Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023

(Under Japanese GAAP)
October 27, 2022
Listed company name:

Drecom Co., Ltd.

Listing

Tokyo Stock Exchange

Code number

3793

URL:

https://drecom.co.jp/

Representative

President and Representative Director: Yuki Naito

Contact person

Board of Directors: Hideki Goto (TEL) +81 (0)50-3101-9977

Scheduled date to file quarterly securities report: November 9, 2022
Scheduled start date to commence dividend payments: －Preparation of supplementary materials on quarterly financial results: Yes
Holding of quarterly financial results briefings: Yes(Yen amounts are rounded down to millions, unless otherwise noted.)
1. Consolidated Financial Results for the six months ended September 30, 2022 (From April 1, 2022 to September 30, 2022)(1) Consolidated financial results (cumulative)

Net sales

Operating Income

Six months ended%

September 30, 2022
September 30, 2021
Note: Comprehensive income(% is Year-on-year rate of increase / decrease)
Net income attributable
Ordinary income
to owners of parent
quarterly
%

%

%

5,800

11.9

1,607

66.2

1,547

64.4

1,056

72.6

5,184

-16.2

967

-8.1

941

-8.8

612

-25.9

For the six months ended September 30, 2022 ¥1,057 million yen (72.6%)
For the six months ended September 30, 2021 ¥613 million yen (-25.9%)

Quarterly
Net earnings per share

Quarterly
Diluted net earnings
per share

Six months ended

Yen

Yen

September 30, 2022

37.13

37.08

September 30, 2021

21.41

21.38

(2) Consolidated financial Condition
Total Assets
Six months ended

September 30, 2022

Net Assets

Equity-to-asset ratio

Net assets per share

million yen

million yen%

Yen

12,240

5,529

44.8

192.17

4,574

46.9

159.06

Fiscal year ended

9,653

March 31, 2021

Reference: Equity capital As of September 30, 2022
As of September 30, 2021

¥5,478 million¥4,522 million

2. Cash dividends
Annual dividends
First quarter-end

Second quarter-end

Third quarter-end

Fiscal year-end

Total

Fiscal year ended

JPY

JPY

JPY

JPY

JPY

March 31, 2022

―

0.00

―

5.00

0.00

March 31, 2023
March 31, 2023 (Forecast)

―

0.00
―

5.00

5.00

Note: Revision to the forecast of cash dividends most recently announced: None

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3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)(% increase or decrease from the same period of previous year)

Sales

Operating income%

Fiscal year ending
March 31, 2023

13,000

23.5

%

2,000

%

25.7

Note: Revisions to the most recently announced earnings forecasts:

Profit attributable toEarnings per shareowners of parent

Ordinary income

1,900

23.2

%

1,200

48.6

42.20

None

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change inscope of consolidation): None
New ―, (Company name) ―, Exclusion ― , (Company name) ―(2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
(3) Changes in accounting policies, changes in accounting estimates, and re-display of amendments(i) Changes in accounting policies due to revisions to accounting standards: Yes(ii) Changes in accounting policies due to other reasons: None(iii) Changes in accounting estimates: None(iv) Retrospective restatement: None
(Note) For details, please refer to "2. Quarterly Consolidated Financial Statements and Key Notes and Main Notes(4) Notes on quarterly consolidated financial statements (Change in accounting policy)” on p11of theattached material.
(4) Number of issued shares (common shares)(i) Total number of issued shares at the end of the period (including treasury shares)
As of September 30, 2022

29,129,591 shares

As of March 31, 2022

29,072,696 shares(ii) Number of treasury shares at the end of the period
As of September 30, 2022

619,866 shares

As of March 31, 2022

637,366 shares(iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)
Six months ended September 30, 2022

28,456,134 shares

Six months ended September 30, 2021

28,584,587 shares(Note) 595,800 shares of the Company (5,958 voting rights) owned by Custody Bank of Japan, Ltd. (hereinafter referred toas “ESOP Trust Unit”) are included in the number of treasury stock at the end of the above period.
*Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit
corporation.
*Proper use of earnings forecasts, and other special matters(Notes on future descriptions)
The forecasts above are based on information currently available and certain assumptions deemed reasonable by theCompany as of the date of release of this document. Actual future results may differ from forecasts figures due to various
factors(How to obtain supplementary explanatory materials for financial results)
The Company is scheduled to hold a financial results briefing for institutional investors and analysts on October 27, 2022.
The financial results presentation materials to be distributed at this briefing will be posted on the Company's website
immediately after the briefing.

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Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)

Table of Contents
1. Qualitative Information on Consolidated Financial Results for the Second Quarter Ended September 30, 2022 ····· 4(1) Explanation of Operating Results ..................................................................................................................... 4(2) Explanation of Financial Position ..................................................................................................................... 5
2. Quarterly Consolidated Financial Statements and Key Notes ······································································ 6(1) Quarterly Consolidated Balance Sheet............................................................................................................. 6(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Comprehensive Income Statements............................................................................................................................................................................. 8
Quarterly Consolidated Statement of Income ................................................................................................. 8(Six months ended September 30, 2022) .................................................................................................... 8
Consolidated quarterly statements of comprehensive income ......................................................................... 9(Cumulative period for consolidated second quarter, six months ended September 30, 2022) ..................... 9(3) Quarterly Consolidated Statement of Cash Flows .......................................................................................... 10(4) Notes on quarterly consolidated financial statements ..................................................................................... 11(Notes on going concern assumptions)......................................................................................................... 11(Notes on significant changes in the amount of shareholders' equity)............................................................ 11(Change in accounting policy) ...................................................................................................................... 11(Information by Segment)............................................................................................................................. 12(Significant subsequent events) ................................................................................................................... 12

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Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)

1. Qualitative Information on Consolidated Financial Results for the Second Quarter Ended September 30,
2022(1) Explanation of Operating Results
The Group's raison d'etre is "with entertainment" and our goal is to continue to create services that exceed people's
expectations. We also strive to create unprecedented value and deliver experiences that captivate users. In the medium
term, we aim to become a comprehensive entertainment company that provides a variety of digital entertainment content
globally, centered on our IP, and to achieve sustainable growth and increase our corporate value.
In the mainstay game business, our main business is the development and operation of games, and we develop andoperate third-party IP games, game platforms, and original games. In the media business, we are engaged in businessdevelopment with the aim of creating the next generation of core businesses. We have launched new services on a trial
basis, utilizing our knowledge of Internet services, and are conducting a series of trials for commercialization.
In the first half of the consolidated fiscal year under review, net sales amounted to 5,800,434 thousand yen (up 11.9%
year-on-year), operating income was 1,607,859 thousand yen (up 66.2% year-on-year), ordinary income was 1,547,617
thousand yen (up 64.4% year-on-year), and net income attributable to shareholders of the parent company amounted to
1,056,684 thousand yen (up 72.6% year-on-year), reaching a record high.
The results for each segment for the first half of the fiscal year under review are as follows.

Game BusinessIn the game business, one of our mainstay IP game titles, which celebrated its 8th anniversary, performed well globally
driven by the excitement of the IP and contributed to earnings.
Net sales increased year-on-year due to strong global sales of our mainstay IP titles, as well as the release of new
titles in the previous fiscal year.
Profits increased from the same period of the previous fiscal year due to increased sales of mainstay titles as well as
the closure of some unprofitable titles.
As a result, segment sales amounted to 5,670,326 thousand yen (up 10.8% year-on-year) and segment income
amounted to 1,809,758 thousand yen (up 62.9% year-on-year). In this segment, our core business, we will continue to
strive to maintain stable earnings from titles in operation and aim to increase sales and profits through the success ofseveral new titles under development.

Media BusinessIn the media business, "Rooot," a Twitter-based fan community promotion service, steadily expanded its businessscale and contributed to earnings. In addition, in order to focus on the development, acquisition, and nurturing of IP anddiversification of monetization channels, we are focusing on new businesses in the entertainment domain other thangames, namely publishing and video business. We are also focusing on new business development in the Web3 domain.
Net sales increased year-on-year as "Rooot" steadily expanded its services.
Regarding profit, the amount of loss increased from the same period of the previous fiscal year due to the ongoingcost trend as a result of aggressive investment in new business areas, which we see as a great opportunity to expand
our business performance.
As a result, segment sales amounted to 130,107 thousand yen (up 98.7% year-on-year) and segment loss amounted
to 201,898 thousand yen (segment loss of 143,599 thousand yen in the same period last year). In this segment, theCompany will promote aggressive investments to achieve medium- to long-term business growth.
Looking ahead, we will work to further improve profitability in our mainstay game business and aim to grow sales
through the release of new titles. In addition, we will focus on business development in entertainment areas other thangames to grow into a comprehensive entertainment company centered on IP. Furthermore, we will promote our growthstrategy by integrating our existing businesses with the Web3 domains.

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Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(2) Explanation of Financial Position(Assets)
Current assets at the end of the first half of the current consolidated fiscal year totaled 8,505,795 thousand yen, an
increase of 1,739,786 thousand yen from the end of the previous consolidated fiscal year. This was mainly due toincreases of 1,441,035 thousand yen in cash and deposits and 584,962 thousand yen in accounts receivable. Noncurrent
assets totaled 3,734,232 thousand yen, an increase of 846,771 thousand yen from the end of the previous fiscal year.
This was mainly due to an increase of 901,917 thousand yen in software in progress.
As a result, total assets amounted to 12,240,028 thousand yen.

(Liabilities)
Current liabilities at the end of the first half of the current consolidated fiscal year totaled 3,200,478 thousand yen, an
increase of 490,562 thousand yen from the end of the previous consolidated fiscal year. This was mainly due to increasesof 313,378 thousand yen in income taxes payable and 238,000 thousand yen in current portion of long-term loans
payable. Fixed liabilities totaled 3,509,929 thousand yen, an increase of 1,140,451 thousand yen from the end of theprevious fiscal year. This was mainly due to an increase of 1,159,000 thousand yen in long-term loans payable.
As a result, total liabilities amounted to 6,710,408 thousand yen.

(Net assets)
Total net assets at the end of the first half of the current consolidated fiscal year amounted to 5,529,619 thousand yen,
an increase of 955,544 thousand yen from the end of the previous fiscal year. This was mainly due to the recording of
1,056,684 thousand yen in net income attributable to parent company shareholders.
As a result, the equity ratio was 44.8% (46.9% at the end of the previous fiscal year).

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Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)

2. Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet(Unit: thousand yen)Previous consolidated fiscal year
(March 31, 2022)

Six months ended September 30, 2022
(September 30, 2022)

ASSETS
Current assets
Cash and deposits

4,737,225

6,178,259

Notes and accounts receivable

1,485,317

2,070,279

Accounts receivable

10,144

10,691

Prepaid expenses

157,555

145,313

Other375,766

101,250

Total current assets

6,766,009

8,505,795

184,236

190,229

Accumulated depreciation-13,603-22,188

Buildings (net)170,632

168,040

Fixed assets
Tangible Fixed Asset
Buildings

69,03077,225

Accumulated depreciation-33,995-43,224

Tools, furniture & fixtures (net)35,03434,000Tools, furniture & fixtures

7,232

7,232

Accumulated depreciation-2,007-2,557

Lease assets (net)

5,225

4,675

Total tangible fixed assets

210,891

206,716

Software557,325

412,048

Software suspense account

1,333,425

2,235,342

Total intangible assets

1,890,751

2,647,391

Lease assets

Intangible assets

Investments and other assets
7

59,926

Deferred tax assets

465,737

433,736

Deposit

199,404

199,404

Other

120,668

187,057

Other investments and other assets

785,818

880,124

2,887,461

3,734,232

9,653,470

12,240,028

Investment securities

Total fixed assets
Total assets

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Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(Unit: thousand yen)Previous consolidated fiscal year
(March 31, 2022)

Six months ended September 30, 2022
(September 30, 2022)

357,864

314,876

146,000
808,000

145,000
1,046,000

1,281
579,036

1,281
512,180

142,079
138,497455,457
138,335

Other

537,158

587,347

Total current liabilities

2,709,917

3,200,478

2,014,000

3,173,000

4,806
100,000

4,165
100,000

LIABILITIESCurrent liabilities
Accounts payable
Short-term debit
Long-term debt due within one year
Lease obligations
Accounts payable
Income taxes payable
Bonus payment reserve

Fixed liabilities
Long-term debt
Lease obligations
Asset retirement obligation
Other

250,671

232,764

Total fixed liabilities

2,369,478

3,509,929

5,079,395

6,710,408

Shareholders' equity
Capital

1,792,991

1,811,311

Capital surplus
Retained earnings

2,050,152
953,6812,068,472
1,865,123

Treasury stock-274,029-266,212

Total shareholders' equity

4,522,796

5,478,695

7

7

7

7

49,06749,067

Total liabilities
Net assets

Accumulated other comprehensive income(loss)
Valuation difference on available-for-salesecurities
Total accumulated other comprehensive
incomeStock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

7/12

2,203

1,848

4,574,075

5,529,619

9,653,470

12,240,028

Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Comprehensive Income
Statements
Quarterly Consolidated Statement of Income(Six months ended September 30, 2022)(Unit: Thousand yen)Six months ended
September 30, 2021
(April 1, 2021 to September 30, 2021)

Six months ended
September 30, 2022
(April 1, 2022 to September 30, 2022)

5,184,850
3,187,220

5,800,434
3,171,491

Sales
Cost of sales
Gross profit

1,997,629

2,628,942

Selling, general and administrative expenses

1,030,259

1,021,083

Operating income

967,370

1,607,859

Interest received
Dividends received

25
-

23
3,066

Gain on investments in capital
Other

247

2,080
1,179

Total non-operating income

272

6,349

Interest expense
Payment fee

22,791500

19,68846,332Foreign exchange loss
Other

2,050
1,013

570

Total non-operating expenses

26,354

66,591

941,288

1,547,617

Non-operating revenue

Non-operating expenses

Ordinary income
Extraordinary loss
Impairment loss
Total extraordinary loss
Net income before income taxes and minority
interests
Corporate, inhabitant and enterprise taxes
Income taxes-deferred

4,957

-

4,957

-

936,331

1,547,617

162,402457,711

160,933

32,001

Total income taxes

323,335

489,712

Quarterly net income

612,996

1,057,904

Net income attributable to noncontrolling interests
Net income attributable to owners of the parent

8/12

934

1,220

612,061

1,056,684

Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)

Consolidated quarterly statements of comprehensive income(Cumulative period for consolidated second quarter, six months ended September 30, 2022)(Unit: Thousand yen)Six months ended
September 30, 2021
(April 1, 2021 to September 30, 2021)

Six months ended
September 30, 2022
(April 1, 2022 to September 30, 2022)

612,996

1,057,904

Other securities valuation difference93-

Total other comprehensive income

93-

613,089

1,057,904

612,154

1,056,684

934

1,220

Quarterly net income or loss
Other comprehensive income

Quarterly comprehensive income(Breakdown)
Quarterly comprehensive income for ownersof parent
Quarterly comprehensive income fornon-controlling shareholders

9/12

Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(3) Quarterly Consolidated Statement of Cash Flows(Unit: Thousand yen)Six months ended
September 30, 2021
(April 1, 2021 to September 30, 2021)

Csh flow from operations
Quarterly net income before taxes
Depreciation and amortization
Stock compensation expense
Impairment loss
Interest and dividend income
Fees and commissions
Interest expense
Increase/decrease in trade receivables
Increase/decrease in inventories
Increase/decrease in accounts receivable-other
Increase /decrease in in consumption taxes
receivable
Increase/decrease in prepaid expenses
Increase/decrease in notes and accounts payable
Increase (decrease) in accrued liabilities
Increase/decrease in accrued consumption taxes
Increase/decrease in advances received
Increase/decrease in accrued bonus
Other
Subtotal
Receipts of interest and dividends
Interest payments
Payment of corporate taxes, etc.
Income taxes refunded
Cash flow from operating activities
Cash flow from investment activities
Payments for acquisition of tangible fixed assets
Payments for acquisition of intangible fixed assets
Payments for purchase of investment securities
Payments for acquisition of shares in subsidiaries
resulting in change in scope of consolidation
Other
Cash flows from investing activities
Cash flow from financial activities
Net increase / decrease in short-term loans
payableProceeds from long-term loans payable
Payments for long-term debt
Dividends paid
Other
Cash flows from financing activities
Cash and cash equivalents increased or decreased
Cash and cash equivalents at beginning of period
Cash and cash equivalents at the end of the quarter

10/12

Six months ended
September 30, 2022
(April 1, 2022 to September 30, 2022)

936,331301,275
21,6004,957-25
22,791
239,740-29,927-126,423

1,547,617
177,073
20,002-3,09045,083
19,688-584,962-699
14,480-169,624

9,894
132,181-22,415-195,413-136,190-52,584-23,056
1,082,734
270-22,478-395,264
8,567
673,829-17,005-42,987-61,233
66,817
1,980-21,699
3,113
1,333,805
3,635-15,235-154,761
1,167,443-49,692-777,680-96,290-12,651-916,245-59,920-129,813--11,917-1,065,394

69,254-919,562

100,000-1,000299,000-340,500-5,622
52,877-338,686
5,283,892
4,945,206

2,449,400-1,103,000-144,407-7,8381,193,153
1,441,034
4,732,985
6,174,019

Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(4) Notes on quarterly consolidated financial statements(Notes on going concern assumptions)
Nothing applicable.
(Notes on significant changes in the amount of shareholders' equity)
Nothing applicable.
(Change in accounting policy)(Application of Accounting Standard for Revenue Recognition, etc.)
The "Guidance on Accounting Standard for Measurement of Fair Value" (ASBJ Guidance No. 31, June 17, 2021;
hereinafter referred to as "Guidance on Accounting Standard for Measurement of Fair Value") is applied from the
beginning of the first quarter of the current fiscal year. The new accounting policy stipulated in the Guidance on
Accounting Standard for Measurement of Fair Value will be applied prospectively in accordance with the transitional
treatment stipulated in Paragraph 27-2 of the. The new accounting policy is applied prospectively. There is no impact
from this change.

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Drecom Co., Ltd. (3793) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(Information by Segment)
Segment Information
I. Previous consolidated six months ended (April 1, 2021 to September 30, 2021)
Information on the sales, profits or losses per reporting segment(Unit: Thousand yen)

Quarterly
consolidated
incomestatement
amountReporting Segment
Gamebusiness

Media
Business

Adjustment

Total

Sales
(1) Sales to external customers(2) Intersegment sales andtransfers
Total

Segment profit or Loss

5,119,378

65,471

5,184,850-

5,184,850

-

-

-

-

-

5,119,378

65,471

5,184,850-

5,184,850

1,110,970-143,599

967,370-

967,370

Note: Segment income /loss is adjusted with operating income in the quarterly consolidated statements of income.

II. Current consolidated six months ended (April 1, 2022 to September 30, 2022)
Information on the sales, profits or losses per reporting segment(Unit: Thousand yen)

Quarterly
consolidated
incomestatement
amountReporting Segment
Gamebusiness

Media
Business

Adjustment

Total

Sales
(1) Sales to externalcustomers(2) Intersegment sales andtransfers
Total

Segment profit or Loss

5,670,326

130,1075,800,434-

5,800,434

-

-

-

-

-

5,670,326

130,1075,800,434-

5,800,434

1,809,758-201,898

1,607,859-

1,607,859

Note: Segment income / loss is adjusted with operating income in the quarterly consolidated statements of income.

(Significant subsequent events)
Nothing applicable.

12/12