Contents

Page

Corporate Profile

2

Corporate Information and Information for Investors

3

Financial and Operational Highlights

4

Chairman’s Statement

6

Management Discussion and Analysis

10

Corporate Governance Report

15

Profile of Directors and Senior Management

25

Report of the Directors

28

Independent Auditor’s Report

38

Consolidated Statement of Comprehensive Income

46

Consolidated Statement of Financial Position

48

Consolidated Statement of Changes in Equity

50

Consolidated Statement of Cash Flows51

Notes to the Consolidated Financial Statements

52

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 with 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 tocustomers, which forms our slogan of “Happy Time, Creation”.
NIRAKU has a strong pachinko hall network with 49 halls at present, stretching from Tokyo Metropolitan Area to
Northeast Honshu, equipped with over 28,800 pachinko and pachislot machines serving customers in ten prefectures inJapan.

*

2

For identification purpose only

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Corporate Information and Information for Investors
CORPORATE INFORMATION
Executive Directors

Mr. Hisanori TANIGUCHI (Chairman)
Mr. Akinori OHISHI
Mr. Masataka WATANABE

Non-Executive Director

Mr. Hiroshi BANNAI

Independent Non-Executive Directors

Mr. Michio MINAKATA
Mr. Yoshihiro KOIZUMIMr. Kuraji KUTSUWATA
Mr. Akihito TANAKA

Audit Committee

Mr. Michio MINAKATA (Committee Chairman)
Mr. Hiroshi BANNAI
Mr. Yoshihiro KOIZUMIRemuneration Committee

Mr. Yoshihiro KOIZUMI (Committee Chairman)
Mr. Hisanori TANIGUCHI
Mr. Michio MINAKATA

Nomination Committee

Mr. Hisanori TANIGUCHI (Committee Chairman)
Mr. Kuraji KUTSUWATA
Mr. Akihito TANAKAINFORMATION FOR INVESTORS
Principal Bankers

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

AuditorPricewaterhouseCoopers
Certified Public Accountants
Registered Public Interest Entity Auditor

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

805B, 8/F, Tsim Sha Tsui Centre
66 Mody Road, Tsim Sha Tsui
Kowloon, Hong Kong

Headquarters 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

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

3

Financial and Operational Highlights
The following table summarises the results of the Group for the financial years ended 31 March 2024, 2023, 2022, 2021
and 2020.
2024¥ million HK$ million¥ million(Restated)2023
HK$ million(Restated)2022¥ million

2021¥ million2020¥ million

131,835(107,891)

6,817(5,579)

119,837(97,942)

7,045(5,758)108,075(86,999)

94,414(77,531)139,053(114,046)

23,944

1,238

21,895

1,287

21,076

16,88325,007

1,687
1,324

87
68

1,710
1,007

101
59

359
774

1,015
643

1,663
1,376

Revenue

26,955

1,393

24,612

1,447

22,20918,541

28,046

Hall operating expenses
Administrative expenses
Impairment loss on property,
plant and equipment,right-of-use assets andintangible assets
Impairment loss on financial assets
Profit/(loss) before income tax
Profit/(loss) attributable to theowners of the Company
Earnings/(loss) per share(expressed in Japanese
Yen or Hong Kong dollar)(20,654)(3,795)(1,068)(196)(18,726)(3,568)(1,101)(210)(18,279)(3,246)(17,367)(3,393)(21,910)(5,655)

(396)
(410)
1,831

(20)
(21)
95

(585)
–
1,489

(34)
–
88

(2,004)–(171)(5,592)–(8,502)

(676)
–
581

694

36

1,198

70

(1,181)(5,481)

179

0.58

0.03

1.00

0.06

(0.99)(4.58)

0.15

Overall revenue margin

18.2%

18.2%

18.3%

18.3%

19.5%

17.9%

18.0%

Net profit/(loss) margin

2.6%

2.6%

4.8%

4.8%

(5.3%)(30.2%)(0.5%)

Gross pay-ins
Gross pay-outs
Revenue from pachinko andpachislot business
Revenue from amusement
arcade business
Other revenue

The Group had made certain retrospective adjustments to the financial information for the year ended 31 March 2023
following the business cessation of an indirectly non-wholly owned subsidiary. Details regarding the adjustments madewere provided in Note 11 to the consolidated financial statements for the year ended 31 March 2024.

4

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Financial and Operational Highlights

2024¥ million HK$ million
Current assets
Current liabilities
Net current assets/(liabilities)
Total assets
Total assets less current liabilities
Gearing ratio

13,872
14,017(145)
65,76051,743
1.4

717
725
(8)
3,400
2,675
1.4

As at 31 March2023¥ million HK$ million

2022¥ million

2021¥ million2020¥ million

12,396
11,616780
65,80454,1881.5

13,012
11,9971,015
68,30056,303
1.6

17,93723,805(5,868)77,49153,686
1.7

16,092
11,1794,913
81,15869,979
1.3

729
683
46
3,869
3,186
1.5

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

¥19.34 to HK$1.00, the exchange rate prevailing on 28 March 2024 (i.e. the last business day in March 2024);2.

¥17.01 to HK$1.00, the exchange rate prevailing on 31 March 2023 (i.e. the last business day in March 2023).

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.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

5

Chairman’s Statement
BUSINESS ACTIVITIES AND VISIONIn the current fiscal year, the domestic economy saw further
normalisation of economic activities due to factors such as
the reclassification of Novel Coronavirus (COVID-19)’s
category to Class 5 under the Act on the Prevention of
Infectious Diseases, and an improvement in theemployment and income environment, including the highest
rate of wage increase in 30 years in the annual spring wage
negotiations, and at the same time, there were signs of apick-up in personal consumption. On the other hand, growthin personal consumption remained subdued due to theeffects of rising prices and monetary tightening, but service
consumption showed a relatively steady recovery. Under
these circumstances, in our mainstay pachinko business,
the Group focused on grasping customer needs and profit
opportunities accurately and improving our pachinko halls
management capabilities. In addition, we increased thenumber of amusement machines installed by 1.6%
compared to the previous fiscal year, expanding ourrevenue base by equivalent amount as opening one newhall. As a result, total revenue (gross pay-ins) increased by
10.0% year-on-year to ¥131,835 million and we believe wewere able to firmly meet customer demand without fallingbehind the recovery trend in domestic economic activity. In
the overseas business, the Gross Domestic Product (“GDP”)
growth rates of Vietnam and Cambodia slowed as theireconomies were affected by the slowdown in the Chinese
economy. Consequently, revenue from Dream Games,
which operates amusement arcades in both countries,
decreased by 1.3% year-on-year to ¥1,687 million.

6

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Chairman’s Statement
In the mainstay pachinko business, Smart Slots, the next-generation of new amusement machines introduced in
November 2022, continue to receive high support from customers. To grasp the trend of the market need, we had madefull use of the strong network we had built up with amusement machine manufacturers and distributors, and strategicallypurchased the most effective number of machines in a competitive environment, and focused on creating a hall that could
meet the customers’ needs. In particular, in order to enable more customers to enjoy Smart Slots machines, which are
popular in the market, hall layouts were revamped, and the machine footprint was quickly expanded.
Therefore, the number of slot machines increased significantly by 5.3% compared to previous year. In the installation ofexisting machines, we have also made steady efforts to analyse the trends of customers and competitors and reflected
them in appropriate hall development. As a result, we were able to attract more customers than the market’s rate ofcustomer recovery and increase our market share in the areas where we operate. We believe that we were able toachieve solid results as a year of post-pandemic.
In the current fiscal year, we continued to review our hall operations and accumulated a variety of know-how, such as
promoting labour saving in hall management while retaining services that provide a high level of customer satisfaction.
Since the self-service counters that we introduced last year, which made the prize exchange process contactless, hasbeen well received by our customers, we have further increased the number of halls that have introduced them during
the year, and have completed the introduction of self-service POS at 37 halls, representing 75% hall coverage.
In addition, given the competitive environment of existing halls, we had carried out various measures and experimentswith the aim of further increasing our sales capabilities, we believed that we had achieved certain level of success. We
consider that this will also lead to more options for corporate restructuring methods in the event of mergers andacquisitions.
In the domestic food and beverage business, we opened a new “LIZARRAN” outlet in Tachikawa City, Tokyo in April
2023. As a result of the Spanish restaurant brand gaining some penetration in the Tokyo metropolitan area, we havebegun to receive inquiries from major developers to open new outlets, and the business environment is improving withmore opportunities for opening new outlets in favorable locations.
Nexia Inc., a subsidiary that operates real estate business, invested a total of ¥880 million in March 2024 to acquire a
property in a prime location in Koriyama City. We will continue to consider acquiring prime properties while maintaining
our investment standards.
In terms of business in Southeast Asia, the economies of Vietnam and Cambodia were ahead of Japan in the recovery
from the damage caused by COVID-19, but economic growth in both countries has declined due to factors such as a
slowdown in exports and slump in the real estate industry. Vietnam’s GDP growth rate slowed from 8.0% in previous year
to 5.1% in current year, and Cambodia’s GDP growth rate also decreased slightly from 5.2% to 5.0%, indicating that the
post-pandemic economic recovery has hit a plateau in 2023.
Consequently, operating revenue of Dream Games, a subsidiary that operates amusement arcades in Vietnam andCambodia, decreased slightly by 1.3% year-on-year to ¥1,687 million. Particularly in the second half of the year,
customer sentiment declined and the overall number of customers in the malls where we operated our outlets declined,with a strong negative impact on the leisure industry. From the beginning, we did not plan to open any new outlets in thisfiscal year, and as a result of closing down one outlet, as of the end of March 2024, we have a total of 11 operating
outlets, 8 in Vietnam and 3 in Cambodia.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

7

Chairman’s Statement
Although GDP growth rates of Vietnam and Cambodia in 2023 have slowed compared to the previous year, according to
the data from the International Monetary Fund, strong economic growth is expected to continue at over 5% in these twocountries. We believe that both countries are still in the process of economic development, and that consumption andleisure markets will continue to expand. The amusement arcade business in both Vietnam and Cambodia is based on thestrategy of opening outlets in leading shopping malls. In particular, a lot of new AEON malls are scheduled to open in
Vietnam from 2025, but the competitive environment is gradually becoming more severe. While continuing to develop theoperating structure of the organisation, we are also planning to work on building a steady earnings base by developing
multiple types of standard business formats depending on location and area, opening a new speciality business format ofarcade prize game and planning to open small and medium-sized outlets outside of AEON malls.
The joint business operating a Japanese restaurant food court, YOKOCHO, in Shenzhen, Guangdong Province, China,
opened in July 2019, was indefinitely suspended in February 2020 due to the spread of COVID-19 in China. The
business was subsequently resumed in August 2021, as the COVID-19 situation in China seemed to have calmed down.
However, the business environment did not improve and the situation remained unstable, so we ceased the business inAugust 2023.
As a medium-term strategy, the Group’s priority is to increase the number of amusement machines installed and tosecure sales in pachinko business as the core business, and will actively invest in new hall openings and merger andacquisition with the aim of establishing a structure that can ensure stable earnings. At the same time, investments will bemade to refurbish existing halls and to promote digitalisation with the aim of further increasing operational efficiency.
Furthermore, from a long-term perspective, we plan to expand into new businesses and build business models
domestically based on the premise of an aging, mature society and a declining population.
Outside Japan, we will also seek to grow existing businesses and create new business opportunities while responding tochanges in the business environment in each country.
In 2021, the Group resolved the Environmental, Social and Governance (“ESG”) Management Declaration, which is thebasic concept for conducting sustainable business, “The Group prioritises the public interest and considers its employees,
customers, business partners, local communities, and the entire earth as a whole to be stakeholders. We aim for
management that can achieve sustainable growth together with all”. The concept of ESG, which is the benchmark forsustainable growth, is becoming increasingly important in business, as it serves as an index for selecting investment
targets worldwide. In addition, Sustainable Development Goals established for the purpose of achieving a sustainable
world are having a positive impact on corporate management. The ESG Management Declaration sets out the following
three specific points to be focused on:
1.

Properly appropriate the profits generated to employees, customers, local communities, environment, the entire
earth, vendors and shareholders.

2.

Conduct management that can contribute to society with sustainability from a medium- to long-term perspective,
rather than from a short-term perspective.

3.

Constantly make efforts in new areas boldly and manage our business with entrepreneurial spirit for the sustainable
development of the Company.

These three objectives will also be important in shaping a new corporate culture for the next era of the Group.

8

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Chairman’s Statement
The history of the Group’s pachinko hall business is over 70 years. The reason we have been able to continue ourbusiness for more than 70 years is that we always place emphasis on our relationship with the community and havealways been aware of harmonious coexistence with the community. Entities cannot continue their businesses on theirown, and there is a greater need than ever for them to not only pursue profits for themselves but also develop together
with society. Especially in Fukushima Prefecture, which is our key location in Japan, it is still halfway throughreconstruction from the Great East Japan Earthquake, but as a longer-term issue, increasing the production and labor
force population is regarded as a major challenge. If this long-term declining trend continues, we cannot expect therevitalization of the local economy. On the other hand, if the revitalization of the local economy cannot be realised, theproduction and labor force population will not increase, and we cannot expect to retain or increase customers in thepachinko hall business, which is the core business of the Group. Resolving the local issues in each region where ourGroup operates, will create new business opportunities and lead to the mitigation of future business risks simultaneously.
We regard the pursuit of regional development through our business activities as an important task for future operations.
The Group aims to realise our corporate philosophy of “Providing happy times for people by making the world cheerful,
fun and entertaining”, and will continue to take on the challenges of constantly responding to social changes, aiming to
be a company that will continue for more than 100 years ahead of us. Under the ESG Management Declaration, which isthe basic concept for conducting sustainable business, we will continue to strive to become a company that is
indispensable to society and can meet the expectations of all stakeholders, considering the development and ideal formof our business.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

9

Management Discussion and Analysis
FINANCIAL REVIEWRevenue from Pachinko and Pachislot Business
Revenue from pachinko and pachislot is derived from gross pay-ins netted with gross pay-outs.
Revenue from pachinko and pachislot business increased by ¥2,049 million, or 9.3%, from ¥21,895 million in 2023 to¥23,944 million in 2024. The increase in revenue was attributable to the continued recovery of economy in Japan, andreplacement of gaming machines which triggered higher customer turnover and improved the hall traffic.
Gross pay-ins
For the year ended 31 March 2024, the Group’s gross pay-ins from pachinko and pachislot business amounted to¥131,835 million, comprising revenue from 47 suburban halls and 2 urban halls. The increase in gross pay-ins by¥11,998 million, or 10.0%, as compared to last year was resulted from the factors explained above.
Gross pay-outs
Gross pay-outs, being the aggregate cost of G-prizes and general prizes exchanged by customers, increased from¥97,942 million in 2023 to ¥107,891 million in 2024, an increase of ¥9,949 million, or 10.2%, which corresponded to therise in gross pay-ins.
Revenue margin
Revenue margin recorded at 18.2% for the year ended 31 March 2024, which was relatively stable as compared to
18.3% in 2023. The management continued to review pay-out ratio to stimulate customers’ visit and improve revenue
margin.

Revenue from Amusement Arcade Business
Revenue from amusement arcade business decreased by ¥23 million or 1.3%, from ¥1,710 million in 2023 to ¥1,687
million in current year. The amount comprised revenue derived from Vietnam and Cambodia amounting to ¥1,135 millionand ¥552 million, respectively (2023: ¥1,316 million and ¥394 million, respectively). The slight decrease in revenue wasresulted from the drop in sales income generated from Vietnam as one of the popular game machines was discontinued
during the year, netted with additional income generated from two amusement arcades which were newly opened in
Cambodia at the end of 2022.

Other revenue
Other revenue represents incomes from vending machines, hotel and restaurant operations.
Vending machines income amounted to ¥453 million in 2024. The increase of ¥75 million as compared to ¥378 million in
2023 was resulted from the increase in customer turnover rate as mentioned above.
Income from hotel operation amounted to ¥163 million in 2024, recording an increase of ¥14 million as compared to 2023
of ¥149 million. The increase in hotel income was resulted from mild increase in occupancy rate by 4% as compared tolast year.
Revenue from restaurant operations amounted to ¥708 million for the year ended 31 March 2024, increased by ¥228
million, or 47.5%, as compared to ¥480 million in last year. The increasing popularity of “KOMEDA” café, and the openingof a “LIZARRAN” restaurant in early 2023 were the main drivers to the revenue increase in this sector.

10

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Annual Report 2024

Management Discussion and Analysis
Hall operating expenses
Hall operating expenses increased by ¥1,928 million, or 10.3%, from ¥18,726 million in 2023 to ¥20,654 million 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 ¥7,890 million, ¥4,263 million and ¥3,480 million, respectively, for the year
ended 31 March 2024 (31 March 2023: ¥6,537 million, ¥4,386 million and ¥3,612 million, respectively).
The rise in hall operating expenses was resulted from (i) more frequent replacement of new pachinko and pachislot
machines during the current period; and (ii) minor work being carried out in various halls to provide a better playing
environment to visitors.

Administrative expenses
Administrative expenses increased by ¥227 million, or 6.4% from ¥3,568 million for the year ended 31 March 2023 to¥3,795 million in 2024 as a result of the increase in staff wages during the current year.

Impairment loss
Impairment loss on property, plant and equipment, right-of-use assets and other non-current assets amounted to ¥586
million in current year. The International Accounting Standard 36 “Impairment of Assets” (“IAS 36”) requires that assets
be carried at no more than their recoverable amount. If an asset’s carrying value exceeds the amount that could bereceived through use or selling the asset, then the asset is impaired and IAS 36 requires a company to make provision
for the impairment loss. Non-current assets other than goodwill and intangible assets with indefinite useful life are tested
for impairment when there are events that indicate that the related asset values may not be recoverable, and the Group
carries out reviews of the recoverable amounts of each cash-generating units (“CGUs”).
The management noted that the Group’s financial performance is highly sensitive to changes in market situations. Taking
into account the keen competition within the industries, the management considered CGU with operating loss recorded inrecent two reporting periods and whether budget was met in current period as having impairment indicator, andperformed impairment assessments over pachinko and pachislot hall operations, amusement arcade operations andrestaurant operations by assessing the recoverable amounts of the CGU, determined as the higher of their value-in-use
and fair value less cost of disposal. As a result, the Group recognised an impairment loss of ¥112 million and ¥284 million
over plant, property and equipment, right-of-use assets and other non-current assets, respectively for the year ended 31
March 2024 (31 March 2023: ¥214 million, ¥371 million and ¥1 million over plant, property and equipment, right-of-use
assets and other non-current assets, respectively).

Finance costs
Finance costs, net amounted to ¥891 million for the year ended 31 March 2024 as compared to ¥887 million in 2023. The
increase was due to the overall increase in interest rate.

Profit attributable to owners of the Company, basic earnings per share and dividend
Profit attributable to owners of the Company of ¥694 million was recorded for year ended 31 March 2024, as comparedto ¥1,198 million in prior year. The decrease in profit was due to the increase in income tax expense by ¥856 million,
netted with continued economic recovery in Japan and replacement of game machines with “Smart Slots” machines
which in turn drove more hall traffic.
Basic earnings per share for the year ended 31 March 2024 was ¥0.58 (31 March 2023: ¥1.00). The board of directors of
the Company (the “Board”) has declared a final dividend of ¥0.17 per common share for the year ended 31 March 2024
(31 March 2023: ¥0.11).

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

11

Management Discussion and Analysis
CAPITAL STRUCTURE
The Group principally meets its working capital and other liquidity requirements through a combination of capital
contributions, including cash flow from operations and bank borrowings. The Group’s daily operation is mainly financedby 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 thepayment of expenses, loans and to fund any capital expenditure and commitment that the Group may have from time totime. The Group’s cash surpluses are placed in short-term and 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 and liabilities mainly
denominated in Japanese Yen, as such, the Group does not have any material foreign exchange exposure.
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 Group as at 31 March 2024 and 2023:
As at 31 March

Cash and cash equivalents
Bank deposits with maturity over 3 months

Bank loans
Syndicated loans
Lease liabilities

Total equity
Gearing ratio (Note 1)
Working capital (Note 2)
Note 1: Gearing ratio is calculated as total borrowings less cash and cash equivalents divided by equity.
Note 2: Working capital being current assets less current liabilities.

12

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

2024
¥ million

2023¥ million

12,350345

10,435528

12,695

10,963

6,116
4,316
27,925

6,012
4,194
29,73038,35739,93618,981
1.4(145)

19,294
1.5780

Management Discussion and Analysis
As at 31 March 2024, net current liabilities of the Group totalled ¥145 million (31 March 2023: net current assets ¥780
million), and current ratio was 0.99 as at 31 March 2024 (31 March 2023: 1.07). As at 31 March 2024, there were cash
and cash equivalents of ¥12,350 million (31 March 2023: ¥10,435 million), in which ¥11,009 million was denominated inJapanese Yen, ¥795 million was denominated in United States dollar, ¥449 million was denominated in Hong Kong dollar
and ¥97 million was denominated in other currencies. As at 31 March 2024, the Group had total borrowings and leaseliabilities of ¥38,357 million (31 March 2023: ¥39,936 million). Current portion of bank borrowings and current portion oflease liabilities amounted to ¥7,737 million as at 31 March 2024 (31 March 2023: ¥7,203 million).
The Group’s bank borrowings during the current period comprised bank loans and syndicated loans. As at 31 March
2024, the total bank borrowings amounted to ¥10,432 million (31 March 2023: ¥10,206 million), with average effective
interest rates on bank borrowings ranged from 1.08% to 1.61% (31 March 2023: 0.97% to 1.57%) per annum.
Approximately 4.9% of bank borrowings as at 31 March 2024 were fixed rate borrowings.

HEDGING OF FLOATING RATE BORROWINGS AND FOREIGN EXCHANGE
As at 31 March 2024, the Group had three floating to fixed interest rate swap contracts with banks in Japan (i.e. theGroup pays fixed interest rates and receives interests at floating rate). These interest rate swap contracts were enteredinto as a measure to manage interest rate risk in relation to loans of the Group. As interest rates of some of the Group’sloans are on a floating rate basis, the floating to fixed interest rate swap contracts enabled the Group to reduce thevolatility in the amount of interest being paid. For the year ended 31 March 2024, gain on fair value for interest rate swap
contracts amounted to ¥3 million (31 March 2023: ¥7 million).
The Group did not carry out significant foreign currency investment and its debts were all denominated in Japanese Yen
as at 31 March 2024. As the functional currency of certain subsidiaries are different from the Company, the Group will be
exposed to foreign 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 notlimited 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 1.4 as at 31 March 2024 (31 March 2023: 1.5).

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 andpachislot hall and amusement arcade operations. The table below shows a breakdown of the capital expenditure for theindicated periods:
As at 31 March

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

NIRAKU GC HOLDINGS, INC.

2024
¥ million

2023¥ million

2,289
1,258
4

929
1,932
4

3,551

2,865

Annual Report 2024

13

Management Discussion and Analysis
CHARGES ON ASSETS
As at 31 March 2024 and 2023, the carrying values of charged assets were as below:

Property, plant and equipment
Investment properties
Deposits and other receivables2024¥ million

2023¥ million

8,946
553
158

9,230
572
162

9,657

9,964

CONTINGENT LIABILITIESThe Group did not have any material contingent liabilities as at 31 March 2024 and 2023.

CAPITAL COMMITMENTS
Details of the Group’s capital commitments as at 31 March 2024 and 2023 are set out in Note 34 to the consolidated
financial statements.

SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITIONS AND DISPOSALS OF
SUBSIDIARIES, AND FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS
Save for those disclosed in this annual report, the Group had no plan authorised by the Board for other material
investments or additions of capital assets as at the date of this annual report.
There is no important event affecting the Company that have occurred since the end of the financial year.

EMPLOYEES AND REMUNERATION POLICY
As at 31 March 2024, the Group had 1,334 employees. The remuneration policy of the Group (including those fordirectors 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 35(b) to the consolidated financial statements.

FINAL DIVIDENDThe Board has declared a final dividend of ¥0.17 per common share for the year ended 31 March 2024 (31 March 2023:¥0.11) on 27 May 2024 and the final dividend will be payable on 12 July 2024 to the shareholders of the Company (the“Shareholders”) whose names appear on the register of members of the Company at the close of business on 12 June
2024.
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 27 May 2024 (being 20 to 24 May 2024).

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Corporate Governance Report
CORPORATE GOVERNANCE
During the year ended 31 March 2024, the Company has adopted and complied with all the applicable principles andcode provisions of the Corporate Governance Code (the “CG Code”) contained in Appendix C1 to the Rules Governing
the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), with the exception for codeprovision C.2.1, which requires the roles of chairman and chief executive to be separated and should be performed bydifferent individuals.

Code Provision C.2.1
Under code provision C.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 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 than himself) and members of our senior management. Taking into
account the continuation of the implementation of our business plans, the directors of the Company (the “Directors”)(including our independent non-executive Directors) consider our Chairman is the best candidate for both positions andthe present arrangements are beneficial to and in the interests of our Company and the Shareholders as a whole.

BOARD OF DIRECTORSThe term of office of each director is expired at the close of the annual shareholders meeting relating to the most recent
business year ending within one year following the election of such director.
The Board oversees the management, businesses, strategic directions and financial performance of the Group. The
Board currently comprises a total of eight Directors, with three executive Directors, namely Mr. Hisanori TANIGUCHI, Mr.
Akinori OHISHI and Mr. Masataka WATANABE; one non-executive Director, namely Mr. Hiroshi BANNAI, and four
independent non-executive Directors, namely Mr. Michio MINAKATA, Mr. Yoshihiro KOIZUMI, Mr. Kuraji KUTSUWATA
and Mr. Akihito TANAKA.

(a)

Delegation by the Board
The Board reserves for its decision all major matters of the Company, including: approval and monitoring of allpolicy matters, overall strategies and budgets, internal control and risk management systems, material transactions(in particular those that may involve conflict of interests), financial information, appointment of Directors and othersignificant financial and operational matters. The Board is accountable to the Shareholders. Directors could haverecourse to seek independent professional advice in performing their duties at the Company’s expense and areencouraged to access and to consult with the Company’s senior management independently.
The daily management, administration and operation of the Group are delegated to the senior management. The
delegated functions and responsibilities are periodically reviewed by the Board. Approval has to be obtained fromthe Board prior to any significant transactions entered into by the management.

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Annual Report 202415

Corporate Governance Report(b) Corporate Governance Function
The Board recognises that corporate governance should be the collective responsibility of Directors which includes:

(c)

(a)

to review and monitor the Company’s policies and practices on compliance with legal and regulatory
requirements;(b)

to review and monitor the training and continuous professional development of Directors and senior
management;(c)to develop, review and monitor the code of conduct and compliance manual applicable to employees andDirectors;(d)to develop and review the Company’s policies and practices on corporate governance and to makerecommendations to the Board and report to the Board on matters;(e)to review the Company’s compliance with the CG Code and disclosure in the corporate governance report;
and

(f)

to review and monitor the Company’s compliance with the Company’s whistleblowing policy.

Appointment and Re-election of Directors
The Board is empowered under the articles of incorporation of the Company (the “Articles of Incorporation”) to
appoint any person as a Director, either to fill a casual vacancy or to be an additional member of the Board. Only
the most suitable candidates who are experienced and competent and able to fulfill the fiduciary duties and exercise
reasonable care would be recommended to the Board for selection.
Appointments are first considered by the Nomination Committee in accordance with its terms of reference, theNomination Policy and Board Diversity Policy. Recommendations of the Nomination Committee are then put forth
to the Board for decision. In accordance with the Articles of Incorporation, all Directors shall retire at the next annual
general meeting of the Company (the “AGM”) but are eligible for re-election. Each Director was appointed by awritten service contract setting out the key terms and conditions of his/her appointment. The appointment of
independent non- executive Directors follows the guidelines for assessing independence as set out in Rule 3.13 of
the Listing Rules.

Chairman and Chief Executive Officer
The Board has appointed a Chairman, Mr. Hisanori TANIGUCHI, who provides leadership for the Board and ensures thatthe Board works effectively and that all important issues are discussed in a timely manner. The Chairman also holds the
position of Chief Executive Officer. Since April 2010, our Chairman has been the key leadership figure of our Group who
has been primarily involved in the formulation of business strategies and determination of the overall direction of ourGroup. 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 implementationof our business plans, our Directors (including our independent non-executive Directors) consider our Chairman is thebest candidate for both positions and the present arrangements are beneficial and in the interests of our Company and
our Shareholders as a whole.

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Corporate Governance Report
Independent Non-Executive Directors
The Company has received annual confirmations of independence from all the independent non-executive Directors inaccordance with Rule 3.13 of the Listing Rules. The Board is of the view that all the independent non-executive Directors
are independent and have appropriate professional qualifications or accounting or related financial management
expertise in accordance with Rule 3.10 of the Listing Rules.
The biographical details of the Chairman and the independent non-executive Directors are set out on page 25 and pages
26 to 27, respectively, of this annual report. Save as disclosed in this annual report, none of the Directors has any
personal relationship (including financial, business, family or other material/relevant relationship) with any other Directors
or chief executives.

Board Diversity Policy
The Company recognises and embraces the benefits of having a diverse Board to enhance the quality of its performance.
The Company formulated a Board Diversity Policy which sets out the approach to a diversity of perspectives among
members of its Board.
With a view to achieving a sustainable and balanced development, the Company sees increasing diversity at the Board
level as an essential element in supporting the attainment of its strategic objectives and its sustainable development. The
Company plans to appoint at least one female Director by the end of December 2024. In designing the Board’s
composition, Board diversity has been considered from a number of aspects, including but not limited to gender, age,
cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service. All Board
appointments will be based on meritocracy, and candidates will be considered against objective criteria, having due
regard for the benefits of diversity on the Board.
Selection of candidates will be based on a range of diversity perspectives appropriate to the requirements of theCompany’s business operations and environment as well as the industry in which the Company operates. The ultimate
decision will be based on merit and contribution that the selected candidates will bring to the Board. In addition, theCompany is committed to providing career development and training opportunities for its staff who it considers to havethe suitable experience, skills and knowledge with an aim to promote them to senior management or Directors. The
Company will also ensure that there is gender diversity in staff recruitment at mid to senior levels so as to develop apipeline of potential successors to the Board. For details of the gender ratio in the Company’s workforce as at 31 March
2024, please refer to the ESG report of the Company for the year ended 31 March 2024.
Regarding the Board’s current composition, the Board comprises 8 male Directors with different ages, lengths of service
and diversity perspectives, which have been disclosed in biographical information shown in “Profile of Directors andSenior Management” on pages 25 to 27 of this annual report. The Nomination Committee will continuously monitor andreview the implementation and operation of this policy and the progress towards achieving the measurable objectives,and also review this policy to ensure its effectiveness from time to time, as appropriate. The Nomination Committee will
discuss any revisions that may be required, and recommend any such revisions to the Board for consideration andapproval. The policy has been published on the Company’s website for public information.

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17

Corporate Governance Report
Audit Committee
The Company established the Audit Committee on 25 June 2014 with specific written terms of reference. The Audit
Committee is responsible for assisting the Board in providing an independent view on the financial information of theCompany, effectiveness of our risk management system, financial reporting system and internal control procedures,
overseeing the audit process and internal audit function and performing other duties and responsibilities as assigned by
the Board. The Audit Committee also oversees the corporate governance functions.
The Audit Committee held 15 meetings during the year ended 31 March 2024 to review reports on risk management
system, internal control system and internal audit function of the Group, and to discuss with the management and theexternal auditors the accounting policies and practices which may affect the Group and financial reporting matters. The
Audit Committee reviewed the internal control system and the Group’s financial statements for the year ended 31 March2024 and interim financial statements for the six months ended 30 September 2023 with recommendation to the Board
for approval. The audit plans from external auditors were also reviewed by the Audit Committee and recommendation
was made on the reappointment of the external auditors.
The Audit Committee currently consists of two independent non-executive Directors, namely Mr. Michio MINAKATA (南方美千雄), Mr. Yoshihiro KOIZUMI (小泉義広) and a non-executive Director, namely Mr. Hiroshi BANNAI (坂內弘). It iscurrently chaired by Mr. Michio MINAKATA (南方美千雄), an independent non-executive Director.

Remuneration Committee
The Remuneration Committee is responsible for making recommendations to the Board on the Company’s policy andstructure for the remuneration of all the Directors and senior management of the Group and on the establishment of aformal and transparent procedure for developing remuneration policy for approval by the Board.
The Remuneration Committee currently consists of three members, including two independent non-executive Directors,
namely Mr. Yoshihiro KOIZUMI (小泉義広) and Mr. Michio MINAKATA (南方美千雄), and an executive Director, namely
Mr. Hisanori TANIGUCHI (谷口久徳). It is currently chaired by Mr. Yoshihiro KOIZUMI (小泉義広), an independent nonexecutive Director. The Remuneration Committee held 2 meetings during the year ended 31 March 2024 to review andapprove the management’s remuneration proposals with reference to the Board’s corporate goals and objectives, and to
determine, with delegated responsibility, the remuneration packages of individual executive Directors and senior
management and make recommendations to the Board about the remuneration of non-executive Directors.
For the year ended 31 March 2024, the number of the senior management (including Directors) whose remuneration fellwithin the following bands is as follows:
Emolument bands

Number of individuals

Below ¥10,000,000¥10,000,001 to ¥20,000,000¥20,000,001 to ¥30,000,000¥30,000,001 to ¥100,000,000¥100,000,001 to ¥160,000,000

18

NIRAKU GC HOLDINGS, INC.

5
2
–
2
1

Annual Report 2024

Corporate Governance Report
Nomination Committee
The Company established the Nomination Committee on 25 June 2014 with specific written terms of reference. The
Nomination Committee is responsible for reviewing the structure, size and composition of the Board, overseeing theimplementation of Board Diversity Policy, assessing the independence of the independent non-executive Directors andmaking recommendations to the Board on the appointment and re-appointment of Directors.
The Nomination Committee currently consists of three members, including two independent non-executive Directors,
namely Mr. Kuraji KUTSUWATA (轡田倉治) and Mr. Akihito TANAKA (田中秋人), and an executive Director, namely Mr.
Hisanori TANIGUCHI (谷口久徳). It is currently chaired by Mr. Hisanori TANIGUCHI (谷口久徳), an executive Director.
The Nomination Committee held 4 meetings during the year ended 31 March 2024 to review the structure, size andcomposition (including the skills, knowledge, experience and diversity) of the Board, approve the renewal of the term of
appointment for the Directors, assess the independence of the independent non-executive Directors and review themeasurable objective in implementing the Board Diversity Policy.
All Directors (including non-executive Director and independent non-executive Directors) have formal service agreements
or letters of appointment with the Company for a term of one year commencing from their respective dates of
appointment, subject to retirement in accordance with the Articles of Incorporation. At the AGM held on 29 June 2023,
eight of the Directors retired from office in accordance with the Articles of Incorporation. All of them were re-elected by
Shareholders to continue their offices as Directors. The Nomination Committee has reviewed the Directors’ re-election
plan to ensure that every Director will retire every year at an AGM. As at 31 March 2024, none of the independent nonexecutive Directors has served the Company for more than nine years.
Details of the Directors’ attendance during the year ended 31 March 2024 are set out below:
Number of meetings attended/Eligible to attend

Name of Directors
Mr. Hisanori TANIGUCHI (谷口久徳)
Mr. Akinori OHISHI (大石明徳)
Mr. Masataka WATANABE (渡辺将敬)
Mr. Hiroshi BANNAI (坂內弘)Mr. Michio MINAKATA (南方美千雄)
Mr. Yoshihiro KOIZUMI (小泉義広)
Mr. Kuraji KUTSUWATA (轡田倉治)
Mr. Akihito TANAKA (田中秋人)

GeneralMeeting

Board
Meeting

Audit
Committee
Meeting

Remuneration
Committee
MeetingNomination
Committee
Meeting

1/1
1/1
1/1
1/1
1/1
1/1
1/1
1/1

15/15
15/15
15/15
15/15
15/15
15/15
13/15
15/15

–
–
–
15/15
15/15
15/15
–
–

2/2
–
–
–
2/2
2/2
–
–

4/4
–
–
–
–
–
3/4
4/4

There were 15 meetings of the Board held during the year ended 31 March 2024.
Directors who are considered having conflict of interests or material interests in proposed transactions or contemplated
issues are required to abstain from voting on the relevant resolution.
The Company has mechanisms in place to ensure independent views and input are available to the Board. To facilitate
an effective meeting, the Board and Board committee meeting schedules are informed well in advance to the Directors.
Meeting agenda, materials and information are provided to the Directors prior to meetings. Any Director can give noticeto the Chairman if he intends to include matters on the agenda of a Board meeting. All Directors are welcome to raise
enquiries, suggestions and views during the meetings. To encourage active participation, video conferences are arranged
for Directors who are unable to attend in person. The Board has conducted an annual review on these mechanisms andconsidered they are in place and are effective.
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19

Corporate Governance ReportInduction and Continuous Professional Development
Each newly appointed Director is provided with necessary induction and information to ensure that he/she has a proper
understanding of the Company’s operations and businesses as well as his/her responsibilities under relevant statues,
laws, rules and regulations. The Company also arranges regular seminars to provide Directors with updates on the latest
development and changes in the Listing Rules and other relevant legal and regulatory requirements from time to time.
The Directors are also provided with regular updates on the Company’s performance, position and prospects to enable
the Board as a whole and each Director to discharge their duties.
Directors are encouraged to participate in continuous professional development to develop and refresh their knowledge
and skills. All Directors participated in continuous professional development to develop and refresh their knowledge andskills during the year ended 31 March 2024. The Company’s external lawyers had facilitated Directors’ training by theprovision of presentations, briefings and materials for the Directors primarily relating to the roles, functions and duties ofa listed company director. Directors including Mr. Hisanori TANIGUCHI, Mr. Akinori OHISHI, Mr. Masataka WATANABE,
Mr. Hiroshi BANNAI, Mr. Michio MINAKATA, Mr. Yoshihiro KOIZUMI, Mr. Kuraji KUTSUWATA and Mr. Akihito TANAKA
received this training. Ms. YIU Wai Man Karen, the joint company secretary of the Company, from time to time updates
and provides written training material relating to the roles, functions and duties of a director to all Directors to study, andthey are asked to submit a signed training record to the Company on an annual basis.

AUDITOR’S REMUNERATION
During the year ended 31 March 2024, the total fee in relation to the annual audit of the Group amounted to ¥120 million,
which was paid/payable to PricewaterhouseCoopers and its affiliated firm. The remuneration paid toPricewaterhouseCoopers and its affiliated firm for services rendered is listed as follows:2024¥ million
Types of services
Statutory audit
Non-audit services (Note)

113
7

Total

120

Note: Non-audit services comprise primarily tax advisory services provided to the Group.

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Corporate Governance Report
JOINT COMPANY SECRETARIESThe joint company secretaries are Ms. YIU Wai Man Karen and Ms. NG Sau Mei. Ms. YIU Wai Man Karen is also thefinancial controller and is employed by the Company on a full-time basis.
In order to uphold good corporate governance and ensure compliance with the Listing Rules and applicable Hong Konglaws, the Company also engages Ms. NG Sau Mei, director of the Listing Services Department of TMF Hong Kong
Limited (a company secretarial service provider), as the other joint company secretary to assist Ms. YIU Wai Man Karen
to discharge her duties as company secretary of the Company. The primary contact person of Ms. NG Sau Mei at theCompany is Ms. YIU Wai Man Karen.
During the year ended 31 March 2024, Ms. YIU Wai Man Karen and Ms. NG Sau Mei have undertaken not less than 15hours of relevant professional training respectively in compliance with Rule 3.29 of the Listing Rules.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Board, supported by the finance department, is responsible for the preparation of the financial statements of theCompany and the Group. The Board has prepared the financial statements in accordance with IFRS AccountingStandards issued by International Accounting Standard Board. Appropriate accounting policies have also been used andapplied consistently. The Directors were not aware of any material uncertainties relating to events or conditions which
may cast significant doubt upon the Group’s ability to continue as a going concern.
The statement by the auditor of the Company and the Group regarding its reporting responsibilities on the financial
statements of the Company and the Group is set out in the Independent Auditor’s Report on pages 38 to 45 of thisannual report.

DIRECTORS’ SECURITIES TRANSACTIONSThe Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out inAppendix C3 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 therequired standard set out in the Model Code and the Company’s code of conduct during the year ended 31 March 2024.

SHAREHOLDERS’ RIGHTS
Rights to demand Directors to call for a Shareholders’ meeting
Any one Shareholder holding no less than 3% of the voting rights in the Company for the last six consecutive months
may request the Directors to convene a general meeting. If the Directors do not send out a convocation notice for suchgeneral meeting to be held and such Shareholders’ meeting is not convened by the Directors within eight weeks from thedate of such request, the relevant Shareholder who made the request may convene a general meeting with court
permission.

Rights to put enquires to the Board
The Board and senior management maintain a continuing dialogue with the Shareholders and investors through various
channels including the Company’s AGM. The Chairman, chairmen of the Board committees (or respective designatedmember), executive officers and external auditors will attend the AGM. The Directors will answer questions raised by the
Shareholders on the performance of the Group. Our corporate website which contains corporate information,
announcements as well as the recent developments of the Group enables Shareholders to have timely and updated
information of the Group.

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Corporate Governance Report
Rights to demand Directors to include a proposal in a Shareholders’ meeting
Shareholders continuously holding not less than 1% of the votes of all Shareholders or not less than 300 votes of all
Shareholders for the preceding six months may demand the Directors, no later than eight weeks prior to the date of the
Shareholders’ meeting, to notify Shareholders of the summary of the proposals which the demanding Shareholders
intend to submit with respect to the matters that are the purpose of the Shareholders’ meeting and include a proposal in
the notices of the Shareholders’ meetings. The Company will notify the Shareholders of the date on which an AGM is tobe held no less than ten weeks prior to the date of such meeting by making a voluntary announcement on the websites of
the Company and the Stock Exchange.

INVESTOR RELATIONS
To manage its relationship with investment community and its Shareholders, the Company also communicates throughannouncements and annual and interim reports. All such reports and announcements can also be accessed via the
Company’s website. The Directors, joint company secretary or other appropriate members of the senior management
also respond to inquiries from Shareholders and investment community promptly. Shareholders who intend to put forward
their enquiries about the Company to the Board could send their enquiries via Strategic Financial Relations Limited at
niraku@sprg.com.hk.
The Board has carried out an annual review on the above policy regarding Shareholders’ communication, and consideredthat such policy has been properly implemented during the year ended 31 March 2024 and is effective.

RISK MANAGEMENT AND INTERNAL CONTROLThe Company has formulated the risk management policy and processes which apply to all levels of the Company andits subsidiaries to ensure all material risks which the Company is exposed to are properly identified, analysed, evaluated,
responded, monitored and communicated.
The Board acknowledges its responsibility to ensure that the Company establishes and maintains sound risk
management and internal control systems within the Group and to review the effectiveness of the systems. Such systems
are designed to manage and mitigate risks inherent in the Group to an acceptable level, rather than eliminate the risk offailure to achieve business objectives, and can only provide reasonable assurance against material misstatement or loss.
The structure of the Company’s risk management and internal control systems is to ensure (i) appropriate policies andcontrol procedures have been designed and established to safeguard the Group’s assets against improper use ordisposal; (ii) relevant laws and regulations are adhered to and complied with; and (iii) reliable financial and accounting
records are maintained in accordance with relevant accounting standards and regulatory reporting requirements. The
main structure of the systems is as follows:

The Board•

ensures effective systems are maintained in order to safeguard the assets of the Group;•

defines management structure with clear lines of responsibility and limit of authority; and•determines the nature and extent of significant risk that the Company is willing to take in achieving the strategic
objectives and formulates the Group’s risk management strategies.

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Corporate Governance Report
The Audit Committee•

oversees the systems of the Group;•

reviews and discusses with the management of the Company at least annually to ensure that the management of
the Company has performed its duty to have the effective systems; and•considers major findings on internal control matters and makes recommendations to the Board.

The Internal Audit Department•

analyses and appraises independently the adequacy and effectiveness of the Company’s risk management andinternal control systems;•

reports internal audit findings to the Audit Committee; and•provides recommendations for improvement.

The Risk Management Office•assists the management of the Company in formulating risk management policies, tools and processes;•

gives advice on the design of the systems and action plans taken by the management of the Company inaddressing the identified risks;•

ensures appropriate actions are taken against major risks which affect the Group’s businesses and operations; and•monitors and reviews the systems and reports to the Audit Committee.

The Management of the Company (includes heads of departments and business units)•

designs, implements and monitors the systems and ensures the systems are executed effectively;•

identifies risks and takes measures to mitigate risks in day-to-day operations;•gives prompt responses and conducts follow-up actions against internal control matters raised by internal auditors (ifany) or the independent auditor; and•provides confirmation to the Board on the effectiveness of the systems.

During the reporting period, the Company has carried out the following works in relation to risk management and internal
control:•

The management of the Company, through daily risk management activities, identified major risks that may impact
the Group’s performance; assessed and evaluated the likelihood of occurrence of the identified risks; formulated
and implemented measures, controls and action plans to manage and mitigate such risks;•

Risk management office monitored and reviewed the risk management and internal control systems on an ongoingbasis and reported to the Audit Committee regarding the status of the systems;•

Risk management office periodically followed up and reviewed the implementation of the measures against majorrisks identified and ensured appropriate actions were taken to address all major risks identified;

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23

Corporate Governance Report•

Risk management office reviewed the risk management and internal control systems periodically to identify process
and control deficiencies, and designed and implemented remedial actions to address such deficiencies;•

Risk management office ensured appropriate procedures and measures are in place to safeguard assets against
unauthorised use or disposition, control capital expenditure, maintain proper accounting records and ensure
reliability of financial information used for business and publications;•Internal audit department carried out analysis and independent appraisal of the adequacy and effectiveness of therisk management and internal control systems; examined risk-related documentation prepared by the managementof the Company and conducted interviews with employees at all levels; and•The head of internal audit department attended meetings of the Audit Committee and reported on the internal audit
findings and responded to queries from members of the Audit Committee.

The Group also has a formal written whistleblowing policy to enable officers and employees at all levels and divisions tocommunicate their concerns about any aspect of risks and internal operations.
The Company has internal guidelines in place to ensure inside information is disseminated to the public in accordancewith the applicable laws and regulations. Executive officers and financial function of the Group are delegated withresponsibilities to control and monitor the proper procedures regarding inside information disclosures. Access to inside
information is restricted to relevant senior executives. Relevant personnel and other professional parties involved arereminded to preserve confidentiality of the inside information until it is publicly disclosed. Other procedures including preclearance on dealing in Company’s securities by Directors and designated members of the management, notification ofregular blackout period and securities dealing restrictions to Directors and employees, and identification of project bycode name have also been implemented by the Company against possible mishandling of inside information within theGroup.
During the year under review, the Board has reviewed, through the Audit Committee, the Group’s risk management andinternal control systems and is not aware of any significant issues that would have an adverse impact on theeffectiveness and adequacy of the risk management and internal control systems throughout the year.

CHANGE IN CONSTITUTIONAL DOCUMENTS
There was no significant change in the Company’s constitutional documents made during the year.

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Profile of Directors and Senior Management
CHAIRMAN OF THE BOARD, EXECUTIVE DIRECTOR AND CHIEF EXECUTIVE OFFICER
Mr. Hisanori TANIGUCHI (谷口久徳), aged 61, is the primary leadership figure of the Group. He was appointed as theRepresentative Director and President* (代表取締役社長) of the Company on 10 January 2013, the date of incorporationof our Company, and was re-designated as a Director and Chief Executive Officer on 25 June 2014. Mr. Taniguchi is
responsible for the Group’s overall corporate strategies, management and business development.
Mr. Taniguchi joined the Group in April 1983, deployed in a number of departments across our operations, from humanresources to hall development and sales. Throughout his 40 years of experience with the Group, he has acquired
extensive knowledge in a wide array of aspects in pachinko and pachislot hall operations.
Mr. Taniguchi first involved in our overall general management in November 2002, when he was appointed as the
managing director* (常務取締役) of Niraku Corporation. He was subsequently elected as the vice president* (取締役副社長), president* (取締役社長) and representative director and president* (代表取締役社長) of Niraku Corporation in June
2008, June 2009 and April 2010, respectively. He is currently the representative director and president* (代表取締役社長)
of Niraku Corporation.

EXECUTIVE DIRECTORS
Mr. Akinori OHISHI (大石明徳), aged 59, worked at Sumisho Ekika Gas Co., Ltd.* (住商液化ガス株式会社) (nowEnessance Holdings Co., Ltd.* (株式会社エネサンスホールディングス)), where he was involved in general work in the
management division, from 1987 to 1995, and worked at Dynam Co., Ltd.* (株式会社ダイナム), from 1995 to 1998,
where he was involved in corporate planning. He then went on to serve as an executive of a venture company, then workat a consulting company and finally serve as president of a management consulting company, and he was involved inmanagement consulting for about 10 years.
In April 2009, Mr. Ohishi joined the Group as an adviser* (顧問) of Niraku Corporation. In April 2010, Mr. Ohishi became
the executive officer* (執行役員) and head of corporate planning before promoted to a director* (取締役) of Niraku
Corporation in June 2012, and he was responsible for implementing corporate strategy and business strategy.
Subsequently, Mr. Ohishi served as a Director* (取締役) of the Company from March 2013 to June 2014, and he hasserved as an Executive Officer* (執行役) of the Company from June 2014 to the present.
Mr. Ohishi graduated from the College of Humanities and Sciences, Nihon University* (日本大学), in March 1987. Mr.
Ohishi is well versed in the areas of business strategy and finance, and he was nominated by the Board for monitoring
the business based on his experience and expertise.
Mr. Masataka WATANABE (渡辺将敬), aged 55, worked at Yamaichi Securities Co., Ltd.* (山一證券株式会社) from 1993
to 1994, where he was involved in securities, and from 1995 to 2015, he worked at Hikari Tsushin Inc.* (株式会社光通信),
where he was involved in business strategy and accounting. He was appointed as a director* (取締役) and a member of
the audit committee* (監査等委員) of Hikari Tsushin Inc.* (株式会社光通信) in June 2017, in which capacity he serves tothe present. Hikari Tsushin Inc.* (株式会社光通信) is an information and telecommunications services company listed on
the Tokyo Stock Exchange (stock code: 9435). In December 2018, Mr. Watanabe joined the Group as an adviser* (特別顧問) of the Company.
Mr. Watanabe graduated from The University of Tokyo* (東京大学), Faculty of Economics, in October 1992. Mr.
Watanabe is well versed in the areas of securities trading, accounting and auditing, and he was nominated by the Board
to provide advice based on his experience and expertise.

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25

Profile of Directors and Senior Management
NON-EXECUTIVE DIRECTOR
Mr. Hiroshi BANNAI (坂內弘), aged 85, had served as a police officer in Fukushima Prefecture from 1962 to hisretirement from the police force in 1999, during which he was mainly responsible for handling matters related to antisocialorganisations. Mr. Bannai then served as an executive director* (専務理事) for the Fukushima Prefecture Amusement
Business Association* (福島県遊技業協同組合). Relying on his experience from the police force, Mr. Bannai had also
been an advisor for Fukushima Bank* (福島銀行) from 2002 to 2009 and an advisor for Xebio Co., Ltd.* (株式会社ゼビオ)
from 2003 to 2021. Mr. Bannai received his education from the Fukushima Prefectural Wakamatsu Commercial HighSchool* (福島県立若松商業高等学校). Mr. Bannai was appointed to the Board to supervise the Group’s compliance withapplicable laws and regulations relating to adult entertainment.

INDEPENDENT NON-EXECUTIVE DIRECTORS
Mr. Michio MINAKATA (南方美千雄), aged 57, was appointed as an independent non-executive Director in June 2016.
He started his career at KPMG Century Audit Corporation* (KPMGセンチュリー監査法人). Mr. Minakata then worked forseveral companies and offices including NASDAQ Japan* (ナスダッックジャパン) based on his capability in theaccounting field. Mr. Minakata is currently serving as the representative director* (代表取締役) of IPO Bank* (株式会社IPOバンク) and the partner* (社員) of Mavrick Tax Corporation* (税理士法人マーヴリック). Further, Mr. Minakata iscurrently also an advisor* (監査役) for Showcase Inc.* (株式会社ショーケース), the shares of which are listed on theStandard Market of the Tokyo Stock Exchange (3909: JP). Mr. Minakata received a bachelor’s degree in economics from
Keio University* (慶応義塾大学) in March 1990. Mr. Minakata has also been a member of the Japanese Institute ofCertified Public Accountants since May 1996. Mr. Minakata was appointed to the Board to provide advice to the Company
based on his accounting and management background and expertise.
Mr. Yoshihiro KOIZUMI (小泉義広), aged 69, was appointed as an independent non-executive Director in June 2016. He
has worked for several leading Japanese and foreign companies over the years, including Toshiba Co., Ltd.* (株式会社東芝) from 1979 to 1986 and Daiwa Securities Co., Ltd.* (大和証券株式会社) from 1986 to 1992. Mr. Koizumi also has
experience in working for banks and financial institutions, including Deutsche Bank* (ドイツ銀行) from 1994 to 1997 andSociete General Bank* (ソシエテジェネラル銀行) from 1997 to 2002. Thereafter, Mr. Koizumi also served as therepresentative director* (代表取締役) of Mariner Financial Service Co., Ltd.* (株式会社マリナー•フィナンシャル•サービス) from 2002 to 2015 and has been serving as the representative director* (代表取締役) of Clear Markets Japan Co.,
Ltd.* (Clear Markets Japan 株式会社) since 2014. Mr. Koizumi graduated from the Department of Commerce Science at
Keio University* (慶応義塾大学商学部). Mr. Koizumi has also obtained his qualification as a certified public accountant in
the United States in 1991. Mr. Koizumi was appointed to the Board to provide advice to the Company based on his
financial and management background and expertise.
Mr. Kuraji KUTSUWATA (轡田倉治), aged 82, worked at the Iwase village office* (岩瀬村役場) from 1961 to 1975 before
joining food vendor “Kutsuwata Shoten” (now Kutsuwata Shoten Co., Ltd.* (有限会社くつわた商店)) in 1975. Whileserving as the Company’s representative Director* (代表取締役) from 1980 onwards, in 1985, he established Yappu
Kogyo Co., Ltd.* (有限会社ヤツプ工業), an optical component assembly and processing company, and has served as its
representative director* (代表取締役) to this day. In addition, he has served as a member* (議員) of the Iwase Village
Council* (岩瀬村議会) and as chairman* (会長) of the Iwase Society of Commerce and Industry* (岩瀬村商工会), and in
2004, he became a director* (理事) of the Fukushima Federation of Societies of Commerce and Industry* (福島県商工会
連合会), which oversees management support projects and regional economy promotion projects run by societies ofcommerce and industry in Fukushima Prefecture. From 2012 to the present, he has served as chairman* (会長) of theFederation. A society of commerce and industry is an economic organisation that supports the business activities of small
and medium-sized enterprises.

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Profile of Directors and Senior Management
Mr. Kutsuwata graduated from Fukushima Prefectural Sukagawa High School* (福島県立須賀川高等学校). Mr. Kutsuwata
has contributed to the development of the regional economy, and his perspective is in line with the regional management
strategies that our Group is aiming for, so he has been nominated by the Board to provide advice based on his
experience.
Mr. Akihito TANAKA (田中秋人), aged 76, worked at AEON Co., Ltd.* (イオン株式会社) from 1970 to 2013, where he
was involved in the founding of AEON Hong Kong, and has been active in overseas business development in China and
ASEAN for 30 years. AEON Co., Ltd. is one of the largest companies in Japan with retail store operations listed on theTokyo Stock Exchange (8267: JP). After retiring from AEON Co., Ltd., he established Strategic Center of Asia Co., Ltd.*(株式会社アジア戦略本部) in September 2013 and are involved in management consulting operations as president andrepresentative director* (代表取締役社長). In addition, he served as president* (理事長) of General Incorporated
Foundation Asian Food Business Association* (財団法人アジアフードビジネス協会) and provided support for restaurant
and retail business in Asia until March 2022.
Mr. Tanaka graduated from Kansai University* (関西大学), Faculty of Letters, Department of Journalism, in March 1970 in
Japan. Mr. Tanaka is well versed in the areas of the development of restaurant and retail businesses in China and theASEAN region, and he was nominated by the Board to provide advice based on his experience.

EXECUTIVE OFFICER
Mr. Hidenori MOROTA (諸田英模), aged 58, has been appointed as Executive Officer since November 2014. He is alsoa director of Niraku Corporation since June 2012. He is the head of sales department and oversees the advertising,marketing, sales, machine selection and general prize offerings functions of the Group. Mr. Morota joined the Group in
October 1988 and was elected as a director of Niraku Corporation in June 2001 and was subsequently promoted to an
executive officer* (執行役) in June 2005. He served as a Director of the Company between January 2013 and June 2014,
and was designated as Executive Officer in November 2014. Mr. Morota’s industry positions include the chief director* (理事長) at the Fukushima Prefecture Amusement Business Association* (福島県遊技業協同組合連合会). He has been the
representative director and president* (代表取締役社長) of Nexia Inc. since September 2020.

SENIOR MANAGEMENT
Mr. Tatsuo TANIGUCHI (谷口龍雄), aged 70, was appointed as the representative director and president* (代表取締役社長) of Nexia Inc. in June 2009. His primary duties within the Group are the oversight of property activities, including theselection, acquisition and maintenance of the lands and premises of our pachinko halls. He also manages the officepremises and residential apartment building owned by the Group which were leased to third party customers as anancillary business. Mr. Taniguchi joined the Group in 1974 and resigned his office as Director of the Group in 2014. Mr.
Taniguchi remains his advisory role within the Group, focusing on property activities. Mr. Taniguchi is the brother of the
Chairman and is therefore his associate under the Listing Rules. Mr. Taniguchi is also a controlling shareholder of theCompany and also a person acting in concert with the Chairman within the meanings of the Codes on Takeovers andMergers and Share Buy-backs.
*

For identification purpose only

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27

Report of the Directors
The Directors are here to present the annual report of the Company together with the audited consolidated financial
statements of the Group for the year ended 31 March 2024.

PRINCIPAL ACTIVITIESThe principal activity of the Company is investment holding. The Company and its subsidiaries comprising the Group are
principally engaged in pachinko and pachislot hall operations, amusement arcade operations, hotel operations andrestaurant business in Japan. The principal activities of the subsidiaries are set out in Note 38 to the consolidated
financial statements. The operating segment of the Group for the year ended 31 March 2024 is set out in Note 5 to theconsolidated financial statements.

BUSINESS OVERVIEW
With the restoration of socio-economic activities and benefiting from the consumer confidence regains plus steadyhousehold consumption growth, the Group’s domestic business in Japan and its overseas investments in Southeast
Asian countries have seen a continuous upswing in their revenues. For the year ended 31 March 2024, revenue of theGroup amounted to ¥26,955 million, recording a surge of ¥2,343 million, as compared to ¥24,612 million in 2023. Profit
before tax for the year ended 31 March 2024 was ¥1,831 million, an increase of ¥342 million as compared to the results
in prior year, with the net profit attributable to the owner of the Company amounted to ¥694 million.
Pachinko revenue recorded a considerably increase of ¥2,099 million for the year ended 31 March 2024, from ¥21,895
million in prior year to ¥23,994 million in current year. Investing in new pachinko halls and frequent replacement of gamemachines are the Group’s main focus on broadening its revenue and boosting hall traffic. For the year ended 31 March
2024, investment placed on machine replacement amounted to ¥7,890 million, an increase of ¥1,353 million as compared
to prior year. Apart from complying with the gaming regulation change, more resources are put in machine replacement,such as launching of “Smart Slots” and “Smart Pachinko” machines, to provide parlor visitors with full enjoyment as newmodel machines are featured with popular animations, which in turn driving higher customer turnover rate. The Group
strives to curtail its spending through streamlining operating structure and deploying digital technology to improve
productivity in order to maintain a sustainable growth.
For the year ended 31 March 2024, revenue from amusement arcades business amounted to ¥1,687 million, a slightdecrease in revenue by ¥23 million as compared to prior year, which was resulted from the decrease in sales income
from Vietnam as, to comply with local regulations, one of the popular game machines was discontinued during the year.
With the rapid economic rebound and rollout of 2 new arcades in Cambodia in December 2022, revenue generated from
Cambodia had seen a noticeable increase by 40% as compared to prior year. The management remains confident inachieving persistent revenue growth in Southeast Asian markets.
Revenue from domestic food and beverage business, comprising “LIZARRAN” restaurants, “KOMEDA” cafés and“Gongcha” bubble tea stores, surged by 47.5%, from ¥480 million for the year ended 31 March 2023 to ¥708 million incurrent year. The revitalisation of inbound travelling and the popularity of café visiting, being part of living culture among
domestic consumers, contributed to a sustainable recovery in this sector. The Group is optimistic in this sector and hasscheduled to open two “LIZARRAN” restaurants in Yokohama City and a “KOMEDA” café in an AEON mall by the end of2024.
The economy ahead is expected to be volatile as geopolitical pressure remains unsettled in the short run. Nevertheless,the Group has demonstrated resilience amidst the severity of economic condition. The Group is open to any possible
options for market expansion including business buyout and new outlet set up. More detailed business, prospects anddevelopment of the Group, and analysis of the Group’s performance for the year ended 31 March 2024 are available inthe sections “Chairman’s Statement” on pages 6 to 9 and “Management Discussion and Analysis” on pages 10 to 14 ofthis annual report.

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Report of the Directors
Financial Key Performance Indicators
Certain financial key performance indicators which complement and supplement the financial disclosures are set out in“Financial Review” on pages 10 to 11 and the “Consolidated Financial Statements” on pages 46 to 51 of this annual
report.

Relationship with Suppliers
The Group’s major suppliers consist of pachinko and pachislot machine suppliers, game machines suppliers, G-prize
wholesalers, and general prize suppliers. These suppliers are relatively large and reputable corporations with longstanding relationships with the Group. On average, the Group has over ten years of business dealings with its major
suppliers.

Relationship with Customers
The Group’s revenue comes from pachinko and pachislot business, amusement arcade business, and vending machines.
As a pachinko hall and amusement arcade operator, the Group has a large and diverse customer base across Japan,
Cambodia and Vietnam. Regarding vending machine business, revenue derived from the Group’s top five largest
customers accounted for less than 1% of total revenue of the Group for the year ended 31 March 2024.

Relationship with Employees
The Group’s success, to a considerable extent, depends upon its ability to attract, motivate and retain a sufficient numberof qualified employees, including area managers, hall managers, sales managers and staff. The Group offers competitive
wages, bonuses and other benefits to full time employees. Opportunity for advancement is also crucial in building
employee loyalty and work dedication. The Group provides clear career paths, job rotation and training to its full time
employees. As at 31 March 2024, the Group employed 1,068 staff for pachinko and pachislot business, and 266 staff foramusement arcades business.

Environmental Policy
Pursuant to Amusement Business Law and local ordinances, a pachinko license holder must conduct business in such a
way as not to cause noise or vibrations (limited to voices of people and other noises and vibrations that are part ofoperating a business) in the area surrounding the place of business that exceed the limits specified by prefecturalordinances. To ensure compliance with such laws and regulations, the Group had appointed a manager to supervise andmonitor the compliance, formulate internal standards regarding such matters, and keep records of any relevant incidents.

Licenses, Regulatory Approvals and Compliance Record
The Group had complied with the Listing Rules and all relevant Japan, Cambodia and Vietnam laws and regulations in allmaterial respects and had obtained all material licenses, approvals and permits from relevant regulatory authorities for allof its pachinko halls and amusement centres in 2024.

NIRAKU GC HOLDINGS, INC.

Annual Report 202429

Report of the Directors
Principal Risks and Uncertainties
Principal risks and uncertainties the Group faces include:•risks related to continuous shrinkage of pachinko players in the industry;•risks related to natural disasters, such as earthquake and tsunami;•risks related to human resources and systems application;•

uncertainty as to the profitability of new halls and arcades;•

uncertainty as to the performance of the Group’s existing halls and arcades;•

uncertainty as to the expansion of hall and arcade network;•

uncertainty as to the change of Amusement Business Law and related laws and regulations;•

uncertainty as to the impact on pachinko industry after the passage of the IR Promotion Act; and•uncertainty as to the development of novel coronavirus.

RESULTS AND APPROPRIATIONThe results of the Group for the year ended 31 March 2024 are set out in the consolidated statement of comprehensive
income on pages 46 to 47 of this annual report.
The Directors have declared the payment of a final dividend of ¥0.17 per common share totaling ¥203 million to the
Shareholders. Such dividend will be payable on 12 July 2024 to Shareholders whose names appear on the register ofmembers of the Company at the close of business on 12 June 2024.

DIVIDEND POLICYThe Company has adopted a dividend policy (the “Dividend Policy”), which aims at setting out the principles andguidelines that the Company intends to apply in relation to the declaration, payment or distribution of its net profits as
dividends to the Shareholders. Under the policy, in recommending or declaring dividends, the Company shall maintainadequate cash reserve for meeting its working capital requirements and future growth as well as its shareholder value.
The Company does not have any pre-determined dividend payout ratio. The Board has the discretion to declare anddistribute dividends to the Shareholders, subject to the Articles of Incorporation and all applicable laws and regulations
and the various factors stipulated. When determining declaration or payment of dividends, the Company shall consider
the following matters:•

the Company’s actual and expected financial performance;•

retained earnings and distributable reserves of the Company and each of the members of the Group;•

the Group’s working capital requirements, capital expenditure requirements and future expansion plans;•

the Group’s liquidity position;30

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Annual Report 2024

Report of the Directors•

general economic conditions, business cycle of the Group’s business and other internal or external factors that may
have an impact on the business or financial performance and position of the Company; and•other factors that the Board deems relevant.

Any unclaimed dividend shall not be forfeited until the lapse of six years after the date of declaration of such dividend inaccordance with the Articles of Incorporation.
The Board will review the Dividend Policy as appropriate from time to time. The Dividend Policy has been published on
the Company’s website for public information.

FINANCIAL SUMMARY
A summary of the results and the assets and liabilities of the Group for the last five financial years is set out on pages 4
and 5 of this annual report.

SHARE CAPITAL
Details of the share capital for the year ended 31 March 2024 are set out in Note 25 to the consolidated financial
statements.

EQUITY-LINKED AGREEMENTS
During the year ended 31 March 2024, the Group did not enter into any equity-linked agreements.

RESERVES AND DISTRIBUTABLE RESERVES
Movements in reserves during the year are set out in the consolidated statement of changes in equity on page 50 of thisannual report. Distributable reserves of the Company as at 31 March 2024 amounted to approximately ¥2,467 million.

BANK LOANS AND OTHER BORROWINGSParticulars of bank loans and other borrowings of the Company and the Group as at 31 March 2024 are set out in Note
29 to the consolidated financial statements.

PRE-EMPTIVE RIGHTS
There is no provision for pre-emptive rights under the Articles of Incorporation or the laws of Japan.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIESThe Company did not redeem any of its listed securities during the year ended 31 March 2024 and up to the date of thisannual report. Neither the Company nor any of its subsidiaries purchased or sold any of the Company’s listed securities
during the year ended 31 March 2024 and up to the date of this annual report.

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Annual Report 202431

Report of the Directors
DIRECTORSThe Directors during the year and up to the date of this annual report are:Executive Directors

Mr. Hisanori TANIGUCHI (谷口久徳)
Mr. Akinori OHISHI (大石明徳)
Mr. Masataka WATANABE (渡辺将敬)

Non-Executive Director

Mr. Hiroshi BANNAI (坂內弘)Independent Non-Executive Directors
Mr. Michio MINAKATA (南方美千雄)
Mr. Yoshihiro KOIZUMI (小泉義広)
Mr. Kuraji KUTSUWATA (轡田倉治)
Mr. Akihito TANAKA (田中秋人)

In accordance with articles 29 of the Articles of Incorporation, all Directors will retire at the forthcoming AGM and, being
eligible, offered themselves for re-election. The Company has received from each of the independent non-executive
Directors an annual confirmation of independence pursuant to Rule 3.13 of the Listing Rules and the Company considers
that all of the independent non-executive Directors are independent.

DIRECTORS’ SERVICE CONTRACTS
None of the Directors has a service contract with the Company or any of its subsidiaries which is not determinable within
one year without payment of compensation, other than statutory compensation.

DIRECTORS’ MATERIAL INTERESTS IN TRANSACTIONS, ARRANGEMENTS AND
CONTRACTS THAT ARE SIGNIFICANT IN RELATION TO THE GROUP’S BUSINESS
Save as disclosed in this annual report, no transactions, arrangements and contracts of significance in relation to theGroup’s business to which the Company, any of its subsidiaries was a party and in which a Director and the Director’sconnected party had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time
during the year.

DIRECTORS’ INTEREST IN COMPETING BUSINESS
Save as disclosed in this annual report, as at the date of this annual report, none of the Directors or their respective
associates had engaged in or had any interest in any business which competes or may compete with the businesses of
the Group.

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Report of the Directors
PERMITTED INDEMNITY PROVISION
The Articles of Incorporation provide that the Company may execute an agreement with its Directors to limit their liability
under Article 423 of the Companies Act in Japan. The Company has taken out and maintained Directors’ liability
insurance throughout the year and up to date of this annual report, which provides appropriate cover for the Directors.

REMUNERATION OF DIRECTORS AND FIVE INDIVIDUALS WITH HIGHEST EMOLUMENTS
No remuneration was paid to the Directors or the five highest paid individuals as an inducement to join or upon joining
the Group. Further, no compensation was paid to, or receivable by, the Directors or past Directors or the five highest paid
individuals during the years ended 31 March 2024 and 2023 for the loss of office as director of any member of the Groupor of any other office in connection with the management of the affairs of any member of the Group.
Details of the emoluments of the Directors and five highest paid individuals during the reporting period are set out in
Notes 8 and 37 to the consolidated financial statements.

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 ASSOCIATEDCORPORATIONAs at 31 March 2024, the interests and short positions of the Directors and the chief executive of the Company and theirassociates in the shares, underlying shares and debentures of the Company and its associated corporations (within themeaning of Part XV of the Securities and Futures Ordinance (the “SFO”)) which have been notified to the Company andthe Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or which were recorded in the register as
required to be kept by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and theStock Exchange pursuant to the Model Code set out in Appendix C3 to the Listing Rules were as follows:

Total

Approximate %of shareholding

Name

Capacity/Nature of interest

Hisanori TANIGUCHI (谷口久徳)

Beneficial owner

85,624,184
common shares

7.16%

Hiroshi BANNAI (坂內弘)Beneficial owner

216,000
common shares

0.02%

Notes:(1)

All interests stated are long positions.

(2)

There were 1,195,850,460 shares in issue as at 31 March 2024.

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33

Report of the Directors
Save as disclosed above, as at 31 March 2024, none of the Directors and chief executive of the Company had or wasdeemed to have any interest or short position in the shares, underlying shares or debentures of the Company or its
associated corporations (within the meaning of Part XV of the SFO) that was required to be notified to the Company andthe Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which
they were taken or deemed to have under such provisions of the SFO), or required to be recorded in the register to be
kept by the Company under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange
pursuant to the Model Code.

SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND/OR SHORT POSITIONS IN THE SHARESAND UNDERLYING SHARES OF THE COMPANY
As at 31 March 2024, 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 of the Company which fall
to be 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:

Capacity/Nature of interest

Yoshihiro TANIGUCHI (谷口佳浩)

Beneficial owner;interest of controlled
corporation; custodian(1)98,440,000
common shares

8.23%

Seiai TANIGUCHI (谷口正愛)

Interest of a spouse(2)85,624,184
common shares

7.16%

Yurie TANIGUCHI (谷口祐莉恵)

Interest of a spouse(3)98,440,000
common shares

8.23%

Okada Holdings Limited

Beneficial owner(4)80,500,000
common shares

6.73%

Universal Entertainment Corporation

Beneficial owner(4)80,500,000
common shares

6.73%

Tiger Resort Asia Limited

Beneficial owner(4)80,500,000
common shares

6.73%

DENSHO Co., Ltd.

Beneficial owner

226,020,460
common shares

18.90%JUKKI Limited

Beneficial owner

181,470,000
common shares

15.17%

34

Annual Report 2024

NIRAKU GC HOLDINGS, INC.

Total

Approximate %of shareholding

NameReport of the Directors
Notes:(1)

The interests held by Mr. Yoshihiro TANIGUCHI (谷口佳浩) 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 his children, the voting rights of which are

exercisable by Mr. Yoshihiro TANIGUCHI (谷口佳浩); and (iii) 53,360,000 shares held by the YT Family Trust for the benefit of his children, namely

Mr. Akinori TANIGUCHI (谷口晃紀) and Mr. Masahide TANIGUCHI (谷口昌英). 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 TANIGUCHI (谷口佳浩) 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.
(2)

Ms. Seiai TANIGUCHI (谷口正愛) is the spouse of our Chairman and is therefore deemed to be interested in the shares that our Chairman isinterested in under the SFO.

(3)

(4)

Ms. Yurie TANIGUCHI (谷口祐莉恵) is the spouse of Mr. Yoshihiro TANIGUCHI (谷口佳浩) and is therefore deemed to be interested in the sharesthat Mr. Yoshihiro TANIGUCHI (谷口佳浩) is interested in under the SFO.

Okada Holdings Limited indirectly holds 70.28% interest in Universal Entertainment Corporation, which directly holds Tiger Resort Asia Limited.
Accordingly, each of Universal Entertainment Corporation and Okada Holdings Limited is deemed to be interested in such 80,500,000 shares heldby Tiger Resort Asia Limited.

(5)

All interests stated are long positions.

(6)

There were 1,195,850,460 shares in issue as at 31 March 2024.

Save as disclosed above, and as at 31 March 2024, the Directors were not aware of any persons (who were not Directors
or chief executive of the Company) who had an interest or short position in the shares or underlying shares of theCompany 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.

ARRANGEMENTS TO PURCHASE SHARES OR DEBENTURES
Save as disclosed under the section headed “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 Corporation”, at no time during the year was the Company, any subsidiary or its holding company or any
fellow subsidiary a party to any arrangement to enable the Directors to acquire benefits by means of the acquisition ofshares in, or debentures of, the Company or any other body corporate.

MANAGEMENT CONTRACTS
No contracts concerning the management and administration of the whole or any substantial part of the business of theCompany were entered into or existed during the year.

NON-COMPETITION UNDERTAKING
The controlling Shareholders, including the members of the Taniguchi Consortium, have confirmed to the Company of
their compliance with the non-competition undertakings provided to the Company under a deed of non-competition dated
16 March 2015. The independent non-executive Directors have reviewed the status of compliance and confirmed that all
the undertakings under the deed of non-competition have been complied with by the controlling Shareholders and duly
enforced since the Listing Date and up to the date of this annual report.

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35

Report of the Directors
DONATIONS
Charitable and other donations made by the Group during the year amounted to approximately ¥2 million.

CONNECTED TRANSACTIONSThe Directors confirm that during the year ended 31 March 2024, the Group did not have any connected transactions andcontinuing connected transactions as defined under the Listing Rules. The significant related party transactions madeduring the year that did not constitute connected transactions under the Listing Rules were disclosed in Note 35 to theconsolidated financial statements. The Directors therefore confirm that the Company has complied with the disclosure
requirements in accordance with Chapter 14A of the Listing Rules.

MAJOR CUSTOMERS AND SUPPLIERS
During the year ended 31 March 2024, less than 1.0% of the Group’s revenue were attributed by the Group’s five largest
customers; while 72.0% and 93.4% of the Group’s total purchases were attributed by the Group’s largest and the fivelargest suppliers, respectively. The largest supplier of the Group supplies G-prize to the Group’s pachinko halls and has
a business relationship of more than 10 years with the Group. To the knowledge of the Directors, none of the Directors or
any Shareholders who owned 5.0% or more of the issued share capital of the Company as at 31 March 2024 or any of
their respective associates held any interest in any of the five largest suppliers of the Group.

REMUNERATION POLICY AND PENSION SCHEME
Remuneration policy of the Group is reviewed regularly, making reference to legal framework, market condition andperformance of the Group and individual staff (including the Directors). The remuneration policy and remuneration
packages of the executive Director and members of the senior management of the Group are reviewed by the
Remuneration Committee.
Particulars of the Group’s retirement benefit schemes are set out in Note 37 to the consolidated financial statements.

AUDIT COMMITTEE
The Audit Committee had reviewed, together with the management and external auditor, the accounting principles andpolicies adopted by the Group and the audited consolidated financial statements for the year ended 31 March 2024.

SUFFICIENCY OF PUBLIC FLOAT
Based on information publicly available to the Company and to the knowledge of the Directors, at least 25% of theCompany’s total issued share capital, the prescribed minimum percentage of public float approved by the Stock
Exchange and permitted under the Listing Rules, is held by the public at all times as of the date of this annual report.

36

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Report of the Directors
AUDITOR
PricewaterhouseCoopers has acted as auditor of the Company for the year ended 31 March 2024.
The consolidated financial statements have been audited by PricewaterhouseCoopers who shall retire in the forthcoming
AGM and, being eligible, will offer itself for re-appointment. A resolution for the re-appointment ofPricewaterhouseCoopers as auditor of the Company will be proposed at the forthcoming AGM.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTThe environmental, social and governance report of the Group is published separately in parallel with the publication ofthis annual report.

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
Chairman, Executive Director and Chief Executive Officer
Hisanori TANIGUCHI
Fukushima, Japan, 27 May 2024
* For identification purpose only

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

37

Independent Auditor’s Report

To the Shareholders 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)

OPINION
What we have audited
The consolidated financial statements of 株式会社二ラク▪ジー▪シー▪ホールディングス Niraku GC Holdings, Inc.* (the“Company”) and its subsidiaries (the “Group”), which are set out on pages 46 to 118, comprise:•the consolidated statement of financial position as at 31 March 2024;•

the consolidated statement of comprehensive income for the year then ended;•

the consolidated statement of changes in equity for the year then ended;•

the consolidated statement of cash flows for the year then ended; and•the notes to the consolidated financial statements, comprising material accounting policy information and otherexplanatory information.

Our opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of theGroup as at 31 March 2024, and of its consolidated financial performance and its consolidated cash flows for the year
then ended in accordance with IFRS Accounting Standards and have been properly prepared in compliance with thedisclosure requirements of the Hong Kong Companies Ordinance.

*

For identification purpose only

38

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Independent Auditor’s Report
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants(including International Independence Standards) issued by the International Ethics Standards Board for Accountants(“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code.

KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of theconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
The key audit matter identified in our audit is related to impairment assessment of property, plant and equipment, right-ofuse assets and other non-current assets.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

39

Independent Auditor’s Report
Key Audit Matter

How our audit addressed the Key Audit Matter

Impairment assessment of property,
plant and equipment, right-of use assets andother non-current assets
Refer to Notes 4, 14 and 15 to the consolidated financial
statements for the related disclosures.
As at 31 March 2024, the Group had property, plant andequipment, right-of-use assets and other non-current
assets of ¥17,565 million, ¥24,036 million and ¥1,188
million, respectively, before provision for impairment.
These property, plant and equipment, right-of-use assets
and other non-current assets were related to the cashgenerating units (“CGUs”) of each individual pachinko
and pachislot hall in Japan, a hotel business in Japan,
each restaurant in Japan, each amusement arcade inSoutheast Asia and the restaurant operation in China.
The performance of the Group’s operations were
impacted by keen competition within the industries.
Management reviews for impairment whenever events orchanges in circumstances indicate that carrying amountof a CGU may not be recoverable. For the year ended
31 March 2024, management assessed for whether the
CGUs have any impairment indicator by considering
whether it records operating loss in recent two reporting
periods and whether the budget (the projected operating
cashflow after overhead allocation) was met in current
period, and performed impairment review on identified
CGUs.

40

NIRAKU GC HOLDINGS, INC.

In relation to the impairment assessments of property, plantand equipment, right-of-use assets and other non-current
assets performed by management, we assessed thereasonableness of management’s assessments as towhether impairment indicators were identified for CGUs. We
challenged management’s criteria for identification of
impairment indication by comparing to the historicalperformance and operational development of the CGUs.
Our procedures in relation to management’s impairment
assessments of property, plant and equipment, right-of-use
assets and other non-current assets included the following:•

Understanding and evaluating the internal control over
impairment assessment process performed bymanagement in order to assess the inherent risk ofmaterial misstatement by considering the degree of
estimation uncertainty and level of other inherent risk
factors such as complexity and subjectivity;•

Assessing management’s determination of CGUs toevaluate whether they are reasonable based on our
understanding of the Group’s business; and•Comparing the recoverable amounts derived by thevalue-in-use and fair value less cost of disposal toensure the higher of the two values was applied for theprovision of impairment.

Annual Report 2024

Independent Auditor’s Report
Key Audit Matter

How our audit addressed the Key Audit Matter

Impairment assessment of property,
plant and equipment, right-of use assets andother non-current assets (Continued)
Management performed impairment assessments toassess the recoverable amounts of these CGUs, whichwere determined as the higher of value-in-use or fairvalue less cost of disposal. The value-in-use calculations
were performed by management and derived fromincome approach based on future cash flow forecasts of
the CGUs. The fair value less cost of disposal
calculations were performed by management withreference to valuation prepared by an independent
professional qualified valuer.
Based on management’s assessment, provision for
impairment loss of ¥112 million and ¥284 million wererecorded for property, plant and equipment and right-ofuse assets, respectively, during the year ended 31
March 2024.

•

To evaluate management’s value-in-use calculations,
we have:•

Compared current year actual results with prioryear forecasts to assess the reliability ofmanagement’s prior forecasts;•

Challenged management’s assumption onrevenue growth rates by comparing the ratio toindustry trends, the Group’s historicalperformance and operational development;•

Assessed management’s assumption on
discount rates by comparing to the cost of capitaland cost of debt of comparable organisations in
the industry with the assistance of our internalvaluation expert;•

Reconciled the data input of the forecasts to
supporting evidence, such as approved budgets,historical performance and operational
development;•

Assessed mathematical accuracy of the value-inuse calculations; and•Evaluated the sensitivity analysis performed bymanagement around the first year revenue
growth rates and discount rates to ascertain theextent and likelihood of such changes had been
appropriately considered.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

41

Independent Auditor’s Report
Key Audit Matter

How our audit addressed the Key Audit Matter

Impairment assessment of property,
plant and equipment, right-of use assets andother non-current assets (Continued)
We focused on this area due to the significance of thecarrying values of the property, plant and equipment,right-of-use assets and other non-current assets to theGroup; the high degree of subjectivity relating to theidentification of impairment indicators and estimation
involved in the determination of recoverable amounts;
the complexity of calculations; and the judgement
involved in the determination of key assumptions ofrevenue growth rate, discount rate in value-in-use
calculations, and unit price per square meter of land andbuilding under sales comparison approach in fair valueless cost of disposal calculation.

••

To evaluate management’s fair value less cost of
disposal calculations, we have:•

Evaluate the valuer’s competence, capabilities
and objectivity;•

Reviewed the fair value less cost of disposal
calculation performed by management to assess
the appropriateness of methodology used;•

Assessed the reasonableness of the valuation bycomparing market quotation of similar properties
based on our independent research;•

Assessed the mathematical accuracy of fairvalue less cost of disposal calculation; and•Evaluated the sensitivity analysis performed bymanagement around per square meter sales
price for land and replacement cost for building
to ascertain the extent and likelihood of suchchanges had been appropriately considered.

We have assessed the adequacy of the disclosuresrelated to impairment of property, plant and equipment,right-of-use assets and other non-current assets in thecontext of IFRS Accounting Standards disclosure
requirements.

Based on the procedures performed, we considered that thejudgement and estimates adopted by management inrelation to the impairment assessment of property, plant andequipment, right-of-use assets and other non-current assets
were supportable by available evidence.

42

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Independent Auditor’s Report
OTHER INFORMATION
The directors of the Company are responsible for the other information. The other information comprises all of theinformation included in the annual report other than the consolidated financial statements and our auditor’s report
thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, weare required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF DIRECTORS AND THE AUDIT COMMITTEE FOR THE
CONSOLIDATED FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation of the consolidated financial statements that give a trueand fair view in accordance with IFRS Accounting Standards and the disclosure requirements of the Hong Kong
Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
The Audit Committee is responsible for overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
We report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards oraccept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

43

Independent Auditor’s Report
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theGroup’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the directors.

•

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause theGroup to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

44

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Independent Auditor’s Report
From the matters communicated with the Audit Committee, we determine those matters that were of most significance inthe audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
The engagement partner on the audit resulting in this independent auditor’s report is Chan Hin Gay, Gabriel.

PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 27 May 2024
* For identification purpose only

NIRAKU GC HOLDINGS, INC.

Annual Report 202445

Consolidated Statement of Comprehensive Income
For the year ended 31 March 2024

2024

Continuing operations
Revenue
Other income
Other gains, net
Impairment loss on property, plant and equipment
Impairment loss on right-of-use assets
Impairment loss on financial assets
Hall operating expenses
Administrative expenses

Note¥ million

2023(Restated)¥ million

5

26,955

24,6126
6
14
15
3.1(b)
7
7

518
504
(112)
(284)
(410)
(20,654)(3,795)

487
156
(214)
(371)
–
(18,726)(3,568)

2,722

2,376

Operating profit
Finance income
Finance costs

9
9

72
(963)

84
(971)

Finance costs, net

9

(891)

(887)

10

1,831
(1,166)

1,489
(310)

665

1,179

(547)

(126)

Profit for the year

118

1,053

Profit/(loss) attributable to:
Owners of the Company:
Continuing operations
Discontinued operation

694
(279)

1,198
(64)

415

1,134

(29)
(268)

(19)
(62)

(297)

(81)

118

1,053

Profit before income tax
Income tax expense
Profit for the year from continuing operations
Loss for the year from discontinued operation

Non-controlling interests:
Continuing operations
Discontinued operation

46

NIRAKU GC HOLDINGS, INC.

Annual Report 202411

Consolidated Statement of Comprehensive Income
For the year ended 31 March 2024

2024
¥ million

2023(Restated)¥ million

0.58(0.23)
0.35

1.00(0.05)
0.95

Profit for the year

118

1,053

Other comprehensive income/(loss)
Item that will not be subsequently reclassified to profit or loss
Change in value of financial assets through other comprehensive income
Item that have been or may be subsequently reclassified to profit or loss
Currency translation differences

19

(54)

(210)

(45)

Total comprehensive (loss)/income for the year

(73)

954

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

375
(448)

1,079
(125)

(73)

954

684
(309)

1,118
(39)

375

1,079

(151)
(297)

(88)
(37)

(448)

(125)

(73)

954

Note
Earnings/(loss) per share for profit attributableto owners of the Company— Basic and diluted (expressed in Japanese Yen per share)
From continuing operations
From discontinued operation
For the year

12

Total comprehensive (loss)/income attributable to:
Owners of the Company:
Continuing operations
Discontinued operation

Non-controlling interests:
Continuing operations
Discontinued operation

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying
notes.

NIRAKU GC HOLDINGS, INC.

Annual Report 202447

Consolidated Statement of Financial Position
As at 31 March 2024

ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Investment properties
Intangible assets
Interest in an associate
Prepayments, deposits and other receivables
Financial assets at fair value through other 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

Total assets

48

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Note

2024
¥ million

2023¥ million

14
15
16
17
13
23
19
30

17,45323,752
668
285
–
4,148
534
5,048

16,89825,145
691
322
–
4,426
511
5,415

51,88853,408

55
154
866
102
–
345
12,350

67
107
982
98
179
528
10,435

13,872

12,396

65,76065,804

21
22
23
19
24
24

Consolidated Statement of Financial Position
As at 31 March 2024

Note

2024
¥ million

2023¥ million

25
26

3,000
17,1633,000
17,028Non-controlling interest

20,163(1,182)

20,028(734)

Total equity

18,981

19,294

5,303
25,317
2,141
1

5,765
26,9682,158
3

32,762

34,894

196
5,129
2,608
5,657
–
427

125
4,441
2,762
4,287
1
–

14,017

11,616

46,77946,510(145)

780

65,76065,804

EQUITY
Equity attributable to owners of the Company
Share capital
Reserves

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

29
15
28
20

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

27
29
15
28
20

Total liabilities
Net current (liabilities)/assets
Total equity and liabilities

The consolidated financial statements on pages 46 to 118 were approved by the Board of Directors on 27 May 2024 andwere signed on its behalf.

Hisanori Taniguchi
Director
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

NIRAKU GC HOLDINGS, INC.

Annual Report 202449

Consolidated Statement of Changes in Equity
For the year ended 31 March 2024

Attributable to owners of the Company
Investment
Share

CapitalCapitalsurplusreserve

Legal revaluation
reserveNon-reserve

Retained

Exchange

controlling

capital (Note 26(a)) (Note 26(b)) (Note 26(c)) (Note 26(d))

earnings

reserve

Sub-totalinterest

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

3,000

13,954(16,028)

107

(152)

18,741

8

19,630(609)

19,021

–

–

–

–

–

1,134

–

1,134

(81)

1,053

–

–

–

–

(54)

–

–

(54)

–

(54)

–

–

–

–

–

–

(1)

(1)

(44)

(42)

–

–

–

–

(54)

1,134

(1)

1,079

(125)

954

Final dividend relating to 2022

–

–

–

–

–

(478)

–

(478)

–

(478)

Interim dividend relating to 2023

–

–

–

–

–

(203)

–

(203)

–

(203)

Total transactions with owners

–

–

–

–

–

(681)

–

(681)

–

(681)

Balance at 31 March 2023

3,000

13,954(16,028)

107

(206)

19,194

7

20,028(734)

19,294

Balances at 1 April 2023

3,000

13,954(16,028)

107

(206)

19,194

7

20,028(734)

19,294

–

–

–

–

–

415

–

415

(297)

118

–

–

–

–

19

–

–

19

–

19

–

–

–

–

–

–

(59)

(59)

(151)

(210)

–

–

–

–

19

415

(59)

375

(448)

(73)

Final dividend relating to 2023

–

–

–

–

–

(132)

–

(132)

–

(132)

Interim dividend relating to 2024

–

–

–

–

–

(108)

–

(108)

–

(108)

Total transactions with owners

–

–

–

–

–

(240)

–

(240)

–

(240)

3,000

13,954(16,028)

107

(187)

19,369(52)

20,163(1,182)

18,981

Balances at 1 April 2022
Comprehensive income
Profit/(loss) for the year
Other comprehensive loss
Financial assets at fair value through othercomprehensive income, net of tax
Currency translation difference
Total comprehensive (loss)/income forthe yearComprehensive income
Profit for the year
Other comprehensive income/(loss)
Financial assets at fair value through othercomprehensive income, net of tax
Currency translation difference
Total comprehensive income/(loss)
for the year

Balance at 31 March 2024

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

50

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Consolidated Statement of Cash Flows
For the year ended 31 March 2024

2024
¥ million

2023¥ million

8,430
(141)
(194)

6,872
(101)
(839)

8,095

5,932

(2,211)
(4)
264
(436)
619
7
24

(1,014)(4)
102(1,602)
1,316
2
25(1,737)(1,175)

4,905(4,679)(240)(3,727)
(704)

7,813
(9,248)(681)(2,863)(750)

Net cash used in financing activities(4,445)(5,729)Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange gain/(loss) on cash and cash equivalents

1,913
10,4352(972)
11,451(44)

12,35010,435

Note
Cash flows from operating activities
Cash generated from operations
Interest paid
Income tax paid, net

32

Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from disposal of property, plant and equipment
Placement of bank deposits with maturity over 3 months
Proceed from withdrawal of bank deposits with maturity over 3 months
Interest received
Dividend received

17
32

Net cash used in investing activities
Cash flows from financing activities
Proceeds from bank borrowings
Repayment of bank borrowings
Dividend paid
Principal element of lease payments
Interest element of lease payments

Cash and cash equivalents at end of the year

32
32

24

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

51

Notes to the Consolidated Financial Statements
1

GENERAL INFORMATION, REORGANISATION AND BASIS OF PRESENTATION
1.1 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.* (the “Company”) was
incorporated in Japan under the Japan Companies Act with limited liability on 10 January 2013. The addressof 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. In August
2023, the Group discontinued the restaurant operation in China. Details are set out in Note 11. The Company
is listed on the Main Board of The Stock Exchange of Hong Kong Limited.
These consolidated financial statements are presented in millions of Japanese Yen (“¥”), unless otherwise
stated.
These consolidated financial statements have been approved by the board of directors of the Company on 27
May 2024.

2

BASIS OF PREPARATIONThe consolidated financial statements have been prepared in accordance with all applicable IFRS AccountingStandards and the disclosure requirements of the Hong Kong Companies Ordinance Cap.622. The consolidated
financial statements have been prepared under the historical cost convention, as modified by financial assets andfinancial liabilities (including derivative financial instruments) which are carried at fair value.
The preparation of the consolidated financial statements in conformity with IFRS Accounting Standards requires theuse of certain critical accounting estimates. It also requires management to exercise its judgement in the process ofapplying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.
The Group had net current liabilities of ¥145 million as at 31 March 2024. The Directors believed that the Group has
adequate cash flows to maintain the Group’s operation as the Group has cash and cash equivalents of ¥12,350
million and unutilised banking facilities readily available to the Group amounted to ¥3,016 million as at 31 March
2024.
Accordingly, the Directors are of the opinion that the Group is able to meet in full its financial obligations as they fall
due for the foreseeable future and it is appropriate to prepare these consolidated financial statements on a going
concern basis.

52

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Annual Report 2024

Notes to the Consolidated Financial Statements
2

BASIS OF PREPARATION (CONTINUED)(i)

New and amended standards and practice statement to existing standards adopted by theGroup
The Group has applied the following amendments to standards and practice statement for the first time for
their annual financial year commencing 1 April 2023:
IFRS 17
Amendments to IAS 8
Amendments to IAS 1 andIFRS Practice Statement 2
Amendments to IAS 12
Amendments to IAS 12

Insurance Contracts
Definition of Accounting Estimates
Disclosure of Accounting Policies
Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
International Tax Reform — Pillar Two Mode Rules (amendments)

The adoption of these amendments to accounting standards has no material impact on the Group’s financial
statements except as described below.
Amendments to IAS 12, Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
The amendment should be applied to transactions that occur on or after the beginning of the earliest
comparative period presented. In addition, the Group should recognise deferred tax assets and deferred tax
liabilities at the beginning of the earliest comparative period for all deductible and taxable temporary
differences associated with right-of-use assets and lease liabilities, and decommissioning, restoration andsimilar liabilities, and the corresponding amounts recognised as part of the cost of the related assets. The
cumulative effect of recognising these adjustments is recognised in retained earnings, or another componentof equity, as appropriate.
Following the adoption of the amendments, the Group would recognise a separate deferred tax assets arisingfrom the lease liabilities and a deferred tax liability arising from the right-of-use assets. However, as thesenew deferred tax assets and liabilities qualify for offsetting in accordance with IAS 12, there was no impact on
the consolidated financial statements of the Group, except for the disclosure of the deferred tax assets andliabilities to be presented in the notes to the consolidated financial statements.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

53

Notes to the Consolidated Financial Statements
2

BASIS OF PREPARATION (CONTINUED)(ii)

New and amended standards and interpretation to existing standards not yet adopted by
the Group
Certain amendments to accounting standards and interpretation have been published that are not mandatoryfor 31 March 2024 reporting periods and have not been early adopted by the Group:
Effective foraccounting
periodbeginning on
or after
Amendments to IAS 1

Classification of Liabilities as
Current or Non-current
Amendments to IAS 1
Non-current Liabilities with Covenants
Amendments to IFRS 16
Lease Liability in a Sale and Leaseback
Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements
Amendments to IAS 21
Lack of Exchangeability
Amendments to IFRS 10
Sale or Contribution of Assets between an Investor
and IAS 28
and its Associate or Joint Venture

1 January 2024
1 January 2024
1 January 2024
1 January 2024
1 January 2025
To be determined

The Group is in the process of assessing the impact of adopting these new accounting standards andinterpretation on its future reporting periods and on foreseeable future transactions.

3

FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk,
cash flow and fair value interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group’s financial performance. The Group does not use any derivative financial
instruments to hedge its financial risks.
Risk management is carried out by management of the Group. Formal and informal management meetings
are held to identify significant risks and to develop procedures to deal with any risks in relation to the Group’sbusinesses.
(a)Market risk(i) Foreign exchange risk
The Group operates principally in Japan and is exposed to foreign exchange risk arising fromvarious foreign currency transactions and foreign, primarily with respect to cash and cash
equivalents denominated in Hong Kong dollar (“HK$”), United States dollar (“US$”), Vietnamese
Dong (“VND”) and Chinese Renminbi (“RMB”).
The Group also has certain investments in foreign operations, whose net assets are exposed toforeign currency translation risk. Currency exposure arising from the net assets of the Group’s
foreign operations is managed primarily through borrowings denominated in the relevant foreign
currencies.

54

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Annual Report 2024

Notes to the Consolidated Financial Statements
3

FINANCIAL RISK MANAGEMENT (CONTINUED)
3.1 Financial risk factors (Continued)(a)Market risk (Continued)(i) Foreign exchange risk (Continued)
Majority of the cost and revenue of the local operations in Vietnam, China and Hong Kong areprimarily transacted in their local functional currency which are VND, RMB and HK$, respectively,
and therefore foreign exchange transactional risks are minimal.
At 31 March 2024, if US$ had strengthened/weakened by 15% (2023: 10%) against the ¥, with allother variables held constant, post-tax profit/(loss) for the year would have been approximately ¥84
million, higher/lower (2023: ¥53 million lower/higher), mainly as a result of foreign exchange
differences on translation of US$ denominated cash at bank balance.
At 31 March 2024, if HK$ had strengthened/weakened by 15% (2023: 10%) against the ¥, with allother variables held constant, post-tax profit/(loss) for the year would have been approximately ¥40
million, higher/lower (2023: impact on post-tax profit is remote), mainly as a result of foreignexchange differences on translation of HK$ denominated cash at bank balance.
(ii)

Cash flow and fair value interest rate risk
The Group’s interest rate risk arises from bank balances and borrowings which are carried atvariable rates, which expose the Group to cash flow interest rate risk.
As at 31 March 2024, if interest rates were increased or decreased by 25 basis points and all othervariables were held constant, the Group’s post-tax profit/(loss) would have increased or decreased
by approximately ¥7 million (2023: decreased or increased by approximately ¥1 million).
The Group manages its interest rate exposure with a focus on reducing the Group’s overall cost ofdebt and exposure to changes in interest rates. When considered appropriate, the Group uses
derivatives such as interest rate swaps to manage its interest rate exposure. The Group’s maininterest rate exposure relates to ¥ denominated borrowings. In the opinion of the directors, fairvalue interest rate risk is low as the amounts of interest rate swaps are insignificant during theyear ended 31 March 2024 (2023: Same), and accordingly, sensitivity analysis has not been
disclosed.

(iii) Price risk
The Group is exposed to equity securities price risk because of investments in listed securities
held by the Group which are classified on the consolidated statement of financial position as
financial assets at fair value through other comprehensive income.
The table below summarises the impact of increases/decreases of the share prices of underlying
financial instruments on the Group’s equity. The analysis is based on the assumption that theshare prices of the underlying financial instruments had increased or decreased by 5% with allother variables held constant.

Impact on other components of equity
Share prices:— increase by 5%— decrease by 5%

NIRAKU GC HOLDINGS, INC.

2024
¥ million

2023¥ million

19
(19)

18
(18)

Annual Report 2024

55

Notes to the Consolidated Financial Statements
3

FINANCIAL RISK MANAGEMENT (CONTINUED)
3.1 Financial risk factors (Continued)(b)Credit risk
Credit risk arises mainly from cash deposited at banks, trade receivables, deposits and otherreceivables, financial assets at fair value through profit or loss and through other comprehensive
income.
In respect of cash deposited at banks and financial assets at fair value through profit or loss and throughother comprehensive income, the credit risk is considered to be low as the counterparties are bankswith high credit ratings assigned by international credit rating agencies.
Approximately 96% (2023: 97%) of the Group’s revenue is settled in cash, hence there is no significant
concentration of credit risk, whether through exposure to individual customers, specific industry sectors
and/or regions.
The Group has set up long-term co-operative relationship with the customers and trade partners. In viewof the history of business dealings with these parties and the sound collection history of the receivables
due from them, management believes that there is no material credit risk inherent in the Group’s
outstanding receivable balance due from these customers.
In measuring the expected credit losses, trade receivables are grouped based on shared credit risk
characteristics and days past due. The expected loss rates are based on the payment profiles of sales
over a period of 12 months and the corresponding historical credit losses experienced. The historicalloss rates are adjusted to reflect current and forward-looking macroeconomic factors affecting the abilityof the customers to settle the receivables. On that basis, the loss allowance as at 31 March 2024 and2023 was assessed to be immaterial.
The Company adopts general approach for expected credit losses of other receivables and consider
most of the financial assets have not significantly increased in credit risk from initial recognition. Except
for one of the other receivables that are in default and considered credit impaired, management makeindividual assessment on the recoverability of the balances taking into account the historical settlement
records as well as past experience. Therefore, the balance of ¥410 million was fully provided for as at
31 March 2024 (2023: Nil).
Thus, for remaining financial assets are classified in stage one and only consider 12-month expectedcredit losses. In measuring the expected credit losses, the credit quality has been assessed withreference to historical credit losses experienced and financial position of the counterparties. On thatbasis, the remaining loss allowance during the years ended 31 March 2024 and 2023 is assessed to beimmaterial.

56

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Notes to the Consolidated Financial Statements
3

FINANCIAL RISK MANAGEMENT (CONTINUED)
3.1 Financial risk factors (Continued)(c)Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and bank balances, the availabilityof funding from an adequate amount of committed credit facilities from leading banks and the ability toclose out market position.
The Group maintains liquidity by a number of sources including orderly realisation of short-term financial
assets and receivables, and long term financing including long-term borrowings. The Group aims tomaintain flexibility in funding by keeping sufficient bank balances, committed credit lines available andinterest bearing borrowings which enable the Group to continue its business for the foreseeable future.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on theremaining period at the statement of financial position date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12
months equal to their carrying balances as the impact of discounting is not significant.

As at 31 March 2024
Non-derivatives
Trade payables
Accruals, provisions andother payables
Borrowings
Lease liabilities

Derivatives
Derivative financial
instruments, net settled
As at 31 March 2023
Non-derivatives
Trade payables
Accruals, provisions andother payables
Borrowings
Lease liabilities

Derivatives
Derivative financial
instruments, net settled

Within1 year¥ million

Between1 and 2years
¥ million

Between
2 and
5 years¥ millionOver
5 years¥ million

Total
contractual
cash flow¥ million

Carryingvalue¥ million

196

–

–

–

196

196

2,344
5,356
3,273

18
2,509
3,096

7
3,030
7,864

173
45
19,271

2,542
10,94033,5042,494
10,432
27,925

11,1695,623

10,901

19,48947,182

41,047

1

–

–

–

1

1

125

–

–

–

125

125

1,270
4,628
3,493

154
2,474
3,123

11
3,415
8,360

4
118
20,8401,439
10,63535,816

1,252
10,20629,730

9,516

5,751

11,786

20,961

48,01541,313

1

3

–

–

4

4

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

57

Notes to the Consolidated Financial Statements
3

FINANCIAL RISK MANAGEMENT (CONTINUED)
3.2 Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital. The Group uses bank borrowings to finance its
operations.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid toshareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio
is calculated as total debt divided by equity. Total debt is calculated as total borrowings (include bankborrowings and lease liabilities) less cash and cash equivalents. Equity is calculated as ‘equity’ as shown inthe consolidated statement of financial position.
2024¥ million

2023¥ million

Borrowings
Lease liabilities
Less: Cash and cash equivalents

10,432
27,925(12,350)

10,20629,730(10,435)

Total debt

26,00729,501Equity18,981

19,2941.4

1.5

Gearing ratio

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

58•

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).

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
3

FINANCIAL RISK MANAGEMENT (CONTINUED)
3.3 Fair value estimation (Continued)
Level 1¥ million

Level 2¥ million

Level 3¥ million

Total¥ million

–

102

–

102

534

–

–

534

534

102

–

636

Liabilities
Derivative financial liabilities— Interest rate swaps

–

1

–

1

As at 31 March 2023
AssetsFinancial assets at fair value through profit or loss
— Trust fund

–

98

–

98

511

–

–

511

511

98

–

609

–

4

–

4

As at 31 March 2024
AssetsFinancial assets at fair value through profit or loss
— Trust fundFinancial assets at fair value through othercomprehensive income— Listed securities

Financial assets at fair value through othercomprehensive income— Listed securities

Liabilities
Derivative financial liabilities— Interest rate swaps

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

59

Notes to the Consolidated Financial Statements
3

FINANCIAL RISK MANAGEMENT (CONTINUED)
3.3 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 thestatement of financial position date. A market is regarded as active if quoted prices are readily andregularly 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 for financial assets held by the Group is the current bid
price. These instruments are included in level 1. Instruments included in level 1 represent Tokyo Stock
Exchange and the Stock Exchange of Hong Kong equity investments classified as fair value throughother comprehensive 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 by using
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 tofair value an instrument are observable, the instrument is included in level 2. As at 31 March 2024 and2023, instruments included in level 2 comprise trust fund and interest rate swaps issued by financial
institutions in Japan which were classified as financial assets at fair value through profit or loss.
As at 31 March 2024 and 2023, there were no financial instrument held by the Group was in level 3.
There were no transfers between levels 1, 2 and 3 during the years ended 31 March 2024 and 2023.
Management discussed with the respective investment managers to understand the performance of theunderlying investments and fair value measurement basis conducted by the respective investment
managers in order to evaluate whether the fair values as stated in the investment statements at the endof reporting period are appropriate.

4

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. The Groupmakes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing amaterial adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed
below.

60

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
4

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)(a)

Impairment of property, plant and equipment, right-of-use assets and non-current assets
The Group has substantial investments in property, plant and equipment, right-of-use assets and other noncurrent assets. For goodwill, the Group conducts reviews annually whether goodwill has suffered any
impairment whenever events or changes in circumstances indicate that the carrying amounts may not berecoverable. Property, plant and equipment, right-of-use assets and other non-current assets are tested for
impairment whenever events or changes in circumstances indicate that the carrying amount may not berecoverable. Judgement is required in the area of asset impairment, particularly in assessing: (i) whether an
event has occurred that may indicate that the related asset values may not be recoverable: (ii) whether the
carrying value of an asset can be supported by the recoverable amount, being the higher of fair value-in-use
and fair value less costs to sell. Value-in-use calculations require the use of management judgements andestimates in the area of asset impairment particularly in assessing: (i) whether an event has occurred that
may indicate that the related asset values may not be recoverable; (ii) whether the carrying value of an asset
can be supported by the recoverable amount, being the net present value of future cash flows which are
estimated based upon the continued use of the asset in the business; and (iii) the appropriate key
assumptions to be applied in preparing cash flow projections including whether these cash flow projections
are discounted using an appropriate rate. Fair value less costs of disposal calculations require available datafrom binding sales transactions, conducted at arm’s length, for similar assets or observable market prices lessincremental costs for disposing of the asset. Changing the assumptions selected by management inassessing impairment, including the discount rates or the growth rate assumptions in the cash flow
projections, could materially affect the net present value used in the impairment assessment and as a result
affect the Group’s financial condition and results of operations.
Details of the key assumptions applied by management in assessing impairment of property, plant andequipment, right-of-use assets and other non-current assets are stated in Note 14, while details of the key
assumptions applied in assessing impairment of goodwill are stated in Note 17.

(b) Income taxes
The Group is subject to income taxes in Japan, Vietnam, Cambodia, Singapore and China. Significant
judgement is required in determining the provision for income taxes. There are many transactions andcalculations for which the ultimate tax determination is uncertain. Where the final tax outcome of thesematters is different from the amounts that were initially recorded, such differences will impact the current anddeferred income tax assets and liabilities in the period in which such determination is made.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

61

Notes to the Consolidated Financial Statements
5

REVENUE AND SEGMENT INFORMATION
Material accounting policy
Revenue from contracts with customers is recognised by reference to each distinct performance obligation
promised in the contract with customer when or as the Group transfers controls of the goods or services promisedin a contract and the customer obtains control of the goods or services.
The Group satisfies a performance obligation and recognises revenue over time, if one of the following criteria ismet:•

The customer simultaneously receives and consumes the benefits provided by the Group’s performance as
the Group performs;•

The Group’s performance creates or enhances an asset that the customer controls as the asset is created orenhanced;•

The Group’s performance does not create an asset with an alternative use to the Group and the Group hasan enforceable right to payment for performance completed to date.

If any of the above conditions are not met, the Group recognises revenue at the point in time at which theperformance obligation is satisfied.
Specific criteria for each of the Group’s activities are described as below.
(i)

Revenue from pachinko and pachislot business represents the gross pay-ins, net of the gross pay-outs tocustomers. Gross pay-ins represents the amount received from customers for rental of pachinko balls andpachislot tokens. Gross pay-outs represents the aggregate cost of G-prizes and general prizes exchanged bycustomers. G-prizes are decorative cards with a small embedded piece of gold or silver or coin-shaped
pendants of gold or silver which can be sold by customers to a G-prize buyer for cash, and general prizes are
generally the types of goods sold in convenience stores, such as snacks, drinks and cigarettes.
Customers rent pachinko balls and pachislot tokens to play the games, and the balls or tokens won can beeither exchanged for prizes or saved for subsequent visits. The Group offers both general prizes andG-prizes. Customers who opt to claim G-prizes in exchange for the pachinko balls and pachislot tokens maysell their G-prizes to an independent G-prize buyer for cash outside of the pachinko hall. Revenue isrecognised over the period of each play.
A contract liability is recognised when the Group has received upfront fees from the customers. The Group
records these as unutilised balls and tokens in the liabilities section of the consolidated statement of financial
position. Such contract liability is recognised as revenue when they are utilised by customers. Income fromexpired prepaid integrated circuit and membership cards are recognised as other income upon expiry of theusage period.

(ii)

62

Hotel revenue from room rental is recognised over time during the period of stay for the hotel guests.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
5

REVENUE AND SEGMENT INFORMATION (CONTINUED)
Material accounting policy (Continued)(iii)

Vending machine income is recognised on a straight-line basis over the accounting periods covered by theterms and conditions as stipulated in the agreement. Contingent vending machine income is recognised when
the Group sells a product to the customer.
A contract liability is recognised when the Group has received upfront fees from the customers. The Group
records these as rental receipt in advance in the liabilities section of the consolidated statement of financial
position. Such contract liability is recognised as revenue when such services are rendered to customers.

(iv)

Restaurant revenue from provision of food and beverages services is recognised when the related services
have been provided to customers.

(v)

Amusement arcade business is recognised when the provision of amusement arcade services are rendered,being when the customers utilised the tokens to play the games. A contract liability is recognised when theGroup has received upfront fees from the customers. The Group records these as unutilised tokens in theliabilities section of the consolidated statement of financial position. Such contract liability is recognised asrevenue when such services are rendered to customers.

(vi)

Rental income from investment properties is recognised on a straight-line basis over the term of the leases.
Receipt in advance is recognised when the Group has received upfront fees from the customers. The Group
records these as rental receipt in advance in the liabilities section of the consolidated statement of financial
position. Such receipt in advance is recognised as other income when such services are rendered tocustomers.

(a)Revenue from continuing operations
An analysis of the revenue of the Group from continuing operations is as follows:
2024

Gross pay-ins
Less: gross pay-outs
Revenue from pachinko and pachislot hall business
Revenue from amusement arcades
Vending machine income
Revenue from hotel operations
Revenue from restaurant operations¥ million

2023(Restated)¥ million

131,835(107,891)

119,837(97,942)

23,944
1,687
453
163
708

21,895
1,710
378
149
480

26,955

24,612

During the year ended 31 March 2024, revenue recognised that was included in the contract liabilities
balances of receipt in advance relating to vending machines and unutilised balls and tokens relating topachinko and pachislot hall business and amusement arcades at the beginning of the year amounted to¥81 million (2023: ¥95 million) and ¥1,667 million (2023: ¥1,371 million), respectively.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

63

Notes to the Consolidated Financial Statements
5

REVENUE AND SEGMENT INFORMATION (CONTINUED)(a)

Revenue from continuing operation (Continued)
As at 31 March 2024, the amount of transaction price allocated to the contract liabilities in relation to receipt inadvance relating to vending machines and unutilised balls and tokens relating to pachinko and pachislot hallbusiness and amusement arcades that are unfulfilled were ¥86 million (2023: ¥165 million) and ¥1,972 million(2023: ¥1,710 million), respectively, of which all are expected to be recognised as revenue during the nextreporting period.

(b) Segment information
Management has determined the operating segments based on the reports reviewed by the CODM that areused 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 theoperating segments based on a measure of adjusted loss before income tax and unallocated corporate
expenses for the purposes of allocating resources and assessing performance. These reports are preparedon the same basis as this consolidated financial statements.
Management has identified four reportable segments based on the types of services, namely (i) pachinko andpachislot hall operations, (ii) amusement arcade operations, (iii) restaurant operation in China and (iv) others,
representing hotel and restaurant operations in Japan.
In August 2023, the Group has terminated the restaurant operation in China. As a result, the restaurant
operation is reported in the current period as discontinued operation. Details are set out in Note 11.
Segment assets consist primarily of property, plant and equipment, investment properties, right-of-use assets,intangible assets, inventories, trade receivables, prepayments, deposits and other 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 and financial assets at fair value throughother comprehensive income.
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.

64

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
5

REVENUE AND SEGMENT INFORMATION (CONTINUED)(b) Segment information (Continued)
The segment information provided to the executive directors for the years ended 31 March 2024 and 2023 are
as follows:
For the year ended 31 March 2024

Pachinko andpachislot halloperations

Continuing operations
Amusement
arcadeoperations
Other

Discontinued
operation

Total

Restaurant
operations

Total

Japan
¥ million

SoutheastAsia¥ million

Japan &
Hong Kong¥ million¥ million

China¥ million¥ million

Segment revenue from externalcustomers
Over time
At a point in time

24,397
–

1,687
–

163
708

26,247708–
80

26,247788

Segment revenue from externalcustomers

24,397

1,687

871

26,95580

27,035

2,419

(223)

(60)

2,136

(547)

1,589
(305)

Segment results
Unallocated amount

1,284(1,166)

Profit before income tax
Income tax expense
Profit for the year
Other segment items
Depreciation and amortisation expenses
Impairment loss on property, plant andequipment
Impairment loss on right-of-use assets
Impairment loss on financial assets
Finance income
Finance costs

118(3,619)

(347)

(51)

(4,017)–(4,017)

(112)
(284)
–
68
(893)

–
–
(410)
4
(65)

–
–
–
–
(5)

(112)
(284)
(410)
72
(963)

–
–
–
–
(6)

(112)
(284)
(410)
72
(969)

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

65

Notes to the Consolidated Financial Statements
5

REVENUE AND SEGMENT INFORMATION (CONTINUED)(b) Segment information (Continued)
For the year ended 31 March 2023 (Restated)
Discontinued
Continuing operations
operation
Amusement
arcadeRestaurant
operations
Other
Total
operations

Pachinko andpachislot halloperations

Japan¥ million

SoutheastAsia¥ million

Japan &
Hong Kong¥ million¥ million

China¥ million¥ million

Segment revenue from externalcustomers
Over time
At a point in time

22,273
–

1,710
–

149
480

24,132
480–
172

24,132652

Segment revenue from externalcustomers

22,273

1,710

629

24,612

172

24,784

2,287

155

(108)

2,334

(126)

2,208
(845)

Segment results
Unallocated amount
Profit before income tax
Income tax expense

1,363
(310)

Profit for the year

1,053

Other segment items
Depreciation and amortisation expenses
Impairment loss on property, plant andequipment
Impairment loss on right-of-use assets
Impairment loss on irrecoverable
prepayments
Finance income
Finance costs
Finance costs

66

Total

NIRAKU GC HOLDINGS, INC.

(925)

(3,577)

(495)

(26)

(4,098)(73)(4,171)

(176)
(319)

–
–

(38)
(52)

(214)
(371)

–
–

(214)
(371)

–
67
(925)

–
17
(42)

(1)
–
(4)

(1)
84
(971)

–
–
(8)

(1)
84
(979)

(42)

Annual Report 2024

(4)

(971)

(8)

(979)

Notes to the Consolidated Financial Statements
5

REVENUE AND SEGMENT INFORMATION (CONTINUED)(b) Segment information (Continued)
The segment assets as at 31 March 2024 and 2023 are as follows:

As at 31 March 2024
Segment assets
Unallocated assets
Deferred income tax assets

Pachinko andpachislot halloperations

Amusement
arcadeoperations

OthersRestaurant
operations

Total

Japan
¥ million

SoutheastAsia¥ million

Japan &
Hong Kong¥ million

China¥ million¥ million

53,420

1,364

1,001

11

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

As at 31 March 2023
Segment assets
Unallocated assets
Deferred income tax assets

65,760

2,802

595

154

–

3,551

Pachinko andpachislot halloperations

Amusement
arcadeoperations

OthersRestaurant
operations

Total

Japan
¥ million

SoutheastAsia¥ million

Japan &
Hong Kong¥ million

China¥ million¥ million

52,528

1,806

273

766

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

55,796
4,916
5,048

55,373
5,016
5,415
65,804

2,322

534

NIRAKU GC HOLDINGS, INC.

–

9

Annual Report 2024

2,865

67

Notes to the Consolidated Financial Statements
5

REVENUE AND SEGMENT INFORMATION (CONTINUED)(b) Segment information (Continued)
The total of non-current assets other than financial instruments and deferred tax assets, analysed by locationof the assets, is as follows:

Japan, country of domicile
Southeast Asia

2024
¥ million

2023¥ million

41,560870

42,474877

42,43043,351

No single external customer contributed more than 10% revenue to the Group’s revenue for the years ended
31 March 2024 and 2023.

6

OTHER INCOME AND OTHER GAINS, NET FROM CONTINUING OPERATIONS
2024

Other income from continuing operations
Rental income
Income from expired IC and membership cards
Dividend income
Compensation and subsidies
Income from scrap sales of used pachinko and pachislot machines
OthersOther gains, net from continuing operations
Gain on release of lease liabilities
Gain/(loss) on fair value for financial assets at fair value through profit or loss
Gain on fair value for derivative financial instruments
Gain/(loss) on disposal of property, plant and equipment, net
Exchange gain, net
Others68

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

¥ million

2023(Restated)¥ million

231
26
24
31
151
55

221
24
25
19
152
46

518

487

–
4
3
91
410
(4)

37
(7)
7
(10)
111
18

504

156

Notes to the Consolidated Financial Statements
7

HALL OPERATING EXPENSES AND ADMINISTRATIVE EXPENSES FROM CONTINUINGOPERATIONS
2024

Auditors’ remuneration— Audit fees
— Other services
Employee benefits expenses— Hall operations— Administrative
Operating lease rental expense in respect of land and buildings
Depreciation of property, plant and equipment (Note 14)
Depreciation of right-of-use assets (Note 15)
Depreciation of investment properties (Note 16)
Amortisation of intangible assets (Note 17)
Other taxes and duties
Utilities expenses
Consumables and cleaning
Repairs and maintenanceOutsourcing service expenses
Prizes procurement expenses to wholesalers
Pachinko and pachislot machines expenses (Note)
Advertising expenses
Impairment loss on irrecoverable prepayments
Legal and professional fees
Others¥ million

2023(Restated)¥ million

113
7

112
22

4,263
1,560
243
1,476
2,453
23
65
322
1,149
1,042
624
764
1,142
7,890
976
–
94
243

4,285
1,394
243
1,468
2,618
23
62
343
1,201
845
309
709
1,013
6,537
893
1
109
107

24,44922,294

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

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

69

Notes to the Consolidated Financial Statements
8

EMPLOYEE BENEFITS EXPENSES (INCLUDING DIRECTORS’ EMOLUMENTS)
2024

Salaries, bonuses and allowances
Pension costs — defined contribution plan
Other employee benefits(a)¥ million

2023(Restated)¥ million

4,769
63
991

4,614
70
995

5,823

5,679

Pension costs — defined contribution plans
The Company and its subsidiaries operate defined contribution plans which covers all full-time employees anddirectors. No forfeited contribution was incurred during the year (2023: Nil).

(b) Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for the year ended 31 March 2024
include three directors (2023: three directors) whose emoluments are reflected in the analysis shown in Note
36. The emoluments payable to the remaining two (2023: two) individuals during the year ended 31 March2024 and 2023 are as follows:

Salaries, allowances and other benefits
Pension cost — defined contribution plan2024
¥ million

2023¥ million

49
1

49
2

50

51

The number of highest paid individuals whose remuneration fell within the following band is as follows:
Number of individuals
2024

2023

¥17,010,001 to ¥25,515,000(equivalent to approximately HK$1,000,001 to HK$1,500,000)

1

1¥25,515,001 to ¥34,020,000(equivalent to approximately HK$1,500,001 to HK$2,000,000)

1

1Emolument bands

70

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
9

FINANCE COSTS, NET FROM CONTINUING OPERATIONS
2024

Finance income from continuing operations
Bank interest income
Interest income on lease receivables
Other interest income

Finance costs from continuing operations
Bank borrowings
Lease liabilities
Provision for unwinding discountFinance costs, net from continuing operations¥ million

2023(Restated)¥ million

7
32
33

2
34
48

72

84

(141)
(698)
(124)

(101)
(742)
(128)

(963)

(971)

(891)

(887)

10 INCOME TAX EXPENSE
Material accounting policy
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on
the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
(i)Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period in the countries where the Company and its subsidiaries and associates
operate and generate taxable income. Management periodically evaluates positions taken in tax returns withrespect to situations in which applicable tax regulation is subject to interpretation and considers whether it isprobable that a taxation authority will accept an uncertain tax treatment. The Group measures its tax balances
either based on the most likely amount or the expected value, depending on which method provides a better
prediction of the resolution of the uncertainty.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

71

Notes to the Consolidated Financial Statements
10 INCOME TAX EXPENSE (CONTINUED)(ii)

Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill.
Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in atransaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have beenenacted or substantially enacted by the end of the reporting period and are expected to apply when therelated deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise
those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amountand tax bases of investments in foreign operations where the company is able to control the timing of thereversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable
future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax
assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either
to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised inother comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
2024¥ million

2023(Restated)¥ million

Current income tax— Japan— Other Asian countries

721
77

346
(27)

Deferred income tax

798
368

319
(9)

1,166

310

Total charge for the year

No provision for Hong Kong profits tax has been made for the years ended 31 March 2024 and 2023 as the Group
did not generate any assessable profits arising in Hong Kong during the years ended 31 March 2024 and 2023.

72

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
10 INCOME TAX EXPENSE (CONTINUED)
Japan corporate income tax include national corporate income tax, inhabitants tax, and enterprise tax, and has
been calculated on the estimated assessable profit for the year. During the year ended 31 March 2024, the effective
rates of national corporate income tax, inhabitants tax, and enterprise tax resulted in statutory income tax rates of
34.1% (2023: 34.1%).
Income tax for the Group’s Vietnam operations has been provided at the rate of 20.0% (2023: 20.0%) on theestimated assessable profit derived from Vietnam for the year. Taxation on other jurisdictions’ profits has been
calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the jurisdictions inwhich the Group operates.
The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the profits
tax rate of Japan as follows:
2024

Profit from continuing operations before income tax
Loss from discontinued operation before income tax

Tax calculated at domestic tax rates applicable to profit
in the respective countries
Income not subject to tax
Expenses not deductible for tax purpose
Unrecognised tax losses
Unrecognised deductible temporary differences
Utilisation of previously unrecognised tax losses¥ million

2023(Restated)¥ million

1,831
(547)

1,489
(126)

1,284

1,363

570
(17)
495
149
39
(70)

497
(2)
163
78
(159)
(267)

1,166

310

The weighted average applicable tax rate was 44.4% for the year ended 31 March 2024 (2023: 36.5%). Thechange is caused by a change in the profitability mix of the Group’s subsidiaries in the respective countries.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

73

Notes to the Consolidated Financial Statements
11 DISCONTINUED OPERATION
Due to the spread of COVID-19 and intermittent business suspension policy imposed in China, the restaurant
operation in China (“YOKOCHO business”) had been suffering from persistent loss. After due and carefulconsideration, on 27 July 2023, a written resolution was passed by all directors of NPJ Hong Kong Limited (anindirectly non-wholly-owned subsidiary of the Company) to resolve NPJ China Yokocho Co., Ltd. (“NPJ China”), a
wholly-owned subsidiary of NPJ Hong Kong Limited) to withdraw from its YOKOCHO business in China in August2023. The YOKOCHO business officially ceased on 15 August 2023. On 19 September 2023, another written
resolution was passed by the Board of NPJ Hong Kong Limited to approve the bankruptcy plan of the YOKOCHO
business. On 1 March 2024, another written resolution was passed by the Board of the Company to approve forfiling of a bankruptcy liquidation to the court in China. Subsequently on 17 April 2024, a bankruptcy order was
granted by the Shenzhen Intermediate People’s Court (the “Court”) and a trustee was then appointed by the Count
on 22 April 2024. The management of the Group believes that the cessation of business operation of NPJ China
will improve the financial position of the Group, which is in the interests of the Company and its shareholders as awhole. As at the date of this report, the bankruptcy process is ongoing.
The financial results of the discontinued business are presented in the consolidated statement of comprehensive
income as discontinued operation in accordance with IFRS 5 “Non-current Assets Held for Sales and Discontinued
Operations”. Comparative figures have been restated to conform to the current year’s presentation.
The results of NPJ China for the two years are presented below:
For the year ended 31 March2024¥ million

2023¥ million

Revenue
Other income and losses, net
Loss on early termination of lease agreement (Note)
Operating expenses
Administrative expenses
Finance cost, net

80
(24)
(431)
(62)
(104)
(6)

172
(2)
–
(145)
(143)
(8)

Loss before tax from discontinued operation
Income tax expense

(547)
–

(126)
–

Loss for the year from discontinued operation

(547)

(126)

Note: The Company submitted an unilateral early termination request for the lease of restaurants upon cessation of YOKOCHO business. In thisregard, the landlord filed an arbitration claim demanding a total compensation of approximately ¥674 million. Taken into account the leaseliabilities of ¥243 million recognised on the book, a loss from early termination of ¥431 million is recognised in the consolidated statement ofcomprehensive income for the year ended 31 March 2024.

74

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
11 DISCONTINUED OPERATION (CONTINUED)
For the year ended 31 March2024¥ million

2023¥ million

Other comprehensive (loss)/income
Exchange differences on translation of discontinued operation

(59)

50

Total comprehensive loss for the year from discontinued operation

(606)

(76)

The net cash flows incurred by NPJ China are as follows:
For the year ended 31 March2024¥ million

2023¥ million

Net cash outflow from operating activities
Net cash (outflow)/inflow from financing activities

(85)
(41)

(95)
173

Net (decrease)/increase in cash generated by the subsidiary

(126)

78

Cash and cash equivalents at beginning of the year
Effect of exchange rate changes on cash and cash equivalents

132
4

55
(1)

10

132

Annual Report 2024

75

NIRAKU GC HOLDINGS, INC.

Notes to the Consolidated Financial Statements
12 EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to owners of the Company by
the weighted average number of ordinary shares in issue during the years ended 31 March 2024 and 2023.

Profit/(loss) attributable to owners of the Company (¥ million)
Continuing operations
Discontinued operation

Weighted average number of ordinary shares for the
purpose of calculating basic earnings/(loss) per share (thousands)
Basic and diluted earnings/(loss) per share (¥)
Continuing operations
Discontinued operation
For the year

2024

2023

694
(279)

1,198
(64)

415

1,134

1,195,850

1,195,850

0.58(0.23)
0.35

1.00(0.05)
0.95

No diluted earnings/(loss) per share is presented as there were no potential dilutive shares during the years ended
31 March 2024 and 2023. Diluted earnings/(loss) per share is equal to the basic earnings/(loss) per share.

76

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
13 INTEREST IN AN ASSOCIATE
2024¥ million

2023¥ million

Investment in unlisted shares, at cost5

5

Share of results:
At 1 April
Share of loss

(5)
–

(5)
–

Interest in an associate––

Details of the associate as at 31 March 2024 and 2023 are as follows:

Name

Yes! E-Sports Asia
Holdings Limited(“YEAH”)

Place ofincorporation andkind of legal entity

Hong Kong, limited
liability company

Principal activities
and place of
operation

Particulars of issued
share capitalInterest held
2024

2023

40%

40%

Annual Report 2024

77

Provision for e-sports 50,000 shares with paid
events services
up capital of
US$100,000

There is no contingent liability relating to the Group’s interest in the associate.

NIRAKU GC HOLDINGS, INC.

Notes to the Consolidated Financial Statements
14 PROPERTY, PLANT AND EQUIPMENT
Material accounting policy
Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net of theirresidual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plantand equipment, the shorter lease term as follows:— Buildings— Leasehold improvements— Equipment and tools

20 to 40 years
Shorter of lease term or useful lives
2 to 20 years

Non financial assets other than goodwill are tested for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount bywhich the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets aregrouped at the lowest levels for which there are separately identifiable cash inflows which are largely independentof the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of eachreporting period.

Freehold land
¥ million

Buildings¥ million

Leaseholdimprovements¥ million

Equipment
and tools¥ million

Construction
progress¥ million

Total¥ million

7,773

11,62913,472

13,074

1

45,949(247)(7,153)(9,854)(10,941)–(28,195)

Net book amount

7,526

4,476

3,618

2,133

1

17,754

Year ended 31 March 2023
Opening net book amount
Additions
Disposal
Depreciation
Impairment loss
Translation difference

7,526
–
–
–
(79)
–

4,476
–
(86)
(345)
(72)
–

3,618
354
(10)
(528)
(48)
5

2,133
478
(5)
(595)
(15)
4

1
97
(11)
–
–
–

17,754929(112)(1,468)(214)
8Closing net book amount

7,447

3,973

3,391

2,000

87

16,898

7,769

11,503

13,582

13,48787

46,428(322)(7,530)(10,191)(11,487)–(29,530)

7,447

3,973

3,391

2,000

87

16,898

At 1 April 2022
Cost
Accumulated amortisation and provision for
impairment

At 31 March 2023 and 1 April 2023
Cost
Accumulated amortisation and provision for
impairment
Net book amount78

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Freehold land
¥ million

Buildings¥ million

Leaseholdimprovements¥ million

Equipment
and tools¥ million

Construction
progress¥ million

Total¥ million

Year ended 31 March 2024
Opening net book amount
Additions
Disposal
Depreciation
Impairment loss
Transfer between categories
Translation difference

7,447
–
–
–
–
–
–

3,973
106
(56)
(330)
(6)
–
–

3,391
291
(10)
(525)
(19)
44
9

2,000
1,803
(63)
(621)
(87)
–
18

87
89
(44)
–
–
(44)
–

16,8982,289(173)(1,476)(112)–
25

Closing net book amount

7,447

3,687

3,181

3,050

88

17,453

7,769

11,544

13,822

15,09088

48,313(322)(7,857)(10,641)(12,040)–(30,860)

7,447

3,687

3,181

3,050

88

17,453

At 31 March 2024
Cost
Accumulated amortisation and provision for
impairment
Net book amount

Depreciation expenses of ¥1,368 million (2023: ¥1,364 million) has been charged in “hall operating expenses” and¥108 million (2023: ¥104 million) has been charged in “administrative expenses” for the year ended 31 March 2024.
The net carrying amount of the Group’s property, plant and equipment that were pledged for the banking facilities
granted to the Group for the years ended 31 March 2024 and 2023 has been disclosed in Note 29.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

79

Notes to the Consolidated Financial Statements
14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Impairment assessment
Non-current assets other than goodwill and intangible assets with indefinite useful life are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
The Group carries out reviews of the recoverable amounts of each cash-generating unit (“CGU”), which isdetermined as each individual pachinko and pachislot hall in Japan, a hotel business in Japan, each restaurant inJapan, each amusement arcade in Southeast Asia and the restaurant operation in China, whenever impairment
indicator is noted.
For the year ended 31 March 2024, management assessed for whether CGUs have any impairment indicator byconsidering whether it recorded operating loss in recent two reporting periods and whether budget (the projected
operating cashflow after overhead allocation) was met in current period. The management has reviewed therecoverability of the relevant carrying amounts of these CGUs.
The recoverable amount of a CGU is determined as the higher of value-in-use or the fair value less cost of disposal.
The value-in-use calculations use pre-tax cash flow projections based on financial budgets approved bymanagement covering a one-year period which taken into account the performance of each of the CGUs in current
year and incorporating management’s latest plans for each CGU. Cash flows beyond the one-year period are
extrapolated using the estimated growth rates stated below.
2024

2023

First year
revenue
growth rate

Revenue
growth rate
after thefirst year

Pachinko and pachislot hall operations -10% to +30%
Amusement arcade operations
N/A
Restaurant operations
6%

0%
N/A
0%

Pre-tax
discount rate

First year
revenue
growth rate

Revenue
growth rate
after thefirst year

Pre-tax
discount rate

9.3%
N/A
9.3%

-3% to +12%65%
14% to 18%

0%
5%
0%

9.0%
20.0%
9.0%

The discount rates applied by the Group that reflect the current market assessment of the time value of money andthe risk specific to the CGUs. Revenue growth rates are determined based on past experience and expectations onmarket and operational development.
The fair value less cost of disposal is applied for CGU with significant self-owned property, for impairment
assessment purpose. No CGU subject to impairment review for the years ended 31 March 2024 and 2023 hadsignificant self-owned property and no recoverable amount is derived from fair value less cost of disposal.

80

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Impairment assessment (Continued)
The key assumptions used for fair value less costs of disposal calculations for the years ended 31 March 2024 and2023 are as follows:

Sales comparison approach
Land — unit price square meter

2024

2023

¥644,000¥599,000

The Group’s finance department includes a team that reviews the valuations performed by the independent valuer
on a similar property which management made reference to, for purposes of the fair value less cost of disposal
calculation. This team reports directly to the executive directors. Discussions of valuation processes and results areheld between the valuation team and the senior management at least annually.
At each financial year end the finance department:•

Verifies all major inputs to the independent valuation report;•

Assesses property valuations movements when compared to the prior year valuation report;•

Holds discussions with the independent valuer.

The management compared the recoverable amounts derived by the value-in-use and fair value less cost of
disposal, and applied the higher of the two for the provision for impairment.
For the year ended 31 March 2024, as a result of the impairment review of CGUs with impairment indicator,
impairment loss of approximately ¥112 million (2023: ¥214 million) and ¥284 million (2023: ¥371 million) has beenrecognised on property, plant and equipment and right-of-use assets (Note 15), respectively. There was no
impairment loss recognised for other non-current assets for the year ended 31 March 2024 (2023: ¥1 million
recognised for irrecoverable prepayments).
For pachinko and pachislot operations, if the first year revenue growth rate in the value-in-use calculations
decreases by 2% (2023: Same) with other assumptions remain constant, impairment loss would be increase by
JPY83 million (2023: no additional impairment loss would be recorded). If the discount rate in the value-in-use
calculations increases by 1% (2023: Same) with other assumptions remain constant, impairment loss would be
increase by JPY68 million (2023: no additional impairment loss would be recorded).
For amusement arcade operations, as all CGUs were fully impaired in prior years with no additions in fixed assets
since then. Therefore, no impairment assessment is carried out for the year ended 31 March 2024. For the year
ended 31 March 2023, if the first year revenue growth rate in the value-in-use calculations decreases by 2% withother assumptions remain constant, impairment loss would be increase by ¥4 million). If the discount rate in thevalue-in-use calculations increases by 2% with other assumptions remain constant, no additional impairment loss
would be recorded.
For restaurant operations, if the first year revenue growth rate decreases by 2% (2023: Same), or the discount rateincreases by 1% (2023: Same), with other assumptions remain constant, no additional impairment loss would berecorded (2023: Same).
NIRAKU GC HOLDINGS, INC.

Annual Report 2024

81

Notes to the Consolidated Financial Statements
15 LEASES
Material accounting policy
Leases are recognised as a right-of-use and a corresponding liability at the date at which the leased asset isavailable for use by the Group.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract
to the lease and non-lease component based on their relative stand-alone prices. However, for leases of real estate
for which the Group is a lessee, it has elected not to separate lease and non-lease components and instead
accounts for these as a single lease components.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants other than the security interest in the leased assets that are heldby the lessor. Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:•

fixed payments (including in-substance fixed payments), less any incentives receivable;•amounts expected to be payable by the Group under residual value guarantees;•

the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and•payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of
the liability.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss overthe lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability foreach period.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used,being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset ofsimilar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group uses recent third-party financing received by the individual
lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing wasreceived.
The group is exposed to potential future increases in variable lease payments based on an index or rate, which are
not included in the lease liability until they take effect. When adjustments to lease payments based on an index orrate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

82

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
15 LEASES (CONTINUED)
Material accounting policy (Continued)
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on astraight-line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset isdepreciated over the underlying asset’s useful life. While the group revalues its land and buildings that arepresented within property, plant and equipment, it has chosen not to do so for the right-of-use buildings held by thegroup.
Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, anylease payments made at or before the commencement date less any lease incentive received, any initial direct costand restoration costs.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets arerecognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of
12 months or less without a purchase option. Low-value assets comprise IT equipment and small items of officefurniture.
Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis
over the lease term. The respective leased assets are included in the investment properties.
During the year ended 31 March 2024, the Group entered into a number of lease agreements for and recognised
additions of right-of-use assets of ¥1,258 million (2023: ¥1,932 million).

(a)Amounts recognised in the consolidated statement of financial position
2024¥ million

2023¥ million

Right-of-use assets
Buildings
Leasehold improvement
Equipment and tools
Vehicles

20,452
2,996
255
49

21,891
3,000
223
31

Total right-of-use assets

23,75225,145

Lease liabilities
Current
Non-current

2,608
25,317

2,762
26,96827,92529,730For the year ended 31 March 2024, as a result of the impairment review of CGUs with impairment indicator(Note 14) and annual impairment assessment on goodwill (Note 17), impairment loss of approximately ¥284
million (2023: ¥371 million) has been recognised on right-of-use assets.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

83

Notes to the Consolidated Financial Statements
15 LEASES (CONTINUED)(b) Amounts recognised in the consolidated statement of comprehensive income
2024

Depreciation of right-of-used assets from continuing operations
Buildings
Leasehold improvement
Equipment and tools
VehiclesInterest expense (included in finance costs)
Expense relating to short-term leases (included in hall operating expenses)
Expense relating to leases of low-value assets that are notshown above as short-term leases (included in administrative expenses)¥ million

2023(Restated)¥ million

2,172
184
82
15

2,329
231
43
15

2,453

2,618

698
230

742
232

13

11

The total cash outflow for leases during the year ended 31 March 2024 was ¥4,674 million (2023: ¥3,856
million).

(c)

The Group’s leasing activities and how these are accounted for
The Group leases various offices, pachinko and pachislot halls, amusement arcades centres, equipment andvehicles. Rental contracts are typically made for fixed periods of 5 to 20 years but may have extension options
as described below.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants other than the security interests in the leased assets thatare held by the lessor. Leased assets may not be used as security for borrowing purposes.

(d) Extension and termination options
Extension and termination options are included in a number of property leases across the Group. These
terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension
and termination options held are exercisable under mutual agreement by the Group and the respective lessor.
In determining the lease term, management considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended(or not terminated).

84

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
16 INVESTMENT PROPERTIES
Material accounting policy
Investment properties, principally freehold office buildings, are held for long-term rental yields and are not occupiedby the Group. Investment property is initially measured at cost, including related transaction costs and whereapplicable borrowing costs. After initial recognition, investment properties are stated at historical cost lessaccumulated depreciation and impairment losses.
Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation of
investment properties, except for the freehold land, which is not subject to depreciation, is calculated using thestraight-line method to allocate their costs to their residual values over their estimated useful lives of 41 to 45 years.
2024¥ million

2023¥ million

1,041
(350)

1,041
(327)

691

714

At costAt beginning of year
Depreciation

691
(23)

714
(23)

At end of year

668

691

1,041
(373)

1,041
(350)

668

691

At 1 April
Cost
Accumulated depreciation

At 31 March
Cost
Accumulated depreciation and provision for impairment

As at 31 March 2024, investment properties of ¥553 million (2023: ¥572 million) was pledged to secure generalfacilities granted to the Company (Note 29).
The Group had no unprovided contractual obligations for future repairs and maintenance as at 31 March 2024 and2023.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

85

Notes to the Consolidated Financial Statements
16 INVESTMENT PROPERTIES (CONTINUED)
Investment properties are situated in Japan and rented out under operating lease. Amounts recognised inconsolidated statement of comprehensive income for investment properties are as follows:

Rental income
Direct operating expenses from property that generated rental income

2024¥ million

2023¥ million

102
(17)

104
(17)

The fair value of Group’s investment properties were valued as at 31 March 2023 and 2022 by an independent
professionally qualified valuer who holds recognised relevant professional qualification and has recent experiencein the locations and segments of the investment properties valued. The valuations were determined using theincome approach (term and reversionary method) which largely used observable and unobservable inputs,
including market rent, yield and estimation in vacancy rate after expiry of current lease. Such fair values estimationof investment properties are categorised under level 3 of the fair value hierarchy. As at 31 March 2024, the fairvalue of investment properties amounted to ¥1,046 million (2023: ¥1,046 million).
The key assumptions used for the valuations for the years ended 31 March 2024 and 2023 are as follows:

Income approach
Monthly rental per square meter
Discount rate
Vacancy rate after expiry of current lease terms

2024

2023

¥1,105–¥4,584
5.0%–5.8%
3.0%–5.0%¥1,105–¥4,584
5.1%–5.9%
3.0%–5.0%

17 INTANGIBLE ASSETS
Material accounting policy
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value
in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groupsof assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed
for possible reversal of the impairment at the end of each reporting period.

86

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
17 INTANGIBLE ASSETS (CONTINUED)

Goodwill¥ million
At 1 April 2022
Cost
Accumulated amortisation andprovision for impairment

Computersoftware Trademarks¥ million¥ million

Contract
License relationship¥ million¥ million

Total¥ million

1,202

436

143

54

322

2,157

(1,112)

(380)

(109)

(54)

(141)

(1,796)

Net book amount

90

56

34

–

181

361

Year ended 31 March 2023
Opening net book amount
Additions
Amortisation (Note 7)
Translation difference

90
–
–
–

56
4
(20)
–

34
–
(13)
5

–
–
–
–

181
–
(29)
14

361
4
(62)
19

Closing net book amount

90

40

26

–

166

322

1,202

428

156

54

352

2,192

(1,112)

(388)

(130)

(54)

(186)

(1,870)Net book amount

90

40

26

–

166

322

Year ended 31 March 2024
Opening net book amount
Additions
Amortisation (Note 7)
Translation difference

90
–
–
–

40
4
(20)
–

26
–
(14)
8

–
–
–
–

166
–
(31)
16

322
4
(65)
24

Closing net book amount

90

24

20

–

151

285

1,202

432

177

54

399

2,264

(1,112)

(408)

(157)

(54)

(248)

(1,979)

90

24

20

–

151

285

At 31 March 2023 and 1 April 2023
Cost
Accumulated amortisation andprovision for impairment

At 31 March 2024
Cost
Accumulated amortisation andprovision for impairment
Net book amount

NIRAKU GC HOLDINGS, INC.

Annual Report 202487

Notes to the Consolidated Financial Statements
17 INTANGIBLE ASSETS (CONTINUED)
Amortisation expenses of ¥65 million was charged in “hall operating expenses” for the year ended 31 March 2024
(2023: ¥62 million).

Impairment test for goodwill
Goodwill arises from the acquisitions of certain pachinko and pachislot halls and a subsidiary which engages inamusement arcade business in previous years, and is monitored by management at the level of individual pachinko
and pachislot hall and the operating segment of amusement arcade operations. A segment-level summary of the
goodwill allocation is represented below.

Pachinko and pachislot operations
Amusement arcade operations

2024¥ million

2023¥ million

90
–

90
–

90

90

Management reviews annually whether the carrying amount of the CGU or the group of CGUs is higher than therecoverable amount which results in impairment of goodwill. The recoverable amount of a CGU is determined as
the higher of value-in-use or fair value less cost of disposal.
The value-in-use calculations are used in both pachinko and pachislot operations and amusement arcade
operations, and the calculations use pre-tax cash flow projections based on financial budgets approved bymanagement covering a one-year period, which management assumes no operation suspensions with cash flows
remains the same as the latest financial performance. Cash flows beyond the one-year period are extrapolatedusing the estimated growth rates.
The key assumptions used for fair value less costs of disposal calculations for the years ended 31 March 2024 and2023 are as follows:First year
revenue
growth rate
Pachinko and pachislot hall operations

–2%

2024
Revenue
growth rate
after thePre-tax
first year discount rate
0%

9.3%

First year
revenue
growth rate2023
Revenue
growth rate
after thefirst year

Pre-tax
discount rate

5%

0%

9.0%

The discount rates applied by the Group are rates that reflect current market assessment of the time value ofmoney and the risk specific to the CGUs. Revenue growth rate is based on past practices and expectations onmarket and operational development.

88

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
17 INTANGIBLE ASSETS (CONTINUED)
For the year ended 31 March 2024, as a result of the annual impairment review on CGU with goodwill allocated, no
impairment loss has been recorded (2023: Same).
For the value-in-use calculations of pachinko and pachislot operations as at 31 March 2024, if the first year revenue
growth rate decreases by 2% (2023: Same) with other assumptions remain constant, no impairment loss would berecorded (2023: Same). If the discount increases by 1% (2023: Same) with other assumptions remain constant, no
impairment loss would be recorded (2023: Same).

18 FINANCIAL INSTRUMENTS BY CATEGORY

Financial assets
Financial assets at fair value
Fair value through profit or loss
Fair value through other comprehensive income

Financial assets at amortised cost
Trade receivables
Deposits and other receivables
Bank deposits with original maturity over 3 months
Cash and bank balances

Financial liabilities
Financial liabilities at fair value
Derivative financial instruments
Financial liabilities at amortised cost
Trade payables
Accruals, provisions and other payables
Borrowings
Lease liabilities

NIRAKU GC HOLDINGS, INC.

2024
¥ million

2023¥ million

102
534

98
511

636

609

154
4,155
345
12,350

107
4,514
528
10,43517,004

15,584

17,64016,193

1

4

196
2,494
10,432
27,925125
1,252
10,20629,73041,04741,31341,04841,317

Annual Report 2024

89

Notes to the Consolidated Financial Statements
19 FINANCIAL ASSETS AT FAIR VALUE(a)

Financial assets at fair value through profit or loss

Unlisted securities

2024¥ million

2023¥ million

102

98

Change in fair value of financial assets at fair value through profit or loss are recorded in “other gains, net” inthe consolidated statement of comprehensive income (Note 6).
The fair values of these debt and equity securities are determined by discounted cash flow approach. The fairvalues of these unlisted securities are within level 2 of the fair value hierarchy (Note 3.3).

(b) Financial assets at fair value through other comprehensive income

Listed securities— Equity securities

2024¥ million

2023¥ million

534

511

Changes in fair values of financial assets at fair value through other comprehensive income are recorded in“investment revaluation reserve” in the consolidated statement of changes in equity. The fair values of allequity securities are based on the current bid prices and recent transaction prices in an active market. The
fair values of these equity securities are within level 1 of the fair value hierarchy (Note 3.3).

20 DERIVATIVE FINANCIAL INSTRUMENTS
2024¥ million

2023¥ million

Interest rate swaps
Less: non-current portion

1
(1)

4
(3)

Current portion–1

Derivative financial instruments are utilised by the Group in the management of its interest rate exposures. The
Group’s policy is not to utilise derivative financial instruments for trading or speculative purposes. The Group hasentered into interest rate swaps agreement with banks mainly to swap floating interest rate borrowings to fixedinterest rate borrowings to manage the fixed and floating interest rate mix of the Group’s total debt portfolio. As at
31 March 2024, the notional amount of the outstanding interest rate swaps agreement with the banks wasdenominated in ¥ and amounted to ¥1,907 million (2023: ¥2,000 million).

90

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
21 INVENTORIES

Supplies2024¥ million

2023¥ million

55

67

The cost of inventories recognised as expenses and included in “hall operating expenses” amounted to ¥7,890
million (2023: ¥6,537 million) for the year ended 31 March 2024.

22 TRADE RECEIVABLES

Trade receivables2024¥ million

2023¥ million

154

107

Trade receivables represent income receivable from vending machines. The credit terms granted by the Groupgenerally ranged from 0 to 30 days.
As at 31 March 2024 and 2023, the ageing analysis of the trade receivables, based on invoice date, is as follows:

Less than 30 days
Over 30 days2024
¥ million

2023¥ million

153
1

106
1

154

107

The maximum exposure to credit risk at the reporting date is the carrying value of the receivable mentioned above.
The Group does not hold any collateral as security.
The carrying amounts of trade receivables approximate their fair values as at 31 March 2024 and 2023 and aredenominated in ¥.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

91

Notes to the Consolidated Financial Statements
23 PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

Non-current portion
Rental and other deposits
Lease receivables
Other prepayments and receivables

Current portion
Prepayment for prizes in operation for pachinko and pachislot halls
Rental prepayments
Lease receivables
Consumption tax receivables
Other prepayments and receivables2024¥ million

2023¥ million

2,741
1,158
249

2,691
1,188
547

4,148

4,426

245
116
31
4
470

372
123
64
–
423

866

982

The carrying amounts of deposits and other receivables approximate their fair values as at 31 March 2024 and2023.
Certain deposits and other receivables have been pledged to secure general facilities granted to the Company(Note 29).

24 CASH AND BANK BALANCES
2024¥ million

2023¥ million

Current portion
Cash on hand
Cash at banks
Short term bank deposits

1,180
10,940
230

783
9,569
83

Cash and cash equivalents
Bank deposits with maturity over 3 months

12,350345

10,435528

12,695

10,963

12,695

10,963

Total cash and bank balances

92

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
24 CASH AND BANK BALANCES (CONTINUED)
Cash and bank balances are denominated in the following currencies:

¥
US$
HK$
VND
Others2024¥ million

2023¥ million

11,354
795
449
92
5

9,768
753
307
113
22

12,695

10,963

Number ofsharesShare
Capital¥ million

1,195,850,460

3,000

25 SHARE CAPITAL

Ordinary shares, issued and fully paid:
At 31 March 2023, 1 April 2023 and 31 March 2024

26 RESERVES(a)Capital surplus
Under the Japan Companies Act, certain portion of the consideration from the issuance of share capital shallbe credited to the share capital and the remaining of the consideration shall be credited to capital surplus.

(b) Capital reserve
Capital reserve represents the difference between the value of net assets of the subsidiary acquired by theCompany 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 appropriated as legal
reserve (a component of either capital surplus or retained earnings) until an aggregate amount of legal capitalreserve and 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 of financial assets
through other comprehensive income held at the end of the reporting period.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

93

Notes to the Consolidated Financial Statements
27 TRADE PAYABLES
The ageing analysis of the trade payables based on invoice dates as at 31 March 2024 and 2023 were as follows:

Less than 30 days
Over 30 days2024
¥ million

2023¥ million

195
1

51
74

196

125

The carrying amounts of trade payables approximate their fair values as at 31 March 2024 and 2023 and weredenominated in ¥.

28 ACCRUALS, PROVISIONS AND OTHER PAYABLES

Non-current portion
Provision for reinstatement costs
Rental deposit received
Other payables

Current portion
Accrued purchases for pachinko and pachislot machines
Accrued purchases for property, plant and equipment
Accrued staff costs
Contract liabilities:
Receipt in advance
Unutilised balls and tokens
Other tax payable
Office expenses and consumables
Provision for loss on early termination of lease
Utilities payable
Other payables2024¥ million

2023¥ million

1,958
142
41

1,965
151
42

2,141

2,158

291
195
871

274
117
787

86
1,972
385
848
674
48
287

165
1,710
538
361
–
54
281

5,657

4,287

The carrying amounts of other payables approximate their fair values as at 31 March 2024 and 2023 and weredenominated in ¥.

94

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
29 BORROWINGS
Material accounting policy
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees
paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it isprobable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, thefee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it
relates.
Borrowings are removed from the consolidated statement of financial position when the obligation specified in thecontract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability thathas been extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss as finance costs.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to
extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which ismeasured as the difference between the carrying amount of the financial liability and the fair value of the equity
instruments issued.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of theliability for at least 12 months after the reporting period.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of aqualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its
intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for
their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period in which they are incurred.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

95

Notes to the Consolidated Financial Statements
29 BORROWINGS (CONTINUED)

Non-current portion
Bank loans
Syndicated loans

Current portion
Bank loans
Syndicated loans

Total borrowings

2024¥ million

2023¥ million

2,932
2,371

3,112
2,653

5,303

5,765

3,184
1,945

2,900
1,541

5,129

4,441

10,432

10,2062024¥ million

2023¥ million

5,129
2,387
2,871
45

4,441
2,366
3,281
118

10,432

10,206As at 31 March 2024 and 2023, the Group’s borrowings were repayable as follows:

Within 1 year
Between 1 and 2 years
Between 2 and 5 years
Over 5 years

The average effective interest rates (per annum) at the end of each reporting period were set out as follows:

Bank loans
Syndicated loans

96

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

2024

2023

1.61%
1.08%

1.57%
0.97%

Notes to the Consolidated Financial Statements
29 BORROWINGS (CONTINUED)
At the end of each reporting period, the total borrowings are pledged by certain assets and their carrying values areshown as below:

Property, plant and equipment
Investment properties
Deposits and other receivables2024¥ million

2023¥ million

8,946
553
158

9,230
572
162

9,657

9,964

2024
¥ million

2023¥ million

3,016

1,682

The undrawn borrowing facilities of the Group at each reporting period are as follows:

Floating rate
— Expiring over 1 year

The carrying amounts of borrowings of the Group approximate their fair values as at 31 March 2024 and 2023 andwere denominated in ¥.

30 DEFERRED INCOME TAX
The analysis of deferred income tax assets is as follows:

Deferred income tax assets— to be recovered after more than 12 months— to be recovered within 12 months

Deferred income tax liabilities— to be recovered after more than 12 months
Deferred income tax assets, net

NIRAKU GC HOLDINGS, INC.

2024
¥ million

2023¥ million(Restated)

14,397943

15,336843

15,34016,179(10,292)(10,764)

5,048

5,415

Annual Report 2024

97

Notes to the Consolidated Financial Statements
30 DEFERRED INCOME TAX (CONTINUED)
The net movement on the deferred income tax account is as follows:2024¥ million

2023¥ million

At 1 April
Credited to the consolidated statement of other comprehensive income(Charged)/credited to profit or loss

5,415
1
(368)

5,342
64
9

Deferred income tax assets

5,048

5,415

The movement in deferred income tax assets and liabilities during the years ended 31 March 2024 and 2023 is asfollows:

Deferred income tax assets

Property,plant andequipment¥ million

98

Fair value
throughother
Right-of-use comprehensive
assetsincome¥ million¥ million

Losscarriedforward¥ million

Other
provisions¥ million

Total¥ million

Balances at 1 April 2022, as previously reported
Change in accounting policy – IAS12

4,184
–

740
9,866

84
–

680
–

717
–

6,405
9,866

Balance at 1 April 2022, as restated(Charged)/credit to profit or loss
Charged to other comprehensive income

4,184(1,440)–10,606
1,278
–

84
–
64

680
(289)
–

717
295
–

16,271(156)
64

Balance at 31 March 2023 and 1 April 2023,
as restated
Charged to profit or loss
Credited to other comprehensive income

2,744
(18)
–

11,884
(492)
–

148
–
1

391
(38)
–

1,012
(292)
–

16,179(840)
1Balance at 31 March 2024

2,726

11,392

149

353

720

15,340NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
30 DEFERRED INCOME TAX (CONTINUED)
Deferred income tax liabilities
Property, plantand equipment¥ million

Right-of-use
assets¥ million

Other
provisions¥ million

Total¥ million

Balances at 1 April 2022,
as previously reported
Change in accounting policy – IAS12

(951)
–

–
(9,866)(112)–(1,063)(9,866)

Balance at 1 April 2022, as restated
Credited/(charged) to profit or loss

(951)
216

(9,866)
(163)

(112)
112

(10,929)
165

Balance at 31 March 2023 and 1 April 2023,
as restated(Charged)/credited to profit or loss

(735)
(3)

(10,029)475––(10,761)472

Balance at 31 March 2024

(738)

(9,554)–(10,292)

The deferred tax assets and liabilities are offset when there is a legally enforceable right to set off and when thedeferred income taxes relate to the same taxation authority. The amounts shown in the consolidated statement offinancial position are determined after appropriate offsetting.
Deferred income tax assets are recognised for tax losses carry-forwards to the extent that the realisation of therelated tax benefits through the future taxable profits is probable. As at 31 March 2024, the Group has unrecognised
tax losses of approximately ¥1,493 million (2023: ¥1,449 million) to carry forward for offsetting against futuretaxable income. These tax losses have no expiry dates except for the tax losses of ¥116 million (2023: ¥277 million)and ¥598 million (2023: ¥502 million) which can be carried forward for 10 years and 5 years, respectively.
Other than the above, there was no material unprovided deferred income tax as at 31 March 2024 and 2023.

31 DIVIDENDS
During the year ended 31 March 2024, the Company paid final dividend of ¥132 million (¥0.11 per common share)and interim dividend of ¥108 million (¥0.09 per common share) to their shareholders in respect of the years ended
31 March 2023 and 31 March 2024, respectively.
On 27 May 2024, the board of directors of the Company declared a final dividend of ¥0.17 per common sharetotalling ¥203 million in respect of the year ended 31 March 2024. These consolidated financial statements do notreflect this dividend payable.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

99

Notes to the Consolidated Financial Statements
32 CASH GENERATED FROM OPERATIONS
2024¥ million

2023¥ million

Profit before income tax
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Depreciation of investment properties
Amortisation of intangible assets(Gain)/loss on disposal of property, plant and equipment
Loss on write-off 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
Impairment loss on financial assets
Loss on early termination of lease agreement
Finance income
Finance costs
Dividend income
Gain on fair value for derivative financial instruments(Gain)/loss on fair value for financial assets at fair value through profit or loss
Gain on modification of leases
Changes in working capital:
Inventories
Trade receivables
Prepayments, deposits and other receivables
Trade payables
Accruals, provisions and other payables

1,284

1,363

1,476
2,453
23
65
(91)
–
112
284
–
–
410
431
(72)
969
(24)
(3)
(4)
–

1,468
2,618
23
62
10
–
214
371
–
1
–
–
(84)
979
(25)
(7)
7
(52)

13
(47)
55
72
1,024

(23)
(33)
90
17
(127)

Cash generated from operations

8,430

6,872

In the consolidated statement of cash flows, proceeds from disposal of property, plant and equipment andcomprise:2024¥ million

2023¥ million

Net book amount
Gain/(loss) on disposal of property, plant and equipment

173
91

112
(10)

Proceeds from disposal of property, plant and equipment

264

102

100

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
32 CASH GENERATED FROM OPERATIONS (CONTINUED)
Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for the years ended 31 March 2024
and 2023 presented.
2024¥ million

2023¥ million

Cash and cash equivalents
Bank deposits with maturity over 3 months
Lease liabilities
Borrowings

12,350345(27,925)(10,432)

10,435528(29,730)(10,206)

Net debt(25,662)(28,973)

Liabilities fromfinancing activities

Other assets

Cash andcash
equivalents¥ millionBankdepositswithmaturityover
3 months¥ millionLease
liabilities¥ million

Borrowings¥ million

Total¥ million

At 1 April 2022
Cash flows
Accrued interest elements of lease repayment
Other non-cash movements

11,451
(972)
–
(44)

242
286
–
–

(30,689)
3,613
(750)
(1,904)(11,641)
1,435––(30,637)
4,362
(750)
(1,948)At 31 March 2023 and 1 April 2023
Cash flows
Accrued interest elements of lease repayment
Other non-cash movements

10,435
1,915
–
–

528
(183)
–
–

(29,730)
3,861
(704)
(1,352)(10,206)(226)––(28,973)
5,936
(704)
(1,921)

Net debt at 31 March 2024

12,350345(27,925)(10,432)(25,662)

33 CONTINGENCIES
As at 31 March 2024, the Group did not have any significant contingent liabilities (2023: same).

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

101

Notes to the Consolidated Financial Statements
34 COMMITMENTS
Capital commitments
The outstanding commitments not provided for in the consolidated financial statements as at 31 March 2024 and2023 are as follows:

Contracted but not provided forPurchase of property, plant and equipment2024¥ million

2023¥ million

858

102

35 RELATED PARTY TRANSACTIONS
For the purposes of these consolidated financial statements, parties are considered to be related to the Group if theparty has the ability, directly or indirectly, to exercise significant influence over the Group in making financial andoperating decisions. Related parties may be individuals (being members of key management personnel, significant
shareholders and/or their close family members) or other 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 berelated if they are subject to common control.
Other than those transactions and balances disclosed elsewhere in the consolidated financial statements, thefollowing 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 years ended 31
March 2024 and 2023:

Service fee expenses
Niraku USA, Inc.

2024
¥ million

2023¥ million

32

29

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

102

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
35 RELATED PARTY TRANSACTIONS (CONTINUED)(b) Key management compensation
Key management includes directors (executive, non-executive and external directors) and the senior
management of the Group. The compensation paid or payable to key management for employee services isshown below:

Directors’ fees
Basic salaries, allowances and other benefits in kind
Employee’s contribution to pension scheme2024¥ million

2023¥ million

290
27
6

301
52
6

323

359

36 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY
At 31 MarchNoteASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Deposits and other receivables
Loans to subsidiaries
Investments in subsidiaries
Deferred income tax assets

Current assets
Prepayments, deposits and other receivables
Loans to subsidiaries
Financial assets at fair value through profit or loss
Cash and cash equivalents

Total assets

NIRAKU GC HOLDINGS, INC.

2024
¥ million

2023¥ million

–
20
5
2,549
16,286
–

–
10
5
3,052
16,28671

18,86019,424

383
3,002
102
3,767

469
1,930
98
3,824

7,254

6,321

26,11425,745

Annual Report 2024

103

Notes to the Consolidated Financial Statements
36 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY (CONTINUED)
At 31 March
Note

2024
¥ million

2023¥ million

(a)

3,000
16,5853,000
16,314

Total equity

19,585

19,314

LIABILITIES
Non-current liabilities
Borrowings
Lease liabilities
Other payables
Derivative financial instruments
Deferred tax liabilities

3,646
8
7
1
39

4,115
–
10
3
–

3,701

4,128

2,702
11
110
–
5

2,189
10
53
1
50

2,828

2,303

Total liabilities

6,529

6,431

Total equity and liabilities

26,11425,745EQUITY
Share capital
Reserves

Current liabilities
Borrowings
Lease liabilities
Other payables
Derivative financial instruments
Current income tax liabilities

104

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
36 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY (CONTINUED)(a)Reserves movement of the Company

Balance at 1 April 2022

Share

CapitalRetained

capitalsurplusearnings

Total¥ million¥ million¥ million¥ million

19,4503,000

13,954

2,496

Profit for the year

–

–

545

545

Final dividend related to 2022

–

–

(478)

(478)

Interim dividend related to 2023

–

–

(203)

(203)
19,314

Balances at 31 March 2023 and 1 April 2023

3,000

13,954

2,360

Profit for the year

–

–

511

511

Final dividend related to 2023

–

–

(132)

(132)

Interim dividend related to 2024

–

–

(108)

(108)

3,000

13,954

2,631

19,585

Balances at 31 March 2024

37 BENEFITS AND INTERESTS OF DIRECTORS
Directors and chief executive’s emoluments
The remuneration of every director of the Company paid/payable by the Group for the years ended 31 March 2024
and 2023 is set out below:
For the year ended 31 March 2024Fee
¥ million

Salaries,
allowancesand otherbenefits¥ million

Definedcontribution
pensioncosts¥ million

Total¥ million

152
31
14

–
–
–

1
1
1

153
32
15

Non-executive director
Hiroshi Bannai

4

–

–

4

Independent non-executive directors
Michio Minakata
Yoshihiro Koizumi
Kuraji Kutsuwata
Akihito Tanaka

6
4
4
4

–
–
–
–

–
–
–
–

6
4
4
4

219

–

3

222

Name

Directors
Hisanori Taniguchi (also the Chief Executive)
Akinori Ohishi
Masataka Watanabe

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

105

Notes to the Consolidated Financial Statements
37 BENEFITS AND INTERESTS OF DIRECTORS (CONTINUED)
Directors and chief executive’s emoluments (Continued)
For the year ended 31 March 2023

Fee
¥ million

Salaries,
allowancesand otherbenefits¥ million

Definedcontribution
pensioncosts¥ million

Total¥ million

152
33
13

–
–
–

1
1
1

153
34
14

Non-executive director
Hiroshi Bannai

4

–

–

4

Independent non-executive directors
Michio Minakata
Yoshihiro Koizumi
Kuraji Kutsuwata
Akihito Tanaka

6
4
4
4

–
–
–
–

–
–
–
–

6
4
4
4

220

–

3

223

Name

Directors
Hisanori Taniguchi (also the Chief Executive)
Akinori Ohishi
Masataka Watanabe

The remuneration shown above represents remuneration received from the Group by these directors in theircapacity as employees to the Group and/or their capacity as directors of the Company during the years ended 31
March 2024 and 2023.
There was no arrangement under which a director waived or agreed to waive any emoluments during the years
ended 31 March 2024 and 2023.
During the year ended 31 March 2024, the Group did not pay consideration to any third parties for making available
directors’ services (2023: Nil).
As at 31 March 2024, there is no loans, quasi-loans and other dealing arrangements in favour of directors,
controlled bodies corporate by and connected entities with such directors (2023: Nil).
Save as disclosed in Note 35, no significant transactions, arrangements and contracts in relation to the Group’sbusiness to which the Group was a party and in which a director of the Group had a material interest, whether
directly or indirectly, subsisted at the end of the year or at any time during the year (2023: Nil).

106

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

Notes to the Consolidated Financial Statements
38 SUBSIDIARIESThe following is a list of the principal subsidiaries at 31 March 2024 and 2023:

Name

Principal country ofoperation anddate ofincorporation
Principal activities

Type oflegal status

Issued andpaid up capital

Effective interest held
as at 31 March

Ownership held by
non-controlling interestas at 31 March

2024

2023

2024

2023

Directly held
Niraku Corporation

Japan,
27 August 1969

Pachinko and pachislot
hall operations

Limited liability
company¥257 million

100%

100%

–

–

Nexia Inc.

Japan,
19 June 2009

Property investment

Limited liability
company¥30 million

100%

100%

–

–

NGCH Hong Kong Limited

Hong Kong,
4 May 2017

Investment holding

Limited liability
company

HK$700,000

100%

100%

–

–

Dream Games

Singapore,
Wholesale of computer
Limited liability
3 November 2014
games, sporting andcompany
other recreational goods

US$2,912,412

100%

100%

–

–

Singapore Pte. Ltd.

Indirectly held
Niraku Merrist Corporation

Japan,
Provision of cleaning
24 February 2010service

Limited liability
company¥5 million

100%

100%

–

–

OOCube Inc.

Japan,
21 July 2021

Human resourcesmanagement company

Limited liability
company¥20 million

100%

100%

–

–

NPJ Hong Kong Limited

Hong Kong,
10 May 2017

Investment holding

Limited liability
company

HK$700,000

51%

51%

49%

49%

Dream Games (Japan)

Japan,
9 April 2013

Investment holding

Limited liability
company¥100 million

100%

100%

–

–

Socialist Republic of Amusement centre
Vietnam,operation
10 April 2013

Limited liability
company

VND35,145,000,000(equivalents to
US$1,650,000)

100%

100%

–

–

Cambodia,
1 February 2011

Amusement centre
operation

Limited liability
company

9,100,000,000 Riels(equivalents to
US$2,275,000)

100%

100%

–

–

China,
31 January 2018

Restaurant operation

Limited liability
company

US$2,100,000

51%

51%

49%

49%

Annual Report 2024

107

C0., Ltd.
Dream Games Vietnam
Co., Ltd.

Dream Games Cambodia
Co., LtdNPJ China Yokocho Co.,
Ltd. (Note)
Note:

As at 31 March 2024, this subsidiary is under bankruptcy proceedings as disclosed in Note 11.

NIRAKU GC HOLDINGS, INC.

Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES
39.1 Principles of consolidation and equity accounting(i)

Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity where the Group is exposed to, or has rights to, variable returns from its involvementwith the entity and has the ability to affect those returns through its power to direct the activities of theentity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group (refer
to Note 39.3).
Inter-company transactions, balances and unrealised gains on transactions between Group companies
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the transferred asset. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
consolidated statement of profit or loss, statement of comprehensive income, statement of changes inequity and balance sheet respectively. No separate disclosure of summary of financials of the noncontrolling interests is presented due as it is not financially significance to the Group.

(ii)

Associates
Associates are all entities over which the Group has significant influence but not control or joint control.
This is generally the case where the Group holds between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting (see (iii) below),
after initially being recognised at cost.

(iii)

Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted
thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit
or loss, and the Group’s share of movements in other comprehensive income of the investee in othercomprehensive income. Dividends received or receivable from associates and joint ventures arerecognised as a reduction in the carrying amount of the investment.
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in
the entity, including any other unsecured long-term receivables, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are
eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminatedunless the transaction provides evidence of an impairment of the asset transferred. Accounting policies
of equity-accounted investees have been changed where necessary to ensure consistency with thepolicies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with thepolicy described in Note 39.9.

108

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Annual Report 2024

Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.1 Principles of consolidation and equity accounting (Continued)(iv)

Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control astransactions with equity owners of the Group. A change in ownership interest results in an adjustment
between the carrying amounts of the controlling and non-controlling interests to reflect their relativeinterests in the subsidiary. Any difference between the amount of the adjustment to non-controllinginterests and any consideration paid or received is recognised in a separate reserve within equity
attributable to owners of the Company.
When the Group ceases to consolidate or equity account for an investment because of a loss of control,
joint control or significant influence, any retained interest in the entity is remeasured to its fair value withthe change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognised in other comprehensive
income in respect of that entity are accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously recognised in other comprehensive income
are reclassified to profit or loss or transferred to another category of equity as specified/permitted byapplicable IFRS Accounting Standards.
If the ownership interest in a joint venture or an associate is reduced but joint control or significant
influence is retained, only a proportionate share of the amounts previously recognised in othercomprehensive income are reclassified to profit or loss where appropriate.

39.2 Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a
subsidiary comprises the:•fair values of the assets transferred;•

liabilities incurred to the former owners of the acquired business;•

equity interests issued by the Group;•

fair value of any asset or liability resulting from a contingent consideration arrangement; and•fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises
any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value orat the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.

NIRAKU GC HOLDINGS, INC.

Annual Report 2024

109

Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.2 Business combinations (Continued)
The excess of the:•consideration transferred;•amount of any non-controlling interest in the acquired entity; and•acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are lessthan the fair value of the net identifiable assets of the business acquired, the difference is recognised directlyin profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the Group’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions. Contingent consideration is classified either as
equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fairvalue with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains orlosses arising from such remeasurement are recognised in profit or loss.

39.3 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs
of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received
and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend from theseinvestments if the dividend exceeds the total comprehensive income of the subsidiary in the period thedividend is declared or if the carrying amount of the investment in the separate financial statements exceeds
the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill.

39.4 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker (“CODM”). The CODM is identified as the executive directors of the Company.
The board of the Company has appointed a strategic steering committee which assesses the financial
performance and position of the Group, and makes strategic decisions. The steering committee, which has
been identified as being the chief operating decision maker, consists of the chief executive officer, the chief
financial officer and the manager for corporate planning.

110

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Annual Report 2024

Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.5 Foreign currency translation(i)Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using thecurrency of the primary economic environment in which the entity operates (the “functional currency”).
The consolidated financial statements is presented in Japanese Yen (“¥”), which is the Company’sfunctional currency and the Group’s presentation currency.

(ii)

Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at thedates of the transactions. Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised in profit or loss. They are deferred inequity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are
attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit orloss, within finance costs. All other foreign exchange gains and losses are presented in the statement ofcomprehensive income on a net basis within other gains, net.
Non-monetary items that are measured at fair value in a foreign currency are translated using theexchange rates at the date when the fair value was determined. Translation differences on assets andliabilities carried at fair value are reported as part of the fair value gain or loss. For example, translationdifferences on non-monetary assets and liabilities such as equities held at fair value through profit orloss are recognised in profit or loss as part of the fair value gain or loss and translation differences on
non-monetary assets such as equities classified as fair value through other comprehensive income arerecognised in other comprehensive income.

(iii)

Group companies
The results and financial position of foreign operations (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency aretranslated into the presentation currency as follows:•

assets and liabilities for each financial position presented are translated at the closing rate at thedate of that financial position•

income and expenses for each statement of profit or loss and statement of comprehensive income
are translated at average exchange rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income andexpenses are translated at the dates of the transactions), and•all resulting exchange differences are recognised in other comprehensive income.

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111

Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.5 Foreign currency translation (Continued)(iii)

Group companies (Continued)
On consolidation, exchange differences arising from the translation of any net investment in foreign
entities, and of borrowings and other financial instruments designated as hedges of such investments,
are recognised in other comprehensive income. When a foreign operation is sold or any borrowings
forming part of the net investment are repaid, the associated exchange differences are reclassified to
profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated asassets and liabilities of the foreign operation and translated at the closing rate.

39.6 Property, plant and equipment
Land and buildings comprise mainly pachinko and pachislot halls and offices. All property, plant andequipment are stated at historical cost less accumulated depreciation, except freehold land which is not
subject to depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of theitems.
Construction in progress is stated at cost less impairment loss. It is not depreciated until completion of theconstruction and the relevant assets are available for use.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to theGroup and the cost of the item can be measured reliably. The carrying amount of any component accounted
for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to
profit or loss during the reporting period in which they are incurred.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of eachreporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These areincluded in profit or loss. When revalued assets are sold, it is Group policy to transfer any amounts included
in other reserves in respect of those assets to retained earnings.

112

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Annual Report 2024

Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.7 Intangible assets(i)

Goodwill
Goodwill is measured as described in Note 39.3. Goodwill on acquisitions of subsidiaries is included inintangible assets. Goodwill is not amortised but it is tested for impairment annually, or more frequently if
events or changes in circumstances indicate that it might be impaired, and is carried at cost lessaccumulated impairment losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation ismade to those cash-generating units or groups of cash-generating units that are expected to benefit
from the business combination in which the goodwill arose. The units or groups of units are identified at
the lowest level at which goodwill is monitored for internal management purposes, being the operating
segments (Note 5).

(ii)

Trademarks, licences and customer contracts
Separately acquired trademarks and licences are shown at historical cost. Trademarks, licences andcustomer contracts acquired in a business combination are recognised at fair value at the acquisition
date. They have a finite useful life and are subsequently carried at cost less accumulated amortisationand impairment losses. Amortisation is calculated using the straight-line method to allocate the costover their estimated useful lives of 7 to 10 years.

(iii)

Computer software
Computer software is stated at cost less accumulated amortisation and impairment losses. Amortisation
is calculated using the straight-line method to allocate the cost over their estimated useful lives of 5
years.

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113

Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.8 Financial assets(i)Classification
The Group classifies its financial assets in the following measurement categories:•

those to be measured subsequently at fair value (either through other comprehensive income(“OCI”) or through profit or loss), and•those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and thecontractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For
investments in equity instruments that are not held for trading, this will depend on whether the Grouphas made an irrevocable election at the time of initial recognition to account for the equity investment at
fair value through other comprehensive income (“FVOCI”).
The Group reclassifies debt investments when and only when its business model for managing thoseassets changes.
(ii)

Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which
the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights toreceive cash flows from the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.

(iii)

Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable tothe acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are
expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether
their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing
the asset and the cash flow characteristics of the asset. There are three measurement categories into
which the Group classifies its debt instruments:•

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Amortised cost: Assets that are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured at amortised cost. Interest
income from these financial assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in profit or loss andpresented in other gains, net together with foreign exchange gains and losses. Impairment losses
are presented as separate line item in the statement of comprehensive income.

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Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.8 Financial assets (Continued)(iii)

Measurement (Continued)
Debt instruments (Continued)•
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, aremeasured at FVOCI. Movements in the carrying amount are taken through OCI, except for therecognition of impairment gains or losses, interest income and foreign exchange gains and losses
which are recognised in profit or loss. When the financial asset is derecognised, the cumulative
gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognisedin other gains, net. Interest income from these financial assets is included in finance income using
the effective interest rate method. Foreign exchange gains and losses are presented in othergains, net and impairment expenses are presented as separate line item in the statement ofcomprehensive income.
•

FVTPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL.
A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in
profit or loss and presented net within other gains, net in the period in which it arises.

Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management
has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent
reclassification of fair value gains and losses to profit or loss following the derecognition of theinvestment. Dividends from such investments continue to be recognised in profit or loss as other income
when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVTPL are recognised in other gains, net in thestatement of comprehensive income as applicable. Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI are not reported separately from other changes infair value.
(iv)

Impairment
The Group assesses on a forward-looking basis the expected credit losses associated with its debt
instruments carried at amortised cost and FVOCI. The impairment methodology applied depends onwhether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables, see Note 3.1 forfurther details.

39.9 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where theCompany currently has a legally enforceable right to offset the recognised amounts, and there is an intention
to settle on a net basis or realise the asset and settle the liability simultaneously. As at 31 March 2024 and2023, there were no financial assets or financial liabilities which were subject to offsetting, enforceable masternetting or similar agreements.

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Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.10 Inventories
Inventories represent supplies, including uninstalled pachinko and pachislot machines with useful life typicallyless than one year, and other consumables which are stated at the lower of cost and net realisable value.
Cost is determined using the first-in, first-out method.

39.11 Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. They are generally due for settlement within 30 days and therefore are all classified as
current.
Trade and other receivables are recognised initially at the amount of consideration that is unconditional unlessthey contain significant financing components, when they are recognised at fair value. The Group holds tradeand other receivables with the objective of collecting the contractual cash flows and therefore measures them
subsequently at amortised cost using the effective interest method. See Note 3.1 for a description of theGroup’s impairment policies.

39.12 Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents
includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.

39.13 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net oftax, from the proceeds.

39.14 Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial
year which are unpaid. Trade and other payables are classified as current liabilities if payment is due within
one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as noncurrent liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at amortised costusing the effective interest method.

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Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.15 Employee benefits(i)

Pension obligations
The Group operates a defined contribution plan under which the Group pays fixed contributions into aseparate entity. The Group has no legal or constructive obligations to pay further contributions if thefund does not hold sufficient assets to pay all employees the benefits relating to employee service in thecurrent and prior periods.
The Group has established a defined contribution plan for its eligible employees. The assets of the plan
are held in separate trustee-administered funds. Contributions to the plan by the Group are calculated
as a percentage of employees’ monthly basic salaries. The Group has no further payment obligations
once the contributions have been paid. The contributions are recognised as employee benefit expense
when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund ora reduction in the future payments is available.

(ii)

Bonus plans
The group recognises a liability and an expense for bonuses and profit-sharing based on a formula thattakes into consideration the profit attributable to the company’s shareholders after certain adjustments.
The group recognises a provision where contractually obliged or where there is a past practice that hascreated a constructive obligation.

(iii)

Employee leave entitlements
Employee entitlements to annual leave are recognised when they accrue to employees. A provision ismade for the estimated liability for annual leave as a result of services rendered by employees up to thestatement of financial position date.
Employee entitlements to sick leave and maternity or paternity leave are not recognised until the time ofleave.

39.16 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has
been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement isdetermined by considering the class of obligations as a whole. A provision is recognised even if the likelihoodof an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditure expected to be required to settle theobligation using a pre-tax rate that reflects current market assessments of the time value of money and therisks specific to the obligation. The increase in the provision due to passage of time is recognised as interest
expense.

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Notes to the Consolidated Financial Statements
39 SUMMARY OF OTHER POTENTIALLY MATERIAL ACCOUNTING POLICIES (CONTINUED)
39.17 Interest income
Interest income from financial assets at FVTPL is included in the net fair value gains/(losses) on these assets.
Interest income on financial assets at amortised cost and financial assets at FVOCI is calculated using theeffective interest method and is recognised in profit or loss as part of other income.
Interest income is presented as finance income where it is earned from financial assets that are held for cash
management purposes. Any other interest income is included in other income.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial
asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial
assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of
the loss allowance).

39.18 Dividend income
Dividends are received from financial assets measured at fair value through profit or loss and at fair value
through other comprehensive income. Dividends are recognised as other income in the consolidated
statement of comprehensive income when the right to receive payment is established.

39.19 Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the
grant will be received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary tomatch them with the costs that they are intended to compensate.
Government grants relating to property, plant and equipment are included in non-current liabilities as deferred
government grants and are credited to profit or loss on a straight-line basis over the expected lives of therelated assets.

39.20 Dividend distribution
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer atthe discretion of the entity, on or before the end of the reporting period but not distributed at the end of thereporting period.

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