Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibility for the contents of this announcement, make norepresentation as to its accuracy or completeness and expressly disclaim any liability
whatsoever for any loss howsoever arising from or in reliance upon the whole or any
part of the contents of this announcement.

(Incorporated in Japan with limited liability)(Stock Code: 1245)

INTERIM RESULTS ANNOUNCEMENTFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
RESULTS HIGHLIGHTS

#

*

•

Gross pay-ins were ¥53,181 million (or HK$3,698 million#), recording an increaseof 26.4% as compared with the same period last year;•

Revenue was ¥10,795 million (or HK$751 million # ), recording an increase of
30.0% as compared with the same period last year;•

Profit before income tax was ¥1,625 million (or HK$113 million#), compared withthe loss before income tax of ¥1,738 million for the same period last year;•

Profit for the period attributable to shareholders of the Company was ¥1,209
million (or HK$84 million#), recording a hike of ¥2,857 million (or HK$199 million)
as compared with the same period last year;•

Basic earnings per share of the Company was ¥1.01 (or HK$0.07#) (Six months
ended 30 September 2020: basic loss per share was ¥1.38);•

The Board has resolved not to declare an interim dividend for the six months
ended 30 September 2021 (Six months ended 30 September 2020: Nil); and•The Group operated 47 halls as at 30 September 2021.
Translated into Hong Kong dollar at the rate of ¥14.38 to HK$1.00, the exchange rate prevailingon 30 September 2021 (i.e. the last business day in September 2021).

For identification purpose only

–1–The board (the “Board”) of directors (the “Directors”) of NIRAKU GC HOLDINGS, INC.*(the “Company” or “NIRAKU”) is pleased to announce the unaudited condensed
consolidated results of the Company and its subsidiaries (the “Group”) for the six
months ended 30 September 2021 together with the comparative figures for the six
months ended 30 September 2020 as follows:
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVEINCOMENote

Six months ended
30 September
2021
2020
¥ million¥ million(Unaudited)(Unaudited)

Revenue

4

10,795

8,302

Other income
Other gains, net
Hall operating expenses
Administrative and other operating expenses
Impairment loss on loan to an associate

5
5
6
6

331
1,376
(8,523)(1,786)–392
137(7,950)(1,679)(271)

Operating profit/(loss)

2,193(1,069)Finance income
Finance costs

39
(607)

47
(716)

Finance costs, net

7

(568)

(669)

Profit/(loss) before income tax
Income tax expense

8

1,625
(422)

(1,738)(14)

Profit/(loss) for the period

1,203(1,752)

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

1,209
(6)

(1,648)
(104)

1,203

(1,752)1.01(1.38)

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

–2–

9

Note

Six months ended
30 September
2021
2020
¥ million¥ million(Unaudited)(Unaudited)
1,203(1,752)

(10)

24

(8)

(26)

Total comprehensive income/(loss)
for the period

1,185(1,754)

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

1,205
(20)

(1,650)
(104)

1,185

(1,754)

Profit/(loss) for the period
Other comprehensive (loss)/income
Items that will not be subsequently reclassified to
profit or loss
Change in value of financial assets at fair value
through other comprehensive income
Items that have been or may be subsequently
reclassified to profit or loss
Currency translation differences–3–

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 September
2021
Note
¥ million(Unaudited)

31 March2021¥ million(Audited)

18,10327,381
726
1,333
4,357
–

18,581
27,949
737
1,400
4,545
–

563
5,758

577
5,765

58,221

59,554

59
36
1,082
108
267
71
11,192

21
64
1,327
106
474
42
15,903

12,815

17,937

Total assets

71,03677,491EQUITY
Equity attributable to shareholders of
the Company
Share capital
Reserves

3,000
18,9673,000
17,762

Non-controlling interest

21,967(576)

20,762(556)

Total equity

21,391

20,206ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Investment properties
Intangible assets
Prepayments, deposits and other receivables
Interest in an associate
Financial assets at fair value throughother comprehensive income
Deferred income tax assets

Current assets
Inventories
Trade receivables
Prepayments, deposits and other receivables
Financial assets at fair value through profit or loss
Current income tax recoverable
Bank deposits with maturity over 3 months
Cash and cash equivalents

–4–

11
12
11
11

13

30 September
2021
Note
¥ million(Unaudited)

31 March2021¥ million(Audited)

7,473
28,857
2,170
13

738
30,5342,192
16

38,51333,480

92
4,157
2,603
3,996
3
281

108
15,929
2,906
4,131
3
728

11,13223,805

Total liabilities

49,64557,285

Total equity and liabilities

71,03677,491

LIABILITIES
Non-current liabilities
Borrowings
Lease liabilities
Provisions and other payables
Derivative financial instruments

15
12

Current liabilities
Trade payables
Borrowings
Lease liabilities
Accruals, provisions and other payables
Derivative financial instruments
Current income tax liabilities

14
15
12

–5–

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
1GENERAL 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 inJapan under the Japan Companies Act with limited liability on 10 January 2013. The address of its
registered office is 1-39 Hohaccho 1-chome, Koriyama-shi, Fukushima, Japan.
The Company is an investment holding company. The Company and its subsidiaries (together, the“Group”) are principally engaged in pachinko and pachislot hall operations, hotel and restaurant
operations in Japan, amusement arcade operations in Southeast Asian countries, and restaurant
operations in China. The Company is listed on the Main Board of The Stock Exchange of Hong Kong
Limited.
This condensed consolidated interim financial information is presented in millions of Japanese Yen(“¥”), unless otherwise stated.
This condensed consolidated interim financial information was approved for issue on 19 November
2021.

2

BASIS OF PREPARATIONThis condensed consolidated interim financial information for the six months ended 30 September
2021 has 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 does not include all the notes of the typenormally included in an annual financial report. Accordingly, this condensed consolidated interim
financial information should be read in conjunction with the annual financial statements for the year
ended 31 March 2021, which have been prepared in accordance with International Financial
Reporting Standards (“IFRSs”).

3

ACCOUNTING POLICIESExcept as described below, the accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 March 2021, as described in the annual financial
statements.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable toexpected total annual earnings.
(a)

New and amended standards adopted by the GroupThe Group has applied the following amendments for the first time for their annual reporting
period commencing 1 April 2021:
Amendments to IAS 39, IFRS 4, IFRS 7,
IFRS 9 and IFRS 16
Amendments to IFRS 16
Amendments to IFRS 16

Interest Rate Benchmark Reform — Phase 2
COVID-19 Related Rent Concessions
COVID-19-Related Rent Concessions
beyond 30 June 2021 (unaccompanied)The adoption of the amendments did not have any material impact on the Group’s accounting
policies.

–6–

(b)

New and amended standards, improvements and practice statement to existing
standards (collectively, the “Amendments”) not yet adopted by the Group
Effective foraccounting
periods
beginningon or after
Amendments to IFRS 3
Amendments to IFRS 16
Amendments to IAS 37
Amendments to Annual
Improvement project
Amendments to IAS 1
IFRS 17
Amendments to IFRS 17
Amendments to IAS 8
Amendments to IAS 1 andIFRS Practice Statement 2
Amendments to IAS 12
Amendments to IFRS 10
and IAS 28

Reference to Conceptual Framework
Property, Plant and Equipment: Proceeds
before Intended Use
Onerous Contracts — Cost of Fulfillinga Contract
Annual improvements to IFRSs 2018–2020

1 January 2022
1 January 2022

Classification of Liabilities as Current or
Non-current
Insurance Contracts
Amendments to IFRS 17
Definition of Accounting Estimates
Disclosure of Accounting Policies

1 January 2023

Deferred Tax related to Assets and Liabilities
arising from a Single Transaction
Sale or Contribution of Assets between
an Investor and its Associate or
Joint Venture

1 January 2023

1 January 2022
1 January 2022

1 January 2023
1 January 2023
1 January 2023
1 January 2023

To be determined

The related impacts of the adoption of these Amendments to the Group are currently underassessment and the Group is not yet in a position to state whether any substantial changes to
the Group’s significant policies and presentation of the financial information will result.

–7–

4

REVENUE AND SEGMENT INFORMATION(a)

RevenueSix months ended
30 September
2021
2020
¥ million¥ million(Unaudited)(Unaudited)(b)

Revenue
Gross pay-ins
Less: gross pay-outs

53,181(42,781)

42,082(34,598)

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

10,400
97
180
3
115

7,484
526
150
20
122

10,795

8,302

Segment information
Management has determined the operating segments based on the reports reviewed by thechief operating decision maker (“CODM”) that are used for making strategic decisions. The
CODM is identified as the executive directors of the Company. The executive directors consider
the business from a service perspective and assess the performance of the operating segments
based on a measure of segment results, being adjusted profit/(loss) before income tax andunallocated corporate expenses for the purposes of allocating resources and assessing
performance. These reports are prepared on the same basis as this condensed consolidated
interim financial information.
Management has identified four reportable segments based on the types of services, namely (i)pachinko and pachislot hall operations, (ii) amusement arcade operations, (iii) restaurant
operations in China and (iv) others, representing hotel and restaurant operations in Japan.
Segment assets consist primarily of property, plant and equipment, investment properties,
right-of-use assets, intangible assets, inventories, trade receivables, prepayments, deposits andother receivables, bank deposits 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, financial assets at fair value through other comprehensive income andinterest in an associate.
Capital expenditure comprises additions to property, plant and equipment, right-of-use assets,
investment properties and intangible assets. Unallocated corporate expenses and income tax
expenses are not included in segment results.

–8–

The segment information provided to the executive directors for the six months ended 30
September 2021 and 2020 are as follows:

Pachinko andpachislot halloperations
Japan¥ million

Six months ended 30 September 2021
Amusement
arcadeoperations
Restaurant
Southeast
operations
Other
Asia
China
Japan
¥ million¥ million¥ million

Total¥ million

Segment revenue from external customers
Over time
At a point in time

10,580
–

97
–

–
23

3
92

10,680115

Segment revenue from external customers

10,58097

23

95

10,795

Segment results
Corporate expenses

2,207

(244)

(295)

(35)

1,633
(8)

Profit before income tax
Income tax expense

1,625
(422)

Profit for the period

1,203

Other segment items
Depreciation and amortisation expenses
Impairment loss on right-of-use assets
Impairment loss on property,
plant and equipment
Impairment loss on intangible assets
Impairment loss on irrecoverable
prepayments
Finance income
Finance costs(1,737)
(21)

(193)
–

(49)
(274)

(9)
–

(1,988)
(295)

(42)
–

–
–

(1)
(9)

–
–

(43)
(9)

–
36
(576)

–
3
(31)

(56)
–
–

–
–
–

(56)
39
(607)

–9–

Pachinko andpachislot halloperations
Japan¥ million

Six months ended 30 September 2020
Amusement
arcadeRestaurant
operations
operations
Other
Southeast Asia
China
Japan
¥ million¥ million¥ million

Total¥ million

Segment revenue from external customers
Over time
At a point in time

7,634
–

526
–

–
–

20
122

8,180
122

Segment revenue from external customers

7,634

526

–

142

8,302

Segment results
Corporate expenses(1,161)

(87)

(65)

(113)

(1,426)(312)

Loss before income tax
Income tax credit(1,738)(14)

Loss for the period(1,752)Other segment items
Depreciation and amortisation expenses
Impairment loss on right-of-use assets
Impairment loss on property,
plant and equipment
Finance income
Finance costs(2,151)
(8)

(225)
–

(10)
–

(10)
–

(2,396)
(8)

(172)
46
(668)

(17)
1
(48)

–
–
–

–
–
–

(189)
47
(716)

Restaurant
operations
China¥ million

Other
Japan
¥ million

Total¥ million

297

739

The segment assets as at 30 September 2021 and 31 March 2021 are as follows:
Pachinko andAmusementpachislot hallarcadeoperations
operations
Japan Southeast Asia
¥ million¥ million
As at 30 September 2021
Segment assets
Unallocated assets
Deferred income tax assets

56,697

1,378

Total assets
Addition to non-current assets other thanfinancial instruments and deferred
tax assets

59,111
6,167
5,758
71,0362,207– 10 –

158

–

–

2,365

Pachinko andAmusementpachislot hallarcadeoperations
operations
Japan Southeast Asia
¥ million¥ million
As at 31 March 2021
Segment assets
Unallocated assets
Deferred income tax assets

62,1501,750

Restaurant
operations
China¥ million

Other
Japan
¥ million

576

933

65,4096,317
5,765
77,491

Total assets
Addition to non-current assets other thanfinancial instruments and deferred
tax assets

Total¥ million

3,909

231

4

90

4,234

The total non-current assets other than financial instruments and deferred tax assets, analysedby location of the assets, are as follows:Japan
Southeast Asia
China

As at
30 September
2021¥ million(Unaudited)

As at
31 March2021¥ million(Audited)

47,684784–

47,722948
412

48,46849,082

No single external customer contributed more than 10% revenue to the Group’s revenue for thesix months ended 30 September 2021 and 2020.

– 11 –

5

OTHER INCOME AND OTHER GAINS, NET
Six months ended
30 September
2021
2020
¥ million¥ million(Unaudited)(Unaudited)
Other income
Rental income
Income from expired IC and membership cards
Dividend income
Compensation and subsidies (Note)
Income from scrap sales of used pachinko and pachislot machines
OthersOther gains, net
Gain on release of lease liabilities
Gain on fair value changes of financial assets through profit or loss
Gain on fair value changes of derivative financial instruments
Gain/(loss) on disposal of property, plant and equipment, net
Loss on disposal of intangible assets
Others

105
11
9
84
77
45

77
8
14
189
44
60

331

392

1,349
2
3
25
(32)
29

132
4
–
(16)
–
17

1,376

137

Note:
During the six months ended 30 September 2021 and 2020, compensation and subsidies weremainly received from the Government of Japan as a financial aid to Japanese corporations during
the COVID-19 pandemic.

– 12 –

6

OPERATING PROFIT/(LOSS)
Operating profit/(loss) is stated after charging the following:
Six months ended
30 September
2021
2020
¥ million¥ million(Unaudited)(Unaudited)
Employee benefits expenses— Hall operations— Administrative and others
Short-term operating lease rental expense in respect ofland and buildings
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Depreciation of investment properties
Amortisation of intangible assets
Impairment loss on property, plant and equipment
Impairment loss on right-of-use assets
Impairment loss on intangible assets
Impairment loss on irrecoverable prepayments
Pachinko and pachislot machines expenses (Note)

2,280
618

2,456
570

65
814
1,131
11
32
43
295
9
56
2,835

76
997
1,363
10
26
189
8
–
–
1,533

Note:
Pachinko and pachislot machines are expensed off in the interim condensed consolidated statementof comprehensive income upon installation. The expected useful lives of these machines are lessthan one year.
7

FINANCE COSTS, NET
Six months ended
30 September
2021
2020
¥ million¥ million(Unaudited)(Unaudited)
Finance income
Bank interest income
Interest income on lease receivables
Other interest income

Finance costs
Bank borrowings
Lease liabilities
Provision for unwinding discountFinance costs, net– 13 –

1
18
20

1
19
27

39

47

(51)
(431)
(125)

(108)
(498)
(110)

(607)

(716)

(568)

(669)

8

INCOME TAX EXPENSE
Six months ended
30 September
2021
2020
¥ million¥ million(Unaudited)(Unaudited)
Current tax— Japan— Other Asian countries

408
(3)

10
(3)

Deferred income tax

405
17

7
7

422

14

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 29.9%
for the six months ended 30 September 2021 (For the six months ended 30 September 2020:
29.9%).
Taxation on other Asian countries profits has been calculated on the estimated assessable profit/(loss) for the year at the rate of taxation prevailing in the countries in which the Group operates.
These rates range from 17.0% to 20.0% for the six months ended 30 September 2021 (For the six
months ended 30 September 2020: same).
9

EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to shareholdersof the Company by the weighted average number of ordinary shares in issue during the six months
ended 30 September 2021 and 2020.
Six months ended
30 September
2021
2020
(Unaudited)(Unaudited)
Profit/(loss) attributable to shareholders of the Company (¥ million)
Weighted average number of shares for the purpose of
calculating basic loss per share (thousands)
Basic and diluted earnings/(loss) per share (¥)

1,209(1,648)

1,195,850

1,195,850

1.01(1.38)

Diluted earnings/(loss) per share is the same as basic earnings/(loss) per share as there was nopotential dilutive shares during the six months ended 30 September 2021.

– 14 –

10

DIVIDENDS
No dividend was paid during the six months ended 30 September 2021 and 30 September 2020.
The Board has resolved not to declare an interim dividend for the six months ended 30 September
2021 (For the six months ended 30 September 2020: Nil).

11

PROPERTY, PLANT AND EQUIPMENT, INVESTMENT PROPERTIES AND INTANGIBLE ASSETS
During the six months ended 30 September 2021, the Group incurred capital expenditures ofapproximately ¥388 million and ¥2 million for property, plant and equipment and intangible assets,
respectively (For the six months ended 30 September 2020: ¥812 million and ¥25 million,
respectively.)
During the six months ended 30 September 2021, the net book value of property, plant andequipment and intangible assets disposed amounted to approximately ¥11 million and ¥32 million,
respectively (For the six months ended 30 September 2020: ¥32 million for properties, plant andequipment).
As at 30 September 2021, property, plant and equipment and investment properties of ¥9,572
million and ¥603 million, respectively, (31 March 2021: ¥9,790 million and ¥611 million, respectively)
were pledged to secure bank borrowings.
Impairment reviews on property, plant and equipment, right-of-use assets and other noncurrent assets
The Group carried out reviews of the recoverable amounts whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. The reviews were
performed at cash-generating unit (“CGU”) level, which is determined as each individual pachinko
and pachislot hall, a pachinko and pachislot hall with hotel business, restaurant and amusement
arcade.
For the six months ended 30 September 2021, the management regards CGUs that were lossmaking for current period and performed below management’s expectation as having impairment
indicator. The management has reviewed the recoverability of the relevant carrying amounts of these
CGUs.
The recoverable amount of a CGU is determined based on the fair value less cost of disposal orvalue-in-use, whichever is higher.
The value-in-use calculations use pre-tax cash flow projections based on financial budgets approvedby management covering a three-year period. Cash flows beyond the three-year period are
extrapolated using the estimated growth rates stated below. The key assumptions used in the valuein-use calculations for the six months ended 30 September 2021 and 2020 are as follow:
Six months ended 30 September
2021
2020
Revenue
Discount
Revenue
Discount
growth rate
rate growth rate
rate
Pachinko and pachislot hall operations
Amusement arcade operations
Restaurant operations
Other operations

*

0%
0%
0%
0%

9%
20%
17%
9%

0%
0%
N/A*
N/A*

9%
19.7%
N/A*
N/A*

As no impairment indicator was identified as at 30 September 2020, no impairment assessment was performed.

– 15 –

The discount rates applied by the Group are rates that reflect current market assessment of the timevalue of money and the risk specific to the CGUs. Revenue growth rate is based on past practices
and expectations on market and operational development.
The fair value less cost of disposal calculation is based on valuation carried out by an independent
professionally qualified valuer, who holds recognised relevant professional qualifications and has
recent experiences in the locations and segments of the property valued. The valuation wasdetermined using the market approach, which largely used observable and unobservable inputs,
including unit price per square meter of sales comparable for land. The fair values of the CGU
subject to fair value less cost of disposal calculation is within level 3 of the fair value hierarchy.
The key assumptions used for fair value less costs of disposal calculation for the six months ended
30 September 2021 and 2020 are as follow:
Six months ended
30 September
2021
2020
Sales comparison approach
Land — unit price square meter¥97,200¥97,200

The Group’s finance department includes a team that reviews the valuation performed by the
independent valuer for financial reporting purposes. This team reports directly to the executive
directors. Discussions of valuation processes and results are held between the valuation team andvaluer at least annually.
For the six months ended 30 September 2021, as a result of the impairment review, impairment lossof approximately ¥43 million (For the six months ended 30 September 2020: ¥189 million), ¥295
million (For the six months ended 30 September 2020: ¥8 million), ¥9 million (For the six months
ended 30 September 2020: Nil) and ¥56 million (For the six months ended 30 September 2020: Nil)has been recognised on property, plant and equipment, right-of-use assets, intangible assets andirrecoverable prepayments, respectively.
For pachinko and pachislot hall operations, impairment loss of approximately ¥63 million has beenrecognised for current period (For the six months ended 30 September 2020: ¥180 million).
For amusement arcade operations, no impairment loss was recognised for current period (For the six
months ended 30 September 2020: ¥17 million).
For restaurant operations, impairment loss of approximately ¥340 million, which represents all of its
non-current assets, has been recognised in current period (For the six months ended 30 September
2020: Nil).
No impairment loss has been recognised for other operations for six months ended 30 September
2021 and 2020.
For pachinko and pachislot operations, if the revenue growth rate in the value-in-use calculations
decreased by 2% with other assumptions remain constant, addition in impairment loss of ¥168
million would be recorded. If the discount rate in the value-in-use calculations increased by 1% withother assumptions remain constant, addition in impairment loss of ¥184 million would be recorded.
If the unit price per square meter in the fair value less cost of disposal calculation decreased by 1%,
with other assumptions remain constant, addition in impairment loss would be immaterial.
For amusement arcade operations, if the revenue growth rate in the value-in-use calculations
decreased by 2% with other assumptions remain constant, addition in   impairment loss of ¥11
million would be recorded. If the discount rate in the value-in-use calculations increased by 2% withother assumptions remain constant, addition in impairment loss of ¥10 million would be recorded. If
the operation suspensions in Vietnam and Cambodia continue until March 2022, addition in
impairment loss of ¥22 million would be recorded.

– 16 –

For restaurant operations and other operations, if the revenue growth rate decreased by 2%, or the
discount rate increased by 1%, with other assumptions remain constant, addition in impairment loss
would be immaterial.
12

LEASES
During the six months ended 30 September 2021, the Group entered into a number of leaseagreements for the use of equipment, staff quarters and vehicles, and therefore recognised the
additions of right-of-use assets of ¥1,975 million.
During the six months ended 30 September 2021, the Group received COVID-19-related rent
concessions in the form of wavier or reduction on fixed monthly rental and has accounted such rent
concessions as lease modifications.
Amounts recognised in the interim condensed consolidated statement of financial position are as
follows:

Right-of-use assets
Buildings
Leasehold improvement
Equipment and tools
VehiclesLease liabilities
Current
Non-current

30 September
2021¥ million(Unaudited)

31 March2021¥ million(Audited)

26,845254
246
36

27,286355
263
4527,381

27,9492,603
28,8572,906
30,534

31,46033,440For the six months ended 30 September 2021, as a result of the impairment review, impairment lossof approximately ¥295 million (2020: ¥8 million) has been recognised on right-of-use assets. Refer toNote 11 for details of the impairment review.
13

TRADE RECEIVABLES

Trade receivables

30 September
2021¥ million(Unaudited)

31 March2021¥ million(Audited)

36

64

Trade receivables represent commission income receivable from vending machines and income
receivables from hotel and restaurant operations. The credit terms granted by the Group generally
ranged from 0 to 30 days.

– 17 –

The ageing analysis of the trade receivables, based on invoice date, is as follows:
30 September
2021¥ million(Unaudited)

31 March2021¥ million(Audited)

36

64

30 September
2021¥ million(Unaudited)

31 March2021¥ million(Audited)

2
90

108
–

92

108

30 September
2021¥ million(Unaudited)

31 March2021¥ million(Audited)

3,053
4,420

738
–

7,473

738

2,160
1,997

3,740
12,1894,157

15,929

11,63016,667Less than 30 days
14

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

Less than 30 days
31–90 days

15

BORROWINGS

Non-current portion
Bank loans
Syndicated loans

Current portion
Bank loans
Syndicated loans

Total borrowings

As at 31 March 2021, the Group was not able to comply with certain financial covenants for part of
the Group’s bank borrowings and reclassified borrowings of approximately ¥7,063 million,
representing the non-current portion of total borrowings of approximately ¥14,758 million, to current
liabilities. In June 2021, subsequent to obtaining written consents from the banks on waiving theirrights to request immediate repayment, management reclassified the portion of relevant borrowings
that was scheduled to be paid after 12 months from the date of wavier letter from current to noncurrent.

– 18 –

MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS OVERVIEW
With the rollout of vaccines and increasing number of people received vaccinations,Japan has seen a downtrend in Coronavirus Disease 2019 (“COVID-19”) infections.
Tapering off the coronavirus countermeasures as previously imposed by the local
government, the domestic consumer spending in Japan has seen an improving sign.
Howbeit the upside in Japan, the impact of COVID-19 continues to be severe in
Southeast Asian countries including the Group’s investments in Vietnam and Cambodia,
where social-distancing measures and district-level lockdowns have led to a hugedamage on the Group’s business as all amusement arcades were required to suspend
their operations during the current financial period. Nevertheless, YOKOCHO restaurants
have resumed their operations in August 2021 providing Japanese mid-end food andbeverages to customers. For the six months ended 30 September 2021, revenue of theGroup amounted to ¥10,795 million, recording a surge of ¥2,493 million, as comparedto ¥8,302 million for the six months ended 30 September 2020. The Group’s revenue
margin was improved by 1.8%, turning around the Group’s net margin from a loss
margin of 21.1% for the six months ended 30 September 2020 to a net profit margin of
11.1% in current period, generating a net profit attributable to owners of ¥1,209 million
for the six months ended 30 September 2021 as compared to a net loss of ¥1,648
million in prior period. Effective cost controls continue to be an important measure to
the Group for achieving a stable positive return.
BUSINESS SEGMENT ANALYSIS
Pachinko business
Pachinko revenue recorded an increase of ¥2,916 million for the six months ended 30
September 2021 from ¥7,484 million in prior period to ¥10,400 million in current period.
As COVID-19 panic subsided and the state of emergency in Japan was subsequently
lifted, the pachinko business has noted a steady improvement, but the overall hall traffic
has yet to rebound to pre-pandemic level. This phenomenon can be explained as theimpact of change of consumer behavior during the pandemic and the enduring pachinko
industry recession. Expanding the market share through opening new or acquiringexisting halls; increasing customer turnover via providing a wide variety of gamemachines; and prudent spending to maintain a stable positive return remain to be theGroup’s business strategies. In August 2020, a large size hall named Oomachi was
opened in the Koriyama city, contributing to an additional gross pay-in of ¥1,778 million
for the six months ended 30 September 2021. Machine replacement exercise waslargely restored. The amount invested in machine replacement had increased from
¥1,533 million for the six months ended 30 September 2020 to ¥2,835 million in current
period, enabling customers to enjoy new model machines and in return, increasing halltraffic. With the implementation of effective cost saving measures such as streamlining
operating structure, bargain for rental concession and review expenditure thoroughly,
the administrative and other operating expenses were able to maintain at the same level
as prior period.

– 19 –

Amusement arcades business
The pandemic has deeply cracked the amusement arcade business where the Group
operated in Vietnam and Cambodia. Since the announcement of district-level lockdownby Vietnamese government and Cambodian government to curb COVID-19 surge, allarcades, in Vietnam and in Cambodia, were forced to suspend their operations.
Prolonged restrictions imposed by local government had caused hardest-hit on theamusement segment leading to a tremendous fall of 81.6% in revenue from ¥526 million
for the six months ended 30 September 2020 to ¥97 million in current period. Albeit theunderperformed results in current period, the management foresees a steady pick-up in
the fourth quarter of the financial year after the local governments announced the liftingof restrictions and reopening cross-border activities, allowing all amusement arcades toresume their businesses in 2021.
Restaurant business
Complying with the request from Tokyo Metropolitan government, according to
declaration of the State of Emergency, all 3 franchised Spanish restaurants under thename “LIZARRAN” were required to shorten their business days and business hours. As
a result, income generated from this sector was plunged by 70% to ¥15 million for thesix months ended 30 September 2021 as compared to ¥50 million for the same period
in prior year. The management expects a gradual improvement in this sector after theease of restriction was announced by the Japanese government in late October 2021.
Benefiting from the full operation of pachinko halls, the 2 franchised cafés, “KOMEDA”,
locating in the vicinity of pachinko halls had recorded a stable increase of income of
10%, to ¥77 million for the six months ended 30 September 2021. “YOKOCHO”, anarray of Japanese restaurants situated in Shenzhen Upper Hills commercial building in
China, had resumed its business since August 2021, generating an income of ¥23
million in current period. The management had shifted their business strategy fromproviding high-end food and beverage to positioning on mid-end products, which better
meets the demand of customers in China.
PROSPECT AND FUTURE DEVELOPMENTAs the spread of the infections contains, governments around the world are preparing
for exit strategies to reanimate their economies. Despite the negative impact of thepandemic may continue to last for months, with the invincible belief, flexible andadaptable to change, the Group is positive in restoring hall traffic and starting newinvestments. A new hall equipped with 600 game machines is scheduled to open in the
fourth quarter in Ibaraki province, northern part of Kanto area.
Seeing the increasing popularity of bubble tea in Japan, during the interim period,
Niraku Corporation, a wholly-owned subsidiary of the Group, entered into a franchise
agreement with Gong Cha, a renowned Taiwanese tea chain store company, to open
the Group’s first ever bubble tea café. The two pioneer Gong Cha cafés will commence
their business in the third quarter.

– 20 –

Stepping into human resources business, an indirect wholly-owned subsidiary, OOCube
Inc., was established in Japan in July 2021, providing manpower dispatching andintroduction service.
Allying with large Japanese shopping mall developers, like Aeon, as the paramount for
selecting new outlet location remains the business strategy of the Group in its Southeast
Asian investments. The management is planning to open 2 new game centres inVietnam in the coming year, bringing in new revenue and strengthening Dream Games’s
market share.
With the relaxation of restrictions across countries, global economy is expected torecover at a steady pace. The Group looks forward to a post-pandemic era and isprepared to grab every opportunity in a rapid changing environment. The Group
continues to uphold its motto — “Happy, Time, Creation”; bring joy to players; establish
a rapport, long-term relationship with customers and business partners; and strive forsustainable returns to shareholders.
FINANCIAL REVIEWRevenue from Pachinko and Pachislot Business
Revenue from pachinko and pachislot business is derived from gross pay-ins nettedwith gross pay-outs.
Revenue from pachinko and pachislot business recorded a surge of ¥2,916 million, or
39.0%, from ¥7,484 million for the six months ended 30 September 2020 to ¥10,400
million for the same period in 2021. The hike in revenue was attributable to theresumption of pachinko hall operations and gradual recovery of hall traffic after theremoval of state of emergency order imposed by the government of Japan in early
2021.
Gross pay-ins
Gross pay-ins recorded a notable increase of ¥11,099 million, or 26.4%, from ¥42,082
million for the six months ended 30 September 2020 to ¥53,181 million for the same
period in current year.
Gross pay-outs
Gross pay-outs, being the aggregate cost of G-prizes and general prizes exchanged bycustomers, increased by ¥8,183 million, or 23.7%, from ¥34,598 million for the six
months ended 30 September 2020 to ¥42,781 million for the same period in 2021
which corresponded to the rise in gross pay-ins.
Revenue margin
The revenue margin increased by 1.8% from 17.8% for the six months ended 30
September 2020 to 19.6% for the same period in current year. The increase in revenue
margin was due to slight adjustment of pay-out ratio to stimulate customers’ visit.
– 21 –

Revenue from amusement arcade business
Revenue from amusement arcade business dropped from ¥526 million for the six
months ended 30 September 2020 to ¥97 million for the same period in 2021. The
amount comprised revenue derived from Vietnam and Cambodia amounting to ¥93
million and ¥4 million, respectively (30 September 2020: ¥459 million and ¥67 million,
respectively). The plunge in revenue was due to the lockdown and social distancing
measures imposed by local governments, causing a relatively prolonged closure ofgame centres in both Vietnam and Cambodia.
Other revenue
Other revenue represents incomes from vending machines, hotel and restaurant
operations.
Vending machine income amounted to ¥180 million for the six months ended 30
September 2021. The increase of ¥30 million, or 20.0%, as compared to ¥150 million
for the six months ended 30 September 2020 was attributable to the uplift of the stateof emergency previously declared by the government in Japan, allowing all pachinkohalls to resume their businesses.
Income from hotel operation amounted to ¥3 million for the six months ended 30
September 2021, recording a significant drop of ¥17 million, or 85%, as compared tothe six months ended 30 September 2020 of ¥20 million. The hit on hotel income wasdue to the earthquake that happened in February 2021 causing a large scale ofdamages on the building itself which led to a six months’ closure for hotel retrofit.
Revenue from restaurant operations amounted to ¥115 million for the six months ended
30 September 2021. The fall of ¥7 million, or 5.0% as compared to ¥122 million for thesix months ended 30 September 2020 was resulted from the resumption of YOKOCHO
business in August 2021 bringing in an additional revenue of ¥23 million; netted with thedecrease in income from Lizarran as a result of COVID-19 impact.
Hall operating expenses
Hall operating expenses increased by ¥573 million, or 7.2%, from ¥7,950 million for thesix months ended 30 September 2020 to ¥8,523 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 depreciation expenses, amounting to ¥2,835
million, ¥2,280 million and ¥1,894 million, respectively, for the six months ended 30
September 2021 (30 September 2020: ¥1,533 million, ¥2,456 million and ¥2,220
million, respectively).
The rise in hall operating expenses was mainly resulted from more frequent replacementof new pachinko and pachislot machines to attract customers’ visit and to comply withgaming regulations.

– 22 –

Administrative and other operating expenses
Administrative and other operating expenses amounted to ¥1,786 million for the six
months ended 30 September 2021 recorded an increase of ¥107 million, or 6.4%, ascompared to same period in prior year of ¥1,679 million. The rise is mainly due toimpairment loss of ¥339 million which was provided for during the current period, nettedwith drop in administrative expense as effective cost control continues to be the major
measure of the Group in maintaining a stable net return.
Finance costs
Finance costs, net amounted to ¥568 million for the six months ended 30 September
2021, recorded a drop of ¥101 million, or 15.1%, as compared to ¥669 million for thesame period in 2020 as less bank borrowings were made during the current period.
Profit/(loss) attributable to shareholders of the Company, basic earnings/(loss) per
share and dividend
Profit attributable to shareholders of the Company of ¥1,209 million was recorded forthe six months ended 30 September 2021, as compared to the loss of ¥1,648 million
for the six months ended 30 September 2020. The turnaround was resulted from fulloperations of all pachinko halls and regaining of customer visit as mentioned above.
Basic earnings per share for the six months ended 30 September 2021 was ¥1.01(basic loss per share for the six months ended 30 September 2020: ¥1.38). The Board
has resolved not to declare an interim dividend for the six months ended 30 September
2021 (30 September 2020: nil).
CAPITAL STRUCTURE
The Group principally meets its working capital and other liquidity requirements througha combination of capital contributions, including cash flow from operations and bankborrowings. The Group’s daily operation is mainly financed by operating cash flows, andrelied 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 and commitment that the Group may have from time to time. The Group’s
cash surpluses are placed in short-term and long-term fixed deposits to maintainliquidity. 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 and liabilities mainly denominated in Japanese Yen, as such, theGroup does not have any material foreign exchange exposure.

– 23 –

The table below sets forth the information regarding the cash and bank balances,borrowings, lease liabilities, working capital, total equity and gearing ratio of the Groupas at 30 September 2021 and 31 March 2021, and operating cash flows before
movements in working capital of the Group for the six months ended 30 September
2021 and 2020, respectively:

Cash and cash equivalents
Bank deposits with maturity over 3 months

Bank loans
Syndicated loans
Lease liabilities

Working capital (Note 1)
Total equity
Gearing ratio (Note 2)

As at
30 September
2021¥ million

As at
31 March2021¥ million

11,19271

15,90342

11,263

15,945

5,213
6,417
31,4604,478
12,18933,44043,09050,107

1,683
21,391
1.5(5,868)20,206
1.7

For the six months ended
30 September
2021
2020
¥ million¥ million
Operating cash flows before movements inworking capital

3,245

861

Note 1:

Working capital being current assets less current liabilities.

Note 2:

Gearing ratio is calculated as total borrowings and lease liabilities less cash and cash
equivalents divided by equity.

As at 30 September 2021, net current assets of the Group totalled ¥1,683 million (31March 2021: net current liabilities ¥5,868 million), and current ratio was 1.15 as at 30
September 2021 (31 March 2021: 0.75). As at 30 September 2021, there were cash andcash equivalents of ¥11,192 million (31 March 2021: ¥15,903 million), in which ¥10,105
million was denominated in Japanese Yen, ¥764 million was denominated in United States
dollar, ¥261 million was denominated in Hong Kong dollar and ¥62 million was
denominated in other currencies. As at 30 September 2021, the Group had totalborrowings and lease liabilities of ¥43,090 million (31 March 2021: ¥50,107 million).
Current portion of bank borrowings and current portion of lease liabilities amounted to¥6,760 million as at 30 September 2021 (31 March 2021: ¥18,835 million).
– 24 –

The Group’s bank borrowings during the current period comprised bank loans andsyndicated loans. As at 30 September 2021, the total bank borrowings amounted to¥11,630 million (31 March 2021: ¥16,667 million), with average effective interest rates
on bank borrowings ranged from 0.98% to 1.65% (31 March 2021: 0.67% to 1.68%)
per annum. Approximately 8.6% of bank borrowings as at 30 September 2021 were
fixed rate borrowings.
HEDGING OF FLOATING RATE BORROWINGS AND FOREIGN EXCHANGE
As at 30 September 2021, the Group had three floating to fixed interest rate swap
contracts with banks in Japan (i.e. the Group pays fixed interest rates and receives
interests at floating rate). These interest rate swap contracts were entered into as ameasure to manage interest rate risk in relation to loans of the Group. As interest rates
of some 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 2021, gain on fair value for interest
rate swap contracts amounted to ¥3 million (for the six months ended 30 September
2020: Nil).
The Group did not carry out significant foreign currency investment and its debts were
all denominated in Japanese Yen as at 30 September 2021. As the functional currencyof certain subsidiaries are different from the Company, the Group will be exposed toforeign exchange risk arising from such exposure, namely in Singapore Dollar,
Vietnamese Dong, Cambodian Riel and Renminbi against Japanese Yen. The
management is assessing the significance of the foreign currency exposures faced by
the Group and will consider adopting appropriate measures to mitigate the risk,
including but not limited to entering into currency hedges.
GEARING RATIOThe gearing ratio, defined as the aggregate of interest-bearing loans and lease liabilities
less cash and cash equivalents, divided by total equity, was 1.5 as at 30 September
2021 (31 March 2021: 1.7).

– 25 –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 maintenance of our pachinko and pachislot hall andamusement arcade operations. The table below shows a breakdown of the capital
expenditure for the indicated periods:

Property, plant and equipment
Right-of-use assets
Investment properties
Intangible assets

As at
30 September
2021¥ million

As at
31 March2021¥ million

388
1,975
–
2

1,718
2,293
183
40

2,365

4,234

CHARGES ON ASSETS
As at 30 September 2021 and 31 March 2021, the carrying values of charged assets
were as below:

Property, plant and equipment
Investment properties
Deposits and other receivables

As at
30 September
2021¥ million

As at
31 March2021¥ million

9,572
603
168

9,790
611
170

10,343

10,571CONTINGENT LIABILITIESThe Group did not have any material contingent liabilities as at 30 September 2021 and
31 March 2021.

– 26 –

SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITIONS AND DISPOSALS OF
SUBSIDIARIES, AND FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITALASSETS
During the six months ended 30 September 2021, the Group did not conduct any
significant investments, material acquisitions or disposals. Save for those disclosed inthis interim results announcement, the Group had no plan authorised by the Board forother material investments or additions of capital assets as at the date of this interim
results announcement.
EMPLOYEES AND REMUNERATION POLICY
As at 30 September 2021, the Group had 1,571 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 andcompetence of the employees.
CORPORATE GOVERNANCE
During the six months ended 30 September 2021, the Company has adopted andcomplied with all the applicable principles and code provisions of the Corporate
Governance Code and Corporate Governance Report (the “CG Code”) contained inAppendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange ofHong Kong Limited (the “Stock Exchange”) (the “Listing Rules”), with the exception forcode 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 theshareholders 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 the formulation ofbusiness 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 than himself) and members of our senior management. Taking
into account the continuation of the implementation of our business plans, the directorsof the Company (including our Independent Non-executive 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.

– 27 –

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 the year ended 31 March 2021 was held on
29 July 2021 (the “2021 AGM”), while the notice for the 2021 AGM was despatched on
7 July 2021. The above arrangement complied with the articles of incorporation of theCompany (the “Articles of Incorporation”) prepared pursuant to the Companies Act inrespect of the minimum notice period of 21 calendar days (the date of sending and thedate of the meeting shall not be included within this period) for AGM but the notice
period for the 2021 AGM was less than 20 clear business days before the 2021 AGM.
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, theannual 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 theannual report which accompanied the AGM notice despatched to the shareholders of
the Company.
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 madespecific enquiry with all Directors, the Directors confirmed that they had complied withthe required standard set out in the Model Code and the Company’s code of conduct
during the six months ended 30 September 2021.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIESThe Company did not redeem any of its listed securities during the six months ended 30
September 2021. 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
2021.
CHANGE TO INFORMATION IN RESPECT OF DIRECTORS
There is no change in information of the Directors since the date of the Company’s
Annual Report 2021 which required to be disclosed pursuant to Rule 13.51B(1) of the
Listing Rules.
INTERIM DIVIDENDThe Board has resolved not to declare an interim dividend for the six months ended 30
September 2021 (30 September 2020: Nil).

– 28 –REVIEW OF INTERIM RESULTS
The audit committee of the Company has reviewed the unaudited condensed
consolidated interim financial information and the Interim Report for the six months
ended 30 September 2021 and discussed the financial related matters with the
management. The unaudited condensed consolidated interim financial information of
the Group for the six months ended 30 September 2021 has been reviewed by theCompany’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”.
PUBLICATION OF INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORTThis interim results announcement is published on the websites of the Stock Exchange(www.hkexnews.hk) and the Company (www.ngch.co.jp), and the interim report of theCompany for the six months ended 30 September 2021 will be dispatched to theshareholders of the Company and will be published on the respective websites of theStock Exchange and the Company in due course.
On behalf of the BoardNIRAKU GC HOLDINGS, INC.*
株式会社ニラク▪ジー▪シー▪ホールディングス
Hisanori TANIGUCHI
Chairman, Executive Director and Chief Executive Officer
Fukushima, Japan, 19 November 2021
As at the date of this announcement, the executive Directors are Hisanori TANIGUCHI,
Akinori OHISHI and Masataka WATANABE; the non-executive Director is Hiroshi
BANNAI; and the independent non-executive Directors are Michio MINAKATA, Yoshihiro
KOIZUMI, Kuraji KUTSUWATA and Akihito TANAKA.
*

for identification purpose only

– 29 –