May 7, 2024
Company:
Representative:

Harmonic Drive Systems Inc.
Akira Nagai, President,
Representative Director(Code number: 6324 Tokyo Stock Exchange Standard Market)
Contact:
Akira Maruyama, Representative Director
Makiko Ono, Executive Officer
Phone:+81-3-5471-7810

Notice Regarding Recording of Impairment Losses and Revision to the Financial Results Forecast
Harmonic Drive Systems Inc. (hereinafter “the Company”) hereby announces for the full year of the fiscal year
ended March 31, 2024, impairment losses are expected to be recorded for intangible assets (such as goodwill)
which were recognized upon making the German consolidated subsidiary, Harmonic Drive SE, a subsidiary, asdescribed below. Furthermore, in conjunction, we hereby announce that in consideration of recent financial results
trends, the financial results forecast for the full year of the fiscal year ended March 31, 2024 (consolidated andnon-consolidated) announced on November 9, 2023 were revised as described below.
1. Recording of Impairment Losses
The Harmonic Drive Systems Group (hereinafter “the Group”) acquired Harmonic Drive AG (currentlyHarmonic Drive SE), previously an equity-method affiliate, making it a subsidiary, in order to further
strengthen the business foundation of the European market, which is expected to grow significantly in thefuture, on March 22, 2017. After making it a subsidiary, the Group sought synergies in sales,
manufacturing, and development, and whereas Harmonic Drive SE experienced constant fluctuations infinancial results, the business foundation was strengthened to where we presently stand. Although further
growth can be expected in the future, the situation is where there has been a delay in achieving the income
plan anticipated at the time of acquisition. Due to this, indications of impairment were recognized for
intangible assets (goodwill, customer related assets, and technical assets) that were generated as a result of
the above subsidiary, and as a result of determining whether impairment losses should be recognized, forthe fiscal year ended March 31, 2024, impairment losses (¥28,159 million) are expected to be recorded as
extraordinary losses for some of the amount. Due to recording the impairment losses, some of deferred tax
liabilities will be reversed, so the impact of this matter on “profit attributable to owners of parent” isexpected to be ¥24,220 million.
The Group, in accordance with Japanese accounting standards, amortizes the above intangible assets using
the straight-line method (amortization period of 20 years), and for the fiscal year ended March 31, 2024,
although approximately ¥3,000 million per year is expected to be recorded as amortization cost in selling,
general and administrative expenses, due to the recording of the above impairment losses, the amount isexpected to decrease to approximately ¥1,000 million per year from the fiscal year ending March 31, 2025
onwards.

12. Revision to the Financial Results Forecast for the Full Year of the Fiscal Year Ended March 31, 2024
(1) Revision to the Consolidated Financial Results Forecast for the Full Year of the Fiscal Year Ended
March 31, 2024
(April 1, 2023 – March 31, 2024)

Net sales

Operating profit Ordinary profit

Profitattributable toowners ofparent

Million yen

Million yen

Million yen

Million yen

Revised forecast (B)Differences (B – A)
Changes (%)

55,700700
1.3100500-500700-(24,800)(24,000)-(Reference) Financial results forthe previous fiscal year
(Fiscal year ended March 31,2023)

71,527

10,224

10,757

7,595

Previous forecast (A)55,000

(400)

(200)

(800)

Basic earnings
per shareYen(8.41)(260.92)

79.67<<Reasons for revision to the financial results forecast>>
This revision is mainly due to expectations of consolidated net sales to exceed the previous forecast, andexpectations of consolidated operating profit and consolidated ordinary profit to also exceed the previous
forecast, with the expectation of securing a profit.
Profit attributable to owners of parent has been revised down mainly due to the above forecast of impairment
losses.
(2) Revision to the Non-Consolidated Financial Results Forecast for the Full Year of the Fiscal Year Ended
March 31, 2024
(April 1, 2023 – March 31, 2024)
Net sales
Previous forecast (A)Revised forecast (B)Differences (B – A)
Changes (%)(Reference) Financial results forthe previous fiscal year
(Fiscal year ended March 31,2023)

Operating profit Ordinary profit

Net income

Million yen

Million yen

Million yen

2,300
2,300
-

2,300
(18,500)(20,800)-

24.19(194.64)

50,883

8,927

9,378

6,880

72.1728,000
28,500500
1.8(500)(500)-Million yen

Basic earnings
per shareYen<<Reasons for revision to the financial results forecast>>
Although net sales are expected to exceed the forecast, there are no changes to the forecast for operating profit
and ordinary profit as the cost of sales is expected to increase due to the recording of provision for inventories,etc. For profit, as impairment losses are expected to be recorded on intangible assets related to Harmonic Drive
SE on a consolidated basis, due to the expected deterioration of the financial condition of GK HD Management,a consolidated subsidiary of the Company that holds shares of Harmonic Drive SE, it is expected that ¥20,513
million in loss on valuation of investments in capital of subsidiaries and associates will be recorded as
extraordinary losses in the non-consolidated financial results for the fiscal year ended March 31, 2024, and has
been revised down.

2There are no changes to the forecast for year-end dividends for the fiscal year ended March 31, 2024. Financial
results for the fiscal year ended March 31, 2024 and the new medium-term management plan (fiscal 2024 –2026) are scheduled to be announced on May 13, 2024.
3. Reduction in Compensation for Directors
Taking the above recording of impairment losses and revision to the financial results forecast seriously, inorder to clarify management responsibilities, there will be a reduction in compensation for Directors asfollows.
(1) Details of the reduction in compensation for Directors
Chairperson and Director
30% of monthly compensation
President and Representative Director
30% of monthly compensation
Representative Director and Senior Executive Officer 15% of monthly compensation
Director and Executive Officer
10% of monthly compensation(2) Effective period
Two months from May 2024
<Notes on financial results forecasts>
The statements on financial results forecasts contained herein are based on information currently available to
the Company and certain assumptions deemed reasonably by the Company. The actual financial results may
differ significantly due to various factors.

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