,729

1,479,711

Less valuation allowance(673,801)(707,675)

744,928772,036

53,74160,513

162,841

174,736

16,87447,427

233,456

282,677

511,471489,358

Total
Deferred tax liabilities
Valuation difference on available-for-salesecurities
Prepaid pension cost
Other
Total
Net deferred tax assets

2. Significant sources of differences between the statutory tax and effective tax rate(%)
FY3/22(As of Mar. 31, 2022)

FY3/23(As of Mar. 31, 2023)

Statutory tax rate

30.6

30.6

(Adjustments)
Permanent difference of entertainment expenses
and other items
Residential tax for the period

(0.1)

(2.6)

0.4

0.3

Increase (decrease) in valuation allowance

4.6

1.6

Tax credit

(0.4)

(6.3)

Others

(0.0)

(0.0)

Effective tax rate

35.1

23.6

Revenue Recognition
Basic information in understanding revenue from contracts with customers is not presented because it is the same as
described in “(Revenue Recognition)” in the Notes to Consolidated Financial Statements.
Subsequent Events
Not applicable.

- 96 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

(ⅳ) Annexed non-consolidated detailed schedules
Annexed detailed schedule of property, plant and equipment, etc.

Item

Type of assets(Thousand yen)
Accumulated
Depreciation
Balance as of depreciation
orMar. 31, 2023
or
amortizationamortization

Balance as ofApr. 1, 2022

Increase

Decrease

240,360

135,696047,419328,636531,216

3,066

3,157

-

378

5,844

1,986

82,482

32,845030,986

84,341

399,981

142,361---

142,361

-

-

1,066

-

-

1,066

-

468,270

172,764

078,784562,250

933,183

81,784

18,465-25,19675,053

-

6,180

-

-

-

6,180

-

87,964

18,465-25,196

81,233-

Property, plantand equipment
Buildings
Structures
Tools, furniture andfixtures
Land
Construction inprogress
Total property, plantand equipment
Intangible
assetsSoftwareTelephone subscription
rightTotal intangible assets

Annexed detailed schedule of provisions
Account
Allowance for doubtful
accounts
Provision for bonuses
Provision for bonuses for
directors (and other officers)
Provision for loss on
construction contracts
Provision for retirement
benefits
Provision for share awards for
directors (and other officers)

Balance as ofApr. 1, 2022

Increase(Thousand yen)
Balance as ofMar. 31, 2023

Decrease

98,375

13,12565,41046,0901,095,710

1,167,316

1,095,710

1,167,316

33,72735,02533,72735,02552,9606,801

52,9606,801

956,848

92,72557,655

991,918

120,728

21,031-

141,759(2) Components of major assets and liabilities
This information is omitted because the Group has prepared the consolidated financial statements.
(3) Other information
Not applicable.

- 97 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Ⅵ. Outline of Share-related Administration of Reporting Company
Fiscal year

From April 1 to March 31

Annual General Meeting of
Shareholders

In JuneRecord date

March 31

Record date of dividends ofsurplusNumber of sharesconstituting one unit
Acquisition of odd-lot
shares

September 30
March 31

Handling office
Shareholder register
administrator

100 shares(Special account)
4-5-33 Kitahama, Chuo-ku, Osaka
Stock Transfer Agency Business Planning Department, Sumitomo Mitsui Trust Bank, Limited(Special account)
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Sumitomo Mitsui Trust Bank, Limited

AgencyAcquisition fee

Method of public notice───────
Separately specified amount equivalent to share trading brokerage fees
The Company posts electronic public notices on its website; provided, however, that whenelectronic public notice cannot be used due to an accident or any other unavoidable reason, thepublic notices shall be given in The Nihon Keizai Shimbun.
The Company’s website
https://www.jast.jp/en/

Special benefits for
Not applicable.
shareholders
Note: In accordance with the Company’s Articles of Incorporation, a shareholder holding odd-lot shares does not have any rights
other than those listed below:(1) Rights listed in each item of Article 189, Paragraph 2 of the Companies Act;
(2) Rights to make a request pursuant to the provisions of Article 166, Paragraph 1 of the Companies Act; and(3) Rights to receive allotment of shares for subscription and allotment of share acquisition rights for subscription in
proportion to the number of shares held by the shareholder.

- 98 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Ⅶ. Reference Information of Reporting Company
1. Information about Parent of Reporting Company
Not applicable, because the Company does not have a parent company.
2. Other Reference Information
From the beginning of the current fiscal year until the filing date of this Annual Securities Report, the Company has
filed the following documents:(1) Annual Securities Report and attached document thereof and Confirmation Letter
Filed for the 50th fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) with the Director-Generalof the Kinki Local Finance Bureau on June 24, 2022.
(2) Internal Control Report and attached document thereof
Filed with the Director-General of the Kinki Local Finance Bureau on June 24, 2022.
(3) Quarterly Reports and Confirmation Letter
Filed for the first quarter (from April 1 to June 30, 2022) of the 51st fiscal year ended March 31, 2023 with the
Director-General of the Kinki Local Finance Bureau on August 12, 2022.
Filed for the second quarter (from July 1 to September 30, 2022) of the 51st fiscal year ended March 31, 2023 with
the Director-General of the Kinki Local Finance Bureau on November 11, 2022.
Filed for the third quarter (from October 1 to December 31, 2022) of the 51st fiscal year ended March 31, 2023 with
the Director-General of the Kinki Local Finance Bureau on February 13, 2023.
(4) Extraordinary Report
Filed the Extraordinary Report pursuant to the provisions of Article 19, Paragraph 2, (ix)-2 of the Cabinet Office
Order on Disclosure of Corporate Affairs (resolutions made at the General Meeting of Shareholders) with the
Director-General of the Kinki Local Finance Bureau on June 28, 2022.

- 99 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Section 2 Information about Reporting Company’s Guarantor, etc.
Not applicable.

- 100 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Independent Auditor's Report and Internal Control Audit Report
June 28, 2023
To the Board of Directors ofJapan System Techniques Co., Ltd.

Deloitte Touche Tohmatsu LLCOsaka office
Designated Limited Liability Partner,
Engagement Partner,
Certified Public Accountant:

Ikutoshi Senzaki

Designated Limited Liability Partner,
Engagement Partner,
Certified Public Accountant:

Masaru Fujikawa

Audit of Financial Statements
Audit Opinion
Pursuant to the provisions of Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we have audited
the consolidated financial statements of Japan System Techniques Co., Ltd. (the “Company”) and its consolidated
subsidiaries (the “Group”) provided in the “Financial Information” section in the Company’s Annual Securities Report,
namely, the consolidated balance sheet as of March 31, 2023, and the consolidated statement of income, consolidated
statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the fiscal year from April 1, 2022 to March 31, 2023, and the notes to significant accounting policies in the preparationof consolidated financial statements and other notes and the annexed consolidated detailed schedules.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial
position of the Group as of March 31, 2023, and its consolidated financial performance and cash flows for the fiscal year
then ended in accordance with accounting principles generally accepted in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities underthose standards are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements” section of our report. We are independent of the Group in accordance with the provisions of the Code ofProfessional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of theconsolidated financial statements of the current fiscal year. Those matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

- 101 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Estimate of total construction cost for revenue recognition over a specified period based on progress
Key audit matter description

How the key audit matter was addressed in the audit

As described in “Significant Accounting Policies in the
Preparation of Consolidated Financial Statements, 4.
Accounting policies, (5) Recognition of significant revenues
and expenses” and “Significant Accounting Estimates, 1.
Estimate of total construction cost for revenue recognition
over a specified period based on progress” in the Notes toConsolidated Financial Statements, the Company records net
sales for contracts where the performance obligation is
fulfilled over a specified period, such as contracted software
production and relevant services, which are the Company’s
major businesses, by estimating the progress of fulfilling theperformance obligation and recognizing revenue based on the
progress for that period. Net sales for the current fiscal year
amounted to 23,519,516 thousand yen, of which 1,856,776
thousand yen was from revenue recognized over a specified
period based on progress.
Net sales from revenue recognized over a specified period
based on progress are calculated by multiplying the total
construction revenue by the progress. The progress isdetermined by the input method based on the ratio of theactual costs incurred by the end of the current fiscal year to theestimated total construction cost (the cost-to-cost basis).
Contracted software production and relevant services, mainly
including a contracted system integration service, are of highly
individualized nature, such as due to different specifications
and work periods. Any revisions to specifications after the startof contracted software production and relevant services maychange the man-hours required for the work. Therefore, in
estimating the total construction cost, which is the basis for net
sales from revenue recognized over a specified period basedon progress, it is necessary to update the estimate of thenumber of man-hours required to complete the work in atimely manner, and appropriate estimates require
management’s judgment.
Given the above, we considered the estimate of total
construction cost for revenue recognition over a specified
period based on progress in contracted software production
and relevant services to be of particular importance anddetermined this matter as a key audit matter.

Our audit procedures related to the estimate of total
construction cost for revenue recognition over a specified
period based on progress included the following, among
others:• We examined the effectiveness of the development andoperation of internal controls over the estimate of total
construction cost.
• We compared the total construction cost in the previous fiscal
year and the actual costs incurred in the current fiscal year
for projects to which progress-based revenue recognition wasapplied in the previous fiscal year to examine the accuracy ofthe estimate of total construction cost.
• After questioning each business head manager and reviewing
monthly management meeting minutes, monthly reports andother documents to determine whether there were any
projects that would require revisions to the original
estimates, we questioned the managers of projects concerned
and reviewed relevant documents pertaining to the progressof the projects to ensure that the total construction cost wasreviewed in a timely manner.
• We compared the original estimate of total construction costwith the actual costs incurred, questioned the managers ofprojects concerned about the factors contributing to thediscrepancies for projects with large discrepancies, andreviewed relevant documents related to the progress, toensure that the revised estimate of total construction cost has
been updated appropriately.
• We analyzed the cost accruals of significant projects to which
net sales were recorded by recognizing revenue over a
specified period based on progress, from the perspectives
such as whether there were any projects with cost accrualsthat were not initially anticipated. For projects concerned, wequestioned the managers of the projects concerned and, if
necessary, performed additional procedures to examine theappropriateness of the cost accruals.
• Net sales from revenue recognized over a specified period
based on progress were reconciled with the contract and costcalculation documents for estimating the total construction
cost, and recalculated on the cost to cost basis.

Other Information
Other information included in the Annual Securities Report is information other than the consolidated financial statements
and non-consolidated financial statements and their audit reports. Management is responsible for preparing and disclosing
the other information. In addition, Audit & Supervisory Board Members and the Audit & Supervisory Board are
responsible for overseeing the execution of duties by Directors in the development and operation of the reporting process
for the other information.
Our audit opinion on the consolidated financial statements does not cover the other information, and we do not express
any form of assurance conclusion thereon.
Our responsibility in the audit of the consolidated financial statements is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, weare required to report that fact.
We have nothing to report in this regard.

- 102 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Responsibilities of Management, Audit & Supervisory Board Members and the Audit & Supervisory Board for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordancewith accounting principles generally accepted in Japan, and for the development and operation of such internal control as
management determines is necessary to enable the preparation and fair presentation of the consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles
generally accepted in Japan and using the going concern basis of accounting unless management either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the execution ofduties by Directors in the development and operation of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the consolidated financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion
on the consolidated financial statements based on our audit from an independent point of view. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgement and maintainprofessional skepticism throughout the audit. We also:• Identify and assess the risk of material misstatement of the consolidated financial statements, whether due to fraud
or error, and design and perform audit procedures responsive to those risks. The procedures selected to be applied
depend on the auditor’s judgement. In addition, we obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit todesign audit procedures that are appropriate in the circumstances, but not for the purpose of auditing the consolidated
financial statements to express an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used by the management and their method of application, as wellas the reasonableness of accounting estimates made by the management and related notes thereto.
• Conclude on the appropriateness of management’s use of the going concern basis for preparing the consolidated
financial statements. And, based on the audit evidence obtained, determine whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated notes to the consolidated financial statements or, if such notes are inadequate, to express a qualified opinion
with exceptions on the consolidated financial statements. Our conclusions are based on the audit evidence obtainedby or on the date of our auditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
• Evaluate whether the overall presentation of the consolidated financial statements and the notes thereto are inaccordance with accounting principles generally accepted in Japan, as well as the overall presentation, structure andcontent of the consolidated financial statements, including the notes thereto, and whether the consolidated financial
statements represent the underlying transactions and accounting events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the Group to express an opinion
on the consolidated financial statements. We are responsible for the direction, supervision, and performance of theaudit of the consolidated financial statements. We remain solely responsible for our audit opinion.
We communicate with Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit, and other matters required by auditing standards.
We also provide Audit & Supervisory Board Members and the Audit & Supervisory Board with a statement that we havecomplied with relevant ethical requirements in Japan regarding independence and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards to eliminate or reduce obstruction factors.
- 103 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Of the matters communicated with Audit & Supervisory Board Members and the Audit & Supervisory Board, we
determine those matters that were of most significance in the audit of the consolidated financial statements for the current
fiscal year as key audit matters. We describe these matters in our auditor’s report unless laws and regulations preclude
public disclosure about the matters or, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Audit of Internal Control
Audit Opinion
Pursuant to the provisions of Article 193-2, Paragraph 2 of the Financial Instruments and Exchange Act, we have audited
the Internal Control Report of the Company as of March 31, 2023.
In our opinion, the accompanying Internal Control Report, in which the Company states that internal control over financial
reporting was effective as of March 31, 2023, presents fairly, in all material respects, the assessment of internal control
over financial reporting, in accordance with assessment standards for internal control over financial reporting generally
accepted in Japan.
Basis for Audit Opinion
We conducted our internal control audit in accordance with auditing standards for internal control over financial reporting
generally accepted in Japan. Our responsibilities under those standards are further described in the “Auditor’s
Responsibilities for the Audit of the Internal Control” section of our report. We are independent of the Group in accordancewith the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our other ethical responsibilities asauditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Responsibilities of Management, Audit & Supervisory Board Members and the Audit & Supervisory Board for theInternal Control ReportManagement is responsible for the development and operation of internal control over financial reporting, and the
preparation and fair presentation of the Internal Control Report in accordance with assessment standards for internal
control over financial reporting generally accepted in Japan.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing and examining
the development and operation of internal control over financial reporting.
Internal control over financial reporting may not fully prevent or detect misstatements in financial reporting.
Auditor’s Responsibilities for the Audit of the Internal Control
Our responsibilities are to obtain reasonable assurance about whether the Internal Control Report is free from material
misstatement and to issue an internal control audit report that includes our opinion on the Internal Control Report basedon our internal control audit from an independent point of view.
In accordance with auditing standards for internal control over financial reporting generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Perform audit procedures to obtain audit evidence about the results of the assessments of internal control overfinancial reporting in the Internal Control Report. The procedures are selected and applied by the auditor’s judgment
based on the significance of effects on the reliability of financial reporting.
• Evaluate the overall presentation of the Internal Control Report, including the appropriateness of the scope,
procedures, and results of management’s assessments of internal control over financial reporting.
• Obtain sufficient appropriate audit evidence about the results of the assessments of internal control over financial
reporting in the Internal Control Report. We are responsible for the direction, supervision, and performance of theaudit of the Internal Control Report. We remain solely responsible for our audit opinion.
We communicate with Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the scope andtiming of the planned internal control audit, the results thereof, significant deficiencies in internal control to be disclosedthat we identify during our audit and those that were remediated, and other matters required by auditing standards forinternal control.
We also provide Audit & Supervisory Board Members and the Audit & Supervisory Board with a statement that we have

- 104 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

complied with relevant ethical requirements in Japan regarding independence and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards to eliminate or reduce obstruction factors.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its engagement partners do not have any interest in the Group which is required to be disclosed pursuant to
the provisions of the Certified Public Accountants Act of Japan.
Notes: 1. The original copy of the above report is kept separately by the Company (the reporting company of the Annual
Securities Report).
2. The associated XBRL data are not included in the scope of the audit.

- 105 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Independent Auditor’s Report
June 28, 2023
To the Board of Directors ofJapan System Techniques Co., Ltd.

Deloitte Touche Tohmatsu LLCOsaka office
Designated Limited Liability Partner,
Engagement Partner,
Certified Public Accountant:

Ikutoshi Senzaki

Designated Limited Liability Partner,
Engagement Partner,
Certified Public Accountant:

Masaru Fujikawa

Audit Opinion
Pursuant to the provisions of Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we have audited
the non-consolidated financial statements of Japan System Techniques Co., Ltd. (the “Company”) provided in the“Financial Information” section in the Company’s Annual Securities Report, namely, the non-consolidated balance sheet
as of March 31, 2023, and the non-consolidated statement of income and non-consolidated statement of changes in equity
and the notes to significant accounting policies for the 51st fiscal year from April 1, 2022 to March 31, 2023, and therelated notes and the annexed detailed schedules.
In our opinion, the accompanying non-consolidated financial statements present fairly, in all material respects, thefinancial position of the Company as of March 31, 2023, and its financial performance for the fiscal year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities underthose standards are further described in the “Auditor’s Responsibilities for the Audit of the Non-consolidated Financial
Statements” section of our report. We are independent of the Company in accordance with the provisions of the Code ofProfessional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the nonconsolidated financial statements for the current fiscal year. Those matters were addressed in the context of our audit of
the non-consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Estimate of total construction cost for revenue recognition over a specified period based on progress
As described in “Significant Accounting Policies, 4. Recognition of revenues and expenses” and “Significant Accounting
Estimates, 1. Estimate of total construction cost for revenue recognition over a specified period based on progress” in the Notes
to Non-consolidated Financial Statements, the Company records net sales for contracts where the performance obligation is
fulfilled over a specified period, such as contracted software production and relevant services, which are the Company’s major
businesses, by estimating the progress of fulfilling the performance obligation and recognizing revenue based on the progress forthat period. Net sales for the current fiscal year amounted to 18,552,222 thousand yen, of which 1,844,911 thousand yen was fromrevenue recognized over a specified period based on progress.

- 106 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

Key audit matter description and how the key audit matter was addressed in the audit for this matter are not presented because
they are the same as described in “Key Audit Matters (Estimate of total construction cost for revenue recognition over a specified
period based on progress)” in the audit report on the consolidated financial statements.

Other Information
Other information included in the Annual Securities Report is information other than the consolidated financial statements
and non-consolidated financial statements and their audit reports. Management is responsible for preparing and disclosing
the other information. In addition, Audit & Supervisory Board Members and the Audit & Supervisory Board are
responsible for overseeing the execution of duties by Directors in the development and operation of the reporting process
for the other information.
Our audit opinion on the non-consolidated financial statements does not cover the other information, and we do not
express any form of assurance conclusion thereon.
Our responsibility in the audit of the non-consolidated financial statements is to read the other information and, in doingso, consider whether the other information is materially inconsistent with the non-consolidated financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, weare required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management, Audit & Supervisory Board Members and the Audit & Supervisory Board for the Nonconsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the non-consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for the development and operation of such internal
control as management determines is necessary to enable the preparation and fair presentation of the non-consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the non-consolidated financial statements, management is responsible for assessing the Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting
principles generally accepted in Japan and using the going concern basis of accounting unless management either intends
to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the execution ofduties by Directors in the development and operation of the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Non-consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the non-consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion on the non-consolidated financial statements based on our audit from an independent point of view. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these non-consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgement and maintainprofessional skepticism throughout the audit. We also:• Identify and assess the risk of material misstatement of the non-consolidated financial statements, whether due tofraud or error, and design and perform audit procedures responsive to those risks. The procedures selected to be
applied depend on the auditor’s judgement. In addition, we obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit todesign audit procedures that are appropriate in the circumstances, but not for the purpose of auditing the nonconsolidated financial statements to express an opinion on the effectiveness of the Company’s internal control.

- 107 -

Japan System Techniques Co., Ltd. (Securities code: 4323)
Annual Securities Report for the Fiscal Year Ended March 2023

• Evaluate the appropriateness of accounting policies used by the management and their method of application, as wellas the reasonableness of accounting estimates made by the management and related notes thereto.
• Conclude on the appropriateness of management’s use of the going concern basis for preparing the non-consolidated
financial statements. And, based on the audit evidence obtained, determine whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated notes to the non-consolidated financial statements or, if such notes are inadequate, to express a qualified
opinion with exceptions on the non-consolidated financial statements. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
• Evaluate whether the overall presentation of the non-consolidated financial statements and the notes thereto are inaccordance with accounting principles generally accepted in Japan, as well as the overall presentation, structure andcontent of the non-consolidated financial statements, including the notes thereto, and whether the non-consolidated
financial statements represent the underlying transactions and accounting events in a manner that achieves fairpresentation.
We communicate with Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit, and other matters required by auditing standards.
We also provide Audit & Supervisory Board Members and the Audit & Supervisory Board with a statement that we havecomplied with relevant ethical requirements in Japan regarding independence and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards to eliminate or reduce obstruction factors.
Of the matters communicated with Audit & Supervisory Board Members and the Audit & Supervisory Board, we
determine those matters that were of most significance in the audit of the non-consolidated financial statements for thecurrent fiscal year as key audit matters. We describe these matters in our auditor’s report unless laws and regulations
preclude public disclosure about the matters or, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweighthe public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its engagement partners do not have any interest in the Company which is required to be disclosed pursuant
to the provisions of the Certified Public Accountants Act of Japan.
Notes: 1. The original copy of the above report is kept separately by the Company (the reporting company of the Annual
Securities Report).
2. The associated XBRL data are not included in the scope of the audit.

- 108 -