(Incorporated in Japan with limited liability

Stock Code 股份代號 : 1245

2018 /2019
I N TE RI M R EP O RT 中 期 報 告

INTERIM REPORT 2018/2019 中期報告

This interim report is printed on environmentally friendly paper
本中期報告以環保紙印製)

Contents
Page

Corporate Profile

2

Corporation Information and Information for Investors

3

Financial and Operational Highlights

4Management Discussion and Analysis

6

Corporate Governance and Other Information

14

Report on Review of Interim Financial Information

19

Interim Condensed Consolidated Statement ofComprehensive Income

21Interim Condensed Consolidated Statement of
Financial Position

22

Interim Condensed Consolidated Statement of
Changes in Equity

24

Interim Condensed Consolidated Statement of
Cash Flows25

Notes to the Condensed Consolidated Interim
Financial Information27

Corporate Profile
株式会社ニラク▪ジー▪シー▪ホールディングス NIRAKU GC HOLDINGS, INC.* (“NIRAKU” or the “Company”,
Hong Kong stock code: 1245, together with its subsidiaries, the “Group”) is a leading pachinko hall operator in
Fukushima Prefecture in Japan, and has over 60 years of pachinko hall operation experience. The Company
was listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 8 April
2015 (the “Listing Date”).
Since the opening of the first pachinko hall in 1950, NIRAKU has been aiming in bringing enjoyable experience
to customers, which forms our slogan of “Happy Time, Creation”.
NIRAKU has a strong pachinko hall network with 54 halls at present, stretching from Tokyo Metropolitan Area to
Northeast Honshu, equipped with over 29,100 pachinko and pachislot machines serving customers in ten
prefectures in Japan.

* for identification purpose only

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Corporation Information and Information for Investors
CORPORATE INFORMATION
Executive Director

Mr. Hisanori TANIGUCHI (Chairman)(also known as Mr. JEONG Seonggi)

Non-Executive Director

Mr. Hiroshi BANNAI

Independent Non-Executive Directors

Mr. Hiroaki MORITA
Mr. Michio MINAKATA
Mr. Yoshihiro KOIZUMIAudit Committee

Mr. Michio MINAKATA (Committee Chairman)
Mr. Hiroaki MORITA
Mr. Hiroshi BANNAI

Remuneration Committee

Mr. Hiroaki MORITA (Committee Chairman)
Mr. Yoshihiro KOIZUMIMr. Hisanori TANIGUCHI

Nomination Committee

Mr. Hisanori TANIGUCHI (Committee Chairman)
Mr. Michio MINAKATA
Mr. Yoshihiro KOIZUMIINFORMATION FOR INVESTORS
Principal Bankers

Mizuho Bank, Ltd.
Sumitomo Mitsui Bank Corporation
The Toho Bank, Ltd.

AuditorPricewaterhouseCoopers

Compliance Adviser

Shenwan Hongyuan Capital (H.K.) Limited

Legal Adviser

Deacons

Share Registrar

Computershare Hong Kong Investor Services Limited
Shops 1712–1716,
17/F Hopewell Centre,
183 Queen’s Road East,
Wan Chai, Hong Kong

Principal Place of Business in Hong Kong

505, 5/F Hutchison House,
10 Harcourt Road,
Central, Hong Kong

Headquarter in Japan and Registered Office

1-1-39 Hohaccho
Koriyama-shi, Fukushima,
Japan 963-8811

Stock Code

1245

Investor and Media Relations Consultant

Strategic Financial Relations Limited

Websitewww.ngch.co.jp

Investor Relation Inquiry

e-mail: niraku@sprg.com.hk

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3

Financial and Operational Highlights
The following table summarises the results of the Group for the financial periods ended 30 September 2018 and2017.
For the six months ended 30 September
2018
2017
¥ million
HK$ million¥ million
HK$ million
Gross pay-ins
Gross pay-outs
Revenue from pachinko and pachislot business
Revenue from amusement arcade business
Other revenue

71,189(57,972)
13,217
768
453

4,899
(3,990)909
53
31

70,236(57,560)
12,676–432

4,727(3,873)853–
29

Revenue

14,438994

13,108882

Hall operating expenses
Administrative and other operating expenses
Profit/(loss) before income tax
Profit/(loss) attributable to the shareholdersof the Company(11,166)(2,011)
1,393

(768)
(138)
96

(11,478)(1,824)
(104)

(772)
(123)
(7)

878

59

(221)

(15)

0.73

0.050

(0.18)(0.012)Overall revenue margin

18.6%

–

18.0%

–

Net profit/(loss) margin

5.9%

–

(1.7%)–

Earnings/(loss) per share (expressed inJapanese Yen or Hong Kong dollar)

As at 30 September 2018
¥ million
HK$ million
Current assets
Current liabilities
Net current assets
Total assets
Total assets less current liabilities
Gearing ratio

4

NIRAKU GC HOLDINGS, INC.

19,0809,882
9,198
53,022
43,14063.7%

Interim Report 2018/2019

1,313
680
633
3,649
2,969
–

As at 31 March 2018
¥ million
HK$ million
17,3638,815
8,548
52,171
43,356
69.6%

1,282
651
631
3,853
3,202
–

Financial and Operational Highlights
CURRENCY TRANSLATIONS
For the purpose of illustration only and unless otherwise specified in this interim report, certain amounts
denominated in Japanese Yen (“¥”) are translated into Hong Kong dollar (“HK$”) at the rates (as the casemay be) described below:
1.

¥14.53 to HK$1.00, the exchange rate prevailing on 28 September 2018 (i.e. the last business day in
September 2018);2.

¥14.86 to HK$1.00, the exchange rate prevailing on 29 September 2017 (i.e. the last business day in
September 2017);

3.

¥13.54 to HK$1.00, the exchange rate prevailing on 29 March 2018 (i.e. the last business day in March2018);

No representation is made that the amounts in Japanese Yen could have been, or could be, converted into
Hong Kong dollar or vice versa, at such rates or at any other rates on such date or on any other dates.

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Management Discussion and Analysis
BUSINESS OVERVIEW
Pachinko business
For the six months ended 30 September 2018, gross pay-ins and revenue from pachinko and pachislot businessamounted to ¥71,189 million and ¥13,217 million, respectively. Despite of continual recession in pachinko
industry, the Group had recorded an increase in gross pay-ins and revenue by ¥953 million (or 1.4%) and ¥541
million (or 4.3%), respectively, as compared to the six months ended 30 September 2017. The rise in revenue
was mainly attributable to the Niraku Hitachi-omiya hall, which was opened in December 2017. Total revenue
derived from this suburban hall amounted to ¥134 million for the six months ended 30 September 2018.
Furthermore, the Group continued in optimising the pay-out ratio to improve the revenue margin. This strategic
measure had proven its success as the revenue margin had gone up to 18.6% in current period, an increase of
0.6% as compared to same period in 2017.

Amusement arcade business
On 20 November 2017, the Group acquired Dream Games Singapore Pte. Ltd. (“Dream Games”) and its
subsidiaries, which engages in amusement arcades operation in Vietnam and Cambodia. Dream Games is ayoung company established in 2013, nevertheless, since its inception, its business strategy is to ally with large
Japanese mall developers, focusing on opening amusement arcades in new shopping arcades. For the six
months ended 30 September 2018, this sector had contributed ¥768 million of revenue to the Group.

Restaurant business
The Group is currently operating two restaurants, located in Shinbashi and Nishi Shinjuku, as a franchisee of
Spanish restaurant chain “Lizarran” developed by the Spain-based Comess Group, which operates restaurants
mainly in Europe. For the six months ended 30 September 2018, revenue derived from these restaurants
amounted to ¥118 million, a significant increase of ¥41 million was noted as compared to the same period in
2017. The core reason for the surge being the new revenue stream from Nishi Shinjuku which was opened inearly August 2017.

CHALLENGES FACED, RECENT DEVELOPMENT AND FUTURE PLANS
The pachinko industry as a whole continues to be severe, and is moving towards a polarised market, since it isexpected that small to medium scale pachinko halls are going off the market. The pachinko industry is further
dampened with the launch of new regulations over gaming elements in pachinko and pachislot machines; aswell as the passage of the “Act on the Promotion of the Development of Integrated Resort Areas” which
inevitably imposed pressure on pachinko operators to counter the gambling addiction issue associated withthe legalisation of casinos, as well as stringent restrictions on pachinko advertising and promotion activities.

6

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Management Discussion and Analysis
To tackle these challenges, the Group has been carrying out various measures which include streamlining cost
structure, increasing customers return rate, providing a gaming environment to meet the needs of diverse fans,and opening new halls. “Niraku Hitachi-Omiya hall”, as mentioned above, is a hall opened in late 2017 which
is designed based on the concept of community space in the area and is a new style for the future. The Grouphas made every effort to accommodate the needs of local communities, create halls where visitors can spend
a relaxing and enjoyable time, encourage those who are not keen on pachinko games would also pay a visit.
Close to the end of September 2018, we closed down an underperformed suburban hall, the “Niraku Mizuho
hall”. Its closure would allow the Group to better allocate resources between each existing hall. As a result, thenumber of pachinko halls at present amounted to 54 stores (excluding the “Niraku Tomioka hall”, for which theprospect of resumption of business has yet to be determined due to nuclear disaster).
Moving forward, the Group will continue to make improvements on replacing machines in each hall to matchcustomer preference, improve gaming environment, strengthen the organisation through promotion andadvertising, streamline the cost structure, and work closely within the Group and the communities to deliver
better service and increase support from the locals.
The Group stepped its foot in Southeast Asian countries in November 2017 after the acquisition of Dream
Games, a company which operates amusement arcades in Vietnam and Cambodia. Seeing the fast-growing
economies and their young demography populations which lead to high demand in amusement facilities,
during the current period, the Group opened a new amusement arcade in Cambodia. As a result, the numberof amusement arcades in total moved from 7 to 8 halls. The management is confident that steady inflow ofincome will be generated and which has evidenced by a month-on-month increase in revenue. The Group’s
future strategy is to capture the economic growth of Asian countries and continue to increase its market sharein amusement business.
Apart from pachinko and amusement businesses, the Group also persists in seizing every opportunity inrestaurant business. The Group is convinced that, with its profound experiences in entertainment and customer
service industry, it can take full advantage of the efficient store management and operation, service andquality maintenance. As a new move, concept of accommodating a café inside the vicinity of pachinko hall
was introduced during the current period. “Komeda Café” provides a cosy place for both pachinko and nonpachinko players to enjoy a drink and light meals. The Group plans to continue rolling out more restaurants(Lizarran brand and Komeda Café brand) in Japan.

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Management Discussion and Analysis
FINANCIAL REVIEW
Gross pay-ins
Gross pay-ins recorded an increase of ¥953 million, or 1.4%, from ¥70,236 million for the six months ended 30
September 2017 to ¥71,189 million for the same period in current year. The rise was attributable to the inflow ofrevenue from a new hall which was opened in December 2017 despite of the slump in pachinko industry.

Gross pay-outs
Gross pay-outs, being the aggregate cost of G-prizes and general prizes exchanged by customers, increasedby ¥412 million, or 0.7%, from ¥57,560 million for the six months ended 30 September 2017 to ¥57,972 million forthe same period in 2018, which generally mirrored the increase in gross pay-ins.

Revenue and revenue margin from pachinko and pachislot business
Revenue from pachinko and pachislot business ascended from ¥12,676 million for the six months ended 30
September 2017 to ¥13,217 million for the same period in current year. The increase of ¥541 million was primarily
due to additional revenue derived from the new hall as discussed above.
The revenue margin increased by 0.6% from 18.0% for the six months ended 30 September 2017 to 18.6% for thesame period in current year. The increase in revenue margin was due to the effect of drop in pay-out ratio
which led to positive impact on revenue margin in current period.

Revenue from amusement arcade business
In November 2017, the Group acquired 100% of equity interest in Dream Games, a company engages in theoperation of entertainment and amusement facilities in Cambodia and Vietnam. As a result of the acquisition,
the financial results of Dream Games and its subsidiaries were consolidated into the Group’s financial
statements.
For the six months ended 30 September 2018, the revenue contributed from amusement arcade businessamounted to ¥768 million, of which ¥655 million and ¥113 million were derived from Vietnam and Cambodia,
respectively.

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Management Discussion and Analysis
Other revenue
Other revenue represents incomes from vending machines, hotel and restaurant operations.
Vending machine income amounted to ¥258 million for the six months ended 30 September 2018. The
decrease of ¥14 million or 5.1% as compared to ¥272 million for the same period in 2017 was resulted from thedecrease in customer visits.
Income from hotel operations noted a slight decrease of ¥6 million from ¥83 million for the six months ended 30
September 2017 to ¥77 million for the six months ended 30 September 2018. The drop is due to higher
competition in hotel business which led to decrease in average occupancy rate by 4.7%.
Revenue from restaurant under the brand “LIZARRAN” amounted to ¥118 million for the six months ended 30
September 2018. The surge of ¥41 million as compared to the same period in 2017 is mainly attributable to the
opening of the third Spanish restaurant in August 2017 which generated additional revenue.

Hall operating expenses
Hall operating expenses decreased by ¥312 million, or 2.7%, from ¥11,478 million for the six months ended 30
September 2017 to ¥11,166 million for the same period in current year. Major components of hall operating
expenses are pachinko and pachislot machine expenses, staff cost for hall staff and rental expenses,
amounting to ¥3,374 million, ¥2,716 million and ¥1,480 million, respectively, for the six months ended 30
September 2018 (30 September 2017: ¥4,339 million, ¥2,588 million and ¥1,307 million, respectively).
The decline in hall operating expenses is mainly resulted from plunge in pachinko and pachislot machine
expenses netted with increase in utilities and maintenance expenses.

Administrative and other operating expenses
Administrative and other operating expenses increased by ¥187 million, or 10.3% from ¥1,824 million for the six
months ended 30 September 2017 to ¥2,011 million for the same period in 2018. The hike in expenses is due toincrease in staff cost and advertising expense, and extra costs were incurred for closure of a hall in late
September 2018.

Finance costs
Finance costs, net recorded a decrease of ¥9 million, or 3.9%, from ¥232 million for the six months ended 30
September 2017 to ¥223 million for the same period in 2018. The drop is resulted from the decrease in totalborrowings for the six months ended 30 September 2018 as compared to the same period in 2017.

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Management Discussion and Analysis
Profit/(loss) attributable to owners of the Company, basic earnings/(loss) per share and dividend
Profit attributable to owners of the Company of ¥878 million was recorded for the six months ended 30
September 2018, as compared to the loss attributable to owners of ¥221 million for the six months ended 30
September 2017. The turnaround from loss to profit was mainly attributable to additional revenue driven fromthe new pachinko hall and Dream Games business, together with the decline in machine expenses.
Basic earnings per share was ¥0.73 (basic loss per share for the six months ended 30 September 2017: ¥0.18).
The Board has declared an interim dividend of ¥0.08 (or HK$0.006) per share for the six months ended 30
September 2018 (30 September 2017: Nil). The interim dividend will be payable on 8 January 2019 to theshareholders of the Company (the “Shareholders”) whose names appear on the register of members of theCompany at close of business on 7 December 2018.

CAPITAL STRUCTURE
The Group principally meets its working capital and other liquidity requirements through a combination ofcapital contributions, including cash flow from operations and bank borrowings. The Group’s daily operation ismainly financed by operating cash flows, and relied on short- and long-term borrowings for financing working
capital, future expansion plans and unexpected needs. The Group’s treasury objective is mainly to ensure
there is sufficient cash flow to meet the payment of expenses, loans and to fund any capital expenditure andcommitment that the Group may have from time to time. The Group’s cash surpluses are placed in short-termand long-term fixed deposits to maintain liquidity. The Group has not experienced any difficulty in repaying its
borrowings.
The Group’s principal business activities are carried out in Japan, with income, expenditure, assets andliabilities mainly denominated in Japanese Yen, as such, the Group does not have any material foreignexchange exposure.

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Management Discussion and Analysis
The table below sets forth the information regarding the cash and cash equivalents, bank deposits, bankborrowings, obligations under finance leases, working capital, total equity and gearing ratio of the Group as at
30 September 2018 and 31 March 2018, and operating cash flows before movements in working capital of theGroup for the six months ended 30 September 2018 and 2017, respectively:

Cash and cash equivalents
Bank deposits

Bank loans
Syndicated loans
Obligations under finance leases

Working capital
Total equity
Gearing ratio

As at
30 September
2018¥ million

As at
31 March2018¥ million

17,491
123

15,59490

17,614

15,684

3,453
10,733
3,658

3,574
11,166
4,135

17,844

18,875

9,198
28,016
63.7%

8,548
27,136
69.6%

For the six months ended
30 September
2018
2017
¥ million¥ million
Operating cash flows before movements in working capital

2,955

1,246

Net current assets of the Group totalled ¥9,198 million as at 30 September 2018 (31 March 2018: ¥8,548 million),and current ratio was 1.93 as at 30 September 2018 (31 March 2018: 1.97). As at 30 September 2018, there were
cash and cash equivalents of ¥17,491 million (31 March 2018: ¥15,594 million), in which ¥16,292 million was
denominated in Japanese Yen, ¥799 million was denominated in United States dollar, ¥247 million was
denominated in Hong Kong dollar, ¥136 million was denominated in Vietnam Dong and ¥17 million in othercurrencies. The Group had total borrowings of ¥17,844 million as at 30 September 2018 (31 March 2018: ¥18,875
million). Current portion of borrowings and current portion of obligations under finance leases amounted to¥4,876 million as at 30 September 2018 (31 March 2018: ¥4,774 million).
The Group’s bank borrowings during the current period comprised bank loans and syndicated loans. As at 30
September 2018, the total bank borrowings amounted to ¥14,186 million (31 March 2018: ¥14,740 million), withaverage effective interest rates on bank borrowings ranged from 1.02% to 1.91% (31 March 2018: 0.8% to 1.1%)
per annum. Approximately 4.8% of bank borrowings as at 30 September 2018 were fixed rate borrowings.

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Management Discussion and Analysis
HEDGING OF FLOATING RATE BORROWINGS AND FOREIGN EXCHANGE
As at 30 September 2018, the Group had one floating to fixed interest rate swap contract with a bank in Japan(i.e. the Group pays fixed interest rates and receive interests at floating rate). This interest rate swap contract
was entered into as a measure to manage interest rate risk in relation to loans of the Group. As interest rates ofsome of the Group’s loans are on a floating rate basis, the floating to fixed interest rate swap contracts
enabled the Group to reduce the volatility in the amount of interest being paid. For the six months ended 30
September 2018, the gain on fair value for interest rate swap contracts amounted to ¥3 million.
The Group’s debts were primarily denominated in Japanese Yen. After the acquisition of Dream Games, theGroup maintains an appropriate level of external borrowings in Vietnam Dong for natural hedging of Vietnam
Dong attributed to projects in Vietnam. The Vietnam Dong exposure of the Group is mainly derived from thetranslation of non-current assets and liabilities of the Vietnam subsidiary with functional currency of Vietnam
Dong and the Vietnam Dong deposits held for future development costs. As at 30 September 2018, thetranslation of non-current assets and liabilities of subsidiaries with functional currency other than Japanese Yen
to Japanese Yen by using exchange rates at that day resulted in a gain of ¥56 million is recognised in equity.
Apart from this, the Group does not have any material foreign exchange exposure.

GEARING RATIOThe gearing ratio, defined as the aggregate of interest-bearing loans and obligations under finance leases,
divided by total equity, was 63.7% as at 30 September 2018 (31 March 2018: 69.6%). The drop of 5.9% ascompared with that of the year ended 31 March 2018 was mainly due to increase of total equity of ¥880
million, netted with decrease of total borrowings of ¥1,031 million.

CAPITAL EXPENDITURE
Capital expenditure mainly comprised of expenditure for (i) the purchase of property, plant and equipment
mainly used for construction of buildings, and (ii) the purchase of equipment and tools for the expansion andmaintenance of our pachinko and pachislot hall and amusement arcade operations. The table below showsa breakdown of the capital expenditure for the indicated periods:

Property, plant and equipment
Investment properties
Others12

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As at
30 September
2018¥ million

As at
31 March2018¥ million

426
15
1

1,915
3
1

442

1,919

Management Discussion and Analysis
CHARGES ON ASSETS
As at 30 September 2018 and 31 March 2018, the carrying values of charged assets were as below:

Property, plant and equipment
Investment properties
Deposits and other receivables

As at
30 September
2018¥ million

As at
31 March2018¥ million

9,209
659
581

8,340
662
582

10,4499,584

CONTINGENT LIABILITIESThe Group did not have any material contingent liabilities as at 30 September 2018 and 31 March 2018.

CAPITAL COMMITMENTS
Details of the Group’s capital commitments as at 30 September 2018 and 31 March 2018 are set out in Note 21
to the condensed consolidated interim financial information.

SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, AND
FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS
During the six months ended 30 September 2018, the Group did not conduct any significant investments,
material acquisitions or disposals. Save for those disclosed in this interim report, the Group had no planauthorised by the Board for other material investments or additions of capital assets as at the date of thisinterim report.

EMPLOYEES AND REMUNERATION POLICY
As at 30 September 2018, the Group had 1,453 employees. The remuneration policy of the Group (including
those for directors and employees) is determined by the Remuneration Committee under the Board as per the
performance, qualifications and competence of the employees. Details of the key management
remuneration of the Company are set forth in Note 22(b) to the condensed consolidated interim financial
information.

FINANCIAL KEY PERFORMANCE INDICATORS
Certain financial key performance indicators which complement and supplement the financial disclosures are
set out in “Management Discussion and Analysis” on pages 6 to 13 and the “Condensed Consolidated
Financial Statements” on pages 21 to 46 of this interim report.

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13

Corporate Governance and Other Information
CORPORATE GOVERNANCE
During the six month ended 30 September 2018, the Company has adopted and complied with all theapplicable principles and code provisions of the Corporate Governance Code and Corporate Governance
Report (the “CG Code”) contained in Appendix 14 to the Rules Governing the Listing of Securities on the Stock
Exchange (the “Listing Rules”), with the exception for code provision A.2.1, which requires the roles of chairman
and chief executive to be separated and should be performed by different individuals, and code provision
E.1.3, which requires that notice for an annual general meeting should be sent to the shareholders at least 20
clear business days before the meeting.

Code Provision A.2.1
Under code provision A.2.1 of the CG Code, the roles of chairman and chief executive should be separate
and should not be performed by the same individual. Our Chairman currently holds both positions. Since April
2010, our Chairman has been the key leadership figure of our Group who has been primarily involved in theformulation of business strategies and determination of the overall direction of our Group. He has also been
chiefly responsible for our Group’s operations as he directly supervises our Executive Officers (other thanhimself) and members of our senior management. Taking into account the continuation of the implementationof our business plans, the directors of the Company (the “Directors”) (including our Independent Nonexecutive Directors) consider our Chairman is the best candidate for both positions and the present
arrangements are beneficial to and in the interests of our Company and our Shareholders as a whole.

Code Provision E.1.3
Code provision E.1.3 stipulates that notice for an annual general meeting (the “AGM”) should be sent to its
shareholders by the issuer at least 20 clear business days before the meeting. The AGM of the Company for theyear ended 31 March 2018 was held on 28 June 2018 (“2018 AGM”), while the notice for the 2018 AGM wasdespatched on 7 June 2018. The above arrangement complied with the articles of incorporation of theCompany (the “Articles of Incorporation”) prepared pursuant to the Companies Act in respect of the minimum
notice period of 21 calendar days for AGM but the notice period for the 2018 AGM was less than 20 clear
business days before the 2018 AGM.
Under the Companies Act and the Articles of Incorporation, the Company is required to hold an AGM within
three months after the expiration of each financial year (i.e. on or before 30 June 2018 for the financial year
ended 31 March 2018).
The Companies Act also requires the notice for the AGM to be despatched together with the audited financial
statements under the Japanese Generally Accepted Accounting Principles, which must be approved by the
Board. On the other hand, the annual report must contain audited financial statements prepared under the
IFRS as required under the Listing Rules. As a result, more time was required to finalise the annual report of theCompany for the year ended 31 March 2018 which accompanied the 2018 AGM notice despatched to the
Shareholders.

DIRECTORS’ SECURITIES TRANSACTIONSThe Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out
in Appendix 10 to the Listing Rules (the “Model Code”) as its own code of conduct regarding securities
transactions by Directors. Having made specific enquiry with all Directors, the Directors confirmed that they
had complied with the required standard set out in the Model Code and the Company’s code of conduct
during the six months ended 30 September 2018.

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Corporate Governance and Other Information
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIESThe Company did not redeem any of its listed securities during the six months ended 30 September 2018.
Neither the Company nor any of its subsidiaries purchased or sold any of the Company’s listed securities during
the six months ended 30 September 2018.

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND/OR SHORT POSITIONS IN THE SHARES,UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY SPECIFIED UNDERTAKING
OF THE COMPANY OR ANY OTHER ASSOCIATED CORPORATIONAs at 30 September 2018, the interests and short positions of the Directors and the chief executives of theCompany and their associates in the shares of the Company (the “Shares”), underlying Shares and debenturesof the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures
Ordinance (the “SFO”)) which have been notified to the Company and the Stock Exchange pursuant toDivisions 7 and 8 of Part XV of the SFO, or which were recorded in the register as required to be kept pursuant
to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to theModel Code set out in Appendix 10 to the Listing Rules were as follows:
Approximate %of shareholding

Capacity/Nature of interest

Total

Hisanori TANIGUCHI (谷口久徳)(also known as Mr. JEONG Seonggi)

Beneficial owner, interest ofcontrolled corporation(1)225,560,460
common Shares

18.86%

Hiroshi BANNAI (坂內弘)Beneficial Owner

216,000
common Shares

0.02%

Notes:(1)

The interests held by Hisanori TANIGUCHI (谷口久徳) (also known as Mr. JEONG Seonggi) shown above include the 214,060,460 Shares
held in his own name for his own benefit and the 11,500,000 Shares held by Densho Limited* (有限会社伝承), a company collectively
wholly-owned by his children, the voting rights of which are exercisable by him.

(2)

All interests stated are long positions.

(3)

There were 1,195,850,460 Shares in issue as at 30 September 2018.

Save as disclosed above, as at 30 September 2018, none of the Directors and chief executive of the Company
had or was deemed to have any interest or short position in the Shares, underlying Shares or debentures of theCompany or its associated corporations (within the meaning of Part XV of the SFO) that was required to be
notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (includinginterests and short positions which they were taken or deemed to have taken under such provisions of theSFO), or required to be recorded in the register to be kept by the Company under Section 352 of the SFO, or asotherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

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Corporate Governance and Other Information
SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND/OR SHORT POSITIONS IN THE SHARES AND
UNDERLYING SHARES OF THE COMPANY
As at 30 September 2018, to the best knowledge of the Directors, the following persons (not being a Director or
chief executive of the Company) had interests or short positions in the Shares or underlying Shares which fall tobe disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in theregister required to be kept by the Company pursuant to section 336 of the SFO:
Approximate %of shareholding

Capacity/Nature of interest

Total

Tatsuo TANIGUCHI (谷口龍雄)

Beneficial owner, interest ofcontrolled corporation;custodian(1)223,790,000
common shares

18.71%

Masataka TANIGUCHI (谷口晶貴)

Beneficial owner, interest ofcontrolled corporation;custodian(2)151,570,000
common shares

12.67%

Yoshihiro TEI (鄭義弘)*(also known as JEONG Jungwung)

Beneficial owner, interest ofcontrolled corporation;custodian(3)98,440,000
common shares

8.23%

Sumitomo Mitsui Financial Group, Inc.*(株式会社三井住友フィナンシャルグループ)

Interest of controlled
corporation(4)229,137,500
common shares

19.16%

Sumitomo Mitsui Banking Corporation*(株式会社三井住友銀行)

Interest of controlled
corporation(4)229,137,500
common shares

19.16%SMBC Trust Bank Ltd.*(株式会社SMBC信託銀行)

Trustee(1), (2), (3), (4)229,137,500
common shares

19.16%CHOI Jung Ae (崔正愛)Interest of a spouse(5)224,480,460
common shares

18.77%

Hideko TANIGUCHI (谷口秀子)

Interest of a spouse(6)223,790,000
common shares

18.71%

Eiko TANIGUCHI (谷口栄子)

Interest of a spouse(7)151,570,000
common shares

12.67%JEONG Kyeonghae (鄭慶惠)Interest of a spouse(8)98,440,000
common shares

8.23%

Okada Holdings Limited

Beneficial owner(9)80,500,000
common shares

6.73%

16

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Corporate Governance and Other Information

Capacity/Nature of interest

Total

Approximate %of shareholding

Universal Entertainment Corporation

Beneficial owner(9)80,500,000
common shares

6.73%

Tiger Resort Asia Limited

Beneficial owner(9)80,500,000
common shares

6.73%

Notes:(1)

The interests held by Mr. Tatsuo TANIGUCHI (谷口龍雄) shown above include: (i) 161,690,000 Shares held in his own name for his own
benefit, (ii)19,320,000 Shares held by Jukki Limited* (有限会社十起), a company collectively wholly-owned by his children, the voting rightsof which are exercisable by Mr. Tatsuo TANIGUCHI (谷口龍雄); (iii) 1,380,000 Shares held by KAWASHIMA Co., Ltd.* (株式会社KAWASHIMA),
a company collectively wholly-owned by our Chairman, Mr. Tatsuo TANIGUCHI (谷口龍雄) and Mr. Masataka TANIGUCHI (谷口晶貴), thevoting rights of which are exercisable by Mr. Tatsuo TANIGUCHI (谷口龍雄); and (iv) 41,400,000 Shares held by the TT Family Trust for the
benefit of his children, namely Ms. Yoshika TEI (鄭淑佳)* (also known as Ms. JEONG Sukka), Mr. Kousei TEI (鄭光誠)* (also known as Mr.
CHONG Gangsong) and Mr. Kiyokazu TANIGUCHI (谷口清和). SMBC Trust Bank Ltd.* (株式会社SMBC信託銀行) is the trustee and assignee*(受託者) of the TT Family Trust and Mr. Tatsuo TANIGUCHI (谷口龍雄) is entitled to exercise the voting rights attached to the Shares under
the TT Family Trust. The interests under the TT Family Trust are equally distributed among the three beneficiaries under the TT Family Trust.

(2)

The interests held by Mr. Masataka TANIGUCHI (谷口晶貴) shown above include: (i) 11,442,500 Shares held in his own name for his own
benefit; (ii) 5,750,000 Shares held by Hokuyo Kanko Limited* (有限会社北陽觀光), a company collectively wholly-owned by his children,
the voting rights of which are exercisable by Mr. Masataka TANIGUCHI (谷口晶貴); and (iii) 134,377,500 Shares held by the MT Family Trustfor the benefit of his children, namely Mr. Tatsunari TANIGUCHI (谷口辰成)* (also known as Mr. CHONG Jinsong), Mr. Takanari TANIGUCHI(谷口喆成)* (also known as Mr. JEONG Cheolseong) and Mr. Toshinari TANIGUCHI (谷口才成)* (also known as Mr. CHUNG Jaeseong).
SMBC Trust Bank Ltd.* (株式会社SMBC信託銀行) is the trustee and assignee* (受託者) of the MT Family Trust and Mr. Masataka TANIGUCHI(谷口晶貴) is entitled to exercise the voting rights attached to the Shares under the MT Family Trust. The interests under the MT Family Trustare equally distributed among the three beneficiaries under the MT Family Trust.

(3)

The interests held by Mr. Yoshihiro TEI (鄭義弘)* (also known as JEONG Jungwung) shown above include: (i) 33,580,000 Shares held in his
own name for his own benefit; (ii) 11,500,000 Shares held by Daiki Limited* (有限会社大喜), a company collectively wholly-owned by hischildren, the voting rights of which are exercisable by Mr. Yoshihiro TEI (鄭義弘)* (also known as JEONG Jungwung); and (iii) 53,360,000
Shares held by the YT Family Trust for the benefit of his children, namely Mr. Akinori TEI (鄭敬憲)* (also known as JEONG Kyeongheon) andMr. Masahide TEI (鄭將英)* (also known as JEONG Jangyeong). SMBC Trust Bank Ltd.* (株式会社SMBC信託銀行) is the trustee andassignee* (受託者) of the YT Family Trust and Mr. Yoshihiro TEI (鄭義弘)* (also known as JEONG Jungwung) is entitled to exercise the voting
rights attached to the Shares under the YT Family Trust. The interests under the YT Family Trust are equally distributed among the two
beneficiaries under the YT Family Trust.

(4)

Sumitomo Mitsui Financial Group, Inc.* (株式会社三井住友フィナンシャルグループ) holds Sumitomo Mitsui Banking Corporation* (株式会社
三井住友銀行), which holds SMBC Trust Bank Ltd.* (株式会社SMBC信託銀行). Accordingly, each of Sumitomo Mitsui Banking Corporation*(株式会社三井住友銀行) and Sumitomo Mitsui Financial Group, Inc.* (株式会社三井住友フィナンシャルグループ) is deemed to be interested
in such 229,137,500 Shares held by SMBC Trust Bank Ltd.* (株式会社SMBC信託銀行).

(5)

Ms. CHOI Jung Ae (崔正愛) is the spouse of our Chairman and is therefore deemed to be interested in the Shares that our Chairman isinterested in under the SFO.

(6)

Mrs. Hideko TANIGUCHI (谷口秀子) is the spouse of Mr. Tatsuo TANIGUCHI (谷口龍雄) and is therefore deemed to be interested in the
Shares that Mr. Tatsuo TANIGUCHI (谷口龍雄) is interested in under the SFO.

(7)

Mrs. Eiko TANIGUCHI (谷口栄子) is the spouse of Mr. Masataka TANIGUCHI (谷口晶貴) and is therefore deemed to be interested in the
Shares that Mr. Masataka TANIGUCHI (谷口晶貴) is interested in under the SFO.

(8)

Ms. JEONG Kyeonghae (鄭慶惠) is the spouse of Mr. Yoshihiro TEI (鄭義弘)* (also known as JEONG Jungwung) and is therefore deemed
to be interested in the Shares that Mr. Yoshihiro TEI (鄭義弘)* (also known as JEONG Jungwung) is interested in under the SFO.

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/201917

Corporate Governance and Other Information(9)

Okada Holdings Limited indirectly holds 74.21% interest in Universal Entertainment Corporation, which directly holds Tiger Resort Asia
Limited. Accordingly, each of the Universal Entertainment Corporation and Okada Holdings Limited is deemed to be interested in such
80,500,000 Shares held by Tiger Resort Asia Limited.

(10)

All interests stated are long positions.

(11)

There were 1,195,850,460 Shares in issue as at 30 September 2018.

Save as disclosed above, and as at 30 September 2018, the Directors were not aware of any persons (whowere not Directors or chief executive of the Company) who had an interest or short position in the Shares orunderlying Shares which would fall to be disclosed under Divisions 2 and 3 of Part XV of the SFO, or which
would be required, pursuant to Section 336 of the SFO, to be entered in the register referred to therein.

CHANGE TO INFORMATION IN RESPECT OF DIRECTORS
Pursuant to Rule 13.51B(1) of the Listing Rules, the change in information of the Directors since the date of theCompany’s Annual Report 2018 is set out below:•

Mr. Norio NAKAYAMA resigned as the Independent Non-executive Director and a member of each of
the nomination committee of the Company and remuneration committee of the Company with effectfrom 31 October 2018.

Save as disclosed above, there is no change in information of the Directors since the date of the Company’s
Annual Report 2018 which required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.

INTERIM DIVIDENDThe Board has declared an interim dividend of ¥0.08 (or HK$0.006) per share for the six months ended 30
September 2018 (30 September 2017: Nil). The interim dividend will be payable on 8 January 2019 to the
Shareholders whose names appear on the register of members of the Company at close of business on 7
December 2018.
The exchange rate for the conversion of Japanese Yen to Hong Kong dollar for the dividend distributed to the
Shareholders in the currency other than Japanese Yen is based on the average currency rates prevailing five
trading days immediately prior to 22 November 2018 (being 15 to 16 November 2018 and 19 to 21 November2018).

REVIEW OF INTERIM RESULTS
The Audit Committee has reviewed the unaudited condensed consolidated interim financial information andthe Interim Report for the six months ended 30 September 2018 and discussed the financial related matterswith the management. The unaudited condensed consolidated interim financial information of the Group forthe six months ended 30 September 2018 have been reviewed by the Company’s auditor,
PricewaterhouseCoopers, in accordance with International Standard on Review Engagements 2410 “Review
of Interim Financial Information Performed by the Independent Auditor of the Entity”.

*

18

For identification purpose only

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Report on Review ofInterim Financial Information

TO THE BOARD OF DIRECTORS OF 株式会社二ラク•ジー•シー•ホールディングス NIRAKU GC HOLDINGS, INC.*(incorporated in Japan with limited liability)

INTRODUCTION
We have reviewed the interim financial information set out on pages 21 to 46, which comprises the interim
condensed consolidated statement of financial position of 株式会社二ラク•ジー•シー•ホールディングス NIRAKUGC HOLDINGS, INC*. (the “Company”) and its subsidiaries (together, the “Group”) as at 30 September 2018
and the interim condensed consolidated statement of comprehensive income, the interim condensed
consolidated statement of changes in equity and the interim condensed consolidated statement of cash
flows for the six months then ended, and a summary of significant accounting policies and other explanatory
notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require thepreparation of a report on interim financial information to be in compliance with the relevant provisions thereof
and International Accounting Standard 34 “Interim Financial Reporting”. The directors of the Company are
responsible for the preparation and presentation of this interim financial information in accordance with
International Accounting Standard 34 “Interim Financial Reporting”. Our responsibility is to express a conclusionon this interim financial information based on our review and to report our conclusion solely to you, as a body,in accordance with our agreed terms of engagement and for no other purpose. We do not assume
responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review Engagements 2410, “Review
of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim
financial information consists of making inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on Auditing and consequently does not enable
us to obtain assurance that we would become aware of all significant matters that might be identified in anaudit. Accordingly, we do not express an audit opinion.

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

19

Report on Review ofInterim Financial Information
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the interim financial
information of the Group is not prepared, in all material respects, in accordance with International AccountingStandard 34 “Interim Financial Reporting”.

PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 22 November 2018
* For identification purpose only

20

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Interim Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2018

Note

Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)

Revenue

6

14,438

13,108Other income
Other gains/(losses), net
Hall operating expenses
Administrative and other operating expenses

7
7
8
8

319
36
(11,166)(2,011)323(1)(11,478)(1,824)

Operating profit

1,616

128

Finance income
Finance costs

24
(247)

25
(257)

Finance costs, net

9

(223)

(232)

Profit/(loss) before income tax
Income tax expense

10

1,393
(538)

(104)
(117)

Profit/(loss) for the period

855

(221)

Profit/(loss) for the period attributable to:
Owners of the Company
Non-controlling interest

878
(23)

(221)
–

855

(221)

0.73

(0.18)

(5)
173

(88)
–

Total comprehensive income/(loss) for the period

1,023

(309)

Total comprehensive income/(loss) attributable to:
Owner of the Company
Non-controlling interest

1,049
(26)

(309)
–

1,023

(309)

Earnings/(loss) per share for profit/(loss) attributable toowners of the Company— Basic and diluted (expressed in ¥ per share)

11

Other comprehensive income/(loss)
Items that have been reclassified or may be subsequently
reclassified to profit or loss
Change in value of financial assets through othercomprehensive income
Currency translation differences

The notes on pages 27 to 46 are an integral part of this condensed consolidated interim financial information.

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/201921

Interim Condensed Consolidated Statement of Financial Position
As at 30 September 2018

Note

ASSETS
Non-current assets
Property, plant and equipment
Investment properties
Intangible assets
Prepayments, deposits and other receivables
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Deferred income tax assets
Long-term bank deposits

Current assets
Inventories
Trade receivables
Prepayments, deposits and other receivables
Current income tax recoverable
Bank deposits with maturity over 3 months
Cash and cash equivalents

Total assets

13
13
13

14

30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

25,401
659
1,662
3,617
100
945
1,558
–

26,207
662
1,571
3,751
52
953
1,565
47

33,94234,808

279
60
1,127
–
123
17,491

57
57
1,312
300
43
15,59419,08017,36353,022

52,171

The notes on pages 27 to 46 are an integral part of this condensed consolidated interim financial information.

22

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Interim Condensed Consolidated Statement of Financial Position (CONTINUED)
As at 30 September 2018

30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

3,000
25,082

3,000
24,176

Non-controlling interest

28,082(66)

27,176(40)

Total equity

28,01627,136

10,080
2,888
2,150
6

10,854
3,247
2,111
8

15,124

16,220

308
4,106
770
4,352
1
345

247
3,886
888
3,793
1
–

9,882

8,815

Total liabilities

25,00625,035

Total equity and liabilities

53,022

52,171Note

EQUITY
Equity attributable to shareholders of the Company
Share capital
Reserves

LIABILITIES
Non-current liabilities
Borrowings
Obligations under finance leases
Provisions and other payables
Derivative financial instruments

Current liabilities
Trade payables
Borrowings
Obligations under finance leases
Accruals, provisions and other payables
Derivative financial instruments
Current income tax liabilities

15
16

18
19

17
18
19

The notes on pages 27 to 46 are an integral part of this condensed consolidated interim financial information.

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/201923

Interim Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2018

Attributable to shareholders of the Company
Investment
Share

Balance at 1 April 2017

CapitalCapitalLegalrevaluation

surplusreserve

reserve

reserve

Retained

Exchange

Noncontrolling

capital (Note 16(a)) (Note 16(b)) (Note 16(c)) (Note 16(d))

earnings

reserves

Sub-totalinterest

Total¥ million¥ million¥ million¥ million¥ million¥ million¥ million¥ million¥ million¥ million

3,000

13,954(16,028)107

272

26,194–27,499–27,499

–

–

–

–

–

(221)

–

(221)

–

(221)

–

–

–

–

(88)

–

–

(88)

–

(88)

–

–

–

–

(88)

(221)

–

(309)

–

(309)

Comprehensive income
Loss for the period
Other comprehensive loss
Financial assets at fair value
through other comprehensive
income, net of tax
Total comprehensive loss
for the period
Issuance of shares of a subsidiary toa non-controlling shareholder

–

–

–

–

–

–

–

–

5

5

Final dividend relating to 2017

–

–

–

–

–

(36)

–

(36)

–

(36)

Total transaction with owners

–

–

–

–

–

(36)

–

(36)

5

(31)

3,000

13,954(16,028)

107

184

25,937–

27,154

5

27,1593,000

13,954(16,028)107

93

26,143(93)

27,176(40)

27,136

–

–

–

–

–

878

–

878

(23)

855

–

–

–

–

(5)

–

–

(5)

–

(5)

–

–

–

–

–

–

176

176

(3)

173

–

–

–

–

(5)

878

176

1,049

(26)

1,023

Final dividend relating to 2018

–

–

–

–

–

(143)

–

(143)

–

(143)

Total transactions with owners

–

–

–

–

–

(143)

–

(143)

–

(143)

3,000

13,954(16,028)107

88

26,87883

28,082(66)

28,016

Balances at 30 September 2017
(Unaudited)
Balance at 1 April 2018
Comprehensive income
Profit for the period
Other comprehensive income/(loss)
Financial assets at fair value
through other comprehensive
income, net of tax
Currency translation difference
Total comprehensive income
for the period

Balance at 30 September 2018
(Unaudited)

The notes on pages 27 to 46 are an integral part of this condensed consolidated interim financial information.

24

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2018

Unaudited
Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)
Cash flows from operating activities
Cash generated from operations
Interest paid
Income tax refunded/(paid)

3,829
(194)
111

2,023
(201)
(146)

Net cash generated from operating activities

3,746

1,676

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment properties
Purchase of intangible assets
Purchase of financial assets at fair value
Proceeds from disposal of financial assets at fair value
Proceeds from bank deposits with maturity over 3 months
Placement of bank deposits with maturity over 3 months
Proceed from long-term bank deposits
Placement of long-term bank deposits
Interest received
Dividend received

(498)
(14)
(1)
(100)
50
122
(202)
47
–
2
27

(768)
(3)
–
–
50
145
(125)
–
(6)
1
30

Net cash used in investing activities

(567)

(676)

Cash flows from financing activities
Repayment of obligations under finance leases
Proceeds from bank borrowings
Repayment of bank borrowings
Dividends paid

(546)
4,163
(4,765)
(143)

(646)
3,378
(2,948)(36)

Net cash used in financing activities(1,291)(252)

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Exchange gain on cash and cash equivalents

1,888
15,5949748
13,404–

Cash and cash equivalents at end of the period

17,491

14,152NIRAKU GC HOLDINGS, INC.

Interim Report 2018/201925

Interim Condensed Consolidated Statement of Cash Flows (CONTINUED)
For the six months ended 30 September 2018

Non-cash transactions:(a)

For the six months ended 30 September 2018, property, plant and equipment of ¥17 million (For the six
months ended 30 September 2017: ¥25 million) were purchased under finance leases.

(b)

For the six months ended 30 September 2018, certain obligations under finance leases amounting to ¥56
million (For the six months ended 30 September 2017: ¥55 million) were settled through reduction of rental
prepayments.

The notes on pages 27 to 46 are an integral part of this condensed consolidated interim financial information.

26

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Notes to the Condensed Consolidated Interim Financial Information
1

GENERAL INFORMATION
株式会社二ラク•ジー•シー•ホールディングスNIRAKU GC HOLDINGS, INC.* was incorporated in Japan
under the Japan Companies Act with limited liability on 10 January 2013. The address of its registeredoffice is 1-39 Hohaccho 1-chome, Koriyama-shi, Fukushima, Japan.
The Company is an investment holding company. The Company and its subsidiaries comprising theGroup (together, the “Group”) are principally engaged in pachinko and pachislot hall operations, hotel
and restaurant operations in Japan, and entertainment and amusement arcade operations in Asia
countries.
The Company has its primary listing on The Stock Exchange of Hong Kong Limited.
This condensed consolidated interim financial information is presented in millions of Japanese Yen (“¥”),unless otherwise stated.

2

BASIS OF PREPARATIONThe condensed consolidated interim financial information for the six months ended 30 September 2018
have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial
Reporting” issued by the International Accounting Standards Board (“IASB”). The condensed
consolidated interim financial information should be read in conjunction with the annual financial
statements for the year ended 31 March 2018, which have been prepared in accordance with
International Financial Reporting Standards (“IFRSs”).

3

ACCOUNTING POLICIESExcept as described below, the accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 March 2018, as described in those annual financial
statements.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable toexpected total annual earnings.

(i)

New standards and amendments to standards adopted by the GroupThe following new standards and amendments have been issued and effective for annual periods
beginning on 1 April 2018:
IFRS 2 (Amendment)
IFRS 15IFRS 15 (Amendment)
IFRIC 22
IAS 40 (Amendment)
Annual improvement Project IFRS
1 and IAS 28 (Amendment)

Classification and measurement of share-based
payment transactions
Revenue from contracts with customers
Clarification to IFRS 15
Foreign currency transactions and advance consideration
Transfers of investment property
Annual improvement Project 2014-2016 Cycle

The impact of the adoption of IFRS 15 is disclosed in Note 3 (iii) below. The other new or amended
standards did not have any material impact on the Group’s accounting policies.

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/201927

Notes to the Condensed Consolidated Interim Financial Information
3

ACCOUNTING POLICIES (CONTINUED)(ii)

New standards and amendments to existing standards issued but not yet adopted by theGroup
IFRS 16 “Leases” was issued in January 2016. It will result in almost all leases being recognised on thebalance sheet, as the distinction between operating and finance leases is removed. Under the newstandard, an asset (the right to use the leased item) and a financial liability to pay rentals arerecognised. The only exceptions are short-term and low-value leases.
The accounting for lessors will not significantly change. The standard will affect primarily theaccounting for the Group’s operating leases. As at the reporting date, the Group has noncancellable operating lease commitments of ¥10,247,000,000 (Note 21(b)). However, the Group has
not yet determined to what extent these commitments will result in the recognition of an asset anda liability for future payments and how this will affect the Group’s profit and classification of cash
flows. Some of the commitments may be covered by the exception for short-term and low-value
leases and some commitments may relate to arrangements that will not qualify as leases under
IFRS 16.
The standard is mandatory for first interim periods within annual reporting periods beginning on orafter 1 January 2019. The Group does not intend to adopt the standard before its effective date.

(iii) Adoption of IFRS 15, “Revenue from contracts with customers”
The Group has adopted IFRS 15 from 1 April 2018 which resulted in changes in accounting policies
and adjustments to the amounts recognised in the condensed consolidated interim financial
information. In accordance with the transitional provisions in IFRS 15, the Group has adopted themodified retrospective approach and comparative figures have not been restated.
The accounting policies were changed to comply with IFRS 15. IFRS 15 replaces the provision of IAS
18 “Revenue” and IAS 11 “Construction Contracts” that relate to the recognition, classification andmeasurement of revenue and costs.
The effect of the adoption of IFRS 15 is related to presentation of contract liabilities within the“Accruals, provisions and other payables” recognised in the consolidated statement of financial
position as at 1 April 2018 to be consistent with the terminology used under IFRS 15:•

Contract liabilities recognised for unutilised balls and tokens was previously presented within“Accruals, provisions and other payables”.

•

Contract liabilities recognised for vending machine rental receipt in advance was previously
presented within “Accruals, provisions and other payables”.

The adoption of IFRS 15 has no material impact to the Group’s net assets as at 31 March 2018 andthe condensed consolidated results, earnings per share (basic and diluted) and interim condensed
consolidated statement of cash flows for the period ended 30 September 2018.

28

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Notes to the Condensed Consolidated Interim Financial Information
4

ESTIMATESThe preparation of interim financial information requires management to make judgements, estimatesand assumptions that affect the application of accounting policies and the reported amounts of assets
and liabilities, income and expense. Actual results may differ from these estimates.
In preparing this condensed consolidated interim financial information, the significant judgements madeby management in applying the Group’s accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated financial statements for the year
ended 31 March 2018.

5

FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
5.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchangerisk, cash flow and fair value interest rate risk and price risk), credit risk and liquidity risk.
The condensed consolidated interim financial information do not include all financial risk
management information and disclosures required in the annual financial statements, and should
be read in conjunction with the Group’s annual financial statements as at 31 March 2018.
There have been no changes in the risk management policies since year end.

5.2 Liquidity risk
Compared to year end, there was no material change in the contractual undiscounted cash flows
for financial liabilities.

5.3 Fair value estimation
The table below analyses the Group’s financial instruments carried at fair value by level of the inputs
to valuation techniques used to measure fair value. Such inputs are categorised into three levels
within a fair value hierarchy as follows:•

Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

•

Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

•

Inputs for the asset or liability that are not based on observable market data (that is,unobservable inputs) (level 3).

There were no transfers between levels 1, 2 and 3 during the period.

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/201929

Notes to the Condensed Consolidated Interim Financial Information
5

FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)
5.3 Fair value estimation (Continued)
There were no transfers between levels 1, 2 and 3 during the period.
Level 1¥ million

Level 2¥ million

Level 3¥ million

Total¥ million

–

100

–

100

815
–

–
–

–
130

815
130

815

100

130

1,045

Liabilities
Derivative financial liabilities— Interest rate swaps

–

7

–

7

As at 31 March 2018 (Audited)
AssetsFinancial assets at fair value through profit
or loss— Unlisted securities

–

52

–

52

Financial assets at fair value through othercomprehensive income— Listed securities— Unlisted securities

823
–

–
–

–
130

823
130

823

52

130

1,005

–

9

–

9

As at 30 September 2018 (Unaudited)
AssetsFinancial assets at fair value throughprofit or loss
— Unlisted securities
Financial assets at fair value through othercomprehensive income— Listed securities— Unlisted securities

Liability
Derivative financial liabilities— Interest rate swaps

30

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Notes to the Condensed Consolidated Interim Financial Information
5

FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)
5.3 Fair value estimation (Continued)(i)Financial instruments in level 1
The fair value of financial instruments traded in active markets is based on quoted market
prices at the statement of financial position date. A market is regarded as active if quoted
prices are readily and regularly available from an exchange, dealer, broker, industry group,
pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm’s length basis. The quoted market price used forfinancial assets held by the Group is the current bid price. These instruments are included inlevel 1. Instruments included in level 1 represent Tokyo Stock Exchange and The Stock
Exchange of Hong Kong equity investments classified as fair value through othercomprehensive income which were not held for trading purpose.

(ii)

Financial instruments in level 2
The fair value of financial instruments that are not traded in an active market is determined byusing valuation techniques. These valuation techniques maximise the use of observable market
data where it is available and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is includedin level 2. As at 30 September 2018, instruments included in level 2 comprise trust funds andinterest rate swaps issued by a financial institution in Japan and which were classified as
financial assets at fair value through profit or loss.

(iii)

Financial instruments in level 3
As at 30 September 2018, the Group valued its investment in the unlisted private company’s
equity shares based on its net asset value as the Group has determined that the reported net
asset value represents fair value at the end of the reporting period.
There were no transfers between levels 1,2 and 3 during the period ended 30 September 2018.

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/201931Notes to the Condensed Consolidated Interim Financial Information
6

REVENUE AND SEGMENT INFORMATION(a) Revenue
Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)
Revenue
Gross pay-ins
Less: gross pay-outs

71,189(57,972)

70,236(57,560)

Revenue from pachinko and pachislot hall business
Revenue from amusement arcades
Vending machine income
Revenue from hotel operation
Revenue from restaurant operations

13,217
768
258
77
118

12,676–272
83
77

14,438

13,108(b) Segment information
Management has determined the operating segments based on the reports reviewed by the chief
operating decision maker that are used for making strategic decisions. The chief operating decisionmaker is identified as the executive directors of the Company. The executive directors consider thebusiness from a service perspective and assess the performance of the operating segments basedon a measure of adjusted profit before income tax before unallocated corporate expenses for the
purposes of allocating resources and assessing performance. These reports are prepared on thesame basis as this condensed consolidated interim financial information.
Management has identified three reportable segments based on the types of services, namely (i)pachinko and pachislot hall operations, (ii) amusement arcade operations and (iii) others,
representing hotel and restaurant operations.
Segment assets consist primarily of property, plant and equipment, investment properties,
inventories, trade receivables, prepayments, deposits and other receivables, bank deposits withmaturity over 3 months and cash and cash equivalents. They exclude deferred income tax assets
and assets used for corporate functions including financial assets at fair value through profit or loss
and financial assets at fair value through other comprehensive income.
Capital expenditure comprises additions to property, plant and equipment, investment properties
and intangible assets. Unallocated corporate expenses and income tax expenses are not included
in segment results.

32

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Notes to the Condensed Consolidated Interim Financial Information
6

REVENUE AND SEGMENT INFORMATION (CONTINUED)(b) Segment information (Continued)
The segment information provided to the executive directors for the six months ended 30 September
2018 and 2017 are as follows:
Six months ended 30 September 2018
Pachinko andAmusementpachislot hallarcadeoperations
operations
Others
Total
Japan Southeast Asia
Japan
¥ million¥ million¥ million¥ million(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Segment revenue from externalcustomers over time
Segment results
Corporate expenses

13,475768

195

14,438

1,586

79

(49)

1,616
(223)
1,393
(538)

Profit before income tax
Income tax expense
Profit for the period
Other segment items
Depreciation and amortisation
expensesFinance income
Finance costs
Capital expenditures855(1,139)
22
(243)
304

NIRAKU GC HOLDINGS, INC.

(126)
2
(4)
62

(26)
–
–
76

Interim Report 2018/2019(1,291)
24
(247)
442

33

Notes to the Condensed Consolidated Interim Financial Information
6

REVENUE AND SEGMENT INFORMATION (CONTINUED)(b) Segment information (Continued)
Six months ended 30 September 2017
Pachinko andAmusementpachislot hallarcadeoperations
operations
Others
Total
Japan Southeast Asia
Japan
¥ million¥ million¥ million¥ million(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Segment revenue from externalcustomers over time
Segment results
Corporate expenses–

160

13,108

242

–

(62)

180
(284)

Loss before income tax
Income tax expense

(104)
(117)

Loss for the period(221)

Other segment items
Depreciation and amortisation
expensesFinance income
Finance costs
Capital expenditures34

12,948NIRAKU GC HOLDINGS, INC.

(1,124)
25
(257)
693

Interim Report 2018/2019

–
–
–
–

(19)
–
–
74

(1,143)
25
(257)
767

Notes to the Condensed Consolidated Interim Financial Information
6

REVENUE AND SEGMENT INFORMATION (CONTINUED)(b) Segment information (Continued)
The segment assets as at 30 September 2018 and 31 March 2018 are as follows:
Pachinko andpachislot halloperations

As at 30 September 2018
Segment assets (Unaudited)
Unallocated assets
Deferred income tax assets

Others

Total

Japan
¥ million

Amusement
arcadeoperations
SoutheastAsia¥ millionJapan¥ million¥ million

42,666

1,061

1,175

44,902
6,562
1,558

Total assets
As at 31 March 2018
Segment assets (Audited)
Unallocated assets
Deferred income tax assets

53,022

42,247980

1,108

44,335
6,271
1,565

Total assets

52,171

The total non-current assets other than financial instruments and deferred tax assets, analysed bylocation of the assets, is as follows:

Japan, country of domicile
Southeast Asia

As at
30 September
2018¥ million(Unaudited)

As at
31 March2018¥ million(Audited)

30,723616

31,609629

31,33932,238No single external customer contributed more than 10% revenue to the Group’s revenue for the six
months ended 30 September 2018 and 2017.

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

35

Notes to the Condensed Consolidated Interim Financial Information
7

OTHER INCOME AND OTHER GAINS/(LOSSES), NET
Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)
Other income
Rental income
Income from expired IC and membership cards
Dividend income
Income from scrap sales of used pachinko and pachislot machines
Others

82
15
27
179
16

74
16
30
191
12

319

323

Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)
Other gains/(losses), net
Loss on disposal of financial assets at fair value through profit or loss
Gain on fair value for interest rate swaps
Loss on disposal of property, plant and equipment
Loss on disposal of investment properties
Net exchange gain

36

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

(2)
3
(9)
(7)
51

(2)
1
(1)
–
1

36

(1)

Notes to the Condensed Consolidated Interim Financial Information
8

OPERATING PROFIT
Operating profit is stated after charging the following:
Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)
Employee benefits expenses— Hall operations— Administrative and others
Operating lease rental expense in respect of land and buildings
Depreciation of property, plant and equipment
Depreciation of investment properties
Amortisation of intangible assets
Pachinko and pachislot machines expenses (Note)

2,716
823
1,523
1,248
10
33
3,374

2,588
783
1,348
1,117
10
16
4,339

Note: Pachinko and pachislot machines are expensed off in the condensed consolidated statement of comprehensive income upon
installation. The expected useful lives of these machines are less than one year.

9

FINANCE COSTS, NET
Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)
Finance income
Bank interest income
Other interest income

Finance costs
Bank borrowings
Obligations under finance leases
Provision for unwinding discount

2
22

1
24

24

25

(96)
(98)
(53)

(81)
(120)
(56)

(247)

(257)

(223)

(232)

•

Finance costs, net

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

37

Notes to the Condensed Consolidated Interim Financial Information
10 INCOME TAX EXPENSE
Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)
Current tax— Japan— Other Asian countries

507
27

151
–

Deferred income tax

534
4

151
(34)

538

117

Taxation has been provided at the appropriate rates prevailing in the countries in which the Group
operates. The Group is subject to national corporate income tax, inhabitant tax and enterprise tax inJapan, which, in aggregate, resulted in effective statutory income tax rates of approximately 30.2% (30September 2017: same) for the period ended 30 September 2018. Taxation on Asian countries in which
the Group operates. These rates ranges from 17.0% to 20.0% (30 September 2017: N/A).
No provision for Hong Kong profits tax has been made for the six months ended 30 September 2018 and2017 as the Group did not generate any assessable profits arising in Hong Kong during both periods.

11 EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to shareholders of theCompany by the weighted average number of ordinary shares in issue during the six months ended 30
September 2018 and 2017.
Six months ended
30 September
2018
2017
(Unaudited)(Unaudited)
Profit/(loss) attributable to shareholdersof the Company (¥ million)
Weighted average number of shares for the purposeof calculating basic earnings per share (thousands)
Basic and diluted earnings/(loss) per share (¥)

878

(221)

1,195,850

1,195,850

0.73(0.18)

Diluted earnings/(loss) per share is the same as basic earnings/(loss) per share as there was no potential
dilutive shares during the six months ended 30 September 2018 and 2017.

38

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

Notes to the Condensed Consolidated Interim Financial Information
12 DIVIDENDS
During the six months ended 30 September 2018, the Company paid dividend of ¥143 million (¥0.12 perordinary share) to their shareholders in respect of the year ended 31 March 2018.
The Board had declared of an interim dividend of ¥0.08 per ordinary share totalling ¥96 million in respectof the six months ended 30 September 2018 (30 September 2017: Nil). These condensed consolidated
interim financial information do not reflect this dividend payable.

13 PROPERTY, PLANT AND EQUIPMENT, INVESTMENT PROPERTIES AND INTANGIBLE ASSETS
During the six months ended 30 September 2018, the Group incurred expenditures of approximately ¥426
million, ¥15 million and ¥1 million for property, plant and equipment, investment properties and intangible
assets, respectively (Six months ended 30 September 2017: ¥764 million and ¥3 million for property, plantand equipment and intangible assets, respectively.)
No impairment loss for property, plant and equipment was incurred by the Group for the six months
ended 30 September 2018 (Six months ended 30 September 2017: Nil).
During the six months ended 30 September 2018, the net book amounts of disposed property, plant andequipment and investment properties amounted to approximately ¥9 million and ¥7 million, respectively(Six months ended 30 September 2017: ¥1 million for disposed property, plant and equipment). During thesix months ended 30 September 2018, there was no disposal of intangible assets (Six months ended 30
September 2017: Nil).

14 TRADE RECEIVABLES
30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

60

57

Trade receivables

Trade receivables represent income receivable from vending machines. The credit terms granted by theGroup generally ranged from 0 to 30 days.
The ageing analysis of the trade receivables, based on invoice date, is as follows:

Less than 30 days
31 days to 90 days

30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

60
–

53
4

60

57

As at 30 September 2018 and 31 March 2018, no trade receivables were past due or impaired.
NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

39

Notes to the Condensed Consolidated Interim Financial Information
15 SHARE CAPITAL
Number ofsharesShare
Capital¥ million

1,195,850,460

3,000

Ordinary shares, issued and fully paid:
At 30 September 2017, 1 April 2018 and 30 September 201816 RESERVES(a) Capital surplus
Under the Japan Companies Act, certain portion of the consideration from the issuance of sharecapital shall be credited to the share capital and the remaining of the consideration shall becredited to capital surplus.

(b) Capital reserve
Capital reserve represents the difference between the value of net assets of the subsidiary acquiredby the Company and the share capitals in acquired subsidiaries under common control.

(c) Legal reserve
The Japan Companies Act provides that a 10% dividend paid during the year shall be appropriatedas legal reserve (a component of either capital surplus or retained earnings) until an aggregate
amount of legal capital reserve and legal retained earnings equals 25% of share capital. The legal
reserve may be used to reduce a deficit or transfer to share capital upon approval of the general
meeting of shareholders.

(d) Investment revaluation reserve
The investment revaluation reserve comprises the cumulative net change in the fair value offinancial assets through other comprehensive income held at the end of the reporting period.

17 TRADE PAYABLES
The ageing analysis of the trade payables, based on invoice dates, were as follows:

Less than 30 days
31–90 days
Over 90 days

40

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

212
83
13

72
162
13

308

247

Notes to the Condensed Consolidated Interim Financial Information
18 BORROWINGS
30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

2,590
7,490

2,761
8,093

10,08010,854

862
3,244

813
3,073

4,106

3,886

14,186

14,74030 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

Gross finance lease liabilities — minimum lease payments
No later than 1 year
Later than 1 year and no later than 2 years
Later than 2 years and no later than 5 years
Later than 5 years

909
430
1,105
2,046

1,041
817
1,206
1,985

Future finance charges on finance leases

4,490
(832)

5,049
(914)

Present values of finance lease liabilities

3,658

4,135

Non-current portion
Bank loans
Syndicated loans

Current portion
Bank loans
Syndicated loans

Total borrowings

19 OBLIGATIONS UNDER FINANCE LEASESNIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

41

Notes to the Condensed Consolidated Interim Financial Information
19 OBLIGATIONS UNDER FINANCE LEASES (CONTINUED)
The present values of finance lease liabilities are as below:
30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

No later than 1 year
Later than 1 year and no later than 2 years
Later than 2 years and no later than 5 years
Later than 5 years

770
376
817
1,695

888
683
918
1,646

Total obligations under finance leases
Less: Amount included in current liabilities

3,658
(770)

4,135
(888)

Non-current obligations under finance leases

2,888

3,247

Assets arranged under finance leases represent buildings for pachinko and pachislot halls, and gaming
machines for amusement arcades. The average lease term range from 1 to 20 years. No arrangements
have been entered into for contingent rental payments during the reporting periods.

20 CONTINGENCIES
As at 30 September 2018, the Group did not have any significant contingent liabilities (31 March 2018:
Same).

21 COMMITMENTS(a) Capital commitments
The outstanding commitments not provided for in the condensed interim consolidated financial
information are as follows:

Contracted but not provided for Purchaseof property, plant and equipment

42

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

41

62

Notes to the Condensed Consolidated Interim Financial Information
21 COMMITMENTS (CONTINUED)(b) Operating lease commitments(i)

As a lessee
As at 30 September 2018 and 31 March 2018, the Group had future aggregate minimum lease
payments under non-cancellable operating leases in respect of office premises and pachinko
and pachislot halls as follows:

No later than one year
Later than one year and no later than five years
Over five years(ii)

30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

1,278
3,579
5,390

1,251
4,585
4,874

10,247

10,710As a lessor
As at 30 September 2018 and 31 March 2018, the Group’s future aggregate minimum leasereceipts under non-cancellable operating leases in respect of investment properties are as
follows:

No later than one year

NIRAKU GC HOLDINGS, INC.

30 September
2018¥ million(Unaudited)

31 March2018¥ million(Audited)

39

43

Interim Report 2018/2019

43Notes to the Condensed Consolidated Interim Financial Information
22 RELATED PARTY TRANSACTIONS
For the purposes of condensed consolidated interim financial information, parties are considered to berelated to the Group if the party has the ability, directly or indirectly, to exercise significant influence overthe Group in making financial and operating decisions. Related parties may be individuals (being
members of key management personnel, significant shareholders and/or their close family members) orother entities and include entities which are under the significant influence of related parties of the Group
where those parties are individuals. Parties are also considered to be related if they are subject tocommon control.
Other than those transactions and balances disclosed elsewhere in the condensed consolidated interim
financial information, the following transactions were carried out with related parties:(a) Transactions with related parties
The following transactions were undertaken by the Group with related parties during the six months
ended 30 September 2018 and 2017:
Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)
Service fee expenses
Niraku USA, Inc.

17

18

The service fee paid was related to provision of gaming research services carried out by Niraku USA,
Inc. and provision of training to employees of the Group in USA. Niraku USA, Inc. is a firm controlled
by certain parties among the controlling shareholders of the Company. The transactions with relatedparties were conducted in the ordinary course of the business based on terms mutually agreed
between the relevant parties.

(b) Key management compensation
Key management includes directors (executive, non-executive and external directors) and thesenior management of the Group. The compensation paid or payable to key management for
employee services is shown below:
Six months ended
30 September
2018
2017
¥ million¥ million(Unaudited)(Unaudited)
Directors’ fees
Basic salaries, allowances and other benefits in kind
Employee’s contribution to pension scheme

44

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

124
20
2

110
–
2

146

112

Notes to the Condensed Consolidated Interim Financial Information
23 BUSINESS COMBINATION
Acquisition of Dream Games Singapore Pte. Ltd.
On 20 November 2017, the company has completed the acquisition of 100% issued share capital ofDream Games Singapore Pte. Ltd. and its subsidiaries (“Dream Games”) at a cash consideration of ¥1,870
million. Dream Games is engaged in the operation of entertainment and amusement facilities in
Cambodia and Vietnam. The Acquisition represents a strategic opportunity for the Group to establish its
leading presence in gaming and entertainment industry in Southeast Asia and broaden the types ofentertainment provided by the Group.
In respect of the acquisition, during the period the Group has finalised the fair value assessments for the
net assets acquired from the business combination. On completion of the fair value assessments,
adjustment made to the provisional calculation of identifiable assets and liabilities amounted to ¥20
million, with an equivalent decrease in the reported value of goodwill. The changes mainly represent
finalisation of the fair value of property, plant and equipment and intangible assets.
The following table summarises the consideration paid for Dream Games, and the fair value of the assets
acquired and liabilities assumed at the acquisition date.
As at date ofacquisition¥ million
Recognised amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents
Prepayments, deposits and other receivables
Inventories
Property, plant and equipment
Deferred tax assets
Intangible assets
Provision and other payables
Borrowings and obligation under finance leases
Deferred tax liabilities
Current income tax liabilities

117
236
21
583
15
430
(170)
(351)
(94)
(5)

Total identifiable net assets
Goodwill

782
1,088

Net assets acquired

1,870

Purchase consideration settled in cash

1,870

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/201945

Notes to the Condensed Consolidated Interim Financial Information
24 SUBSEQUENT EVENT
On 8 November 2018, a wholly-owned subsidiary of the Group entered into an agreement to subscribe
for 20,000 shares, representing 40% equity interests, of a newly incorporated Hong Kong entity, Yes!E-Sports
Asia Holdings Limited (“YEAH”) at a cash consideration of USD40,000. YEAH is established to be a hub fordeveloping and expanding the e-Sports business in Asia.
In addition to the capital contribution, the Group has also entered into a loan agreement with YEAH toprovide it with a US$3,200,000 loan with interest rate at 4% per annum. The loan was provided on 15
November 2018 and is repayable every six months by instalments over four years. The Group has the rightto demand for full repayment by the time YEAH has surplus funds (defined as any amount of funds,
including cash and cash equivalents, in excess of debt of debt-like liabilities such as lease obligations)that exceed US$3,200,000, the principal amount of the loan.

46

NIRAKU GC HOLDINGS, INC.

Interim Report 2018/2019

(Incorporated in Japan with limited liability

Stock Code 股份代號 : 1245

2018 /2019
I N TE RI M R EP O RT 中 期 報 告

INTERIM REPORT 2018/2019 中期報告

This interim report is printed on environmentally friendly paper
本中期報告以環保紙印製)