グローリー（6457） – [Delayed][Amendment]Notice Regarding the Amendment of Consolidated Financial Results for Fiscal Year Ended March 31, 2021

(TRANSLATION FOR REFERENCE ONLY) March 15, 2022 Company name: Representative: Headquarters: Securities Code: Stock Exchange: Accounting Term: March GLORY LTD. Motozumi Miwa, President 3-1, Shimoteno 1-chome, Himeji, Hyogo, JAPAN 6457 Tokyo (1st Section) Notice Regarding the Amendment of Consolidated Financial Results for Fiscal Year Ended March 31, 2021 [Japanese GAAP] GLORY LTD. (the “Company”) hereby announces that the Company amended, on March 14, 2022 and March 15, 2022 respectively, its consolidated financial results for the fiscal year ended March 31, 2021 (disclosed on May 13, 2021) as attached. Please note that the amendments are underlined for clarity. Please refer to the “Notice Regarding the Amendments of Past Financial Results and the Announcement of Financial Results (Third Quarter of Fiscal Year Ending March 31, 2022)” for the reasons for the amendment. News Release 1 This is a translation of the original Japanese text of the “Consolidated Financial Results for the Fiscal Year Ended March 31, 2021.” Should there be any discrepancy between any part of this translation and the original Japanese text, the latter shall prevail. Consolidated Financial Results for the Fiscal Year Ended March 31, 2021 Company Name: Code number: Representative: Contact person: Scheduled date of Ordinary General Meeting of Shareholders: Scheduled date of dividend payments: Scheduled filing date of Annual Securities Report: Preparation of earnings supplementary explanatory material: Holding of earnings presentation: 6457 G L O R Y L T D . Motozumi Miwa Yukihiro Fujikawa Senior Executive Officer; Executive General Manager, Finance Headquarters TEL +81-79-297-3131 Stock exchange listing: URL: Tokyo (1st Section) President & Representative Director https://corporate.glory-global.com/ June 25, 2021 June 28, 2021 June 28, 2021 Yes Yes (for analysts and institutional investors) May 13, 2021 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2021 (from April 1, 2020 to March 31, 2021) (1) Consolidated Operating Results (Amounts less than one million yen are rounded downward.) (The percentages show the changes from the corresponding period of the previous year.) Net sales Operating income Ordinary income Net income attributable to owners of parent (Millions of yen) (%) (Millions of yen) (%) (Millions of yen) (%) (Millions of yen) (%) 217,423 (3.0) 14,201 (20.8) 14,137 (8.9) 5,705 (32.8) 224,170 (4.9) 17,927 (12.9) 15,514 (24.6) 8,486 (30.8) Year ended March 31, 2021: Year ended March 31, 2020: ¥16,976 million [242.0 %] ¥4,963 million [(64.1) %] Net income per share Fully diluted net income per share Return on equity Ordinary income to total assets Operating income to net sales (Yen) 94.38 140.45 (Yen) ― ― (%) 3.0 4.5 (%) 4.4 5.0 (%) 6.5 8.0 Year ended March 31, 2021 Year ended March 31, 2020 Year ended March 31, 2021 Year ended March 31, 2020 (Note) Comprehensive income (Reference) Income or loss from investments accounted for by the equity method Year ended March 31, 2021: Year ended March 31, 2020: ¥(700) million [ ― %] ¥(1,217) million [ ― %] EBITDA (Operating income + Depreciation + Amortization of goodwill) Year ended March 31, 2021: Year ended March 31, 2020: ¥29,410 million [ (7.7)%] ¥31,865 million [ (3.9)%] Net income before amortization of goodwill (Net income attributable to owners of parent + Amortization of goodwill) Year ended March 31, 2021: Year ended March 31, 2020: ¥10,208 million [ (17.0)%] ¥12,292 million [ (22.6)%] 1 (2) Consolidated Financial Position As of March 31, 2021 As of March 31, 2020 (Reference) Ownership equity As of March 31, 2021: (3) Consolidated Cash flows Total assets Net assets Ownership equity ratio Net assets per share (Millions of yen) (Millions of yen) 330,608 308,431 196,332 186,668 (%) 58.4 59.9 (Yen) 3,195.82 3,056.75 ¥193,200 million As of March 31, 2020: ¥184,721 million Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of period (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) 28,443 24,555 (21,666) (13,032) (12,131) (15,339) 66,057 70,415 First quarter-end Second quarter-end Dividends per share Third quarter-end Year-end Annual (annual) Total dividends Dividend Dividends to payout ratio net assets ratio (consolidated) (consolidated) (Yen) (Yen) (Yen) (Yen) (Yen) (Millions of yen) ― ― 32.00 30.00 ― ― 34.00 66.00 4,010 36.00 66.00 4,010 69.9 (%) 47.0 (%) 2.1 2.1 ― 34.00 ― 34.00 68.00 91.3 3. Consolidated Financial Forecast for the Year Ending March 31, 2022 (from April 1, 2021 to March 31, 2022) (The percentages show the changes from the corresponding period of the previous year.) Net sales Operating income Ordinary income (Millions of yen) (%) (Millions of yen) (%) (Millions of yen) Net income attributable to owners of parent (%) (Millions of yen) (%) Net income per share Six months ending September 30, 2021 106,000 19.6 3,000 88.7 2,500 76.7 1,000 ― Full year 225,000 3.5 10,000 (29.6) 9,500 (32.8) 4,500 (21.1) (Yen) 16.54 74.44 Year ended March 31, 2021 Year ended March 31, 2020 2. Dividends (Record date) Year ended March 31, 2020 Year ended March 31, 2021 Year ending March 31, 2022 (forecast) (Reference) EBITDA Six months ending September 30, 2021 Year ending March 31, 2022 (full year) Net income before amortization of goodwill ¥10,700 million ¥25,400 million Six months ending September 30, 2021 ¥3,300 million Year ending March 31, 2022 (full year) ¥9,200 million 2 Notes: (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries involving a change in the scope of consolidation): Yes Newly included: 1 company (Company name: Acrelec Group S.A.S.) Excluded: – (Note) For more information, please refer to “3. Consolidated Financial Statements and Significant Notes Thereto (5) Notes to Consolidated Financial Statements, Changes in Significant Subsidiaries During the Fiscal Year” on page 20 of the Attachment. (2) Changes in accounting policies and estimates, and restatements (a) Changes in accounting policies associated with revisions of accounting standards, etc.: (b) Changes in accounting policies other than (a): (c) Changes in accounting estimates: (d) Restatements: None None None None (3) Total number of shares issued (common shares) (a) Total number of shares issued at the end of the period (including treasury shares) (b) Number of treasury shares at the end of the period As of March 31, 2021: As of March 31, 2020: As of March 31, 2021: As of March 31, 2020: (c) Average number of shares 63,638,210 shares 63,638,210 shares 2,866,078 shares 2,866,029 shares Year ended March 31, 2021: Year ended March 31, 2020: 60,448,695 shares 60,423,031 shares (Note) In addition to the number of treasury shares at the end of the period, there also existed Company shares owned by the “Board Incentive Plan (BIP) Trust Account” and “Employee Stock Ownership Plan (ESOP) Trust Account.” (As of March 31, 2021: 317,905 shares, As of March 31, 2020: 341,500 shares) (Reference) Summary of Non-consolidated Financial Results 1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2021 (from April 1, 2020 to March 31, 2021) (1) Non-consolidated Operating Results (The percentages show the changes from the corresponding period of the previous year.) Net sales Operating income Ordinary income Net income (Millions of yen) (%) (Millions of yen) (%) (Millions of yen) (%) (Millions of yen) (%) 129,292 (5.6) 7,399 (1.3) 12,333 21.2 9,792 59.0 136,939 (10.7) 7,496 (36.5) 10,180 (29.7) 6,159 (45.1) Year ended March 31, 2021 Year ended March 31, 2020 Year ended March 31, 2021 Year ended March 31, 2020 (2) Non-consolidated Financial Position As of March 31, 2021 As of March 31, 2020 (Reference) Ownership equity Net income per share Fully diluted net income per share (Yen) (Yen) 162.00 101.95 ― ― 3 Total assets Net assets Ownership equity ratio Net assets per share (Millions of yen) (Millions of yen) 263,724 249,759 183,600 176,514 (%) 69.6 70.7 (Yen) 3,037.02 2,920.95 As of March 31, 2021: ¥183,600 million As of March 31, 2020: ¥176,514 million (Note) Financial results reports are exempt from audit conducted by certified public accountants or an audit corporation. (Note) Explanation regarding the appropriate use of financial forecasts and other special items (Caution concerning forward-looking statements) The forward-looking statements such as operational forecasts contained in this report are based on the information currently available to the Company and certain assumptions which the Company regards as legitimate, and are not promises regarding the achievement of forecasts. Actual performance may differ greatly from these forecasts due to various present and future factors. For the assumptions and other related matters concerning the financial forecasts, please refer to “1. Overview of Operating Results and Others (4) Future Outlook” on page 8 of the Attachment. 4 Attachment Contents 6 1. Overview of Operating Results and Others ……………………………………………………………………………………………….. 6 (1) Overview of Operating Results for the Fiscal Year ………………………………………………………………………………………………………… 7 (2) Overview of Financial Position for the Fiscal Year ………………………………………………………………………………………………………… 7 (3) Overview of Cash Flows for the Fiscal Year …………………………………………………………………………………………………………………. 8 (4) Future Outlook ………………………………………………………………………………………………………………………………………………………….. 8 (5) Basic Policy on Profit Distributions and Dividends for the Current and Next Fiscal Years ………………………………………………….. 9 (6) The Company’s Medium to Long-Term Management Strategy and Issues to be Addressed ………………………………………………… 2. Basic Approach to Selection of Accounting Standard ………………………………………………………………………………… 11 3. Consolidated Financial Statements and Significant Notes Thereto ……………………………………………………………… 12 (1) Consolidated Balance Sheet ……………………………………………………………………………………………………………………………………….. 12 (2) Consolidated Statements of Income and Comprehensive Income …………………………………………………………………………………….. 14 Consolidated Statement of Income ………………………………………………………………………………………………………………………………. 14 Consolidated Statement of Comprehensive Income ……………………………………………………………………………………………………….. 15 (3) Consolidated Statement of Changes in Equity ……………………………………………………………………………………………………………….. 16 (4) Consolidated Statement of Cash Flows ………………………………………………………………………………………………………………………… 18 (5) Notes to Consolidated Financial Statements ………………………………………………………………………………………………………………….. 20 Notes Regarding Assumption of a Going Concern …………………………………………………………………………………………………………. 20 Changes in Significant Subsidiaries During the Fiscal Year ……………………………………………………………………………………………. 20 Additional Information ………………………………………………………………………………………………………………………………………………. 20 Segment Information …………………………………………………………………………………………………………………………………………………. 20 Per Share Information ………………………………………………………………………………………………………………………………………………… 23 Significant Subsequent Events ……………………………………………………………………………………………………………………………………. 23 5 1. Overview of Operating Results and Others (1) Overview of Operating Results for the Fiscal Year The global economy in the fiscal year ended March 31, 2021 has been greatly affected by the spread of the novel coronavirus disease (COVID-19). In the U.S. and Europe, economic activities gradually resumed, but restrictions had to be re-imposed due to the resurgence of COVID-19. In addition, in Asia, despite economic recovery shown in China, uncertainty surrounded the outlook of the economy overall. On the other hand, the outlook for the Japanese economy had also been unpredictable, but since the third quarter of the fiscal year, a moderate recovery trend has been evident in capital investment and corporate earnings of manufacturers, etc. Under such circumstances, despite there being major constraints on business activities particularly overseas, the Glory group (the “Group”) has focused efforts on the expansion of sales of self-service products in Japan and overseas, seizing on the sharp growth in needs for contact-free and self-service to prevent infection. Furthermore, in addition to thorough cost controls, there was also support from an increase in sales from maintenance services associated with the issuance of the new 500-yen coin, and in terms of the current fiscal year’s performance, sales and income were both higher than the full year forecast at the time third quarter consolidated results were announced. Looking at individual market, in terms of overseas business, in the U.S. and Europe, sales of self-service “coin and banknote recyclers” for cashiers increased in the retail market, but the financial market was sluggish due to the impact of the spread of COVID-19. In China, business activities have recovered to a near-normal level, with sales on par with the previous fiscal year. Additionally, the performance of the Acrelec Group S.A.S., which was acquired by the Company in April 2020 and is expanding the self-service kiosks related business globally, has gradually recovered since the third quarter of the fiscal year, despite business development in each country lagging initial plans. The domestic business was robust as the financial market performed well with an increase in sales due to the acquisition of replacement demand and the system modifications required in connection with the expected issuance of the new 500-yen coin. In the retail and transportation market, sales of ticket vending machines for restaurants and leisure facilities and other products were sluggish compared to the previous year, but business negotiations for self-service “coin and banknote recyclers” for cashiers and self-service medical payment kiosks progressed at a faster pace than expected in response to labor shortages and change in lifestyles. Meanwhile, for the purpose of expanding new business domains, the Company has formed capital and business alliances with AdInte Co., Ltd., which provides customer analysis and behavior analysis service of retail businesses using its in-house IoT terminal (AIBeacon) and with Showcase Gig Inc., which operates mobile ordering service business, etc. Through these alliances, the Group is focusing efforts on the provision of new solution services that solve social issues and management issues in the retail industry utilizing each other’s respective technologies and know-how. Furthermore, the Company has also focused efforts on commercialization of biometric/image recognition technologies with initiatives for business expansion into new markets such as medical care, nursing and schools. These included sales of “Facial-recognition-driven system” featuring EcoNaviSta Co., Ltd.’s “Health monitoring service” combined with the Company’s facial recognition technology, as well as the start of demonstration tests of the biometric payment service “BioPay” at university campuses. As a result, net sales in the current fiscal year totaled ¥217,423 million (down 3.0% year on year). Of this, sales of merchandise and finished goods were ¥138,748 million (down 9.4% year on year) and sales from maintenance services were ¥78,675 million (up 10.7% year on year). Operating income was ¥14,201 million (down 20.8% year on year), ordinary income was ¥14,137 million (down 8.9% year on year), and net income attributable to owners of parent was ¥5,705 million (down 32.8% year on year). Results of operations in each business segment are as follows. Financial market Sales of this segment’s main products, “open teller systems” and “coin and banknote recyclers” for tellers were strong. In addition, sales from maintenance services increased due to the system modifications required in connection with the expected issuance of the new 500-yen coin. As a result, net sales in this segment were ¥49,877 million (up 18.0% year on year) and operating income was ¥9,861 million (up 197.5% year on year). Retail and transportation market Although sales from maintenance services increased due to the system modifications required in connection with the expected issuance of the new 500-yen coin, sales of the main product, “coin and banknote recyclers” for cashiers were sluggish as a rebound from large-lot demand of the previous year. Additionally, sales of “ticket vending machines” were also sluggish due to a decrease in demand at restaurants and leisure facilities. As a result, net sales in this segment were ¥48,789 million (down 7.0% year on year) and operating income was ¥2,883 million (down 44.5% year on year). 6 Amusement market Sales of this segment’s main products such as “card systems” and “pachinko prize dispensing machines” were slow due to restrictions on capital investment for pachinko parlors. As a result, net sales in this segment were ¥11,020 million (down 46.9% year on year) and operating loss was ¥290 million (vs. operating income of ¥1,998 million in the previous fiscal year). Overseas market In the Americas and Europe, sales of “banknote recyclers” -RBG series- for financial institutions were sluggish due to the impact of the spread COVID-19, but “sales proceeds deposit machines” -CI series- for the retail industry were favorable. Meanwhile, in Asia, sales of “banknote sorters” -UW series- were on par with the previous fiscal year. As a result, net sales in this segment were ¥104,765 million (up 1.1% year on year) and operating income was ¥3,836 million (down 60.8% year on year). Profit and loss from Acrelec Group S.A.S. and its subsidiaries are included in the scope of consolidation from the second quarter. In the “Other” business segment, net sales were ¥2,969 million (down 41.1% year on year) and operating loss was ¥2,089 million (vs. operating loss of ¥2,364 million in the previous fiscal year). All amounts in this section do not include consumption taxes. (2) Overview of Financial Position for the Fiscal Year The following is the financial position at the end of the current fiscal year: Total assets at the end of the current fiscal year were ¥330,608 million, an increase of ¥22,177 million compared with the end of the previous fiscal year. This is mainly the result of increases of ¥6,772 million in retirement benefit asset, ¥6,553 million in goodwill, ¥6,056 million in notes and accounts receivable – trade, and ¥4,504 million in customer relationships. Liabilities were ¥134,275 million, an increase of ¥12,512 million compared with the end of the previous fiscal year. This is mainly the result of increases of ¥3,893 million in long-term borrowings, ¥2,701 million in deferred tax liabilities, and ¥3,781 million in other under non-current liabilities. Note that other under non-current liabilities has increased mainly due to the recording of sold put option liabilities granted to non-controlling interests of overseas consolidated subsidiaries that apply IFRS. Total net assets at the end of the current fiscal year were ¥196,332 million, an increase of ¥9,664 million compared with the end of the previous fiscal year. This is mainly the result of increases of ¥5,264 million in remeasurements of defined benefit plans and ¥3,859 million in foreign currency translation adjustment. As a result, the ownership equity ratio became 58.4% compared with 59.9% at the end of the previous fiscal year. (3) Overview of Cash Flows for the Fiscal Year Cash and cash equivalents (“cash”) at the end of the current fiscal year decreased ¥4,357 million from one year earlier to ¥66,057 million. The following is a summary of cash flows: Cash flows from operating activities Net cash provided by operating activities was ¥28,443 million, compared to ¥24,555 million in the previous fiscal year. This resulted from cash increases including ¥12,590 million from income before income taxes, ¥10,706 million from depreciation and ¥4,502 million from amortization of goodwill, despite the capital outflow of ¥5,088 million due to the payment of income taxes. Cash flows from investing activities Net cash used in investing activities was ¥21,666 million, compared to ¥13,032 million in the previous fiscal year. This resulted primarily from payments of ¥4,876 million to obtain property, plant and equipment pertaining to casting and jig tools for product manufacturing and payments of ¥13,729 million to acquire the shares of Acrelec Group S.A.S. As a result, the free cash flows or total cash flows from operating and investing activities were ¥6,777 million. 7 Cash flows from financing activities Net cash used in financing activities was ¥12,131 million, compared to ¥15,339 million in the previous fiscal year. This resulted from a ¥14,144 million repayment of short-term borrowings, and payment of ¥4,631 million of dividends, despite proceeds from short-term and long-term borrowings of ¥8,268 million. Cash flow indices FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Ownership equity ratio Ownership equity ratio based on market value Debt repayment ratio (years) Interest coverage ratio 60.1% 74.6% 1.6 48.8 62.0% 78.3% 2.4 25.7 59.5% 50.4% 2.0 38.0 59.9% 52.8% 2.0 32.9 58.4% 47.1% 1.7 51.4 Notes: Ownership equity ratio: (Shareholders’ equity + Valuation and translation adjustments) / Total assets Ownership equity ratio based on market value: Market capitalization / Total assets Debt repayment ratio: Interest-bearing liabilities / Operating cash flow Interest coverage ratio: Operating cash flow / Interest payments * All indices are calculated using financial data on a consolidated basis. * Market capitalization is calculated by multiplying the closing price on the balance sheet date by the number of shares issued, net of treasury shares, on the balance sheet date. * Operating cash flow represents cash flow from operating activities per the consolidated statement of cash flows. Interest-bearing liabilities consist of all liabilities on the consolidated balance sheet for which interest is being paid. Interest payments consist of interest expenses paid as presented on the consolidated statement of cash flows. (4) Future Outlook In overseas business, the Company expects sales and income to increase in both the financial market and retail market, due to a recovery in demand for capital investment with the moves to bring COVID-19 under control in major overseas markets such as the U.S. and Europe. In domestic business, the Company expects sales and income to decline mainly due to a counter-reactionary decline in sales from maintenance services that had increased in association with the issuance of the new 500-yen coin. However, the Company forecasts continuation of the trend for contact free, self-service as a measure to prevent infection that increased due to the surge in COVID-19. Therefore, the sales of self-service “coin and banknote recyclers” for cashiers, medical payment kiosks, and ticket vending machines, etc. are expected to be steady. In addition, the Company will make strategic investments for the “Core and New businesses powering growth together” targeted under the newly started “2023 Medium-Term Management Plan.” According to these conditions, the Company forecasts full-year consolidated business results as follows; net sales of ¥225,000 million (up 3.5% year on year), operating income of ¥10,000 million (down 29.6% year on year), ordinary income of ¥9,500 million (down 32.7% year on year) and net income attributable to owners of parent of ¥4,500 million (down 25.6% year on year). The forecast uses exchange rate assumptions of US$1=¥105, 1 euro=¥125. (5) Basic Policy on Profit Distributions and Dividends for the Current and Next Fiscal Years The Company considers the return of profits to shareholders to be an important management task and retains a policy to continue stable dividends while striving to maintain and enhance a sound financial standing in preparation for future business growth. The Company has set a dividend payout ratio of 30% or higher on a consolidated basis for the current fiscal year. Based on the above basic policy, the Company plans to pay a dividend for the current fiscal year of ¥66 per share (interim dividend of ¥30 and year-end dividend of ¥36). This will result in a dividend payout ratio of 69.9% on a consolidated basis. Note that in terms of the dividend for the three years from the fiscal year ending March 31, 2022 to the fiscal year ending March 31, 2024, the decision has been made to maintain the above basic policy while amending the target to aim for a three fiscal years average dividend payout ratio before goodwill amortization on a consolidated basis of 30% or more for such three-year period. Therefore, the forecast annual dividend for the fiscal year ending March 31, 2022 is ¥68 per share (interim dividend of ¥34 and year-end dividend of ¥34). Target payout ratio (%) (three fiscal years average payout ratio before goodwill amortization on a consolidated basis) = Total dividends paid over the three fiscal years Three fiscal years total of “Net income attributable to owners of parent + Goodwill amortization” ×100 8 (6) The Company’s Medium to Long-Term Management Strategy and Issues to be Addressed Long-Term Vision and Medium-Term Management Plan The Company celebrated the 100th anniversary of its founding in March 2018 and established the following “Long-Term Vision 2028” which depicts the Company’s ideal form in ten years to create the next generation. Glory Group Long-Term Vision 2028 “We enable a confident world” The Group has started the “2023 Medium-Term Management Plan” with a three-year planning cycle starting from April 2021 as a second step to realize the Long-Term Vision. Under the concept of “Core and New businesses powering growth together,” we are taking the following key initiatives as the three basic policies of (1) Accelerate business growth to develop “next generation,” (2) Maximize core business profits by innovation, and (3) Establish management base to support sustainable growth. Furthermore, we have set a “Sustainability Policy” and is engaged in activities that contribute to the sustainable growth of society. Note that “Core and New businesses powering growth together” incorporates the Company’s intention to make existing core and new business domains grow together while fostering links between them. Policy 1: Accelerate business growth to develop “next generation” Under Policy 1, we will maximize the use of our customer base, proprietary technologies, and other strengths to expand sales of new business domain that has a high affinity with core business domain that we worked on during 2020 Medium-Term Management Plan, such as kiosk services, data management platform (DMP), and electronic settlement, thus developing new mainstay businesses. For the biometric/image recognition business and robot business, we will utilize our sales expertise and channels in Japan to expand and monetize them. Policy 2: Maximize core business profits by innovation Under Policy 2, we will optimize our product lineup that caters to the market need for contact-free and self-services devices on the back of the ongoing trend toward labor-saving and operational efficiency, and the spread of COVID-19, while at the same time developing a new business model. With these measures, in overseas business, we aim to expand sales in the retail markets and emerging countries. In domestic business, we aim to broaden our reach to new customer bases, in addition to larger accounts, which have traditionally been our primary targets. Furthermore, we will continue to promote operational efficiency and reduce costs, thus reforming our business structure. In domestic business, we will fulfill our corporate mission of supporting social infrastructure in preparation for the new banknotes issue, which is scheduled for 2024, and focus on capturing replacement demand. Policy 3: Establish management base to support sustainable growth Under Policy 3, we will enhance business management focusing on cash flow to support growth investment and shareholder returns. We will also bolster the business administration system by promoting digital transformation (DX) that supports prompt management decisions, business transformation, and productivity improvement. Further we will put our management resources to effective use through portfolio management. By working on the above-mentioned measures, we will strive to enhance our corporate value. For the sake of the well-being of employees, our most important management resource, we will improve employee engagement in the belief that the employee satisfaction is the wellspring of business growth. 9 Sustainability Policy: Promotion of initiatives aimed at contributing to the sustainable growth of society and enhancing corporate values Under Sustainability Policy, we will contribute to the sustainable growth of society and enhance our corporate values by engaging in the activities more oriented toward solving the social issues through our business. In particular, we will focus on the reduction of CO2 emissions in pursuit of a decarbonized society, respect for human rights and diversity, and strengthen corporate governance. As in the above, the Group is adapting to changes in the management environment, providing solution services so that “We enable a confident world,” and promoting initiatives that contribute to sustainable growth of society. 10 2. Basic Approach to Selection of Accounting Standard Given the ongoing convergence between accounting standards, the Group has adopted a policy for the time being of continuing to use the Japanese accounting standard. However, the Group has started preparation on the premise that the application of the International Financial Reporting Standards (IFRS) will be introduced, and the timing of introduction will be disclosed once confirmed. 11 3. Consolidated Financial Statements and Significant Notes Thereto (1) Consolidated Balance Sheet (Millions of yen) As of March 31, 2020 As of March 31, 2021 Assets Current assets Cash and deposits Notes and accounts receivable – trade Electronically recorded monetary claims – operating Investments in leases Securities Merchandise and finished goods Work in process Raw materials and supplies Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Tools, furniture and fixtures Accumulated depreciation Tools, furniture and fixtures, net Land Right-of-use assets Accumulated depreciation Right of use assets, net Construction in progress Total property, plant and equipment Intangible assets Customer relationships Software Goodwill Other Total intangible assets Investments and other assets Investment securities Deferred tax assets Retirement benefit asset Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 71,025 49,603 1,617 1,339 2,051 31,053 7,989 12,639 4,238 (656) 180,901 36,314 (22,449) 13,864 14,206 (11,785) 2,420 53,382 (47,408) 5,974 11,816 4,332 (1,111) 3,220 1,207 38,503 17,968 5,793 43,246 906 67,915 8,352 8,303 478 4,507 (532) 21,110 127,529 308,431 12 66,188 55,660 684 1,074 50 33,176 6,943 12,397 4,635 (1,032) 179,778 37,424 (23,190) 14,234 13,817 (11,529) 2,288 53,582 (48,194) 5,387 11,843 8,408 (3,344) 5,063 366 39,183 22,473 7,178 49,800 1,190 80,642 11,228 8,064 7,250 5,411 (951) 31,003 150,829 330,608 (Millions of yen) As of March 31, 2020 As of March 31, 2021 Liabilities Current liabilities Notes and accounts payable – trade Electronically recorded obligations – operating Short-term borrowings Current portion of long-term borrowings Income taxes payable Provision for bonuses Provision for bonuses for directors (and other officers) Provision for stock grant Other Total current liabilities Non-current liabilities Bonds payable Long-term borrowings Lease obligations Deferred tax liabilities Provision for stock grant Retirement benefit liability Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets 11,469 7,154 24,931 20 1,520 7,088 109 39 33,431 85,766 20,000 46 3,045 5,193 260 3,243 4,206 35,996 121,762 12,892 15,961 162,595 (9,312) 182,137 (455) 5,194 (2,154) 2,584 1,946 186,668 308,431 10,543 6,529 15,656 3,130 2,480 7,553 91 – 41,811 87,796 20,000 3,939 3,820 7,895 245 2,590 7,987 46,478 134,275 12,892 12,294 164,411 (9,241) 180,357 680 9,054 3,109 12,843 3,131 196,332 330,608 13 (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statement of Income (Millions of yen) Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Non-operating income Interest income Dividend income Subsidy income Gain on investments in investment partnerships Other Total non-operating income Non-operating expenses Interest expenses Foreign exchange losses Share of loss of entities accounted for using equity method Other Total non-operating expenses Ordinary income Extraordinary income Gain on sale of non-current assets Gain on sale of investment securities Total extraordinary income Extraordinary losses Loss on sale of non-current assets Loss on retirement of non-current assets Loss on sale of investment securities Loss on valuation of investment securities Provision for allowance for doubtful accounts Impairment losses Total extraordinary losses Income before income taxes Income taxes – current Income taxes – deferred Total income taxes Net income Net income attributable to non-controlling interests Net income attributable to owners of parent 217,423 131,962 85,460 71,259 14,201 271 146 488 357 325 1,589 559 238 700 153 1,652 14,137 4 22 27 1 32 73 421 397 648 1,574 12,590 6,959 (885) 6,073 6,516 811 5,705 224,170 137,109 87,061 69,134 17,927 189 147 77 149 220 785 734 863 1,217 381 3,197 15,514 220 6 226 6 63 0 321 507 – 899 14,842 5,885 (559) 5,326 9,515 1,028 8,486 14 Consolidated Statement of Comprehensive Income (Millions of yen) Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021 Net income Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans, net of tax Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income Comprehensive income Comprehensive income attributable to Owners of parent Non-controlling interests 9,515 (672) (2,542) (1,333) (2) (4,551) 4,963 3,998 964 6,516 1,128 4,059 5,264 6 10,459 16,976 16,000 975 15 (3) Consolidated Statement of Changes in Equity Previous Fiscal Year (from April 1, 2019 to March 31, 2020) (Millions of yen) Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity 12,892 20,938 172,219 (23,884) 182,166 Total changes during period Balance at end of period 12,892 (4,976) 15,961 (9,623) 162,595 14,571 (9,312) (29) 182,137 Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets 219 7,673 (820) 7,072 4,018 193,257 Balance at beginning of period Changes during period Dividends of surplus Net income attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Cancellation of treasury shares Change in scope of consolidation Purchase of shares of consolidated subsidiaries Change in sold put option liabilities related to non-controlling interests, etc. Net changes in items other than shareholders’ equity Balance at beginning of period Changes during period Dividends of surplus Net income attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Cancellation of treasury shares Change in scope of consolidation Purchase of shares of consolidated subsidiaries Change in sold put option liabilities related to non-controlling interests, etc. Net changes in items other than shareholders’ equity Total changes during period Balance at end of period – (674) (674) (455) (0) 119 (292) (14,160) 14,452 (4,684) (3,950) 8,486 (3,950) 8,486 (0) 119 – – – (4,684) 8,486 (0) 119 – – – – – – – – – – – (1,154) (5,104) (1,882) (6,567) 16 (2,478) (1,333) (4,487) 964 (3,522) (2,478) 5,194 (1,333) (2,154) (4,487) 2,584 (2,072) (6,589) 1,946 186,668 Current Fiscal Year (from April 1, 2020 to March 31, 2021) (Millions of yen) Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity 12,892 15,961 162,595 (9,312) 182,137 Total changes during period Balance at end of period 12,892 1,815 164,411 71 (9,241) Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets (455) 5,194 (2,154) 2,584 1,946 186,668 (741) (4,631) Balance at beginning of period Changes during period Dividends of surplus Net income attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Cancellation of treasury shares Change in scope of consolidation Purchase of shares of consolidated subsidiaries Change in sold put option liabilities related to non-controlling interests, etc. Net changes in items other than shareholders’ equity Balance at beginning of period Changes during period Dividends of surplus Net income attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Cancellation of treasury shares Change in scope of consolidation Purchase of shares of consolidated subsidiaries Change in sold put option liabilities related to non-controlling interests, etc. Net changes in items other than shareholders’ equity Total changes during period Balance at end of period – 1,135 1,135 680 (0) 71 951 (3,889) 5,705 (0) 71 – – – (3,667) (1,780) 180,357 5,705 (0) 71 – 951 – (3,667) (3,889) 5,705 – – – – – – – – (3,667) (3,667) 12,294 17 3,859 3,859 9,054 5,264 5,264 3,109 10,259 10,259 12,843 975 11,234 1,185 3,131 9,664 196,332 (4) Consolidated Statement of Cash Flows (Millions of yen) Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021 Cash flows from operating activities Income before income taxes Depreciation Impairment losses Amortization of goodwill Increase (decrease) in allowance for doubtful accounts Increase (decrease) in retirement benefit liability Increase (decrease) in provision for bonuses Increase (decrease) in provision for stock grant Loss (gain) on sale of investment securities Interest and dividend income Subsidy income Interest expenses Loss on retirement of non-current assets Decrease (increase) in trade receivables Decrease (increase) in inventories Increase (decrease) in trade payables Increase (decrease) in lease obligations Decrease (increase) in investments in leases Increase (decrease) in accounts payable – other Decrease/increase in consumption taxes receivable/payable Other, net Subtotal Interest and dividends received Subsidies received Interest paid Income taxes refund (paid) Net cash provided by (used in) operating activities Cash flows from investing activities Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of intangible assets Purchase of investment securities Proceeds from sale and redemption of investment securities Proceeds from distributions from investment partnerships Purchase of shares of subsidiaries resulting in change in scope of consolidation Other, net Net cash provided by (used in) investing activities 14,842 10,133 – 3,805 320 7 (735) (26) (5) (336) (77) 734 63 5,920 (3,341) 1,032 (256) 499 (31) (885) 221 31,883 339 77 (746) (6,998) 24,555 (560) 127 (6,325) 626 (1,795) (1,216) 109 367 (4,289) (77) (13,032) 18 12,590 10,706 648 4,502 704 (192) 388 (54) 51 (417) (488) 559 32 (852) 2,823 (3,920) 212 264 853 1,328 3,436 33,177 419 488 (553) (5,088) 28,443 (80) 560 (4,876) 30 (3,588) (2,726) 2,273 464 (13,729) 6 (21,666) (Millions of yen) Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021 1,984 – (4,493) (1,138) (3,951) (1,154) (6,585) (0) (15,339) (918) (4,734) 75,149 70,415 (9,323) 3,447 (10) (1,613) (3,889) (741) – (0) (12,131) 997 (4,357) 70,415 66,057 Cash flows from financing activities Net increase (decrease) in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Repayments of lease obligations Dividends paid Dividends paid to non-controlling interests Purchase of shares of subsidiaries not resulting in change in scope of consolidation Purchase of treasury shares Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 19 (5) Notes to Consolidated Financial Statements Notes Regarding Assumption of a Going Concern Not applicable. Changes in Significant Subsidiaries During the Fiscal Year For the fiscal year ended March 31, 2021, following the acquisition of 80% of the outstanding shares of Acrelec Group S.A.S., 31 companies, including the subsidiaries of Acrelec Group S.A.S., are included in the scope of consolidation and two companies are included in the scope of application of the equity method. Acrelec Group S.A.S. qualifies as a specified subsidiary of the Company. Additional Information (Accounting estimates associated with the spread of COVID-19) Regarding the impact of COVID-19, the timing for COVID-19 to be brought under control worldwide, including Japan, remains uncertain, but we forecast a gradual recovery in the economy in the next fiscal year as the vaccine is rolled out, and do not consider it to be material. The Group has determined the accounting estimates for valuation of inventories, valuation of equities, etc., impairment of goodwill, etc. based on the assumption that the impact of COVID-19 will continue until the end of next fiscal year. Segment Information 1. Summary of reportable segments The Company’s reportable segments are based on those units within the Company where separate financial information is available and where the Board of Directors periodically reviews matters such as the distribution of management resources and financial performance. The Group operates business activities after formulating comprehensive strategies for the products and services in each market. Accordingly, the Group is comprised of market-specific segments and has established the “Financial market,” “Retail and transportation market,” “Amusement market,” and “Overseas market,” as its four reportable segments. A summary of each reportable segment is as follows: Financial market: Retail and transportation market: Sales and maintenance services to financial institutions, OEM clients and others in Japan. Sales and maintenance services to supermarkets, department stores, cash-in-transit companies, railroad companies, tobacco companies, hospitals, local governments, general companies, and others in Japan. Sales and maintenance services to amusement halls (pachinko parlors) and others in Japan. Sales and maintenance services to financial institutions, cash-in-transit companies, retail stores, casinos, OEM clients and others in overseas. Amusement market: Overseas market: 2. Calculation method of sales, income (loss), assets, and other items by reportable segment Income by reportable segment is operating income. 20 3. Information on sales, income (loss), assets and other items by reportable segment Previous Fiscal Year (from April 1, 2019 to March 31, 2020) Reportable segments Financial market Retail and transportation market Amusement market Overseas market Total Other (Note: 1) Total Reconcilia- tion 42,262 52,487 20,753 – – 103,621 219,125 5,045 224,170 – – – – 42,262 52,487 20,753 103,621 219,125 5,045 224,170 3,314 32,069 5,198 1,998 9,780 20,291 (2,364) 17,927 42,241 17,862 138,938 231,112 6,292 237,405 71,025 1,852 1,605 841 5,602 9,901 231 10,133 – – – – 3,805 3,805 – 3,805 – – 1,705 1,705 – – – (Millions of yen) Amounts reported on the consolidated financial statements 224,170 – – – – – – – – 224,170 17,927 308,431 10,133 3,805 1,705 2,070 1,887 630 12,834 17,422 253 17,675 – 17,675 Notes: 1. “Other” segment is merchandise and finished goods that is not included in the above reportable segments. 2. All operating expenses are either directly charged or allocated to the segments. 3. The reconciliation of ¥71,025 million is surplus funds (cash and deposits). 4. Depreciation and amortization includes amortization of long-term prepaid expenses. 5. Increase in property, plant and equipment and intangible assets includes increases in long-term prepaid expenses. Moreover, this also includes the amount of increase in right-of-use assets recognized in accordance with the application of IFRS 16 at the beginning of the fiscal year ended March 31, 2020. Net sales (1) Sales to customers (2) Intersegment sales or transfers Total Segment profit (loss) (Note: 2) Segment assets (Note: 3) Others (1) Depreciation and amortization (Note: 4) (2) Amortization of goodwill (3) Investments in entities accounted for using equity method (4) Increase in property, plant and equipment and intangible assets (Note: 5) 21 Current Fiscal Year (from April 1, 2020 to March 31, 2021) Reportable segments Financial market Retail and transportation market Amusement market Overseas market Total Other (Note: 1) Total Reconcilia- tion 49,877 48,789 11,020 – – 104,765 214,453 2,969 217,423 – – – – 49,877 48,789 11,020 104,765 214,453 2,969 217,423 9,861 37,757 2,883 (290) 3,836 16,290 (2,089) 14,201 41,164 15,147 161,803 255,872 8,547 264,419 66,188 1,758 1,546 674 6,530 10,510 195 10,706 – – – – 4,502 4,502 – 4,502 11 11 1,062 1,073 – – – (Millions of yen) Amounts reported on the consolidated financial statements 217,423 – 217,423 14,201 330,608 10,706 4,502 1,073 – – – – – – – – 2,024 1,912 491 19,131 23,559 218 23,777 23,777 Notes: 1. “Other” segment is merchandise and finished goods that is not included in the above reportable segments. 2. All operating expenses are either directly charged or allocated to the segments. 3. The reconciliation of ¥66,188 million is surplus funds (cash and deposits). 4. Depreciation and amortization includes amortization of long-term prepaid expenses. 5. Increase in property, plant and equipment and intangible assets includes increases in long-term prepaid expenses. Net sales (1) Sales to customers (2) Intersegment sales or transfers Total Segment profit (loss) (Note: 2) Segment assets (Note: 3) Others (1) Depreciation and amortization (Note: 4) (2) Amortization of goodwill (3) Investments in entities accounted for using equity method (4) Increase in property, plant and equipment and intangible assets (Note: 5) 22 Per Share Information Net assets per share Net income per share Previous Fiscal Year (from April 1, 2019 to March 31, 2020) Current Fiscal Year (from April 1, 2020 to March 31, 2021) ¥3,056.75 ¥140.45 ¥3,195.82 ¥94.38 Notes: 1. Diluted net income per share is not disclosed because dilutive shares are not issued. 2. In the Net assets section, due to the way that net assets per share are calculated, Company shares remaining in the “Board Incentive Plan (BIP) Trust Account” and “Employee Stock Ownership Plan (ESOP) Trust Account” and recorded as treasury shares, are included in treasury shares subtracted from shares issued as of the end of the period (341,500 shares for the previous fiscal year, 317,905 shares for the current fiscal year). Also, due to the way that net income per share is calculated, they are included in the treasury shares subtracted from average number of shares during the period (349,210 shares in the previous fiscal year, 323,458 shares in the current fiscal year). 3. The basis for calculation of the net income per share amount is shown below. Previous Fiscal Year (from April 1, 2019 to March 31, 2020) Current Fiscal Year (from April 1, 2020 to March 31, 2021) Net income attributable to owners of parent (Millions of yen) Amount not attributable to common shareholders (Millions of yen) Net income attributable to owners of parent pertaining to common stock Average number of shares during the fiscal year (Millions of yen) (Shares) Significant Subsequent Events Not applicable. 8,486 – 8,486 5,705 – 5,705 60,423,031 60,448,695 23