Infocom : Consolidated Financial Results for the Fiscal Year Ended March 31, 2023

Note: This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results

for the Year Ended March 31, 2023

[Japanese GAAP]

										April 27, 2023
Company name: INFOCOM CORPORATION
Stock exchange listing: Tokyo
Code number: 4348
URL: https://www.infocom.co.jp/
Representative: Jun Kuroda					President and CEO
Contact: Hiroshi Imafuku					Head of Corporate Communications Office
Phone: [phone]
Scheduled date of Annual General Meeting of Shareholders: June 13, 2023
Scheduled date of commencing dividend payments: June 15, 2023
Scheduled date of filing annual securities report: June 14, 2023
Availability of supplementary briefing material on annual financial results: Yes
Schedule of annual financial results briefing session: Yes
							(Amounts of less than one millions of yen are rounded down.)
1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 to March 31, 2023)
(1) Consolidated Operating Results			(% indicates changes from the previous corresponding period.)
		Net sales			Operating profit	Ordinary profit	Profit attributable to
				owners of parent
Fiscal year ended		Millions of yen		%		Millions of yen	%	Millions of yen	%	Millions of yen	%
March 31, 2023		70,342		8.9		8,526	(15.6)	8,595	(15.7)	3,572	(48.3)
March 31, 2022		64,586		(5.1)		10,098	(6.6)	10,196	(6.8)	6,912	10.1

(Note) Comprehensive income:	Fiscal year ended March 31, 2023:
	Fiscal year ended March 31, 2022:

¥	3,627 million	[	(36.0) %]
¥	5,666 million	[	(21.5) %]

	Basic earnings per	Diluted earnings per	Rate of return on	Ordinary profit to	Operating profit to
	share	share	equity	total assets ratio	net sales ratio
Fiscal year ended	Yen	Yen	%	%	%
March 31, 2023	65.20	64.93	8.0	14.6	12.1
March 31, 2022	126.20	125.65	16.1	17.9	15.6

(Reference) Equity in earnings (losses) of affiliated companies: Fiscal year ended March 31, 2023: Fiscal year ended March 31, 2022:

• - million
• 11 million

(2) Consolidated Financial Position

	Total assets	Net assets	Capital adequacy ratio	Net assets per share
As of	Millions of yen		Millions of yen	%	Yen
March 31, 2023	60,287		45,194	74.3	817.96
March 31, 2022	57,531		44,579	76.8	806.59
(Reference) Equity: As of	March 31, 2023:	¥	44,816 million
As of	March 31, 2022:	¥	44,185 million
(3) Consolidated Cash Flows
	Cash flows from	Cash flows from	Cash flows from	Cash and cash
	equivalents at the end
	operating activities	investing activities	financing activities
	of period
Fiscal year ended	Millions of yen	Millions of yen	Millions of yen	Millions of yen
March 31, 2023	8,137		(1,231)	(3,076)	35,575
March 31, 2022	7,148		(3,225)	(2,217)	31,700

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2. Dividends

		Annual dividends				Payout	Dividends
				Total	to net
								ratio
	1st	2nd		3rd		Year-end	Total	dividends	assets
			(consolidated)
	quarter-end	quarter-end	quarter-end			(consolidated)
Fiscal year ended	Yen	Yen		Yen		Yen	Yen	Millions of yen	%	%
March 31, 2022	-	13.00		-		37.00	50.00	2,738	39.6	6.4
March 31, 2023	-	18.00		-		32.00	50.00	2,739	76.7	6.2
Fiscal year ending
March 31, 2024	-	18.00		-		27.00	45.00		38.5
(Forecast)
(Note) Breakdown of the year-end dividend for the fiscal year ended March 31, 2023 :
Commemorative dividend	5.00	yen
Special dividend	-	yen

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2024 (April 1, 2023 to March 31, 2024)

(% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Ordinary profit	Profit attributable	Basic earnings per
		to owners of parent	share
	Millions of			Millions of		Millions of		Millions of
	yen		%	yen	%	yen	%	yen	%	Yen
Six months ending	37,000		12.0	3,800	2.4	3,800	0.4	2,600	52.2	47.46
September 30, 2023
Full year	78,000		10.9	9,500	11.4	9,500	10.5	6,400	79.2	116.82

* Notes:

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): No

New	-	(Company name:	)
Exclusion:	-	(Company name:	)

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

March 31, 2023:	57,600,000	shares
March 31, 2022:	57,600,000	shares
2) Number of treasury shares at the end of the period:
March 31, 2023:	2,809,562	shares
March 31, 2022:	2,819,167	shares

3) Average number of shares outstanding during the period:
Fiscal Year ended March 31, 2023:	54,785,373	shares
Fiscal Year ended March 31, 2022:	54,774,659	shares

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(Reference) Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 to March 31, 2023)
(1) Non-consolidated Operating Results			(% indicates changes from the previous corresponding period.)
	Net sales			Operating profit			Ordinary profit	Net income
Fiscal year ended	Millions of yen		%		Millions of yen	%			Millions of yen	%	Millions of yen	%
March 31, 2023	20,109		(3.3)		1,958	7.2		5,347	11.3	2,306	(43.5)
March 31, 2022	20,788		0.0		1,827	(16.9)		4,803	13.7	4,080	58.2
	Basic earnings per share	Diluted earnings per share
Fiscal year ended			Yen		Yen
March 31, 2023			42.09			41.92
March 31, 2022			74.50			74.18
(2) Non-consolidated Financial Position
	Total assets		Net assets		Capital adequacy ratio	Net assets per share
As of	Millions of yen		Millions of yen				%		Yen
March 31, 2023			46,416			25,307				54.1		458.01
March 31, 2022			46,265			26,132				56.0		473.01
(Reference) Equity: As of	March 31, 2023:			¥	25,094 million
As of	March 31, 2022:			¥	25,911 million

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1. Analysis of Business Results

1. Overview of Business Results during the Year under Review
   During the consolidated fiscal year under review, the Japanese economy moved toward normalization in socioeconomic activities in response to easing restrictions on activities over the latter half of the year, despite cycles of rising and subsiding COVID-19 infections. At the same time, the economic outlook remained uncertain, due to soaring prices stemming from prolonged geopolitical risks and other factors.
   The e-book market showed signs of recovery as the impact of pirate sites began to subside. However, growth moderated due to the end of special demand for in-home consumption due to COVID-19 and other factors.
   The IT-related market is undergoing a structural shift. The cloud computing market is driving expansion while traditional IT businesses are growing at a more moderate pace. Suppressed during the COVID-19 pandemic, IT investment is recovering. The situation remains fluid, however, with a mixture of positive and negative sentiment, depending on the industry.
   In this operating environment, the Infocom Group medium-term management plan (April 2020 to March 2023) emphasized two fundamental policies: (1) pursue growth and (2) continue strengthening our management foundation to support growth. To this end, we identified e-comics and healthcare as priority businesses. In these areas, we pursued continued growth, endeavored to evolve into a services-oriented business, and engaged in co-creation (M&A, overseas expansion).
   As a result, the Infocom Group generated a historic high net sales of ¥70,342 million for the current consolidated fiscal year, up 8.9% year on year. Operating profit mounted to ¥8,526 million, down 15.6% year-on-year due to increased costs resulting from stepped-up marketing efforts. Ordinary income was ¥8,595 million, down 15.7%, and profit attributable to owners of the parent amounted to ¥3,572 million, down 48.3% due to impairment loss on goodwill related to consolidated subsidiaries and loss on valuation of investment securities.
   The following paragraphs describe our results by segment.

(i) Digital Entertainment Group

Our Digital Entertainment Group posted record-high net sales of ¥46,244 million, up 14.1% compared with the previous consolidated fiscal year. This result was due to expanded content and stronger marketing in e-comic distribution service, as well as several hits in original e-comic titles. Operating profit amounted to ¥6,042 million, down 22.1% year on year due to increased costs stemming from stepped-up marketing efforts.

In our Mecha Comic business, we bolstered the production of original comics and pursued measures to expand our business fields, including advancing the dramatization of our titles. In addition to measures for the Japanese market, we launched an e-comic distribution service for the U.S. market, as well as a new pay-as-you-go system to further improve usability.

Amutus Corporation is the consolidated subsidiary that operates Mecha Comic. The company entered into an equity and business alliance with TWIN ENGINE Inc. to grow the e-comics business through value co-creation in partnership with animation production companies and to conduct research into new business areas.

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(ii) Business Solution Group

Business Solution Group sales rose 0.2% year on year to ¥24,097 million and operating profit increased 6.6% to ¥2,483 million. Corporate software sales remained firm, even while investment sentiment cooled due to the COVID-19 pandemic and delays in hardware delivery caused hospital-related projects to be postponed.

Health IT business sales of work management systems for hospitals were solid in response to the addition of functions complying with overtime caps for physicians scheduled for fiscal 2024 adoption. Overseas, we concluded a strategic equity and business alliance agreement with HealthMetrics Sdn Bhd., a Malaysian health tech company. We also began sales and marketing activities with HealthMetrics, selling our drug information system to medical institutions in Malaysia and Indonesia.

We signed on more enterprise sales partners for GRANDIT miraimil, a cloud service for our integrated ERP GRANDIT software package, building a sales and support structure across a wide range of industries.

1. Overview of Financial Position for the Current Fiscal Year
   Total assets increased ¥2,756 million compared with the end of the previous consolidated fiscal year, amounting to ¥60,287 million. This result was mainly due to increases in cash and deposits and accounts receivable-trade, offset in part by a decrease in goodwill and a decrease in the market value of investment securities. Total liabilities rose ¥2,141 million to ¥15,093 million due to an increase in accounts payable-trade. Net assets rose ¥614 million compared with the end of the previous consolidated fiscal year to ¥45,194 million. This result was mainly due to the posting of profit attributable to owners of the parent, offset in part by a decrease in retained earnings due to dividend payments.
2. Overview of Cash Flows for the Current Fiscal Year
   Cash and cash equivalents as of March 31, 2023 amounted to ¥35,575 million, up ¥3,874 million from one year earlier. The following paragraphs describe cash flows and reasons for major changes in cash flows.
   [Cash flows from operating activities]
   Net cash provided by operating activities amounted to ¥8,137 million (¥7,148 million in the previous fiscal year). This result was mainly due to increases stemming from profit before income taxes of ¥6,342 million (¥10,050 million in the previous fiscal year), depreciation (non-cash item) of ¥954 million (¥1,333 million), impairment loss of ¥728 million (¥43 million), and loss on valuation of investment securities of ¥1,519 million (¥95 million). These increases were offset in part by a decrease stemming from ¥3,078 million in income taxes paid (¥4,661 million).
   [Cash flows from investing activities]
   Net cash used in investing activities amounted to ¥1,231 million (¥3,225 million in the previous fiscal year). This result was mainly due to cash outlays of ¥1,047 million in acquisition of software and other intangible fixed assets (versus ¥989 million in the previous fiscal year) and outlays of ¥655 million for investment securities (¥430 million). These amounts were offset in part by ¥771 million in the receipt of guarantee deposits (¥2 million).
   [Cash flows from financing activities]
   Net cash used in financing activities amounted to ¥3,076 million (¥2,217 million in the previous fiscal year). This result was

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