Consolidated Financial Statements for the First Six Months of FY2022

Consolidated Financial Statements for the First Six Months of FY2022

April 1, 2021, to September 30, 2021 (The Year Ending March 31, 2022)

November 8, 2021

SANKYO CO., LTD.

https://www.sankyo-fever.co.jp/	Representative:	Akihiko Ishihara, President & COO
Shares listed:	Tokyo (1st Section)	Contact:	Yoko Oshima, Senior Executive Operating Officer
Code number:	6417	Planned Date for Submittal of the Financial Statements Report:	November 11, 2021
Telephone:	[phone]	Planned Date for Start of Dividend Payment:	December 1, 2021
		Supplementary materials for the quarterly financial statements:	Yes
		Presentation to explain for the quarterly financial statements:	Yes

(Figures less than 1 million yen have been omitted.)

1.Results for the first six months of FY2022 (From April 1, 2021, to September 30, 2021)

(1) Consolidated operating results

(Percentage figures denote year-over-year changes.)

	Net sales	Operating income	Recurring income	Profit attributable
	to owners of parent
	Millions of yen	Millions of yen	Millions of yen	Millions of yen
1st six months of FY2022	28,061	10.8%	2,914	168.7%	3,409	114.7%	4,575	225.0%
1st six months of FY2021	25,332	(24.4%)	1,084	(64.8%)	1,588	(56.0%)	1,407	(35.5%)
(note) Comprehensive income	1st six months of FY2022	¥4,160 million [45.3%]	1st six months of FY2021	¥2,863 million [203.8%]

	Net income	Fully diluted net
	per share	income per share
	Yen	Yen
1st six months of FY2022	74.70	73.99
1st six months of FY2021	23.01	22.80

(2) Consolidated financial position

	Total assets	Net assets	Capital adequacy
	ratio
	Millions of yen	Millions of yen	%
As of September 30, 2021	296,718	268,634	90.0
As of March 31, 2021	292,104	268,887	91.4

(reference) Shareholders' Equity As of September 30, 2021 ¥267,030 million As of March 31, 2021 ¥267,121 million

2. Dividends

				Cash dividend per share
(Base date)		1st quarter	2nd quarter		3rd quarter		Year-end	Full Year
	Yen	Yen		Yen		Yen	Yen
Year ended March 31, 2021		-	75.00		-		75.00	150.00
Year ended March 31, 2022		-	50.00		-		-	-
Year ended March 31, 2022 (Forecast)	-	-		-		50.00	100.00

Note: Changes in the projected cash dividends in this quarter : No

3. Forecast for FY2022 (From April 1, 2021, to March 31, 2022)

(Percentage figures denote year-over-year changes.)

	Net sales	Operating	Recurring	Profit attributable	Net income
	income	income	to owners of parent	per share
	Millions of yen	Millions of yen	Millions of yen	Millions of yen	Yen
Year ending	73,000	25.6%	8,900	35.1%	9,600	28.2%	6,600	14.8%	107.70
March 31, 2022

Note: Changes in the forecasts of conslidated Financial results in this quarter : No

English translation of "KESSAN TANSHIN" originally issued in Japanese language

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* Notes

1. Changes for important subsidiaries during the 1st six months of FY2021:
2. Application of peculiar accounting methods:
3. Changes in accounting procedures

1. Related to accounting standard revisions etc.:
2. Other changes:
3. Changes in accounting estimates:
4. Retrospective restatements:

1. Outstanding shares (common shares)

1. No. of shares outstanding (including treasury stock) As of Sep. 30, 2021:

b. No. of treasury stock	As of Sep. 30, 2021:
c. Average number of shares issued and outstanding	1st 6M of FY2022:

* This quarterly report is not subject to quarterly review procedures.

Not applicable

Not applicable

Applicable

Not applicable

Not applicable

Not applicable

69,597,500	shares	As of March 31, 2021:
8,294,695	shares	As of March 31, 2021:
61,255,732	shares	1st 6M of FY2021:

69,597,500 shares

8,412,575 shares

61,178,850 shares

* Disclaimer regarding Forward-looking Statements

The statements concerning future performance that are presented in this document are based on judgments using information available to the Company and which are deemed reasonable as of the release date of this material, and they are not intended to assure the achievement of such forecasts presented herein. Actual results may differ due to various factors. For information regarding performance forecasts, please refer to "1.Qualitative Information and Financial

English translation of "KESSAN TANSHIN" originally issued in Japanese language

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SANKYO CO., LTD. (TSE #6417) Results for 1st Six Months of FY2022

1.Qualitative Information and Financial Statements

(1)Operating Results

During the first six months of the fiscal year ending March 31, 2022 (from April 1, 2021 to September 30, 2021), the Japanese economy remained in a challenging situation as economic activity was restricted owing to a declaration of a state of emergency and implementation of other measures to prevent the spread of COVID-19 in Japan amid the protracted pandemic. However, economic activity is expected to return to normal from now on in line with the increasing vaccination rates and the lifting of the state of emergency and other measures.

In the pachinko and pachislot industry, replacement of machines compliant with the former regulations with those compliant with the new regulations is underway as the due date for removal of the machines compliant with the former regulations, January 31, 2022, is approaching. Despite some impacts of the worldwide semiconductor shortages, such as postponing the release of certain new models and restrictions on sales quantities, replacement of pachinko machines is generally proceeding smoothly as manufacturers have supplied extensive new pachinko titles and pachinko machines compliant with the new regulations are proving increasingly attractive to players. On the other hand, regarding pachislot machines, there are too few attractive new models. In view of this background, it is taking more time for machine utilization and the market for new pachislot machines to recover than in the case of pachinko machines. So-called #6.2 models have been introduced in the market since September 2021 step by step and their diffusion is expected to lead to an upturn of the market environment for pachislot machines.

During the first six months of the current fiscal year, the Group released four new pachinko titles (excluding reuse models) and one pachislot title. Fever Mobile Suit Gundam Unicorn, a pachinko title introduced in August, has been maintaining high machine utilization since its release resulting from effective TV commercials for promotion, and we have received additional orders. From the third quarter onward, in view of the demand for new models due to the deadline for the removal of machines compliant with the former regulations is January 31, 2022, we will focus on capturing replacement demand. Our plan includes introduction of the 15th pachinko title of the Evangelion series, which is the Group's mainstay series.

As a result, on a consolidated basis, net sales were ¥28.0 billion, an increase of 10.8% compared with the same period of the previous year, operating income was ¥2.9 billion, an increase of 168.7%, recurring income was ¥3.4 billion, an increase of 114.7%. Profit attributable to owners of parent amounted to ¥4.5 billion, an increase of 225.0%, partly owing to the recording of extraordinary gains on sales of investment securities.

Results of segments are presented below:

Pachinko Machines Business

Regarding the pachinko machines business, sales amounted to ¥25.6 billion, an increase of 14.7% compared with the same period of the previous year, and operating income amounted to ¥6.5 billion, an increase of 37.2%. Sales of pachinko machines amounted to 60,000 units compared with 47,000 units for the same period of the previous fiscal year.

Four titles released included Fever Valvrave the Liberator 2 (introduced in April 2021) and Fever Mobile Suit Gundam Unicorn (introduced in August 2021) under the SANKYO brand, Fever Star Blazers: Space Battleship Yamato 2202 (introduced in July 2021) under the Bisty brand, and Fever Powerful (introduced in May 2021) under the JB brand.

Pachislot Machines Business

Regarding the pachislot machines business, sales amounted to ¥1.1 billion, a decrease of 25.2% compared with the same period of the previous year, and operating loss was ¥1.4 billion, compared with operating loss of ¥1.3 billion in the same period of the previous fiscal year. Sales of pachislot machines amounted to 2,000 units compared with 3,000 units for the same period of the previous fiscal year.

One title released included Pachislot Macross DELTA (introduced in April 2021) under the SANKYO brand.

Ball Bearing Supply Systems Business

Sales of the ball bearing supply systems business were ¥1.1 billion, a decrease of 11.0% compared with the same period of the previous year, and operating loss was ¥45 million, compared with operating loss of ¥56 million in the same period of the previous fiscal year.

Other Businesses

Sales of other businesses were ¥95 million, a decrease of 25.2% compared with the same period of the previous year, and operating income was ¥16 million, an increase of 4.7% compared with the same period of the previous year.

English translation of "KESSAN TANSHIN" originally issued in Japanese language

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SANKYO CO., LTD. (TSE #6417) Results for 1st Six Months of FY2022

(2)Financial Position

Total assets at the end of the first six months of the fiscal year ending March 31, 2022 amounted to ¥296.7 billion, having increased ¥4.6 billion compared with the figure at the previous fiscal year-end. This increase was mainly attributable to a ¥3.3 billion increase in cash and deposits, a ¥2.6 billion increase in accounts receivable for provision of parts and materials for value (included in "Other" of Current assets), a ¥2.0 billion increase in raw materials and inventories, and a ¥1.5 billion increase in merchandise and finished goods, despite a ¥2.5 billion decrease in notes and accounts receivable-trade, and contract assets, and a ¥2.0 billion decrease in investment securities.

Total liabilities amounted to ¥28.0 billion, having increased ¥4.8 billion compared with the figure at the previous fiscal year-end. This increase was mainly attributable to a ¥4.1 billion increase in notes and accounts payable-trade, a ¥1.1 billion increase in electronically recorded obligations-operating, and a ¥0.8 billion increase in liabilities related to transactions involving provision of parts and materials for value (included in "Other" of Current liabilities), despite a ¥1.2 billion decrease in accounts payable (included in "Other" of Current liabilities).

Net assets decreased ¥0.2 billion compared with the figure at the previous fiscal year-end. This decrease was mainly attributable to cash dividends paid amounting to ¥4.5 billion and net unrealized gain on other securities decreased ¥0.4 billion, while profit attributable to owners of parent amounted to ¥4.5 billion. As a result, net assets amounted to ¥268.6 billion and the shareholders' equity ratio decreased 1.4 percentage points to 90.0%.

(3)Forecast of Consolidated Results and Other Forecast Information

No revision has been made to the forecasts of financial results for fiscal 2022 announced on May 13, 2021.

English translation of "KESSAN TANSHIN" originally issued in Japanese language

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SANKYO CO., LTD. (TSE #6417) Results for 1st Six Months of FY2022

2. Quarterly Consolidated Financial Statements and Primary Notes

(1) Consolidated Balance Sheets

(Figures less than 1 million yen have been omitted.)

				As of	As of
				March 31, 2021	Sep. 30, 2021
				Millions of yen	Millions of yen
	Assets:
		Current assets:
			Cash and deposits	88,872	92,229
			Notes and accounts receivable-trade	10,867	-
			Notes and accounts receivable-trad, and contract assets	-	8,289
			Marketable securities	134,999	134,999
			Merchandise and finished goods	7	1,513
			Work in process	102	80
			Raw materials and inventories	4,159	6,216
			Other	4,334	7,250
			Allowance for doubtful accounts	(0)	(1)
			Total current assets	243,343	250,578
		Fixed assets:
			Tangible fixed assets	26,556	26,510
			Intangible fixed assets
			Other	96	143
			Total Intangible fixed assets	96	143
			Investments and other assets:
			Investment securities	15,599	13,561
			Other	6,523	5,937
			Allowance for doubtful accounts	(14)	(13)
			Total investments and other assets	22,108	19,485
			Total fixed assets	48,761	46,139
		Total assets	292,104	296,718

English translation of "KESSAN TANSHIN" originally issued in Japanese language

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