GLORY : FY2017 1st Quarter Financial Results

This is a translation of the original Japanese text of the "Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2018." Should there be any discrepancy between any part of this translation and the original Japanese text, the latter shall prevail.

Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2018

Company Name: GLORY LTD. Stock exchange listing: Tokyo (1st Section)

August 4, 2017

Code number: 6457 URL: http://www.glory-global.com/ Representative: Hirokazu Onoe President & Representative Director

Contact person: Motozumi Miwa Executive Vice President & Representative Director TEL [phone]

Scheduled filing date of Quarterly Securities Report: August 10, 2017

Scheduled date of dividend payments: ―

Preparation of quarterly earnings supplementary explanatory material: Yes

Holding of quarterly earnings presentation: Yes (for analysts and institutional investors)

(Amounts less than one million yen are rounded downward.)

1. Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2018 (from April 1, 2017 to June 30, 2017)

2. Consolidated Operating Results (cumulative)

   (The percentages show the changes from the corresponding period of the previous year.)

   Net sales		Operating income		Ordinary income		Net income attributable to owners of parent
   Three months ended June 30, 2017	(Millions of yen)	(%)	(Millions of yen)	(%)	(Millions of yen) 1,195 (751)	(%) ― ―	(Millions of yen) 335 (860)	(%) ― ―
   	47,213	2.4	2,346	(12.5)
   Three months ended June 30, 2016	46,090	2.9	2,683	190.3

   (Note) Comprehensive income

   Three months ended June 30, 2017:	¥972 million [	― %]
   Three months ended June 30, 2016:	¥(11,594) million [	― %]

   Net income per share	Fully diluted net income per share
   Three months ended June 30, 2017 Three months ended June 30, 2016	(Yen) 5.25 (13.10)	(Yen) ― ―

3. Consolidated Financial Position

4. Total assets	Net assets	Ownership equity ratio	Net assets per share
   As of June 30, 2017	(Millions of yen)	(Millions of yen)	(%)	(Yen)
   	308,806	190,620	60.8	2,935.86
   As of March 31, 2017	312,821	191,443	60.1	2,939.78

   (Reference) Ownership equity

   As of June 30, 2017: ¥187,756 million As of March 31, 2017: ¥187,949 million

5. Dividends

   (Record date)	Dividends per share
   	First quarter-end	Second quarter-end	Third quarter-end	Year-end	Annual
   Year ended March 31, 2017	(Yen)	(Yen)	(Yen)	(Yen)	(Yen)
   	―	30.00	―	30.00	60.00
   Year ending March 31, 2018	―
   Year ending March 31, 2018 (forecast)	31.00	―	31.00	62.00

   (Note) Revisions to the latest dividend forecast: None

6. Consolidated Financial Forecast for the Year Ending March 31, 2018 (from April 1, 2017 to March 31, 2018)

7. (The percentages show the changes from the corresponding period of the previous year.)

   Net sales		Operating income		Ordinary income		Net income attributable to owners of parent		Net income per share
   Six months ending September 30, 2017	(Millions of yen)	(%)	(Millions of yen)	(%)	(Millions of yen)	(%)	(Millions of yen)	(%)	(Yen)
   	105,000	2.6	6,000	(28.2)	6,000	54.7	3,000	40.4	46.92
   Full year	235,000	5.6	21,000	3.1	21,000	22.1	13,000	25.2	203.32

   (Note) Revisions to the latest consolidated financial forecast: None

   Notes:

8. Changes in significant subsidiaries during the period (changes in specified subsidiaries involving a change in the scope of consolidation):

   None

9. Application of accounting methods specific to preparation of the quarterly consolidated financial statements: Yes

10. Changes in accounting policies and estimates, and restatements

11. Changes in accounting policies associated with revisions of accounting standards, etc.: None

12. Changes in accounting policies other than (a): None

13. Changes in accounting estimates: None

14. Restatements: None

15. Total number of shares issued (common stock)

16. Total number of shares issued at the end of the period (including treasury shares) As of June 30, 2017: 68,638,210 shares

    As of March 31, 2017: 68,638,210 shares

17. Number of treasury shares at the end of the period

    As of June 30, 2017: 4,496,099 shares

    As of March 31, 2017: 4,496,099 shares

18. Average number of shares (cumulative from the beginning of the period) Three months ended June 30, 2017: 63,939,636 shares

19. Three months ended June 30, 2016: 65,693,136 shares

    (Note) In addition to the number of treasury shares at the end of the period, there also existed Company shares owned by the "Board Incentive Plan (BIP) Trust Account" and "Employee Stock Ownership Plan (ESOP) Trust Account". (As of June 30, 2017: 189,309 shares, As of June 30, 2016: 181,790 shares)

    (Note) These "Consolidated Financial Results" are not required to be subjected to quarterly reviews.

    (Note) Explanation regarding the appropriate use of financial forecasts and other special items

    The forward-looking statements such as operational forecasts contained in this report are based on the information currently available to the Company and certain assumptions which the Company regards as legitimate, and are not promises regarding the achievement of forecasts. Actual performance may differ greatly from these forecasts due to various present and future factors. For the assumptions and other related matters concerning the financial forecasts, please refer to "1. Qualitative Information on the Financial Statements,

20. Consolidated Financial Forecasts and Other Forward-looking Statements" on page 5 of the Attachment.

    Attachment Contents 1. Qualitative Information on the Financial Statements.............................................................................................. 5

    (1) Operating Results............................................................................................................................................................................ 5

    (2) Consolidated Financial Forecasts and Other Forward-looking Statements ..................................................................................... 5

    2. Quarterly Consolidated Financial Statements and Significant Notes Thereto ...................................................... 6

    (1) Quarterly Consolidated Balance Sheet............................................................................................................................................ 6

    (2) Quarterly Consolidated Statements of Income and Comprehensive Income .................................................................................. 8

    Quarterly Consolidated Statement of Income ................................................................................................................................. 8

    Quarterly Consolidated Statement of Comprehensive Income........................................................................................................ 9

21. Notes to Quarterly Consolidated Financial Statements 10

Notes Regarding Assumption of a Going Concern 10

Notes for Significant Change in the Amount of Shareholders' Equity 10

Application of Accounting Methods Specific to Preparation of the Quarterly Consolidated Financial Statements 10

Segment Information 10

1. Qualitative Information on the Financial Statements
2. Operating Results

   In the three months ended June 30, 2017, the Japanese economy showed a trend of gradual recovery driven by an observed trend toward a pickup in personal consumption, and improvements in both corporate capital investment and the employment situation. The global economy also maintained its trend of gradual recovery, reflecting such positive developments as continuing trends toward recovery in the United States and Europe, and, in Asia, an observed trend toward the improvement of China's economy.

   Under these conditions, in this last year of its three-year 2017 Medium-Term Management Plan, which started in April 2015, the GLORY Group (the "Group") proactively implemented the three strategies-Business, Constitutional, and Corporate Management-under its basic policy to "Realize business growth through 'customer-oriented superb manufacturing' and enhance profitability to achieve the Long-Range Vision 2018."

   As a result, net sales in this three-month period totaled ¥47,213 million (up 2.4% year on year). Of this, sales of merchandise and finished goods were ¥30,806 million (up 1.2% year on year) and sales from maintenance services were ¥16,407 million (up 4.8% year on year). Operating income was ¥2,346 million (down 12.5% year on year), ordinary income was ¥1,195 million (vs. ordinary loss of ¥751 million in the corresponding period of the previous year), and net income attributable to owners of parent was ¥335 million (vs. net loss attributable to owners of parent of ¥860 million in the corresponding period of the previous year).

   Results of operations in each business segment are as follows.

   Financial market

   Although sales of "coin and banknote recyclers" for tellers were steady due to our capturing of replacement demand, sales of this segment's main product, "open teller systems," were sluggish for compact models for small- and medium-sized financial outlets due to the large-scale demand of the previous year having run its course.

   As a result, net sales in this segment were ¥10,015 million (down 12.0% year on year) and operating income was ¥348 million (down 74.1% year on year) due to deterioration in product mix, etc.

   Retail and transportation market

   Although sales of "e-money charger" were robust, sales of this segment's main product, "coin and banknote recyclers" for cashiers, and "sales proceeds deposit machines" for the cash-in-transit market were slow. Therefore, sales for the overall market were maintained at the level of the corresponding period of the previous year.

   As a result, net sales in this segment were ¥9,607 million (down 0.8% year on year) and operating income was ¥608 million (down 29.4% year on year).

   Amusement market

   Sales of this segment's main products such as "card systems" were strong, and net sales in this segment were ¥5,319 million (up 38.8% year on year) and operating income was ¥386 million (up 328.5% year on year).

   Overseas market

   Sales of "banknote recyclers" for the financial market were robust in the United States, and sales of "sales proceeds deposit machines" for the retail market were steady in Europe. On the other hand, in Asia, although sales of "sales proceeds deposit machines" for the retail market were strong, sales of "banknote recyclers" for the financial market were sluggish.

   As a result, net sales in this segment were ¥21,725 million (up 4.9% year on year) and operating income was ¥1,221 million (up 153.3% year on year).

   In the "Other" business segment, net sales were ¥545 million (up 10.5% year on year) and operating loss was ¥218 million (vs. operating loss of ¥97 million in the corresponding period of the previous year).

   All amounts in this section do not include consumption taxes.

3. Consolidated Financial Forecasts and Other Forward-looking Statements

4. No changes have been made to the consolidated financial forecasts for the year ending March 31, 2018 that were announced on May 11, 2017.

5. Quarterly Consolidated Financial Statements and Significant Notes Thereto
7. Quarterly Consolidated Balance Sheet

   (Millions of yen)

   Current assets
   Cash and deposits	74,292	70,817
   Notes and accounts receivable - trade	47,137	40,506
   Securities	3,000	3,000
   Merchandise and finished goods	26,098	31,502
   Work in process	8,491	9,294
   Raw materials and supplies	11,536	11,676
   Other	10,543	11,346
   Allowance for doubtful accounts	(502)	(550)
   Total current assets	180,597	177,593
   Non-current assets
   Property, plant and equipment	35,657	35,709
   Intangible assets
   Customer relationships	22,221	21,824
   Goodwill	51,573	50,474
   Other	5,648	5,524
   Total intangible assets	79,443	77,823
   Investments and other assets
   Investment securities	10,010	10,137
   Other	7,305	7,734
   Allowance for doubtful accounts	(194)	(190)
   Total investments and other assets	17,121	17,680
   Total non-current assets	132,223	131,213
   Total assets	312,821	308,806

   Liabilities

   Current liabilities

   Assets

   As of March 31, 2017 As of June 30, 2017

   Notes and accounts payable - trade	18,484	17,901
   Short-term loans payable	25,602	24,742
   Current portion of long-term loans payable	8,843	9,047
   Income taxes payable	2,903	1,305
   Provision for bonuses	8,191	4,713
   Provision for directors' bonuses	94	23
   Provision for stock grant	61	22
   Other	28,261	34,125
   Total current liabilities	92,443	91,881
   Non-current liabilities
   Long-term loans payable	13,271	10,807
   Provision for stock grant	116	143
   Net defined benefit liability	4,419	4,492
   Other	11,126	10,860
   Total non-current liabilities	28,933	26,304
   Total liabilities	121,377	118,186

   (Millions of yen)

   Net assets

   As of March 31, 2017 As of June 30, 2017

   Shareholders' equity
   Capital stock	12,892	12,892
   Capital surplus	20,974	20,991
   Retained earnings	158,504	157,787
   Treasury shares	(12,090)	(12,022)
   Total shareholders' equity	180,281	179,649
   Accumulated other comprehensive income
   Valuation difference on available-for-sale securities	822	1,010
   Foreign currency translation adjustment	8,181	8,413
   Remeasurements of defined benefit plans	(1,336)	(1,316)
   Total accumulated other comprehensive income	7,667	8,107
   Non-controlling interests	3,494	2,863
   Total net assets	191,443	190,620
   Total liabilities and net assets	312,821	308,806

8. Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statement of Income

   Three months ended June 30, 2016

   (From April 1, 2016

   to June 30, 2016)

   (Millions of yen)

   Three months ended June 30, 2017

   (From April 1, 2017

   to June 30, 2017)

   Net sales 46,090 47,213

   Cost of sales 27,404 28,427

   Gross profit 18,686 18,786

   Selling, general and administrative expenses 16,003 16,439

   Operating income 2,683 2,346

   Non-operating income

   Interest income 42 37

   Dividend income 291 74

   Other 91 53

   Total non-operating income 424 165

   Non-operating expenses

   Interest expenses 139 137

   Foreign exchange losses 3,681 1,148

   Other 38 31

   Total non-operating expenses 3,859 1,317

   Ordinary income (loss) (751) 1,195 Extraordinary income

   Gain on sales of non-current assets 1 4

   Gain on sales of investment securities 4 8

   Total extraordinary income 5 12

   Extraordinary losses

   Loss on retirement of non-current assets	5	3
   Other	-	0
   Total extraordinary losses	5	3
   Income (loss) before income taxes	(751)	1,203
   Income taxes	(146)	591
   Net income (loss)	(605)	612
   Net income attributable to non-controlling interests	255	276
   Net income (loss) attributable to owners of parent	(860)	335

   Quarterly Consolidated Statement of Comprehensive Income

   Three months

   (Millions of yen) Three months

   ended June 30, 2016

   (From April 1, 2016

   to June 30, 2016)

   ended June 30, 2017

   (From April 1, 2017

   to June 30, 2017)

   Net income (loss) (605) 612

   Other comprehensive income

   Valuation difference on available-for-sale securities (233) 188

   Foreign currency translation adjustment (10,939) 134

   Remeasurements of defined benefit plans, net of tax 183 36

   Total other comprehensive income (10,989) 359

   Comprehensive income (11,594) 972

   Comprehensive income attributable to

   Owners of parent (11,722) 792

   Non-controlling interests 127 179

9. Notes to Quarterly Consolidated Financial Statements Notes Regarding Assumption of a Going Concern

   Not applicable.

   Notes for Significant Change in the Amount of Shareholders' Equity

   Not applicable.

   Application of Accounting Methods Specific to Preparation of the Quarterly Consolidated Financial Statements

   Tax expense is calculated by rationally estimating the effective tax rate after application of tax-effect accounting to income before income taxes for the fiscal year including this first quarter, and then multiplying the income before income taxes for the period by the estimated effective tax rate.

   Segment Information

10. Three months ended June 30, 2016 (from April 1, 2016 to June 30, 2016) Information on sales, profit (loss) by reportable segment

    (Millions of yen)

    Reportable segments					Other (Note)	Total	Reconcilia- tion	Amounts reported on the consolidated statement of income
    Financial market	Retail and transportation market	Amusement market	Overseas market	Total
    Net sales	11,376	9,680	3,834	20,705	45,597	493	46,090	-	46,090
    	-	-	-	-	-	-	-	-	-
    Total	11,376	9,680	3,834	20,705	45,597	493	46,090	-	46,090
    Segment profit (loss)	1,345	862	90	482	2,780	(97)	2,683	-	2,683

11. Sales to customers

12. Intersegment sales or transfers

13. Note: "Other" segment is merchandise and finished goods that is not included in the above reportable segments.

14. Three months ended June 30, 2017 (from April 1, 2017 to June 30, 2017) Information on sales, profit (loss) by reportable segment

15. (Millions of yen)

    Reportable segments					Other (Note)	Total	Reconcilia- tion	Amounts reported on the consolidated statement of income
    Financial market	Retail and transportation market	Amusement market	Overseas market	Total
    Net sales

16. Sales to customers

17. Intersegment sales or transfers

10,015

9,607

5,319

21,725

46,668

545

47,213

-

47,213

-

-

-

-

-

-

-

-

-

Total

10,015

9,607

5,319

21,725

46,668

545

47,213

-

47,213

Segment profit (loss)

348

608

386

1,221

2,565

(218)

2,346

-

2,346

Note: "Other" segment is merchandise and finished goods that is not included in the above reportable segments.