グローリー（6457） – [Delayed] FY2021 Financial Results

(TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 This is a translation of the original Japanese text of the “Consolidated Financial Results for the Fiscal Year Ended March 31, 2022.” 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, 2022 6457 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: 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: President & Representative Director Tokyo https://corporate.glory-global.com/ June 24, 2022 June 27, 2022 June 27, 2022 Yes Yes (for analysts and institutional investors) May 12, 2022 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (from April 1, 2021 to March 31, 2022) (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) (%) 226,562 4.2 10,297 (27.5) 10,507 (25.7) 6,509 14.1 217,423 (3.0) 14,201 (20.8) 14,137 (8.9) 5,705 (32.8) Year ended March 31, 2022: Year ended March 31, 2021: ¥17,465 million [2.9 %] ¥16,976 million [242.0 %] Net income per share Fully diluted net income per share Return on equity Ordinary income to total assets Operating income to net sales (Yen) (Yen) 107.65 94.38 ― ― (%) 3.3 3.0 (%) 3.0 4.4 (%) 4.5 6.5 Year ended March 31, 2022 Year ended March 31, 2021 Year ended March 31, 2022 Year ended March 31, 2021 (Note) Comprehensive income (Reference) Income or loss from investments accounted for by the equity method Year ended March 31, 2022: Year ended March 31, 2021: ¥(58) million [ ― %] ¥(700) million [ ― %] EBITDA (Operating income + Depreciation + Amortization of goodwill) Year ended March 31, 2022: Year ended March 31, 2021: ¥27,505 million [ (6.5)%] ¥29,410 million [ (7.7)%] Net income before amortization of goodwill (Net income attributable to owners of parent + Amortization of goodwill) Year ended March 31, 2022: Year ended March 31, 2021: ¥11,764 million [ 15.2%] ¥10,208 million [ (17.0)%] 1 Year ended March 31, 2022 Year ended March 31, 2021 2. Dividends (Record date) Year ended March 31, 2021 Year ended March 31, 2022 Year ending March 31, 2023 (forecast) (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (2) Consolidated Financial Position As of March 31, 2022 As of March 31, 2021 (Reference) Ownership equity As of March 31, 2022: (3) Consolidated Cash flows Total assets Net assets Ownership equity ratio Net assets per share (Millions of yen) (Millions of yen) 362,786 330,608 208,563 196,332 (%) 56.6 58.4 (Yen) 3,394.59 3,195.82 ¥205,273 million As of March 31, 2021: ¥193,200 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) 10,315 28,443 (25,799) (21,666) (942) (12,131) 52,256 66,057 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) ― ― 30.00 34.00 ― ― 36.00 66.00 4,010 34.00 68.00 4,132 63.2 (%) 69.9 (%) 2.1 2.1 ― 34.00 ― 34.00 68.00 205.6 3. Consolidated Financial Forecast for the Year Ending March 31, 2023 (from April 1, 2022 to March 31, 2023) (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 (Yen) 100,000 (3.1) (7,500) ― (7,800) ― (7,800) ― (129.00) Full year 245,000 8.1 6,000 (41.7) 5,500 (47.7) 2,000 (69.3) 33.08 Six months ending September 30, 2022 (Reference) EBITDA Six months ending September 30, 2022: ¥1,100 million Year ending March 31, 2023 (full year): ¥23,200 million Net income before amortization of goodwill Six months ending September 30, 2022: ¥(5,100) million Year ending March 31, 2023 (full year): ¥7,300 million 2 (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 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: Revolution Retail Systems, LLC) 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: Yes None None None (Note) For more information, please refer to “3. Consolidated Financial Statements and Significant Notes Thereto (5) Notes to Consolidated Financial Statements, Changes in Accounting Policies” on page 20 of the Attachment. (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, 2022: As of March 31, 2021: As of March 31, 2022: As of March 31, 2021: (c) Average number of shares 63,638,210 shares 63,638,210 shares 2,866,078 shares 2,866,078 shares Year ended March 31, 2022: Year ended March 31, 2021: 60,467,088 shares 60,448,695 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, 2022: 301,284 shares, As of March 31, 2021: 317,905 shares) (Reference) Summary of Non-consolidated Financial Results 1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (from April 1, 2021 to March 31, 2022) (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) 121,075 (6.4) 2,736 (63.0) 8,670 (29.7) 9,855 (%) 0.6 129,292 (5.6) 7,399 (1.3) 12,333 21.2 9,792 59.0 Year ended March 31, 2022 Year ended March 31, 2021 Year ended March 31, 2022 Year ended March 31, 2021 Net income per share Fully diluted net income per share (Yen) (Yen) 162.99 162.00 ― ― 3 GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (TRANSLATION FOR REFERENCE ONLY) (2) Non-consolidated Financial Position Total assets Net assets Ownership equity ratio Net assets per share (Millions of yen) (Millions of yen) 282,619 263,724 189,258 183,600 (%) 67.0 69.6 (Yen) 3,129.75 3,037.02 As of March 31, 2022 As of March 31, 2021 (Reference) Ownership equity As of March 31, 2022: ¥189,258 million As of March 31, 2021: ¥183,600 million 4 (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (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 9 of the Attachment. 5 (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 Attachment Contents 7 1. Overview of Operating Results and Others ……………………………………………………………………………………………….. 7 (1) Overview of Operating Results for the Fiscal Year ………………………………………………………………………………………………………… 8 (2) Overview of Financial Position for the Fiscal Year ………………………………………………………………………………………………………… 8 (3) Overview of Cash Flows for the Fiscal Year …………………………………………………………………………………………………………………. 9 (4) Future Outlook ………………………………………………………………………………………………………………………………………………………….. 9 (5) Basic Policy on Profit Distributions and Dividends for the Current and Next Fiscal Years ………………………………………………….. 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 Accounting Policies ………………………………………………………………………………………………………………………………….. 20 Changes in Significant Subsidiaries During the Fiscal Year ……………………………………………………………………………………………. 20 Additional Information ………………………………………………………………………………………………………………………………………………. 20 Segment Information …………………………………………………………………………………………………………………………………………………. 20 Per Share Information ………………………………………………………………………………………………………………………………………………… 24 Significant Subsequent Events ……………………………………………………………………………………………………………………………………. 24 6 (TRANSLATION FOR REFERENCE ONLY) 1. Overview of Operating Results and Others (1) Overview of Operating Results for the Fiscal Year GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 In the fiscal year under review, the global economy faced an uncertain outlook, being affected by a number of factors. These include a resurgence in COVID-19, shortages of semiconductors and other parts, rising material prices and logistics costs, and supply chain issues such as tight supply of logistics services, as well as the most recent fears of a downturn caused by the Russia-Ukraine situation. In the US and Europe, initiatives aimed at normalizing economic activity following progress in vaccinations led to signs of a recovery in business conditions. In Asia, challenging conditions persisted under the impact of the pandemic and the delays in vaccinations, etc. In China, where “zero-COVID” policies remain in force, the pace of the recovery also slowed, with declines in personal consumption and industrial production. The Japanese economy saw a moderate recovery as capital investment and corporate earnings recovered. This was despite the strong downward pressure persisting in the food service and hotel industries, whose face-to-face services were largely affected by the pandemic. Under such circumstances, the Group has started the “2023 Medium-Term Management Plan” with the concept of “Core and New businesses powering growth together” from April 2021. In the Core business, sales to financial institutions and the retail industry were both strong in the overseas market. In particular, sales increased for sales proceeds deposit machines used for back-office operations and for self-service coin and banknote recyclers for cashiers used in the retail industry. This is largely attributable to a growing need for contact-free and self-service solutions to prevent COVID-19 infection, and a need for rigorous cash management. In the US, with the aim of expanding sales to retail, we acquired Revolution Retail Systems, LLC, which sells sales proceeds deposit machines for retail back-office operations, and also established a local subsidiary in Poland. In the domestic market, while the large-scale demand for the financial market in the previous year has run its course, sales increased in the retail and transportation market, supported by the sales of products such as self-service coin and banknote recyclers for cashiers, in response to labor shortages and the need for contact-free and self-service solutions. In order to expand our customer base to include new customer groups, we launched a service enabling sales of coin and banknote recyclers for cashiers on a subscription basis. In new businesses, the self-service kiosk-related business being expanded by Acrelec Group S.A.S. in overseas markets performed strongly. We also focused on extending our business domain, through our investing in OneBanks, which provides shared services for bank branch operations within UK retail outlets. In the Japanese market, we deepened our alliance with AdInte Co., Ltd., and launched the BUYZO data utilization service, which seeks to support DX for retail and restaurants by increasing the impact of marketing and promotions through the collection and analysis of data on customer behavior. Furthermore, we worked to create new services which make use of data gathered from smartphones. This has been achieved through partnering with a mobile order services provider, Showcase Gig Inc., to open a BOPIS-style new store exclusively for beverages, whereby the customer orders the merchandise in advance using a smartphone and collects it from a locker. In the biometric/image recognition business, we developed a fall detection system using skeletal recognition technology and 3D cameras, and started PoC (Proof of Concept) studies for the use in nursing facilities to verify that the privacy of room occupants is ensured, that the system operates in both light and dark conditions, and that a comfortable sleeping environment can be maintained by reducing the amount of light emitted by sensors, and other matters. On the other hand, in addition to sales being postponed due to the difficulties in procuring semiconductors and other parts from the third quarter onwards, we witnessed soaring prices for materials, as well as tight supply of shipping services. These factors were responsible for restrictions on production and sales activities both in Japan and overseas. As a result, net sales in the current fiscal year totaled ¥226,562 million (up 4.2% year on year). Of this, sales of merchandise and finished goods were ¥142,667 million (up 2.8% year on year) and sales from maintenance services were ¥83,894 million (up 6.6% year on year). Operating income was ¥10,297 million (down 27.5% year on year), and ordinary income was ¥10,507 million (down 25.7% year on year). Net income attributable to owners of parent was ¥6,509 million (up 14.1% year on year) as a result of the addition of extraordinary income from the transfer of shares of viafintech GmbH, and the subtraction of extraordinary losses recorded due to an incident that occurred at a domestic consolidated subsidiary of the Company as stated below. In February 2022, the Company discovered an incident of embezzlement by a former employee of a consolidated subsidiary of the Company. The Company established an internal investigation committee chaired by a Director (Chairman of the Audit & Supervisory Committee) of the Company to identify the facts and causes of the incident, with the assistance of external attorneys and CPAs. The Company sincerely apologizes to all our stakeholders for any inconvenience this matter may have caused. The Group will swiftly execute measures to prevent such incidents from recurring and take steps to strengthen the internal control system for the Group as a whole, while striving to regain the trust of its stakeholders. Results of operations in each business segment are as follows. 7 (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 Financial market Sales of this segment’s main product, open teller systems, were slow, and sales of coin and banknote recyclers for tellers were also sluggish due to the large-scale demand in the previous year having run its course. In addition, sales from maintenance services decreased due to a slowdown in the system modifications required in connection with the scheduled issuance of the new 500-yen coin. As a result, net sales in this segment were ¥36,079 million (down 27.7% year on year) and operating income was ¥4,644 million (down 52.9% year on year). Retail and transportation market Despite steady sales of this segment’s main products, which are coin and banknote recyclers for cashiers and ticket vending machines, shipments of sales proceeds deposit machines for the cash-in-transit market were sluggish. Profits increased as a result of modification work required in connection with the issuance of the new 500-yen coin, and due to improvements in product mix. As a result, net sales in this segment were ¥47,859 million (down 2.5% year on year) and operating income was ¥2,543 million (up 52.3% year on year). Amusement market Sales increased for the main products, such as card systems and pachinko prize dispensing machines used in pachinko parlors. This contrasts with the previous year, where there was downward pressure from temporary store closures and short operating hours. However, the full-scale recovery of demand was not seen in this segment. As a result, net sales in this segment were ¥12,131 million (up 10.1% year on year) and operating loss was ¥366 million (vs. operating loss of ¥290 million in the previous fiscal year). Overseas market In the Americas and Europe, sales of CI-series sales proceeds deposit machines for the retail industry were robust, and sales of RBG-series coin and banknote recyclers for financial institutions were steady. In Asia, sales of UW-series banknote sorters were sluggish. Furthermore, sales from Acrelec Group S.A.S. and its subsidiaries totaled ¥19,809 million, exceeding the pre-COVID level. As a result, net sales in this segment were ¥127,803 million (up 22.0% year on year) and operating income was ¥4,884 million (up 42.9% year on year). In the “Other” business segment, net sales were ¥2,688 million (up 0.3% year on year) and operating loss was ¥1,408 million (vs. operating loss of ¥456 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 ¥362,786 million, an increase of ¥32,178 million compared with the end of the previous fiscal year. This is mainly the result of a decrease of ¥13,871 million in cash and deposits, and increases of ¥19,251 million in inventories and ¥14,356 million in goodwill. Liabilities were ¥154,223 million, an increase of ¥19,948 million compared with the end of the previous fiscal year. This is mainly the result of increases of ¥7,248 million in long-term borrowings and ¥4,113 million in notes and accounts payable – trade. Total net assets at the end of the current fiscal year were ¥208,563 million, an increase of ¥12,230 million compared with the end of the previous fiscal year. This is mainly the result of increases of ¥8,851 million in foreign currency translation adjustment and ¥2,254 million in retained earnings. As a result, the ownership equity ratio became 56.6% compared with 58.4% 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 ¥13,801 million from one year earlier to ¥52,256 million. The following is a summary of cash flows: Cash flows from operating activities Net cash provided by operating activities was ¥10,315 million, compared to ¥28,443 million in the previous fiscal year. This resulted from 8 (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 cash increases including ¥13,783 million from income before income taxes, ¥11,952 million from depreciation and ¥5,254 million from amortization of goodwill, despite the capital outflow of ¥7,225 million due to the payment of income taxes and a ¥10,927 million increase in inventories. Cash flows from investing activities Net cash used in investing activities was ¥25,799 million, compared to ¥21,666 million in the previous fiscal year. This resulted from ¥6,201 million in proceeds from sale of shares of viafintech GmbH, while on the other hand there was a ¥20,484 million outflow associated with the acquisition of Revolution Retail Systems, LLC, ¥4,809 million for purchase of property, plant and equipment in relation to molds and jigs used for product manufacturing, and a ¥3,938 million payment for the acquisition of AdInte Co., Ltd. shares. As a result, the free cash flows or total cash flows from operating and investing activities were negative ¥15,484 million. Cash flows from financing activities Net cash used in financing activities was ¥942 million, compared to ¥12,131 million in the previous fiscal year. This resulted from a ¥5,637 million repayment of long-term borrowings, and payment of ¥5,226 million of dividends, despite proceeds from long-term borrowings of ¥11,531 million. Cash flow indices Ownership equity ratio Ownership equity ratio based on market value Debt repayment ratio (years) Interest coverage ratio FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 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 56.6% 37.4% 5.5 16.5 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 The outlook for the fiscal year ending March 31, 2023, remains uncertain, with global shortages of parts such as semiconductors and soaring material prices. The Russia-Ukraine situation, coupled with the prospect of supply chain disruption caused by lockdowns in China following the spread of COVID-19 infections, will likely also have an impact on business operations. Under these circumstances, the Group predicts that the trend towards contactless and self-service approaches will continue, not only as a means of addressing labor shortages but also to help prevent infections. We therefore expect continued steady demand for self-service products and services used by financial institutions and retail outlets, both in Japan and overseas. We expect performance in the first half to come under pressure from difficulties in procuring semiconductors and other parts, soaring material prices, and rising costs caused by tight supply of shipping services. However, in the second half we expect procurement difficulties for parts such as semiconductors to ease, and for sales to gradually recover. According to these conditions, the Company forecasts full-year consolidated business results as follows; net sales of ¥245,000 million (up 8.1% year on year), operating income of ¥6,000 million (down 41.7% year on year), ordinary income of ¥5,500 million (down 47.7% year on year) and net income attributable to owners of parent of ¥2,000 million (down 69.3% year on year). The forecast uses exchange rate assumptions of US$1=¥125, 1 euro=¥135. (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 target for the 9 (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 “2023 Medium-Term Management Plan” (from the fiscal year ended March 31, 2022 to the fiscal year ending March 31, 2024), is to achieve an average dividend payout ratio over the three-year period of at least 30% before amortization of consolidated goodwill. 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 The Articles of Incorporation of the Company stipulates that matters such as dividends of surplus provided for in Article 459, paragraph 1 of the Companies Act may be determined by a resolution of the Board of Directors unless otherwise specified by laws and regulations, and the Company has decided to pay dividends of surplus twice in each fiscal year, once at the interim period and again at the year-end. Based on the above basic policy, the Company plans to pay a dividend of surplus for the current fiscal year of ¥68 per share (interim dividend of ¥34 and year-end dividend of ¥34). This will result in a dividend payout ratio before goodwill amortization of 35.0% on a consolidated basis. Based on the above-mentioned policy, the dividend for the fiscal year ending March 31, 2023 is expected to be 68 yen per share (34 yen of interim dividend, 34 yen of year-end dividend). With regard to the future purchase of treasury shares, the Company will take the best approach, considering future business development, investment plans, the internal reserves, and performance trends. The Company’s policy is to keep treasury shares within approximately 5% of total shares issued by retiring any treasury shares in excess of that amount. 10 (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 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 (TRANSLATION FOR REFERENCE ONLY) 3. Consolidated Financial Statements and Significant Notes Thereto (1) Consolidated Balance Sheet GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Millions of yen) As of March 31, 2021 As of March 31, 2022 Assets Current assets Cash and deposits Notes and accounts receivable – trade Notes and accounts receivable – trade, and contract assets 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 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 52,316 – 52,420 749 775 50 38,511 15,658 17,599 12,913 (1,240) 189,753 39,176 (24,255) 14,921 15,434 (13,130) 2,304 53,427 (48,211) 5,215 11,877 10,845 (4,880) 5,964 201 40,485 21,335 8,709 64,157 870 95,072 14,871 8,266 9,660 6,782 (2,106) 37,474 173,032 362,786 GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Millions of yen) As of March 31, 2021 As of March 31, 2022 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 14,656 6,975 16,743 2,585 1,075 22,502 7,373 102 209 27,673 99,898 20,000 11,187 4,409 8,370 247 2,327 7,782 54,325 154,223 12,892 12,286 166,665 (9,191) 182,653 666 17,906 4,047 22,620 3,289 208,563 362,786 (TRANSLATION FOR REFERENCE ONLY) Liabilities Current liabilities Notes and accounts payable – trade Electronically recorded obligations – operating Short-term borrowings Current portion of long-term borrowings Income taxes payable Contract liabilities 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 liabilities 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 13 (TRANSLATION FOR REFERENCE ONLY) (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statement of Income GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Non-operating income Interest income Dividend income Foreign exchange gains 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 Gain on sale of shares of subsidiaries and associates 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 of allowance for doubtful accounts Impairment losses Special investigation expenses 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 14 217,423 131,962 85,460 71,259 14,201 271 146 – 1,171 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 5,705 226,562 136,800 89,762 79,464 10,297 222 149 480 576 1,429 638 – 58 522 1,219 10,507 12 1 4,739 4,752 1 32 – 49 1,171 121 100 1,476 13,783 6,333 (93) 6,239 7,544 1,034 6,509 Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 (TRANSLATION FOR REFERENCE ONLY) Consolidated Statement of Comprehensive Income 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 GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Millions of yen)7,544 (9) 8,984 937 7 9,920 17,465 16,322 1,142 6,516 1,128 4,059 5,264 6 10,459 16,976 16,000 975 15 GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (TRANSLATION FOR REFERENCE ONLY) (3) Consolidated Statement of Changes in Equity Previous Fiscal Year (from April 1, 2020 to March 31, 2021) Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity (Millions of yen)Total shareholders’ equity Balance at beginning of period 12,892 15,961 162,595 (9,312) 182,137 12,892 15,961 162,595 (9,312) 182,137 Cumulative effects of changes in accounting policies Restated balance Changes during period Dividends of surplus Net income attributable to owners of parent Purchase of treasury shares Disposal 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 Cumulative effects of changes in accounting policies Changes during period Dividends of surplus Net income attributable to owners of parent Purchase of treasury shares Disposal 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 (3,889) 5,705 (3,667) (3,667) 12,294 16 Total changes during period Balance at end of period – 12,892 1,815 164,411 71 (1,780) (9,241) 180,357 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 Balance at beginning of period (455) 5,194 (2,154) 2,584 1,946 186,668 Restated balance (455) 5,194 (2,154) 2,584 1,946 186,668 (741) – – – – – – – – 1,135 1,135 680 3,859 3,859 9,054 5,264 5,264 3,109 10,259 10,259 12,843 (0) 71 951 975 1,185 3,131 – (3,889) 5,705 (0) 71 – – (3,667) – (4,631) 5,705 (0) 71 951 – (3,667) 11,234 9,664 196,332 (TRANSLATION FOR REFERENCE ONLY) Current Fiscal Year (from April 1, 2021 to March 31, 2022) Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity (Millions of yen)Total shareholders’ equity Balance at beginning of period 12,892 12,294 164,411 (9,241) 180,357 GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 12,892 12,294 164,410 (9,241) 180,356 Cumulative effects of changes in accounting policies Restated balance Changes during period Dividends of surplus Net income attributable to owners of parent Purchase of treasury shares Disposal 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 Cumulative effects of changes in accounting policies Restated balance Changes during period Dividends of surplus Net income attributable to owners of parent Purchase of treasury shares Disposal 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 Total changes during period Balance at end of period – 12,892 (7) 12,286 2,255 166,665 49 (9,191) 2,297 182,653 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 Balance at beginning of period 680 9,054 3,109 12,843 3,131 196,332 680 9,054 3,109 12,843 3,131 196,331 (7) (1) (4,254) 6,509 49 (972) – – – – – – – – (4,254) 6,509 (1) – 49 – (7) – (5,226) 6,509 (1) – 49 – (7) – 10,906 12,231 208,563 17 (13) (13) 666 8,851 8,851 17,906 937 937 9,776 9,776 4,047 22,620 1,130 157 3,289 (TRANSLATION FOR REFERENCE ONLY) (4) Consolidated Statement of Cash Flows GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 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 Loss (gain) on sale of shares of subsidiaries and associates Interest and dividend 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 liabilities Decrease (increase) in investments in leases Decrease (increase) in accounts receivable – other Increase (decrease) in accounts payable – other Increase/decrease in consumption taxes payable/consumption taxes refund receivable Other, net Subtotal Interest and dividends 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 Proceeds from sale of shares of subsidiaries resulting in change in scope of consolidation Proceeds from sale of shares of subsidiaries and associates Other, net Net cash provided by (used in) investing activities 18 12,590 10,706 648 4,502 704 (192) 388 (54) 51 – (417) 559 32 (852) 2,823 (3,920) 212 264 (73) 853 1,328 3,509 33,665 419 (553) (5,088) 28,443 (80) 560 (4,876) 30 (3,588) (2,726) 2,273 464 (13,729) – – 6 (21,666) 13,783 11,952 121 5,254 1,198 (419) (429) 210 (1) (4,739) (372) 638 32 9,374 (10,927) 1,306 (287) 299 (2,600) 0 (834) (5,779) 17,780 384 (624) (7,225) 10,315 (60) 130 (4,809) 20 (3,424) (3,938) 29 390 (20,484) 6,201 156 (11) (25,799) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Cash flows from financing activities (TRANSLATION FOR REFERENCE ONLY) Net increase (decrease) in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Repayments of lease liabilities 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 GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Millions of yen)(9,323) 3,447 (10) (1,613) (3,889) (741) – (0) (12,131) 997 (4,357) 70,415 66,057 148 11,531 (5,637) (1,738) (4,253) (972) (20) – (942) 2,625 (13,801) 66,057 52,256 19 GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (TRANSLATION FOR REFERENCE ONLY) (5) Notes to Consolidated Financial Statements Notes Regarding Assumption of a Going Concern Not applicable. Changes in Accounting Policies (Application of Accounting Standard for Revenue Recognition, etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the beginning of the current fiscal year, and it has recognized revenue at the time the control of promised goods or services is transferred to the customer at the amount expected to be received upon exchange of said goods or services. The application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations is subject to the transitional treatment provided for in the proviso to paragraph 84 of the Accounting Standard for Revenue Recognition. The cumulative effect of the retrospective application, assuming the new accounting policy had been applied to periods prior to the beginning of the current fiscal year, was added to or deducted from the opening balance of retained earnings of the current fiscal year, and thus the new accounting policy was applied from such opening balance; provided, however, that the new accounting policy was not retrospectively applied to contracts for which nearly all the revenue amounts had been recognized according to the previous treatment in periods prior to the beginning of the current fiscal year, by applying the method provided for in paragraph 86 of the Accounting Standard for Revenue Recognition. Furthermore, by applying the method set forth in item (1) of the supplementary provisions of paragraph 86 of the Accounting Standard for Revenue Recognition, modifications to contracts carried out prior to the beginning of the current fiscal year were accounted for based on the contractual terms after all contract modifications were reflected. Consequently, this cumulative effect was added to or deducted from the opening balance of retained earnings of the current fiscal year. Due to the application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations, “Notes and accounts receivable – trade” under current assets of the consolidated balance sheet as of the end of the previous fiscal year has been included in “Notes and accounts receivable – trade, and contract assets” under current assets from the consolidated balance sheet for the fiscal year under review, while “Other” under current liabilities of the consolidated balance sheet as of the end of the previous fiscal year has been reclassified and presented as “Contract liabilities” and “Other” under the current liabilities from the consolidated balance sheet for the fiscal year under review. In accordance with the transitional treatment provided for in paragraph 89-2 of the Accounting Standard for Revenue Recognition, figures for the previous fiscal year have not been restated in accordance with the new approach to presentation. The impact of this on the consolidated financial statements for the current fiscal year is insignificant. (Application of Accounting Standard for Fair Value Measurement, etc.) The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) and relevant ASBJ regulations from the beginning of the current fiscal year. Furthermore, in accordance with the transitional treatment prescribed in paragraph 19 of the Accounting Standard for Fair Value Measurement and paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), the Company will prospectively apply the new accounting policy prescribed by the Accounting Standard for Fair Value Measurement and relevant ASBJ regulations. The impact of this on the consolidated financial statements for the current fiscal year is insignificant. Changes in Significant Subsidiaries During the Fiscal Year In the current fiscal year, following the acquisition of full ownership of Revolution Retail Systems, LLC, three companies, including the subsidiaries of Revolution Retail Systems, LLC, are included in the scope of consolidation. Revolution Retail Systems, LLC qualifies as a specified subsidiary of the Company. Additional Information (Accounting estimates associated with the spread of COVID-19) With regard to the impact of COVID-19, it is difficult to accurately predict when the pandemic will be resolved, but there are signs that the global economy is moving towards a gradual resumption of economic activity. 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 be limited during the fiscal year ending March 31, 2023. 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. 20 (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 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: (Changes in reportable segments) The Company reclassified its business segments in the current fiscal year, and the following changes have been made for the businesses that were previously included in “Other” segment. These changes have been reflected in this report accordingly. – Part of Biometric/Image recognition business and of businesses that contribute to Electronic settlement-related business now included in “Retail and transportation market” – Part of “New businesses” now included in “Overseas market” Due to these changes, the segment information for the previous fiscal year was prepared based on the classification of reportable segments after the changes. 2. Calculation method of sales, income (loss), assets, and other items by reportable segment Income by reportable segment is operating income. 21 GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (TRANSLATION FOR REFERENCE ONLY) 3. Information on sales, income (loss), assets and other items by reportable segment Previous 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 49,078 － 11,020 － 104,765 214,743 2,680 217,423 － － － － 49,877 49,078 11,020 104,765 214,743 2,680 217,423 1,670 (290) 3,417 14,658 41,164 15,147 161,803 255,872 (456) 8,547 14,201 264,419 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 49,877 － 9,861 37,757 － － 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) 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. 22 GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (TRANSLATION FOR REFERENCE ONLY) Current Fiscal Year (from April 1, 2021 to March 31, 2022) Reportable segments Financial market Retail and transportation market Amusement market Overseas market Total Other (Note: 1) Total Reconcilia- tion 47,859 － 12,131 － 127,803 223,873 2,688 226,562 － － － － 36,079 47,859 12,131 127,803 223,873 2,688 226,562 2,543 (366) 4,884 11,706 (1,408) 10,297 44,633 15,146 202,951 300,370 10,099 310,470 52,316 1,764 1,840 649 7,547 11,801 151 11,952 － － － － 5,254 5,254 － 5,254 433 433 4,610 5,044 (Millions of yen) Amounts reported on the consolidated financial statements － － － － － － － 226,562 － 226,562 10,297 362,786 11,952 5,254 5,044 2,108 2,032 850 23,938 28,929 171 29,101 － 29,101 36,079 － 4,644 37,639 － － 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) 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 ¥52,316 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. 23 (TRANSLATION FOR REFERENCE ONLY) GLORY LTD. (6457) Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 Per Share Information Net assets per share Net income per share Previous Fiscal Year (from April 1, 2020 to March 31, 2021) Current Fiscal Year (from April 1, 2021 to March 31, 2022) ¥3,195.82 ¥94.38 ¥3,394.59 ¥107.65 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 (317,905 shares for the previous fiscal year, 301,284 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 (323,458 shares in the previous fiscal year, 305,044 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, 2020 to March 31, 2021) Current Fiscal Year (from April 1, 2021 to March 31, 2022) 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. 5,705 － 5,705 6,509 － 6,509 60,448,695 60,467,088 24