November 8, 2019

Summary of Consolidated Financial Results
for the Second Quarter of Fiscal Year Ending March 31, 2020
(Six Months Ended September 30, 2019)[Japanese GAAP]
Company name: Japan System Techniques Co., Ltd.
Listing: Tokyo Stock Exchange, First Section
Stock code:
4323
URL: http://www.jast.jp
Representative:
Takeaki Hirabayashi, President and CEO
Contact:
Noriaki Okado, Managing Director and CFO
Tel: +81-6-4560-1000
Scheduled date of filing of Quarterly Report:
November 11, 2019
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting:Yes (for analysts)
Note: The original disclosure in Japanese was released on November 8, 2019 at 16:00 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Second Quarter Ended September 30, 2019
(April 1, 2019 – September 30, 2019)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent
Million yen%
Million yen%
Million yen% Million yen%
Six months ended Sep. 30, 2019
8,610
7.3
190 (27.7)
202 (27.6)(552)
Six months ended Sep. 30, 2018
8,024
14.9
263 182.6
280 136.9
175 189.6
Note: Comprehensive income (million yen) Six months ended Sep. 30, 2019:(583) (-%)
Six months ended Sep. 30, 2018:
147 (up 68.5%)
Diluted net income per
share
Yen
Yen
(104.18)
33.45-

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

Total assets
Net assets
Equity ratio
Net assets per share
Million yen
Million yen%
Yen
As of Sep. 30, 201912,2785,683
46.0
1,065.28
As of Mar. 31, 201913,636
6,418
46.8
1,202.34
Reference: Shareholders’ equity (million yen)
As of Sep. 30, 2019:
5,653
As of Mar. 31, 2019:
6,381
Note: The provisional accounting treatment for a business combination has been finalized in the first quarter of the current fiscal year.
Significant business indicators, etc. related to the previous fiscal year reflect the finalized figures.

2. Dividends
1Q-endYen-

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

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

Total
Yen
28.00
28.00

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

Operating income

Ordinary income

Million yen%
Million yen% Million yen%
Full year
18,000
6.7
925
8.5
950
9.6
Note: Revisions to the most recently announced consolidated earnings forecasts: Yes(Percentages represent year-on-year changes)
Profit attributable to
Net income perowners of parent
shareMillion yen%
Yen15(95.3)
2.83

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

None4) Restatements:

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

5,612,230 shares

As of Mar. 31, 2019:

5,612,230 shares

As of Mar. 31, 2019:

304,710 shares

2) Number of treasury shares at the end of the period
As of Sep. 30, 2019:304,961 shares

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

5,307,255 shares

Six months ended Sep. 30, 2018:

5,248,020 shares

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

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

2(2) Explanation of Financial Position

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

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheet

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

6

Quarterly Consolidated Statement of Income
For the Six-month Period

6

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

8(4) Notes to Quarterly Consolidated Financial Statements

9

Going Concern Assumption

9

Significant Changes in Shareholders’ Equity

9

Additional Information

9

Segment and Other Information

10

Business Combinations

11

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first half of the current fiscal year, the Japanese economy continued to recover at a moderate pace despite
the continuation of geopolitical risk in eastern Asia. The recovery was supported by improvements in corporate
profits, the number of jobs and personal income due to the benefits of economic initiatives by the Japanese
government.
In the IT industry in Japan, according to the latest statistics in the “Survey of Selected Service Industries” by the
Ministry of Economy, Trade and Industry (the final August figures), net sales continued to climb, rising 1.5%
year on year in Fiscal 2018 (compared with 2.5% annual growth in Fiscal 2017). However, the outlook for the IT
industry is uncertain because the sales growth rate was reduced compared with the Fiscal 2017 and there weresome months in Fiscal 2018 when sales were lower than one year earlier.
In the first half, the Japan System Techniques Group (Japan System Techniques Co., Ltd. (JAST) and its
consolidated subsidiaries, hereafter “the JAST Group”) posted net sales of 8,610 million yen (up 7.3% year onyear), operating income of 190 million yen (down 27.7% year on year), ordinary income of 202 million yen(down 27.6% year on year), and loss attributable to owners of parent of 552 million yen (vs. profit attributable toowners of parent of 175 million yen in the same period of the previous fiscal year) due to booking of impairment
loss of 722 million yen as an extraordinary loss. Results by segment were as follows.
In the software business (individualized contracted software development), net sales increased but profits
decreased. Sales remained strong because orders from the service/retail industry, manufacturing industry andfinance/insurance/brokerage industry increased while there was a decrease in orders from the telecommunicationsindustry and public sector. There was an increase in outsourced processing and other costs. As a result, net sales
in this business totaled 5,786 million yen (up 5.3% year on year) and operating loss was 89 million yen (vs.
operating income of 277 million yen in the same period of the previous fiscal year).
In the GAKUEN business (development, sale and related services of operational reform packages for schools),
there was a decrease in end user computing (EUC: contracted development of package -related systems) sales.
However, there were increases in sales of program products (PP) to universities, IT equipment sales andimplementation support sales. Net sales in this business totaled 1,337 million yen (up 38.0% year on year) andoperating income was 189 million yen (vs. operating loss of 60 million yen in the same period of the previous
fiscal year).
In the system sales business (IT equipment sales and IT/telecom infrastructure construction), sales to universities
and the public sector decreased. Net sales in this business totaled 994 million yen (down 15.7% year on year) andoperating income was 109 million yen (down 25.0% year on year).
Lastly, in the medical big data business (inspection, analysis and related services of medical information data),
sales of automated inspection services for health insurance claims, analysis services and services for notificationof the cost of medical care were strong. Net sales in this business totaled 492 million yen (up 28.8% year on year)
and operating loss totaled 23 million yen (vs. operating loss of 103 million yen in the same period of the previous
fiscal year).
Features of the JAST Group’s quarterly results
A feature of the Group’s software, GAKUEN and systems sales businesses is that the delivery inspection periodof most customers concentrates in March, the last month of the fiscal year for most com panies, and then in
September, the last month of the second quarter. This means that the Group’s earnings in the first and third
quarters tend to be much smaller than in the second and fourth quarters.

(2) Explanation of Financial Position
1) Balance sheet position
The balance of current assets at the end of the second quarter of the current fiscal year was 8,648 million yen,down 962 million yen from the end of the previous fiscal year. This was mainly due to decreases in accounts
receivable-trade and cash and deposits. The balance of non-current assets was 3,630 million yen at the end of thesecond quarter, down 395 million yen from the end of the previous fiscal year. This was mainly due to a decreasein customer-related assets.
The balance of current liabilities at the end of the second quarter was 5,034 million yen, down 553 million yen
from the end of the previous fiscal year. This was mainly due to decreases in accounts payable-other, notes andaccounts payable-trade, and increases in advances received and short-term borrowings. The balance of
non-current liabilities was 1,560 million yen at the end of the second quarter, down 69 million yen from the endof the previous fiscal year.
The balance of total net assets was 5,683 million yen at the end of the second quarter, down 734 million yen fromthe end of the previous fiscal year.
2) Cash flows
Cash and cash equivalents decreased 96 million yen from 4,204 million yen at the beginning of the current fiscal
year to 4,108 million yen at the end of the first half of the current fiscal year (vs. 4,412 million yen at the end of
the same period of the previous fiscal year). Cash flows by category were as follows.
Cash flows provided by operating activities totaled 289 million yen, a decrease of 1,096 million yen from 1,385
million yen provided in the same period of the previous fiscal year. This decrease was mainly due to a decrease inproceeds from collection of notes and accounts receivable-trade and an increase in outlays for inventories while
there was a decrease in payments for accounts payable-trade.
Cash flows used in investing activities totaled 457 million yen, an increase of 1,050 million yen from 1,508
million yen used in the same period of the previous fiscal year. This increase was mainly due to an increase in thepayment for purchases of shares of subsidiaries and a decrease in payments for long-term deposits paid.
Cash flows provided by financing activities totaled 86 million yen, a decrease of 1,665 million yen from 1,751
million yen provided in the same period of the previous fiscal year. This decrease was mainly due to a decrease in
short-term borrowings.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
We have revised the consolidated earnings forecast for the fiscal year ending March 31, 2020 which wasannounced on May 14, 2019. For more details, please refer to the “Notice of Recognition of Extra Ordinary Lossand Revision to Earnings Forecast” that was announced today (November 8, 2019).
These projections are based on information available at the time of release of this report. Actual results may differ
from projections due to a variety of factors.

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

AssetsCurrent assets
Cash and deposits

4,260,305

4,147,751

Notes and accounts receivable-trade

4,341,029

3,375,215

Merchandise and finished goods

129,795

57,436Work in process

569,537

818,421

2,695

2,020

Other

345,249

288,024

Allowance for doubtful accounts(38,272)(40,837)

9,610,340

8,648,034

Raw materials and supplies

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

720,814

772,420

Accumulated depreciation(419,276)(452,682)

Buildings and structures, net

301,538

319,737

Land

142,361

142,361

Other

451,991

480,842

Accumulated depreciation(337,562)(352,440)

Other, net

114,428

128,402558,328

590,501

Goodwill

619,660

607,144

Customer-related assets

484,589

119,685

Software

68,396

63,815

Other

7,626

7,626

1,180,273

798,271

Investment securities

688,789

700,147

Retirement benefit asset

542,920553,328

Deferred tax assets

502,531442,288

Guarantee deposits

414,231418,731

Other

151,359

142,599

Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets

Allowance for doubtful accounts(12,209)(15,348)

Total investments and other assets

2,287,621

2,241,746

4,026,223

3,630,520

13,636,564

12,278,554

Total non-current assets
Total assets

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

Liabilities
Current liabilities
Notes and accounts payable-trade

1,128,311

943,136

Short-term borrowings

1,543,696

1,800,000

Current portion of long-term borrowings

8,400

8,400

Income taxes payable

234,023

103,789

Advances received

648,746

981,971

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

722,520653,279

27,465

14,131

37,264

12,561Other

1,237,384

517,337

Total current liabilities

5,587,812

5,034,608

11,90035,11820,051

31,777

13,978615

957,672

969,044

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

116,888

33,660Other509,788490,166

1,630,279

1,560,382

7,218,091

6,594,991

Share capital

1,076,669

1,076,669

Capital surplus

1,085,695

1,085,230

Retained earnings

4,359,161

3,656,230

Treasury shares(277,050)(274,239)

Total shareholders’ equity

6,244,476

5,543,890

Valuation difference on available-for-sale securities

114,167

121,327

Foreign currency translation adjustment(37,345)(65,459)

Remeasurements of defined benefit plans

60,16353,966

Total accumulated other comprehensive income

136,986

109,835

37,01029,837

6,418,472

5,683,563

13,636,564

12,278,554

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

Accumulated other comprehensive income

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

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Six-month Period)First six months of FY3/19(Apr. 1, 2018 – Sep. 30, 2018)(Thousands of yen)First six months of FY3/20(Apr. 1, 2019 – Sep. 30, 2019)

Net sales

8,024,719

8,610,978Cost of sales

6,319,197

6,696,965

Gross profit

1,705,521

1,914,012

Selling, general and administrative expenses

1,442,429

1,723,888

263,092

190,123

Interest income

2,725

5,469

Dividend income

3,218

3,320

Rental income

2,089

2,637

Operating income
Non-operating income

Foreign exchange gains

675-

Subsidy income

8,416

11,593

Other

2,546

5,573

Total non-operating income

19,67028,594

Interest expenses

982

1,686

Rental expenses

976

132

Non-operating expenses

Foreign exchange losses
Other
Total non-operating expenses
Ordinary income-

13,448

683

652

2,642

15,920280,120

202,797-

722,286

Extraordinary losses
Impairment loss-

722,286

Profit (loss) before income taxes

Total extraordinary losses

280,120(519,489)

Income taxes

110,00337,769Profit (loss)

170,117(557,259)

Loss attributable to non-controlling interests(5,426)(4,365)

Profit (loss) attributable to owners of parent

175,544(552,893)

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)

Profit (loss)

First six months of FY3/19(Apr. 1, 2018 – Sep. 30, 2018)(Thousands of yen)First six months of FY3/20(Apr. 1, 2019 – Sep. 30, 2019)

170,117(557,259)

Other comprehensive income
Valuation difference on available-for-sale securities(8,503)

7,159

Foreign currency translation adjustment(5,370)(27,619)

Remeasurements of defined benefit plans, net of tax(8,999)(6,196)

Total other comprehensive income
Comprehensive income(22,872)(26,656)

147,244(583,916)

154,287(580,044)(7,042)(3,871)

Comprehensive income attributable to:Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

(3) Quarterly Consolidated Statement of Cash FlowsFirst six months of FY3/19(Apr. 1, 2018 – Sep. 30, 2018)(Thousands of yen)First six months of FY3/20(Apr. 1, 2019 – Sep. 30, 2019)

Profit (loss) before income taxes

280,120(519,489)

Depreciation

36,33435,196

Amortization of software

21,284

13,490

Amortization of goodwill

4,528

42,278Cash flows from operating activities

Amortization of customer-related assets-

30,525

Impairment loss-

722,286

Increase (decrease) in provision for bonuses(9,110)(68,952)

Increase (decrease) in retirement benefit liability

24,325

10,733

Decrease (increase) in retirement benefit asset(10,190)(10,407)

Interest and dividend income(5,943)(8,789)

982

1,686

Decrease (increase) in trade receivables

1,998,868

977,241

Increase (decrease) in advances received

408,895

333,387

Decrease (increase) in inventories

339,505(176,602)

Increase (decrease) in trade payables

Interest expenses(1,223,794)(184,858)

Other, net(234,720)(740,071)

Subtotal

1,631,084

457,656

6,434

9,275

Interest and dividends received
Interest paid

(964)

(1,499)

Income taxes paid

(251,161)(176,207)

Net cash provided by (used in) operating activities

1,385,392

289,225

153,108

17,550Purchase of property, plant and equipment(47,819)(35,574)

Proceeds from sales of real estate for rent

109,183-

Purchase of software(21,127)(14,996)

Purchase of investment securities(1,181)(1,391)

162--(416,822)(19,775)(5,015)705

372

Cash flows from investing activities
Decrease (increase) in time deposits

Proceeds from cancellation of insurance funds
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Payments for long-term deposits paid
Other, net
Net cash provided by (used in) investing activities(1,680,374)-(1,122)(1,615)(1,508,241)(457,494)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings

1,914,551

256,994

Repayments of lease obligations(11,737)(11,976)

Repayments of long-term borrowings(4,200)(4,900)(146,944)(149,982)-(80)

Dividends paid
Purchase of treasury shares
Repayments to non-controlling shareholders
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents-(3,759)1,751,669

86,295(1,769)(14,661)

Net increase (decrease) in cash and cash equivalents

1,627,050(96,634)

Cash and cash equivalents at beginning of period

2,785,193

4,204,722

Cash and cash equivalents at end of period

4,412,244

4,108,088

(4) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.

Significant Changes in Shareholders’ Equity
Not applicable.

Additional Information
Board Benefit Trust (BBT)
Based on the resolution of the 46th Annual General Meeting of Shareholders, JAST on June 26, 2018 terminated the
directors’ retirement benefit system and introduced a Board Benefit Trust (BBT, hereafter, “the Plan”) for the purpose ofincreasing motivation for contributing to medium to long-term improvement in sales and earnings and an increase incorporate value. The Plan clearly links the compensation of directors with the JAST stock price. Furthermore, directors sharewith shareholders the benefits of a higher stock price as well as the risk of a lower stock price.
1) Overview of transaction
This is a stock compensation plan under which directors receive stock compensation through a trust (a trust established under
the current system, hereafter “the Trust”). The Trust acquires JAST stock using cash contributions from JAST as the source offunds. Directors (excluding external directors; hereafter same unless indicated otherwise) receive stock compensation or amonetary amount equivalent to the market value of the stock in lieu of stock compensation (hereafter “JAST stock”) in
accordance with the rules on the stock compensation plan for directors. In principle, a director becomes eligible for stockcompensation only upon retirement.
2) JAST stock held by the trust
The book value (excluding associated expenses) of JAST stock held by the trust is shown as treasury shares in the net assets
section of the consolidated balance sheet. As of the end of the second quarter, the BBT held 47,800 shares of JAST with abook value of 87.713 million yen.

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

Softwarebusiness

GAKUENbusiness

Systemsales
business

Medicalbig data
business

Total

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

5,492,773

969,201

1,180,017

382,727

8,024,719-

8,024,719

32,049

5,833

2,775

-

40,658(40,658)-

Total

5,524,823

975,034

1,182,792

382,727

8,065,378(40,658)

8,024,719

Net sales

Segment profit (loss)
277,154(60,523)
145,917(103,161)
259,387
3,704
Notes: 1. Segment profit (loss) in the above adjustment represents eliminations for inter-segment transactions.

263,092

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

Total

business

Medicalbig data
business

1,337,079

994,835

492,968

8,610,978-8,610,97827,867

1,763

25,163-54,794(54,794)-

5,813,961

1,338,843

1,019,998

492,968

8,665,772(54,794)

8,610,978Softwarebusiness

GAKUENbusiness

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

5,786,094

Total

sales

Net sales

Segment profit (loss)(89,580)
189,895
109,454(23,352)
186,417
3,706
Notes: 1. Segment profit (loss) in the above adjustment represents eliminations for inter-segment transactions.

190,123

2. Segment profit is consistent with operating income shown on the quarterly consolidated statement of income.
2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment
Significant impairment losses related to non-current assets
In the software business, there was an impairment loss for customer-related assets.
The amount of this loss in the first six months of FY3/20 was 322.928 million yen.
Significant change in goodwill
In the software business, there was an impairment loss for goodwill.
The amount of this loss in the first six months of FY3/20 was 399.358 million yen.
In this business, the Company purchased the stock of AG NET PTE. LTD. (AG NET) located in Singapore and made it aconsolidated subsidiary in the first quarter of FY3/20. Goodwill of 455.805 million yen emerged related to the purchases.
The amount of goodwill is calculated provisionally because the allocation of the acquisition cost is incomplete at the end of
the second quarter.

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

Cash

Acquisition cost:

486.526 million yen
486.526 million yen

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

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

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