JCM GLOBAL Integrated Report 2024

Integrated Report 2024

©TARTAROS 2024

World Automatic Wave platinum sky JAPAN Blue F00792928★

Integrated Report 2024 Fiscal year ended March 31, 2024

Introduction

JCM's Management Principles

JCM Spirit

Purpose

Company Philosophy

Seeking vibrations of the cosmos, let's create our own vibration harmonized with the right vibrations in our society and spread happy

vibrations to the world

Spreading Happiness Worldwide

Mission

Guiding Thankfulness & Gratitude Principles

Be thankful for the opportunity to live and

contribute to society

Responding to the changing needs of the world and continuing to contribute to society

Innovating core technologies and continuing to create new value

Independent Creation Provide creative products and services to people

around the world

Friendly Cooperation Create a happy home and pleasant workplace Self-Improvement Constantly have ambition and be useful to others Put into Practice Do it here and now

Vision

JCM Global Vision 2032 (Contributing to the realization of a rich and sus-

tainable society)

About the Cover Illustration

Integrated

Report 2024

©TARTAROS 2024

World Automatic Wave platinum sky JAPAN Blue F00792928★

Integrated Report 2024 Fiscal year ended March 31, 2024

The cover features "World Automatic Wave platinum sky

JAPAN Blue F00792928★,"

a work by TARTAROS that is a collage of Katsushika Hokusai's ukiyo-e print "The

Great Wave off Kanagawa" and banknotes from 100 countries around the world. This work gives a sense of the transition in human values over time, from nature to economy, and the expansion of the world.

We chose this work with the idea in mind of "looking to a changing world and

challenging the possibilities of the future."

CONTENTS

Introduction

1. Contents, JCM's Management Principles, and Editorial Policy

2. Toward "Vision for 2032"

3. JCM's Strengths

4. JCM in Society and Business Segments

   Vision

   
   
   

5. Our History

   Value Creation, Strategy, and Performance

   
   
   

6. Message from the President

1. Value Creation Process

2. Performance Trends

3. Medium- to Long-Term Risks and Opportunities

4. Net Sales by Area

5. Overview by Segment (Global Gaming)

6. Overview by Segment (International Commercial)

7. Overview by Segment (Domestic Commercial)

8. Overview by Segment (Equipment for the amusement Industry)

9. JCM's Core Technologies

10. From Core Technologies to New Areas

11. R&D

12. Intellectual Property

13. Procurement and Production

14. Quality Assurance

15. Human Capital Strategy

1. Respect for Human Rights and Working Environment

2. Information Security

3. Promotion of Digital Transformation (DX)

4. Initiatives to Combat Climate Change (TCFD recommendation-based disclosures)

35 Message from Outside Director

1. Corporate Governance System

2. Board Member (including Audit & Supervisory Committee Member) Skills Matrix, Main Topics of the Board of Directors and the Nomination and Remuneration Advisory Committee

3. Directors

   Sustainability (Initiatives toward Material Issues)

   
   
   

4. Evaluation of the Board of Directors' Effectiveness, Executive Officers

5. Remuneration System

6. Risk Management, Compliance

   Data Section

   
   
   

7. Major Financial Highlights

8. Major Non-Financial Highlights

9. Corporate Data/Stock Information

Applicable period

This report is based on figures for fiscal 2023 (April 2023 - March 2024). The activities include business activities after April 2024.

Editorial Policy

Corporate Governance

The International Integrated Reporting Framework recommended by the IFRS Foundation and the Guidance for Collaborative Value Creation of Japan's Ministry of Economy, Trade and Industry were used as references in editing the JCM GLOBAL Integrated Report.

Forward-Looking Statements

This report contains forward-looking statements regarding the JCM Group's future. These forward-looking statements are based on judgments made using information available at the time the report was prepared. Readers are advised that actual results might differ substantially from the projections presented herein.

Introduction

Toward "Vision for 2032"

In May 2023, JCM formulated its new medium-term management

1 Vision for 2032 2

JCM Glob o 2

plan, "JCM Global Vision 2032." This plan sets out a long-term vision for 2032, and positions the first three years as a period of "seed sowing" for new businesses. As a key strategy during this period, we believe that expanding our core commercial business

A Group that consistently provides customers with trust in the diversifying money transaction field*

Establishing a position as a brand company in new business areas

is important, and we are working to expand our sales channels by establishing sales subsidiaries in North America (Chicago) and South America (São Paulo) in January and November 2022. Furthermore, in new businesses, we aim to advance into areas such as the medical field, actively engage in joint research, and aim to build a new revenue base.

Continue to capture a high market share in the niche market of money-handling machines

al Visi

*Payment settlement

Take on the challenge of capturing new niche markets for the cashless era

Vision Realization

Net sales ¥55billion

Medium-Term Management Plan

JCM Global Vision 2032

Long-term Vision - Roadmap

(Conceptual image of net sales)

Operating income

¥5.5

n 203

New business areas

billion

Vision Realization

Business areas

Technology, products, and services

• Venture into medical fields, etc.

• Alliances (collaborations), M&As, etc.

• Business development leveraging AI technology

• Solutions realized through system technology

• Promoting automation through robot technology (new fields)

• Business development utilizing AI technology (new fields)

• Business development through bill conveying technology (new fields)

• Promoting automation through robot technology

• Enhancing added value through system technology

Existing business areas

2023/3 2026/3 2029/3 2033/3

(Vision)

Seed sowing for new businesses

Strengthening the profitability of new businesses

Establishing the market position and revenue base for new businesses

Introduction

JCM's Strengths

The JCM Group leverages its accumulated technology to develop and provide high-value- added new technologies and products in various markets around the world, and build global trust and brand value.

Obtaining gaming license and realizing strict compliance

195

(42 states and 2 regions in North America)

licenses

Intellectual property rights (patents, design rights, trademarks) for JCM products in use around the world

859 rights

Continuing to earn the trust of global customers over an extended period through our high brand strength

Supporting currencies in over

140

countries and regions worldwide

Net sales by segment (¥100 million)

57

Fiscal year ended

26 March 31, 2024

59

31.6

billion yen*

172

Global Gaming International Commercial

Domestic Commercial Equipment for the

amusement industry

Net sales by area (¥100 million)

24

84

85 Fiscal year ended

March 31, 2024

31.6

billion yen*

122

Japan

Europe

North America

Other areas

JCM Group Companies

Japan Cash Machine Co., Ltd.

[Osaka City, Osaka]

Development, manufacture, and sales of money-handling

machines and equipment for the amusement industry

JCM Systems Co., Ltd.

[Osaka City, Osaka]

Installation and maintenance of equipment for the amusement industry, etc.

JCM AMERICAN JCM COMMERCE CORP. MECHATRONICS,INC.

[Nevada, U.S.A.] [Illinois, U.S.A.]

Sales of money-handling Sales of money-handling machines machines

Europe

JCM EUROPE GMBH.

[Dusseldorf, Germany]

Sales of money-handling machines

JCM Meiho Co., Ltd.

[Chuo-ku, Tokyo]

Sales of pachinko (pinball) and related machines, etc.

Asia Pacific

North

J-CASH MACHINE (THAILAND) CO.,LTD.

[Bangkok, Thailand]

Software development

J-CASH MACHINE

GLOBAL MANUFACTURING (PHILIPPINES) INC.

[Laguna, Philippines]

Manufacture of money-handling machines

America

JCM COMERCIO MECATRONICA BRASIL LTDA

[São Paulo, Brazil]

Sales of money-handling machines

America

South

*The figures in the above pie chart are rounded down to the nearest

¥100 million, so the sales figures in the center of the graph do not match the totals by category.

JCM GLOBAL Integrated Report 2024 03

Introduction

JCM in Society and Business Segments

As a specialist in monetary processing, the JCM Group supports people's lives in various fields.

By providing reliable products to the world, we contribute to the realization of a convenient and secure society.

International Commercial and Domestic Commercial

We aim to establish a position as a comprehensive component supplier capable of providing one-stop services to casino floors with not only bill validator units but also printer units, digital signage, and more.

We are steadily developing new markets, while increasing convenience for our customers by launching products in Europe, the U.S., Japan, and other Asian markets. Our products include bill recycling and coin recycling units, which are used in diverse commercial markets such as deposit machines, parking payment machines, and ticket vending machines.

In the market of equipment for the amusement industry, which demands advanced identification and validation of bills and coins as well as complex transportation technologies, we consistently provide products that meet our customers' needs. In addition to improving the

efficiency of hall operations, we attract customers through the provision of products that contribute to the improvement of gaming environments.

Printer units

Bill validator units

Bill recycling units

Coin recycling units

Automatic token dispensing system Prize POS system

Digital signage Bill recycling unit for table games

Bill conveying systems Balls/token rental machine

U

R

A

N

T

R

E

S

T

A

Transportation

H OTE L

Retail Other

S UP E R MAR K E T

JCM GLOBAL Integrated Report 2024 04

Introduction

Our History

Since its establishment in 1955, JCM has endeavored to seamlessly connect "people to people" and "people to money" as a manufacturer in the highly specialized field of money-handling machine manufacturing.

2000s

Using the technology we have cultivated as a money circulation specialist on the global market, we will continue to meet the expectations and maintain the trust of people

around the world as an international company that can provide new value

2010s

Pursuing core validation and transportation technologies to lead advanced technological innovation

In our Global Gaming and Equipment for the Amusement Industry Businesses, we have

2020 onward

In order to expand the Commercial Business, we have established a new subsidiary and actively developing the business, aiming to make it a solid pillar of profits.

In order to establish an optimal production system, we have established a new production subsidiary (new

required in each market.

Trends in net sales

• Non-consolidated net sales ■ Consolidated net sales

(Millions of yen)

40,000

35,000

1960s-1970s

30,000

Trend toward computerization/ inlining

1980s-1990s

From applications for validation/counting technologies to development/utilization of proprietary technologies

We aimed to develop new products by combining the Company's inherent know-how in such areas as validation, counting, and classification. We began joint development with America's largest game manufacturer, launched products for the U.S. gaming market, and saw steady growth in our business.

Development of the Money-Handling Machine Business in Western markets/ Response to the need for amusement industry-related equipment

We started selling bill validation machines for multinational bills. The Equipment for the

Amusement Industry Business also grew steadily, becoming another pillar of earnings next to the Money-Handling Machine Business.

leveraged the products, markets, customers, and assets acquired through business acquisitions and transfers and enjoyed synergies while establishing ourselves as a comprehensive component supplier.

plant) in the Philippines. Furthermore,

in order to expand the Commercial business, which is our second-largest pillar after the Gaming Business, we have established new sales subsidiaries in North America (Chicago) and South America (Brazil) and have begun manufacturing and selling the "MRX" bill recycling unit, a product for international commercial use. The unit has been installed in self-checkout registers and ticket vending machines for railways and other facilities around the world.

25,000

20,000

15,000

As department stores and supermarkets grew, cash registers were replaced by computer terminals for sales totalizing. Due to the excellent cash register functions of our products, OEM demand from computer manufacturers was strong.

10,000

5,000

0

1 3 4

2

1955 1959

1981 1988

1999 2010 2014

2020

2022

(Fiscal year)

1

Started manufacturing and selling validation machines for foreign currency bills

Started selling equipment for the amusement industry

3 New banknote issued (Japan)

subsidiary

4 Effects of business acquisitions/transfers

2

1986｜Started manufacturing and selling bill validation machines for U.S. dollars

1988｜Started manufacturing and selling bill validation machines for German marks

1990｜Installation of bill validator units permitted in Nevada 1991｜Started sales of bill validator units for the gaming industry 1993｜Installation of bill validator units permitted outside the United

States

1991｜Started sales of an automatic token supply system, a proprietary belt conveying system that boasts high performance and high quality

1999｜Launched the industry's first polishing system with excellent token cleaning ability

2001｜Started sales of bill validation machines for lenders installed between machines

2004｜Demand resulting from the issuance of new banknotes (1,000, 5,000, and 10,000 yen notes)

2009｜Acquired Sammy Systems Co., Ltd., as a subsidiary (Equipment for the amusement industry)

2014｜Included FutureLogic Group, LLC, in the Company's scope of consolidation as a subsidiary (Global Gaming)

2016｜Partial transfer of Silver Denken's business (Equipment for the amusement industry)

JCM GLOBAL Integrated Report 2024 05

Vision

Message from the President

Top Message

The market environment is diversifying. We will continue to make proactive investments and develop new businesses to build a new foundation for growth.

Yojiro Kamihigashi

Representative Director, President

In the fiscal year ended March 31, 2024, the Company's performance reached its highest level in the past five years, thanks to a recovery in demand after the pandemic was contained and efficiency gains achieved through a

review of the business structure. Based on these results, we expect further net sales and operating income growth in the fiscal year ending March 31, 2025, and are focusing on aggressive investment in new businesses and the development of growth markets. Aiming to create social value, we will continue to steadily promote efforts to realize our Medium-Term Management Plan, "JCM Global Vision 2032."

Business Overview

We continue to take on new challenges based on our expertise and reliability

Since our founding, we, JCM, have contributed to the development of the money circulation system by playing a role in smoothly connecting "people to people" and

"people to money" in the highly specialized field of money-handling machines.

Currently, the core of our business is money-handling machines for casinos and other gaming markets, which account for more than half of our total net sales. In North America, casinos have long been an established social gathering place, and strict laws and regulations are in

place to ensure the integrity of their operations and the manufacture and sale of machines. In this regulatory environment, where obtaining permits and approvals (gaming licenses) for operators is mandatory, the Group has built trust and a solid track record by obtaining and renewing gaming licenses every year, mainly in North America.

While we are proud of the steady growth we have achieved since the 1990s, particularly in machines for the gaming market, we are also aggressively developing new markets by further developing and applying our core technologies to respond to the rapidly changing external environment.

Vision

Message from the President

Review of Performance in Fiscal Year Ended March 31, 2024

People's mindset and human flow have been revitalized, and net sales and operating income are at our highest in the past five years

At the beginning of the new coronavirus pandemic in 2020-2021, we had to overcome many challenges, such as planning the relocation of our production sites and supply chain disruptions. The plan had to be temporarily suspended due to the pandemic, especially after the Company made the important decision to move its production base from China to the Philippines. Our business is mainly in the field of equipment and devices installed in "spaces where people enjoy their leisure time," such as markets for gaming and equipment for the amusement industry, but these markets are highly dependent on the mindset of individuals who enjoy their leisure time as well as the flow of people themselves. For example, international travel and international flows of people are essential to the casino market, and the travel restrictions caused by the COVID-19 pandemic severely affected these markets.

However, as the pandemic subsides, people are moving again and business performance is recovering. During the same period, we also experienced delays and disruptions in product supply due to semiconductor shortages, but these challenges eased in the second half of the fiscal year ended March 2024. In addition, in the past, the Company responded to the printing of new Japanese

yen bills mainly by replacing the hardware. Currently, as technology evolves with the times, we are shifting to a

more efficient business model that allows us to respond only by updating software, which has contributed

significantly to improving profitability.

As a result, for the fiscal year ended March 31, 2024, the Company's results exceed those of the fiscal year ended March 31, 2019, with net sales of 31.6 billion

yen and operating income of 2,839 million yen. In light of this situation, we expect further growth in the fiscal year ending March 31, 2025, and target net sales of 38 billion yen and operating income of 5.1 billion yen. This performance target is higher than the previous record achieved in the fiscal year ended March 2005.

Results by Segment

Diversifying geographies and segments to overcome intense market conditions

Our consolidated results for the fiscal year ended March 31, 2024, were favorable, but the situation is not uniform when we look at results by segment.

P.16-P.19

The Global Gaming Business recorded solid net sales of 17,279 million yen and operating income of 2,794 million yen, driven especially by the North American market, where the economy is on the road to recovery. On the other hand, Europe is affected by multiple uncertainties, including the Russia-Ukraine conflict, the situation in the

Middle East, as well as the sluggish European economy. Especially in Europe, the adjustment of excess orders from customers due to the shortage of semiconductors has yet to be resolved, and a gap between demand and supply has become apparent. The overall gaming market is also experiencing sluggish demand there, which is expected to remain challenging through late 2024 and into 2025.

On the other hand, unlike the global gaming sector, the market environment in the commercial sector is highly competitive with many rival

companies both in Japan and overseas, and it takes time to establish a customer base. Since it is taking longer than originally expected to develop the product and finalize specifications, we need more time before we can see tangible results, but

the process of communication

with customers, product delivery, and test operation is progressing steadily.

Among other things, the International Commercial Segment is currently in a forward investment phase, and earnings have turned negative, but this is due to the strategic focus of this segment. We are making steady

progress in these efforts, focusing on the development of bases, staffing, and the development and improvement of new products for the North American and Central and South American markets.

In the Equipment for the Amusement Industry

Segment, earnings were negative in the fiscal year ended March 31, 2023, but performance has improved since then, with operating income of 1 billion yen in the fiscal year ended March 31, 2024, and both net sales and operating income are expected to exceed those of the previous year in the fiscal year ending March 31, 2025.

It is noteworthy that this performance recovery was not due to a favorable market environment or major external improvements, but the results achieved despite the continuing difficult conditions.

In particular, market conditions in the pachinko hall industry remain challenging, with the number of halls declining at an accelerating rate. Approximately 300 halls closed in 2024, and the number of halls

nationwide is expected to decline to below 6,000. This means that the market has shrunk to about one-third the size it was at its peak. One factor that accelerated this decline in the number of halls in 2024 was the introduction of new banknotes.

In order to continue to operate pachinko halls, it was necessary to invest in equipment to accommodate the new banknotes, and it appears that one after another, economically difficult halls have decided to close their doors on the occasion of introduction of the new banknotes.

In this market environment, a major factor behind our improved performance in this segment was the strengthening of our corporate structure through structural reforms implemented after the pandemic.

Another factor, albeit a temporary one, was the increased demand for smart units as a result of the growing popularity of smart gaming machines, which also

contributed to the improved performance.

In the face of these ongoing changes in market structure, we are striving to maintain and expand our performance by diversifying our geographic regions and business portfolio.

Structural Reforms

Operating with a sense of unity, which is achieved through a single source of information and responsibility

Let me explain a little more about our structural reforms. We aim to further expand our existing businesses and develop new businesses. Specifically, over the three fiscal years ended March 2022 to March 2024, we implemented structural reforms with the aim of improving organizational efficiency and strengthening business

operations. As part of this initiative, we reviewed our sales, development, and maintenance functions and reorganized them appropriately. In particular, with regard to our sales functions, we integrated the sales divisions that were previously dispersed among subsidiaries across Japan into JCM, thereby centralizing management. At the same time, we changed our maintenance division to operate as an independent subsidiary.

These structural reforms were not just organizational restructuring; they involved a scrap-and-build process that also included a review of necessary human resources.

As we respond to the unprecedented situation that is the COVID-19 pandemic, in order to expand our business

on a global scale in the future, it will be important for

Vision

Message from the President

Message from the President

us to create a system that allows the knowledge and information that our Group has cultivated in countries around the world to be shared across borders among all Group companies. To achieve this, it has become more important than ever to secure personnel who can take an international approach and to put in place a system that can enable them to function properly. As a result, we have replaced some of our staff, welcoming new personnel with excellent language skills and those who can take

on specialized management functions. Following this restructuring, we are now in the process of establishing an optimal structure for future business expansion.

The integration of the sales functions also eliminated the traditional vertical structure. By consolidating the information and responsibilities that were previously held by multiple divisions, the gap in understanding between divisions has been eliminated, making it

possible to operate with a more unified sense of purpose. This integration has also proven effective in terms of development, such as software development and hardware design, greatly improving overall operational efficiency.

Furthermore, the reason for separating the maintenance division is to ensure a stable supply of service parts. With this restructuring, the maintenance division can now focus on providing services based on its own management policies, and going forward, it plans to provide fast and reliable support not only domestically but also overseas.

Medium-Term Management Plan

Revising our Medium-Term Management Plan to reflect our performance and promote our growth strategy

The Medium-Term Management Plan, "JCM Global Vision 2032," announced in May 2023, covers the period up to the fiscal year ending March 2026. However, we have already achieved some of our initial targets, and

in particular, our net income for the current fiscal year is already exceeding the final fiscal year target. So, we are reviewing the current plan and developing a revised version that reflects actual results.

We exceeded the targets of our current Medium-Term Management Plan because the recovery from the

COVID-19 pandemic was faster than expected. Behind the early achievement were also a temporary surge in demand due to active orders from customers who had previously been cautious, and the elimination of the semiconductor shortage, which has enabled a stable supply of products. However, we have seen some customers recently requesting adjustments to delivery dates and canceling some orders, and the market will possibly reach a plateau in the fiscal year ending March 31, 2026. In light of these factors, we believe it is necessary to revise our Medium-Term Management Plan to more accurately reflect the current situation.

In the new Medium-Term Management Plan, we are considering incorporating short-term adjustments while maintaining our goal of achieving "net sales of 55 billion yen and operating income of 5.5 billion yen" by 2032.

Given that details have emerged about the status of expansion into commercial markets in North, Central and South America, which were not included in the original plan, as well as concrete progress in efforts to develop new businesses, the plan is expected to be realigned

to include active investment in areas where growth is expected. On the other hand, we intend to consider downward revisions, if necessary, for areas that require more time for business development.

In setting targets, we consider the balance between achievable figures and aggressive content, while taking into account investors' perspectives. Rather than simply setting targets, we will present specific growth strategies, including profit return measures, and place emphasis on formulating credible and persuasive plans.

New Businesses

Taking on new business challenges and building a foundation to support long-term growth

In our Medium-Term Management Plan, "JCM Global Vision 2032," we have positioned the period from the fiscal year ended March 2024 to the fiscal year ending March 2026 as a period of "seed sowing" for new businesses, and are focusing on business development. It may be difficult to produce results in the short term with some of the new businesses, but we believe they are important

for long-term growth and plan to maintain this policy even after revising our Medium-Term Management Plan.

One of the ongoing initiatives is the use of AI in the

Message from the President

medical field, including R&D of a system to help determine the extent of resection for lung cancer in collaboration with the Osaka International Cancer Institute.

This technology is expected to help maintain patients' quality of life after surgery while assisting in determining the extent of lung cancer resection, taking into account the balance between treatment effectiveness and preservation of function. The project is also receiving government subsidies. But it will take time before this technology can be put into practical use, so continued efforts are necessary.

We are also working on developing a universal terminal that will allow easy connection of our components,

such as bill validator units and printers. This will shorten customers' development time and strengthen our competitiveness by providing the system in an easy-to-implement format, and will evolve from the conventional provision of standalone hardware to provision of value for the entire system.

In addition to the initiatives I have mentioned, there are currently several other projects moving forward behind the scenes, but when developing new business, we place importance not only on whether it is interesting but also on whether it can make profits. We plan to conduct thorough market research and competitive analysis and

focus our resources on areas where we expect to achieve commercial success. The new business team consists

of talented people selected from various departments as well as mid-career hires, with the aim of bringing together diverse abilities, values, and perspectives to produce innovative results. Recently, we have been proactively hiring younger generations and female employees, and by

incorporating new ideas and flexibility into our team, we are laying the foundation for creating the next generation of growth engines.

Human Capital Strategy

Human resource strategy to support the global expansion of our business, including the International Commercial Business

In addition to developing new businesses as I just mentioned, we are positioning our human resource strategy as an important pillar in strengthening our competitiveness in the global market. In particular, when expanding into emerging and untapped markets, I believe that the key to success is to hire and train personnel who are familiar with the local areas.

When entering the Latin American market, we put in place a system to gain customer trust by hiring personnel who were familiar with local culture and business practices. This has strengthened our maintenance system, which has previously been lacking, and enabled us to provide community-based services.

Utilizing local human resources improves operational efficiency and also plays an important role in developing the local market. Our personnel stay in the local area for a long period of time, have a thorough understanding of the language and culture, and are able to work in a way

that is rooted in the local area. This makes it easier for our products and services to be accepted by local customers. This approach is designed to achieve sustainable market expansion rather than just short-term market entry, and

we are also looking to expand our commercial presence in India and other emerging markets.

Formulation of Purpose

All employees worked together to re-establish the purpose, missions, and vision

We always approach management, including our human capital strategy, with a medium- to long-term perspective. As part of this, when formulating our Medium-Term Management Plan "JCM Global Vision 2032," we reviewed our purpose, missions and vision to clarify our new direction. This initiative was realized by adopting a bottom-up rather than top-down approach, with repeated discussions primarily at the Executive Officer and General Manager levels. Looking ahead to the next 10 years,

we thought carefully about what we wanted to be as an organization, and as a result, we formulated the purpose of "Spreading Happiness Worldwide" and the missions of "responding to the changing needs of the world and continuing to contribute to society" and "innovating core technologies and continuing to create new value."

During the discussion, while respecting the Company's Guiding and Founding Principles, we seriously considered the challenges our organization currently faces and the role it should play over the next 10 years. Our commitment is to take on new challenges while upholding the values that we hold true, and this attitude is reflected in our purpose, missions, and vision. These involved Executive Officers and personnel selected from all divisions to incorporate diverse perspectives, thereby deepening

Message from the President

common understanding throughout the organization and making the content effective.

The process took a lot of time and effort, but as a result, all employees shared a vision for the future and felt a sense of responsibility to support the Company. I believe that this initiative will contribute to building the Company's atmosphere and culture and will serve as an important foundation for sustainable growth in the future.

Risk Management

A flexible and effective risk management system

well-known large companies are sometimes unable to prevent internal fraud or serious incidents, but we at JCM are particularly focused on ensuring transparency within our organization and cultivating a culture where employees can openly share their concerns and issues, allowing us to detect potential risks early on. The core of risk management lies in people. Since people's awareness and actions determine whether or not risks exist and how large or small they are, we continue our

efforts to encourage employees to have a greater sense of autonomy and responsibility. We also have a flexible and effective system that incorporates the opinions of outside experts when necessary.

We place emphasis on risk management from both short-term and medium- to long-term perspectives, and strive to build an effective system. We intend to prevent fundamental risks through rules and processes, while being flexible in responding to risks that arise from human behavior and decision-making. Our top priority is creating an environment where employees can share information smoothly, and we aim to create a culture where executives and superiors can easily receive information on a daily basis.

Specifically, we seek to provide opportunities for people to speak up on-site and to understand the issues. Additionally, at our overseas bases, we have appointed Japanese managers to ensure the appropriate management of local information, and have established a system to ensure direct communication with local employees, business partners, and other parties. We are also strengthening operations at local bases by recruiting and assigning personnel with financial strength. Even

Message to Stakeholders

A Sustainable Future Together with Stakeholders

We are currently focusing on building a foundation with an eye on the global market in order to achieve sustainable growth. We are in the "seed sowing" stage, aiming to expand our business on a global scale, particularly by expanding into the Latin American market.

We are steadily expanding our revenue base in existing businesses, and based on the results, we are promoting investment in developing new businesses and growth strategies. In this way, we aim to create even more social value and contribute to a wide range of stakeholders, including local communities, business partners, and partner companies.

As mentioned above, in new businesses, we are taking

on a wide range of challenges, such as utilizing AI in the medical field and expanding into emerging markets. We are working on some of our businesses with a medium- to long-term perspective, and we are now at the stage where we can demonstrate concrete results in areas where we expect growth.

Going forward, the entire Group will keep working hard to achieve sustainable growth and remain a company that creates value together with all stakeholders. We would like to ask for your continued support.

Value Creation, Strategy, and Performance

Value Creation Process

Targeted Corporate Image

Contribution to realize a rich and sustainable society through the advancement of core technologies

By means of its currency validation and identification technologies, as well as its conveying technologies, the JCM Group contributes to the seamless circulation and fraud prevention of currency, while providing safety and security to society. By evolving and integrating its unique technologies, the Group aims to achieve greater automation and labor savings, address social and environmental issues, and create richer lives and new value for people around the world.

Management Resources

(as of March 31, 2024)

Human Capital

▶ Number of employees (consolidated)

Overseas

Gaming

Existing Key Markets and Customers

International/Domestic

Japan

Equipment for

New businesses

Value Co-Creation with Stakeholders

Financial Results

2.8

31.6

564

employees

( 409 men,155 women)

▶ Casino operators

▶ Slot machine

▶ Banking (ATMs, change machines)

▶ Transportation (ticketing and

the Amusement Industry

▶ Net Sales

billion yen

▶ Employees overseas

manufacturers

payment machines for railways, buses, etc.; payment machines for parking lots, gas stations, etc.)

▶ Pachinko parlors

Future Value

▶ Operating income billion yen Customers

266 employees

Proprietary Technologies in the Currency Field

▶ Bill validation and identification technologies

▶ Retail (all types of checkout machines, deposit machines, etc.)

Main Products and Services

Creation

Safe and stable

business operations

▶ Operating 9.0

income ratio ％

Fostering Diverse Values

▶ Ratio of female

Robotics, mechatronics, and conveying technologies cultivated through our track record in money handling

▶ Number of engineers

122

engineers

(non-consolidated)

Money-handling machines

Multi-payment checkout machines

services

System services New products/

Shareholders

Highly transparent management and

long-term improvement of corporate value

employees

(consolidated)

▶ Ratio of overseas employees

▶ Ratio of managers

27.5%

47.2% (previous fiscal year 45.8%)

Global Production System

▶ Company-owned plants

2

1plant in Japan (Nagahama, Shiga)

plants 1plant in the Philippines

▶ Main contractors

3companies in Japan

Creation of safety and trust through hybrid products

and services

combining money-handling machines and cashless payment solutions

Product Development

Fusion of core and

Employees

Improving motivation by having employees

share in the management

among female

employees

(consolidated)

▶ Average years of service

(non-consolidated)

Innovation Creation

▶ Patents held

14.2% (previous fiscal year 14.7%)

15.5

years

(previous fiscal year 15.4 years)

585

6 companies 3companies in the Philippines

Global Brand

▶ Gaming licenses

42 states and 2 regions in North America

New Trust

next-generation technologies

Sale of

principles while acquiring skills and expertise

▶ Design rights held

(197 in Japan, 388 overseas)

111 (40 in Japan, 71 overseas)

195

licenses

Creation

Toward improved safety and

Governance

Proprietary technologies

Components

Customized components

New

Business partners

▶ Trademarks held 163 (52 in Japan, 111 overseas)

Raising Our Global Presence

▶ Stable business track record with casino

operators, slot machine manufacturers, and major manufacturers of finished products

productivity

Growth Drivers

businesses

Mutual growth through collaboration linked to social issues

▶ Dominant share of overseas gaming market

60%

of global market

65%

of U.S. market

Natural Capital

▶ Energy consumption

(at production bases in Japan)

4,713 GJ

Global currency big data

Capturing

Customer-oriented sales capability

System Proposals

Society/ Environment

Selected as "Most Innovative New

▶ Awards received Technology" in the EILERS-FANTINI

G2E Vendor Survey (2022 and 2023)

Environmental Impact from Business Activities

▶ CO2 emissions

Financial Capital

Replacement/

Maintenance

Maximum knowledge

Contribution to a sustainable society by

(Total of Scope 1, 2,

and 3)

98,000

tons

▶ Cash equivalents

12.5

▶ Total assets ▶ Net assets

47.6 28.6

Needs

of customers'

operations

reducing greenhouse gases and providing safety and security

12

▶ Waste discharge

(Scope 3 Category 5)

tons

billion yen billion yen billion yen

JCM GLOBAL Integrated Report 2024 12

Performance Trends

The business environment surrounding the JCM Group has been changing more drastically in recent years, and in May 2023, with an eye to further business growth, we formulated and are promoting a Medium-Term Management Plan, "JCM Global Vision 2032," which sets out our "Vison" for the next 10 years and the priority measures to achieve it.

Basic Policy

Aiming to be a truly global company that continues to create markets and value in the field of money circulation

Key Strategies

Segment Strategies

Global Gaming

Improve product offering capabilities, including system products

International Commercial

Following the impact of the pandemic, we recorded losses for two consecutive periods, the years ended March 2020 and March 2021. In response, we focused our sales efforts on existing core products, while also emphasizing the sales of system products aligned with trends

We are strengthening our overall business structure. As part of this effort, we established sales subsidiaries in North America (Chicago) and South America (São Paulo) in January and November 2022, respectively. These subsidiaries serve as key bases for expanding our commercial business, which is essential for the sustainable growth of the Group.

Expand sales channels by

such as cashless payments. In addition, we

We also formulated the Medium-Term Management Plan, "JCM Global Vision

Improve the revenue structure and management quality to enhance overall corporate value for the JCM Group

1. Strengthen the profitability of existing businesses

2. Further enhance dominant businesses

3. Nurture growth businesses

4. Establish a solid management foundation

providing products tailored to the characteristics of each country's market

Domestic Commercial Deepen understanding of major customers' needs Equipment for the amusement industry Capture demand by responding to legal changes such as smoking bans in halls

Review

implemented various cost-saving measures, such as reducing and controlling personnel expenses and R&D costs. We further stabilized management by consolidating business locations, selling owned real estate, and securing funds from financial institutions, all while striving for the continued growth of the Group.

Reducing personnel and R&D expenses,

2032," setting out our long-term vision for what we aim to achieve in 10 years. This plan to the fiscal year ending March 2026 is positioned as a "seed sowing" period for new businesses, with specific key strategies and performance goals defined to

achieve our long-term vision. Thanks to the trust we have earned from global markets, our consolidated financial results for the fiscal year ended March 2024 significantly exceeded our quantitative targets. Without resting on our laurels, the entire JCM Group will continue to make every effort to look back on the trajectory of past performance and steadily achieve quantitative targets for the future.

(Millions of yen)

60,000

50,000

40,000

In the fiscal year ended March 31, 2020, we experienced a significant decline in revenue due to a downturn in the market environment, resulting in a final loss. We began revising our plans in response.

• Net Sales Operating income

  31,270

  Strategy of focusing on existing core products

  Concentrating on the sales of system products while considering trends such as cashless payments

  and consolidating operations

  Selling owned properties, securing loans, etc.

  Established sales subsidiaries in North America and South America to expand our commercial business

  Initial

  31,610

  35,000

  38,500

  55,000 5,500

  (Millions of yen)

  JCM Global Vision 2032

  10,000

  8,000

  6,000

  4,000

  30,000

  20,000

  29,860

  1,372

  1,973

  26,109

  17,010

  20,040

  25,258

  target value

  28,600

  Initial target value

  2,839

  2,625

  3,080

  2,000

  10,000

  0

  (730)

  (2,589)

  568 622

  1,500

  0

  (2,000)

  (4,000)

  2018/3 2019/3 2020/3 2021/3 2022/3 2023/3 2024/3 2025/3 2026/3 2033/3

  (target) (target) (target)

  
  
  

  Medium- to Long-Term Risks and Opportunities

  The business environment surrounding the JCM Group is expected to change rapidly due to various factors.

  Our Group monitors and analyzes these changes, recognizing management resources at hand, competitive advantages, and the social issues that need addressing. We view the risks we must prepare for as opportunities for further growth and focus on controlling these risks while striving to create revenue opportunities.

  Risks Control/Opportunities

  Diversifying payment methods

  • Decrease in demand for money-handling machines due to the rapid development of cashless payments

  • Services to public transportation, etc. Even in a society where cashless transactions are advancing globally, we believe that the demand for cash payments will persist, particularly in public transportation, which serves the public interest, and in service-related products that require consideration for the elderly and others.

    
    
    

  • Responses to emergencies such as cyber-terrorism and disasters In the event of a cyber-terrorist attack or a natural disaster, cashless payment methods may become unusable, and cash payment methods are therefore considered necessary to diversify risks.

  • Services to areas where payment is mainly made in cash Given that cash culture remains strong in many regions such as North, Central and South Americas, we believe that the demand for cash payment methods will continue to exist.

The JCM Group will accurately address this demand, appropriately control risks, and then focus on manufacturing and selling existing products. At the same time, we see the advent of the cashless era as a new growth opportunity. We will leverage the technologies developed through our Money-Handling Machine Business to advance the development of new products related to cashless transactions.

Global conditions and risks

• Unstable economic conditions in countries

• Declining demand in various markets due to worsening global situations such as conflicts and terrorism, as well as a decline in consumer confidence due to natural disasters and infectious diseases

• Decline in production capacity due to shortage of components caused by geopolitical risks

  • Regional diversification of supply chains The JCM Group will continue to explore risk diversification methods by establishing multiple production and sales bases, as well as securing multiple sources for components such as semiconductors.

  • Expansion to new regions We are also expanding into new markets and businesses and developing new products to avoid excessive dependence on our core markets and products. We view these risks as opportunities for growth.

    Through these measures, we will continue our efforts to consistently provide high-quality products and services to our customers.

    Social and environmental changes

  • Decrease in the working-age population due to the falling birthrate and aging population

  • Environmental changes such as storms, floods and other abnormal weather events, infectious diseases, and other events, and the resulting strengthening of regulations

  • Investment in human capital We will actively invest in human capital, taking into account gender diversity, etc., and build a system to secure labor and technical capabilities, while appropriately controlling these risks.

  • Development of products and services that solve social and environmental issues We recognize that these social and environmental challenges not only create new demand from customers but also generate new business opportunities for the Group.

    We aim to continue growing alongside our customers and society by accurately understanding the demand arising from these challenges and constantly developing and supplying products that contribute to solving issues.

    Technological issues

  • Intensifying competition in development due to advances in AI technology

  • Disputes arising from third-party intellectual property infringement

  • Information leakage and business interruption due to cyber-terrorism

  • Protection of intangible assets We will protect intellectual property and make proactive investments in human capital while strengthening security measures. By properly maintaining and developing the technological expertise gained from years in the money-handling machine business, we aim to manage these risks effectively. In addition, we view the evolution of technologies such as AI as a significant opportunity for acquiring new core technologies, developing new products, and entering new markets and businesses.

    Seizing these opportunities, the Group will continuously focus on evolving technologies and strive to develop and deliver standout products amid intensifying competition in technology development.

    Net Sales by Area

    While continuing to engage in its existing businesses, the JCM Group is also working to further expand globally in anticipation of population growth and economic development, particularly in emerging countries. In particular, we are focusing on developing international commercial markets, primarily in North, Central and South Americas and Asia, as a new axis of our management.

    Furthermore, since we have been expanding globally with a medium- to long-term perspective for the past 10 years, we can see the results of this in terms of regional net sales, which have steadily expanded from Japan to overseas.

    Our Group will continue to promote our business with our Group Purpose (reason for existence) of "Spreading Happiness Worldwide" at the core of our management.

    2014 2024

    Europe

    Japan

    North America

    10 years later

    Asia/Other

    Europe

    26.9%

    Japan

    20.1%

    Asia/Other

    42.6%

    North America

    38.5%

    
    
    

    Net sales by area ■ Japan ■ North America ■ Europe ■ Asia/Other

    Overseas sales ratio
    
    

    year-on-year

    35,000 (Millions of yen)

    (%) 100

    31,610

    30,000

    29,761

    30,230

    29,860

    31,270

    27,806

    27,917

    26,109

    71.6

    25,258

    75.4%

    80

    %

    25,000

    62.5%

    20,000

    20,040

    60

    17,010

    15,000

    40

    10,000

    20

    5,000

    0

    %

    2015/3

    2016/3

    2017/3

    2018/3

    2019/3

    2020/3

    2021/3

    2022/3

    2023/3

    2024/3

    0

    6,204

64.8

5,499

61.0%

7,592

2014/3

68.1%

7,873

10,695

10,410

8,447

8,759

8,686

8,419

64.2%

65.6%

73.4%

8,567

68.6%

9,048

25.1%

‌Overview by Segment

Global Gaming

Global Gaming

Net sales composition ratio Net sales (Millions of yen) Segment profit (Millions of yen)

54.7%

17,279

2,794

Capital investment, and depreciation and amortization (Millions of yen)

8.5%

1,704

1,839 1,857

2,795

2,692

15

9

3

523 33

453

115

86

102

2020/3 2021/3 2022/3 2023/3 2024/3

2020/3 2021/3 2022/3 2023/3 2024/3

2023/3 2024/3

Business Conditions

In the domestic commercial market, demand remained strong for products such as bill recycling units for self-service gas station payment machines and restaurant ticket vending machines, and bill validator units for bus fare boxes.

addition, from the second half of the fiscal year onwards, there was greater demand for replacing bill validator units and other machines in response to the printing of new

banknotes, and the fact that software updates were the main response to the banknote printing, which was therefore highly profitable, also contributed to the increases.

Medium-term Outlook Overview of the Fiscal Year Ended March 31, 2024

Both segment net sales and segment profits increased. This was primarily due to the success of proactively proposing products for specific applications in the retail and transportation markets, driven by the increasing number of tourists visiting Japan. In

In the Domestic Commercial Business, we intend to focus on expanding the market share of products for markets in which we have expertise, uncovering latent needs in those markets and among our customers, and developing high-value-added products in an effort to expand the scale of sales in this business.

Equipment for

the Amusement Industry

Equipment for the Amusement Industry

Net sales composition ratio Net sales (Millions of yen) Segment profit (Millions of yen)

18.1%

5,723

4,482

4,345

3,746

6,283

1,001

Capital investment, and depreciation and amortization (Millions of yen)

• Capital investment ■ Depreciation and amortization

(149)

(125)

(391)

160

2020/3 2021/3 2022/3 2023/3 2024/3

(986)

125

33

21

2020/3 2021/3 2022/3 2023/3 2024/3 2023/3 2024/3

Business Conditions

In the market of equipment for the amusement industry, the widespread use of smart

particularly dedicated smart gaming machine units. In particular, dedicated smart gaming machine units, unlike conventional ball rental machines and token rental machines, were almost never sold at low prices, which led to a significant increase in segment profits.

gaming machines has led to a surge in demand for peripheral devices, particularly

dedicated units. Unlike conventional ball rental machines or token rental machines, smart gaming machines are a system that allows for management and play of balls or medals as electronic data, without using physical gaming balls or medals. Although it is expected that this will improve efficiency and convenience, the demand for such machines will be likely temporary.

Overview of the Fiscal Year Ended March 31, 2024

The Company enjoyed a significant increase in sales and installation of peripheral devices,

Medium-term Outlook

In the Equipment for the Amusement Industry Business, we are making efficient investments in response to changes in the market environment, particularly the growing popularity of smart gaming machines.

While demand related to smart gaming machines may be temporary, the need for equipment development to improve operational efficiency and user experience for the entire amusement industry is expected to continue.

We will continue to engage in aggressive sales activities based on such needs.

JCM's Core Technologies

In addition to pursuing money-handling technologies-including identification and validation, transport, collection, and recycling-that are compatible with currency from all over the world, we also focus on the development of system products that apply and develop these technologies and know-how, as well as the promotion and effective utilization of intellectual property rights. To accurately understand our customers' latent needs, our domestic and international sales and development divisions are actively collaborating on new market development activities. As a Group, we will further refine our comprehensive proposal capabilities and take on the challenge of responding to technological innovation in new fields such as electronic money, cards, and coupons that replace paper money and coins, as well as in new media.

Technology platform diagram

Mechatronics technology

Our mechatronics technology enables precise transport, sorting, and aggregation of currencies of various sizes, materials, and conditions worldwide with only modifications to the identification and validation software. The advanced technology developed in money-handling

Lightweight transport system

n

o

v

a

t

i

o

n

O

p

e

n

i

n

Robotics systems Bill transport systems

Core technologies

Sensing technology

PICK UP

We have applied the air and magnetic transport drive system technology adopted in the bill transport system (ALTASIA) to develop a technology for transporting lightweights weighing up to 30 kg in total while inheriting the advantages of the energy saving and

high degree of freedom in transport path design that are the strengths of that system. We intend to leverage and deploy this technology, which enables labor-saving transportation of goods in a wide range of industries such as food service, retail, and logistics, in markets that are different from our existing markets.

Next-generation lightweight transport system

ALTASIA∞ (ALTASIA Infinity)

Click here for product information

Sensors used in money-handling are highly sensitive. While sensors can function adequately for determining printed materials, they might not suffice for reading banknotes. JCM collaborates with sensor manufacturers to research and develop proprietary identification and validation sensors, ensuring uncompromised pursuit of new technologies. We also focus on improving cost-effectiveness in sensor-related technologies, such as image sensors, which tend to be high-cost.

has been applied across various fields, offering innovative business solutions.

System products for casinos

Bill validator

Mechatronics control

Convey, sort, and gather

Core

Sensing

Identification and validation sensor

Amusement systems

Image recognition AI Currency identification and

validation algorithms

A wide variety of currencies are in circulation around the world. Banknotes

units

Printer units

High-speed processing technology

High-durability technology Embedded software control

Robotics

technology

Mechanical design Circuit design Optical design Software design Artificial intelligence research

Image recognition AI

Security analysis Spectrum analysis Proprietary sensors R&D

Bill recycling units

Bill validator machines for

differ in features such as microprinting, watermarks, and materials (including plastic). In addition, usage environments and methods vary by country or region. JCM has developed identification and validation algorithms that accommodate currencies worldwide, based on information obtained through our proprietary network, which includes data on counterfeit and altered currencies.

Automatic payment machines

Identification and validation algorithms

Object detection/identification Image conversion/generation Feature extraction

Character recognition Data analysis

Coin recycling units

deposit machines

Automated Cash Registers

System products

Environmental devices

JCM GLOBAL Integrated Report 2024 20

Sustainability (Initiatives Toward Material Issues)

JCM Global Vision 2032

From Core Technologies to New Areas

-Toward the Vision for 2032 -Roadmap for new businesses

2023-2025

Seed sowing for new businesses

2026-2028 2029-2032

The JCM Group is expanding into new areas by applying the core technologies it has developed through its money-handling technology. Entering new areas requires continuous

Medical field

Start of joint research and presentation at academic conferences

Strengthening the profitability of new

Establishing the market position and revenue

efforts, as it is difficult to commercialize technology in a short period of time. Thus, we are positioning the period from fiscal 2023 to fiscal 2025 as a seed sowing period for new businesses, and are building the foundation for future commercialization.

In fiscal 2023, we have been promoting new initiatives in different areas. Going forward, we will continue to pursue sustainable growth by leveraging the technologies we have developed thus far and pursuing possibilities in new areas.

Transport area New product development

Robotics Start of market introduction

businesses

base for new businesses

TOPICS

Application of JCM's core technologies

Material issues

Seed sowing for new businesses

- Toward entering the medical field -

Next-Generation

Application of image recognition AI to

A wide variety of currencies are in circulation around the world, and the reprinting of Japanese banknotes in 2024 incorporated advanced measures to prevent easy

counterfeiting, such as adopting new anti-counterfeiting technology and universal design. Similarly, various technologies are used in the banknotes of various countries, and a high level of identification capability is required to deal with these.

We have established unique image identification and judgment technologies with (1) the ability to handle a wide variety of banknote types and conditions, (2) technology to suppress the effects of noise, and (3) adaptability to rare samples.

We believe that these technologies can be applied beyond banknote identification to medical image AI. Based on these and other technologies in our mechatronics, sensing, and identification and validation (AI) technologies, we are striving to enter new business areas with the aim of solving social issues through digital transformation. In parallel with these efforts, we will continue to establish JCM's next-generation core technologies.

Activities examples in the medical field

AI technology that uses image recognition

Core Technology

Supporting currencies in over 140 countries and regions worldwide

• Technology for generating reproduced images of currency due to the difficulty of obtaining currency in a wide variety of conditions

• Technology to detect various and complex abnormalities in currency, such as stains, tears, and counterfeit bills

Identification (type of currency)/ determination (authenticity)

to identify abnormal banknotes from around the world

X-ray/CT/cancer cell identification

• Potential for deploying imaging AI in rare cancers and other conditions with few cases

• Potential for developing high-precision AI

*Software as a Medical Device: program medical device (Software/app only medical device)

X-ray/CT images/cell/tissue specimen images

GENUINE

COUNTERFEIT

R&D

R&D Structure Product development structure and development strategies in various fields

The JCM Group manufactures and sells equipment compatible with currencies from more than 140 countries and regions worldwide. This is achieved not only through elemental technology research such as validation techniques and algorithm development but also under an intellectual property strategy that balances defense and offense (p. 23). We have a product development system to create original products that satisfy customers.

Under this system, we are promoting development that further advances our core technologies of identification technology and mechatronics technology.

R&D Strategy for "JCM Global Vision 2032"

The JCM Group has envisioned its "Vision for 2032" in its Medium-Term Management Plan "JCM Global Vision 2032," and in order to realize this vision, the Group has set forth six Key Measures for the three years through fiscal 2025 as the initial phase of the plan. Within these measures, the Group's R&D is focused mainly on four priority issues.

Research and development is essential for the Company to leverage our core technologies and know-how and advance into new business fields. At the same time, in order to further expand the International Commercial Business, which is our second-largest one after our main Gaming Business, the commercial market requires product performance and quality from different perspectives (e.g., maintainability, durability, environment) than the global gaming market. So, we are working to further improve our technological capabilities in order to gain a competitive advantage in the commercial market.

Existing markets

JCM core products

• Bill recycling units and bill validator units

• Printer units

• Bill transport systems

• Automatic payment machines

Existing markets

JCM core technologies

• Currency identification technology (optical/ magnetic sensor identification, image identification/character recognition)

• Mechatronics technology (transport, accumulation, handling)

New markets

Development strategies in product development

• Global coin recycling machines

• Robotech system products

• Next-generation lightweight transport system

• New products tailored to local and market needs

New markets

Elemental Product technology

development research

Gaming

Identification and

Transportation, Retail, validation technologies

Development strategy in elemental technology research

• Medical image processing technology (image recognition

Banking, Amusement industry, and Medical services

and Argo development

AI/image generation AI)

•

Robotics technology

(automation)

• System technology

Intellectual property

Patents, Designs, and Trademarks

Changes in R&D expenses

The JCM Group is working to strengthen research and development with a view to medium- to

R&D expenses

(100 million yen)

20 17

long-term growth. Over the past three years, the proportion of new businesses in total R&D expenses has remained at just under 20%. In

2024, the company is accelerating its focus on new businesses, with the proportion of new businesses expanding to just over 30%.

This increase in R&D expenses is intended to promote expansion into new fields utilizing our core technologies, and we are stepping up investment in growth areas, particularly in the medical field.

We will continue to create new value through technological innovation.

15

10

5

0

(%)

100

80

60

40

20

0

13 13 15

2022/3 2023/3 2024/3 2025/3

(Estimated)

Composition of R&D expenses

• New businesses

• Existing businesses

25 23 21

2022/3 2023/3 2024/3 2025/3

(Estimated)

Intellectual Property

Basic concept

The Group believes that intellectual property is the source of its competitiveness and an extremely important management resource that help us maximize corporate value and achieve growth.

When filing a new patent application, the IP Management Review Board reviews the necessity of the patent application in advance. The Review Board comprehensively considers factors such as the expected scope of rights and the business situation of the product to which the invention is applied, competitor trends, and the costs of filing an application as selection criteria for applications, and determines whether or not to apply for a patent, with the degree of contribution to our business as the main aspect.

Intellectual property strategy

Developing a framework for overseas markets where intellectual property litigation is likely to occur

Commercial

Amusement Industry

In the U.S., the main market for our products, we place great importance on conducting research to check in advance whether similar patents of other companies exist, in light of the risk of litigation over intellectual property rights. In the event that we are involved in a lawsuit, we also have a robust intellectual property management system that focuses on both offense and defense strategies, including unearthing patents that could serve as a countermeasure and responding to discovery requests.

Application trends by business portfolio

In order to implement an intellectual property strategy linked to our management and business strategies, we are transforming our business portfolio while strategically filing patent applications to ensure a competitive advantage in existing businesses and to give ourselves an advantage in expanding our business domain, such as by creating new businesses. Going forward, the Group will continue to work to further strengthen its intellectual property in the businesses that it is prioritizing for expansion.

Breakdown of patent applications by business portfolio

2

24

16

Breakdown of past applications

2016/3-2020/3

(%)

24

6

28

7

12

19

6

Breakdown of applications in the past 5 years

2021/3-2025/3

(%)

34

22

Cooperation with overseas patent firms and lawyers

In order to obtain more effective rights overseas, we hold information sessions for local agents (overseas patent offices and lawyers) about our products. This allows them to gain a deeper understanding of our products, and also allows us to discuss with local agents the key points and methods for obtaining patents while working to obtain rights.

TOPICS Sustainability-related intellectual property activities

Patents contributing to Patent examples contributing to environmental environmental conservation conservation 11.4%

Bill transport systems

A patent for a design structure that significantly reduces power consumption by using a technological configuration that combines air and magnetic forces compared with conventional transport methods

Coin recycling machines

A patent for a design structure that does not use batteries in the main unit in order to reduce the environmental burden associated with battery manufacturing and disposal

Patent applications for new businesses linked to the Medium-Term Management Plan "JCM Global Vision 2032"

In the Medium-Term Management

New businesses International

Global Gaming Domestic Commercial Equipment for the

Others

Plan, we are promoting research and development in the medical field

Trends in patent applications over the past 10 years

to develop new business areas, in addition to developing new markets in international commercial markets and expanding existing technologies into other markets. Supporting this, in 2024, patent applications for

new businesses accounted for the

(Patents)

35

30

25

20

15

10

5

0

• New businesses ■ Existing businesses

majority of our applications.

2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3 2023/3 2024/3 2025/3

(Estimated)

Procurement and Production

Basic concept

As the JCM Group expands its business globally, we believe it is necessary to make

Procurement for stable supply

secure a strong, stable production system.

The production subsidiary in the Philippines is continually working to expand production

capacity and streamline production through

appropriate investments and pursue efficient procurement and production activities in order to maximize the efficiency of our procurement, production, and sales operations. To promote these efforts, the Group is focusing on the following items as the basic policy.

Basic Policy

Production and sales personnel in both domestic and overseas locations share information, and the procurement and production plan is created and updated during regular strategic meetings, incorporating the latest market conditions.

The JCM Group centralizes information at its Head Office in Japan and works closely with the divisions, including the overseas subsidiaries, to ensure stable procurement.

As product life cycles extend, semiconductor production cessation timelines have accelerated. We will closely collaborate with the R&D and Technology divisions accordingly.

In principle, the production subsidiary in the

automation and labor-saving measures, layout improvements, and the addition of more jigs and tools, as well as to build a stable production system.

We are also taking various measures to ensure stable production system in terms of human resources, such as employee training and securing a workforce by improving employee engagement.

Also, information from each sales company is integrated and managed appropriately to

Philippines procures components locally for cost

efficiently manage production sites worldwide.

Furthermore, by developing a global supply chain, we optimize the time and cost of all plans, bringing various financial benefits.

Relevant risk items and responses

In the manufacturing of our products, proper management of each process, including procurement, production and sales activities, is an important issue. In particular, accurately identifying risks in the procurement of components, etc. and production and manufacturing and responding quickly is essential for business continuity and sustainable growth. So, the Group has identified the risks as follows and is taking measures to address them.

saving. But, based on our policy of stable supply, we also take appropriate measures, such as importing some parts

from China (mainland) and Hong Kong.

Going forward, the Group will continue to closely monitor legal reforms, political trends, and market conditions, and will regularly

review its suppliers of components in order to

ensure a stable supply.

Toward establishing an optimal production system

Work at the factory

Initiatives toward inventory optimization

Integrating management across domestic and international parts procurement to inventory depletion activities, the JCM Group aims to optimize and streamline inventory, enhance profitability, and stabilize cash flow. On top of that, the Group maintains optimal inventory levels and has a robust system for stable supply to ensure consistent profitability.

Furthermore, we are working to reduce costs that were incurred redundantly in some processes, prevent the generation of dead stock, and reduce inventory disposal.

Procurement

Production

Sales activities

Price competition

Close communication with the divisions, overseas subsidiaries, business partners, and other parties

Centralization of information to the Head Office in Japan

Measures to improve employee training and engagement

Securing multiple routes

Production sites

Cooperation

Cost cuts and maintenance of safety stock of components

Inventory optimization

Establishment of a stable Inventory Securing stable supply and production system optimization competitive advantage

Production controlling

Response Risks

The Group is striving to build a robust and optimal production system to respond appropriately to diversifying customer needs and fluctuations in demand.

To achieve this, we integrate highly accurate information at the Head Office in Japan and flexibly control production in response to fluctuations in market demand. We also work closely with our production base in Japan,

the Nagahama Plant, and maintain close communication with suppliers, outsourced processing companies, and other parties to

Toward further customer satisfaction, including shorter lead times

The JCM Group utilizes multiple distribution routes that make the most of its overseas bases, and is working to strengthen relationships with business partners in order to shorten lead times for transportation to the major destinations, the

U.S. and European markets.

The Group also has a system that allows it to quickly incorporate customer requests and closely examine costs to ensure a competitive advantage.

Quality Assurance

Basic concept

The JCM Group strives to provide customers with products of appropriate quality on a stable basis, maintain their trust, and thereby enhance its corporate value.

To this end, the Quality Division plays a central role in coordinating with related divisions, including the Production, Development, and Sales divisions, and has a consistent management system under the Quality and Environmental Policy. Quality and Environmental Policy

Sales Div.

Development Div.

Quality Div.

TOPICS Initiatives for Incoming Quality Control (IQC)

The Quality Division has a policy of not accepting non-conforming parts and not putting them on the production line, and performs incoming quality control (IQC) on a daily basis using

non-contact 3D measuring devices and 2D measuring machines for all parts. Furthermore, we strive to strengthen quality by conducting focused IQC on parts that require caution, such as parts that have previously experienced non-conformance, parts to be used in new products, and parts received from new suppliers.

Measurement work at the Nagahama Plant

Production Div.

Quality assurance system

The JCM Group has and operates a quality assurance system that encompasses all processes.

We have a system to meet customer expectations, including rigorous design reviews for compliance, quality assurance, and safety at each process.

Quality assurance activities

For important quality issues, the Group accumulates past experience as organizational knowledge and works to stabilize quality through

Training system

As a company committed to environmental and regulatory compliance, the JCM Group is

intensifying its efforts to comply with environmental regulations, product safety regulations, and

Standards of various countries

(certification marks)

the standardization of quality control activities.

In order to provide high-quality products that pursue customer satisfaction, the Quality Division places emphasis on quality issues at the design stage, and works to improve product quality and performance by promoting quality improvements in the three stages of "development and design," "production," and "sales and maintenance."

2 Production

• We thoroughly inspect parts and continuously

  3 Sales and maintenance

• We centrally monitor the initial operation status.

• We analyze and manage repair status and work to establish activities to prevent recurrence and future problems.

  electromagnetic regulations. As part of these efforts, the Group's Quality Division regularly holds various seminars for related divisions in response to official standards and legal amendments, and strives to improve employee knowledge and product quality through training.

  Activity results

  Excerpt from seminar materials ("Risk Management Seminar")

  1 Development and design

  • At the design and development stages, we build quality into our products using a system

    adhere to quality standards and implement improvement activities in the production process.

• In order to stabilize product quality

  By building quality into the processes from the upstream stages, such as design and development,

  Changes in quality assurance costs

  Domestic retail Amusement industry Overseas

  to prevent quality issues before they occur.

  • We focus on improving the accuracy of product evaluation and promoting improved design quality.

immediately after mass production begins, we

conduct "initial flow evaluation activities" to closely manage and monitor the production status in the early stages.

we have significantly reduced crucial quality issues

compared with five years ago. Additionally, quality assurance costs were reduced to around 15% compared with fiscal 2019. The Group will continue this initiative and strive to strengthen the quality system.

1.0

0.8

0.6

0.4

0.2

0

Percentage of past results (vs. Mar. 2019)

2020/3 2021/3 2022/3 2023/3 2024/3

Human Capital Strategy

Basic concept

Our Medium-Term Management Plan, "JCM Global Vision 2032," sets out a two-pronged management strategy of expanding our core technologies into untapped regions and markets, and taking on the challenge of new businesses. To achieve this two-pronged (offense and defense) management strategy, we are focusing on developing and recruiting the talent that will support our global expansion, and creating an environment that is conducive to the birth of new ideas and innovation, and are promoting a variety of measures along three axes: diversity and inclusion D , developing core talent S , and realizing diverse work styles W .

Hiring policy

D Increase in female hiring rate

As part of our efforts to promote diversity, we

Full-time employees (non-consolidated)

S

Developing core human capital

D

W

Diversity and Realizing diverse

inclusion Value creation work styles

Work and Continuously growing as a Experience "person" through work

Individuality While expressing each person's

individuality

Respect for Human Rights

Each individual respects one another

have a goal of increasing the female hiring ratio

Female hiring ratio (actual) Female employee ratio (actual)

76.0

Female hiring ratio (KPI) Female employee ratio (KPI)

38.8

16.5

20%

or more

or more

30%

16.6

2023/3 2024/3 2033/3

Development policies for human resources

D New employee training

Our new employees undergo on-the-job training (OJT) in all divisions at three major domestic locations over a period of one to three months after joining the Company. Regardless of the department they are assigned to after the training, this program is designed to help them understand "where, how, and with what mindset people are working." This training holds a key role in helping

employees learn and understand the JCM Spirit, which emphasizes working together with mutual respect.

Human Capital Strategy

S Developing core human capital

We are implementing the following initiatives to develop our next-generation and future executive candidates, not only in their areas of expertise but also to help them grow into leaders who can think and make decisions from a management perspective.

Participation in Board of Directors' meetings

Executive officers and executives of foreign subsidiaries participate in Board of Directors' meetings as observers. They gain insights into the perspectives from which management

Childcare leave

We have achieved a 100% utilization rate for female employees taking childcare leave, as reflected in past trends, and the system is well-established to support this.

As a result of efforts to improve the environment through collaboration between the divisions and the Human Resources Division, the percentage of male workers taking childcare leave increased to 60% (a 40% increase from last year). Moving forward, we will continue to promote higher utilization rates of childcare leave as part of our initiatives to support the development of the next generation.

issues are discussed and decisions are made or rejected during these meetings. In

addition, they participate in supplementary explanations and Q&A sessions as necessary to develop their skills in thinking from a management viewpoint.

Participation in the Executive Committee

General Managers participate in the Executive Committee, which primarily consists of internal board directors and executive officers. They present proposals for their respective divisions, engage in discussions, and exchange opinions with board directors and executive officers. Through this practical training, they learn what information is required from a management perspective.

Furthermore, in executing business operations, management decisions are made by incorporating feedback from next-generation executive candidates.

In-house environment development policies

W Employee work-style reform

We are promoting the following initiatives as measures for the work-life balance of our employees based on the slogan "Create a happy home and a pleasant workplace" in its guiding principles.

Working hours

We encourage flextime for all employees, and have changed our paid leave system from a half-day system to an hourly system to allow employees more flexibility in how they work. We have also increased the recommended number of days of "positive off leave," in which employees plan and take paid leave at the beginning of the fiscal year, to 10 days from 7, in addition to the mandatory 7 days. In addition, we offer a juror leave system as a form of special leave, providing employees with opportunities to contribute to society and create a comfortable working environment.

Diversity and inclusion

D Human capital strategy supporting global expansion

As part of our human capital strategy for expanding our existing businesses into new markets and creating new businesses as outlined in our Medium-Term Management Plan, in the fiscal year ended March 31, 2024, we conducted recruitment activities with a focus on securing talented personnel from the following four perspectives: (1) Management personnel well versed in accounting, (2) personnel with strong language skills, (3) hiring of women for positions where there are few, and (4) science personnel who can be posted overseas.

As a result, we were able to secure six excellent employees. We will continue to promote recruitment activities to secure talented personnel.

D Raising awareness about unconscious bias

Should women prioritize childcare?

I'm going on my

second round of

childcare leave

next week

I want to work

harder, but it's hard

to balance work and

childcare

That's power

harassment

Isn't your

husband helping

with childcare?

We've been busy

this year and you're

taking leave

twice?!

Whenever there's

a drinking party at

my company, people

complain if I don't go

to the after-party

In a workshop on unconscious bias that was conducted across all divisions in the fiscal year ended March 2023, 108 phrases that stem from unconscious assumptions were extracted. We periodically posted these phrases in the form of a quiz on the company intranet, striving to provide an opportunity for employees to become aware of their unconscious assumptions. We believe that repeated, steady efforts like this will lead to changes in the awareness and behavior of each employee, and we will carefully implement each measure to promote diversity and inclusion.

Respect for Human Rights and Working Environment

Basic concept

The JCM Group promotes human rights initiatives in compliance with the International Bill of Human Rights (Universal Declaration of Human Rights and International Covenant on Human Rights), the International Labour Organization's (ILO) Declaration on Fundamental Principles and Rights at Work, the Ten Principles of the United Nations Global Compact, and the United Nations Guiding Principles on Business and Human Rights, a global standard.

System for promoting respect for human rights and working environment

The Group has established the "JCM Legal Compliance Code of Conduct" as a guideline for complying with laws, regulations, ethics, and social norms both in Japan and overseas, and has prepared the "Compliance Regulations" and a "Compliance Program" as a specific program to ensure compliance. The Compliance Manual and Detailed Regulations stipulate details about the protection of human rights, including the prohibition of discrimination and harassment on grounds such as nationality, creed, religion, sex, and physical disability, and they are available for viewing at any time on the company intranet.

In addition, we provide compliance training once a year for our executives and employees to foster awareness and thoroughly respect human rights and the working

Human rights due diligence in the supply chain

The Group conducts human rights due diligence together with its business partners, including suppliers, with reference to the Ministry of Economy, Trade and Industry's "Guidelines for Respect for Human Rights in Responsible Supply Chains, etc." and "Practical Reference Material for Respecting Human Rights in Responsible Supply Chains, etc."

Overseas human rights due diligence

J-CASH MACHINE GLOBAL MANUFACTURING (PHILIPPINES)

INC., the Group's overseas manufacturing subsidiary, obtained SA8000:2014 certification in November 2024. Social Accountability 8000, or SA8000, is an international standard management system for corporate social accountability based on the ILO Convention, the United Nations Convention on the Rights of the Child, and the International Bill of Human Rights (Universal Declaration of Human Rights and International Covenant on Human Rights). It is a set

of standards and procedures for health and safety, child labor, forced labor, discrimination, disciplinary actions, compensation

environment, including diversity in our workforce.

(remuneration) and working hours, as well as a certification

SA8000 (2014) Certification

Compliance system for human rights and working environment

The Group has an internal consultation room and a suggestion box as a means for employees to directly report questionable actions related to human rights or the working environment, and an external consultation room with experts as a contact point. The internal consultation room is managed by the compliance officer, and the suggestion box is overseen by a Director who is a full-time Audit & Supervisory Committee Member. When a report is received, we investigate the matter and take measures to prevent recurrence.

The Compliance Committee, chaired by the Group's Director in charge of compliance, monitors whether the compliance program is being implemented appropriately and provides cross-sectional control over the Group's compliance efforts.

standard for realizing these standards and procedures. As a company with bases and business partners both in Japan and overseas, the Group will continue to engage in human rights due diligence in the global supply chain.

Connection with society

As a member of the local community, the JCM Group is engaged in a variety of community-based social contribution activities to ensure harmony between employees and the local community so that we can grow together.

Initiative examples at the Philippine manufacturing subsidiary

The subsidiary donates stationery to a

nearby kindergarten

Mangrove planting activities Marathon at Laguna Technopark, Inc

Information Security

The JCM Group regards information security as the foundation of its corporate activities, and considers it a priority to protect the trust of all customers, business partners, and employees. With the rapid digitization of today's world, the risks of information leaks

and increasingly sophisticated cyber-attacks are increasing. The Group is taking various measures based on five information security measures.

Diagram of information security measures

Physical

PCs

• Application of updated patches

  Physical

• Access control, IC card authentication

• Access control to critical facilities

• Introduction of security cameras

  Human

  • Security training

  • Virus protection

  • Asset management

  • Certificate-based operation

    PC Human

    5 information security measures

• Access control

• Monitoring to prevent internal fraud

  IT assets

  • Visualization of IT assets

  • Management of device information

  • Update patch distribution

  • MDM management

Assets NW

Network

• Integrated threat management

• Access control

• VPN Connection

• Vulnerability assessment

• Sender domain authentication

TOPICS Security training

The JCM Group operates a secure remote work environment that can be used anywhere, with management of terminals, access permissions and device controls. To address the information security risks arising from the spread of remote work, we provide ongoing security training using security training tools (KnowBe4) both in Japan and overseas to ensure

that all employees are security-conscious and can take appropriate actions.

Key measures for the next fiscal year

The Group will further strengthen its information security system to respond to increasingly sophisticated cyber threats. In the coming fiscal year, we will work to further strengthen our network environment by strengthening our overall security infrastructure, including our overseas group companies. We also plan to switch our IT asset management system to a more secure system.

As a key measure for the entire Group, together with our major overseas bases, we are moving forward with plans to integrate our systems with high-security solutions to provide terminal defense, network protection and detection, and 24-hour monitoring.