Application of the Revenue Recognition Accounting Standard

「As a result, for the consolidated fiscal year under review, net sales in the consolidated statement of income decreased by ¥871.253 million, cost of sales decreased by ¥852.530 million, gross profit, operating profit, ordinary profit and profit before income taxes each decreased by ¥18.722 million, and the adjustment for income taxes decreased by ¥6.255 million, resulting in a ¥12.466 million decrease in net income.」

「As a result, for the nine months ended the third quarter of the current consolidated fiscal year, net sales decreased by ¥662.078 million, cost of sales decreased by ¥644.684 million, gross profit, operating profit, ordinary profit and profit before income taxes each decreased by ¥17.393 million, and the adjustment for income taxes decreased by ¥5.809 million, resulting in an ¥11.583 million decrease in net income. In addition, the opening balance of retained earnings for the current fiscal year increased by ¥12.466 million.」

「Following the application, revenue from certain software development and other activities, which had previously been recognised upon customer acceptance, is now recognised over a specified period when the customer receives benefits as the performance obligation is satisfied. In addition, for revenue from sales of certain products, including cybersecurity products, revenue had previously been recognised at the gross amount of consideration received from customers. For transactions in which our role in providing goods or services to customers qualifies as that of an agent, revenue is now recognised net of amounts paid to suppliers and others. As a result, for the six months ended the second quarter of the current consolidated fiscal year, net sales decreased by ¥437.709 million, cost of sales decreased by ¥420.316 million, gross profit, operating profit, ordinary profit and profit before income taxes each decreased by ¥17.393 million, and the adjustment for income taxes decreased by ¥5.809 million, resulting in an ¥11.583 million decrease in net income.」

「We applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, 31 March 2020; hereinafter, the "Revenue Recognition Standard") and other standards from the beginning of the first quarter of the current consolidated fiscal year, and recognise revenue at the amount expected to be received in exchange for the promised goods or services when control of those goods or services is transferred to the customer. As a result, for the first quarter of the current consolidated fiscal year, net sales decreased by ¥273.524 million, cost of sales decreased by ¥258.569 million, gross profit, operating profit and profit before income taxes each decreased by ¥15.740 million, and the adjustment for income taxes decreased by ¥5.237 million, resulting in a ¥10.502 million decrease in net income.」