News Releases

Consolidated Financial Results for the 3rd Quarter of the FY2015

(Rounded down to the nearest million)

Business results for the third quarter of the year ending March 31, 2016

Operating results

(Percentage figures denote year-over-year changes.)
  Net
sales
Operating
income
Ordinary
income
Profit attributable to owners of parent
Million yen % Million yen % Million yen % Million yen %
Third quarter, year
ending March 31, 2016
38,931 -12.8 1,546 -63.4 1,656 -61.6 632 -77.0
Third quarter, year
ending March 31, 2015
44,657 -5.4 4,223 -34.5 4,315 -34.1 2,747 -30.2

(Note) Comprehensive income
Third quarter of the year ended March 31, 2016: ¥644 million (-76.9%)
Third quarter of the year ended March 31, 2015: ¥2,787 million (-29.5%)

  Net income per share Diluted net income per share
Yen Yen
Third quarter, year
ending March 31, 2016
42.81
Third quarter, year
ending March 31, 2015
185.87

Financial position

  Total assets Net assets Shareholders’ equity ratio
Million yen Million yen %
Third quarter, year
ending March 31, 2016
52,360 31,747 60.6
Year ended March 31, 2015 53,528 32,138 60.0

(Reference) Shareholders’ equity
Third quarter of the year ended March 31, 2016: ¥31,747 million
Third quarter of the year ended March 31, 2015: ¥32,138 million

Dividends

  Annual dividends(Yen)
First
quarter-end
Second
quarter-end
Third
quarter-end
Year-end Annual
Year ended March 31, 2015 10.00 60.00 70.00
Year ended March 31, 2016 10.00    
Year ended March 31, 2016
(Forecast)
      40.00 50.00
(Note) Revision of the most recently released dividend forecasts: No

 

Forecast earnings for the year ending March 31, 2016

  Net sales Operating
income
Ordinary
income
Net income
attributable to
equities of
parent
Net income
per share
Million yen % Million yen % Million yen % Million yen % Yen
Entire – year 45,000 -16.7 -1,500 -1,400 -1,600 -108.23
(Note) Revision of the most recently released performance forecasts: No

 

Qualitative Information Regarding the Consolidated Results for the Third Quarter

1. Analytical Review of Operating Results

During the cumulative consolidated third (October-December) quarter, while the Japanese economy showed an improving trend in corporate earnings and employment mainly driven by the government’s economic stimulus measures, the outlook remains unpredictable due to possible downside risks of overseas economies mainly due to the slowdown of the economy in emerging countries, especially China.

The pachinko business, a part of the amusement industry in which the Daikoku Denki Group (“the Group”) is involved, faces a significant challenge in the overall market due to the planned, self-imposed regulations on pachinko and pachislot game machines. Due to this impact, our customers (pachinko halls) are in the situation of reducing investment demands, which is a continuing concern.

Under such a market environment, the Information Systems Segment promoted a proposal for the added values of “BiGMO PREMIUM” (data display tools) and “VEGASIA”(CR unit).

The Control Systems Segment, to correspond to the planned self-imposed regulations, strengthened the development system, and also enhanced the ability for a proposal for plans with a theme of contributing to improving the operation rate of game machines installed in pachinko halls. Also, “Hyakka Ryouran: Samurai Girls” was released in October, and this game machine received a high evaluation because of its strong running contribution.

As a result of the above, during the cumulative consolidated third quarter, net sales amounted to ¥38,931 million, down 12.8% from the same period last year. Consolidated operating income was ¥1,546 million (down 63.4% year on year), consolidated ordinary income was ¥1,656 million (down 61.6% year on year), and consolidated net income attributable to owners of the parent amounted to ¥632 million (down 77.0% year on year).

Business results by segment

Information System Segment

During the cumulative consolidated third quarter, the situation of the introduction of “VEGASIA” (CR unit) in new stores was the same as last year in the last period, but due to the decrease of replacement demand in existing stores, the current fiscal year planned number resulted as shorter than the same period last year, although it was exceeded.

Also, the data display tools, mainly “BiGMO PREMIUM,” fell short of the record of a year ago as well as the planned number due to the decrease of replacement demand in existing stores.

Meanwhile, the research and development cost increased due to the active investment in next-generation product development.

As a result, net sales in the Information Systems Segment were ¥27,882 million (down 10.9% from the same period of the previous fiscal year), and segment-operating income was ¥3,484 million (down 34.8% year on year).

Control System Segment

During the cumulative consolidated third quarter, a number of sold display units fell short of the same period of the previous fiscal year due to the influence of the deterioration of the market environment, but the sales of pachinko-related parts recorded strong sales due to their adoption in various game machines.

The actual number of sold units of pachislot game machines was 5,100, which lowered the initial plan; therefore, an evaluation review was carried out with procured special parts/materials for the machines of 876 million yen.

As a result, net sales in the Control Systems Segment were ¥11,076 million (down 17.0% from the same period of the previous fiscal year), and segment-operating loss amounted to ¥649 million (the same period of the previous fiscal year had an income of ¥147 million).

(Note) Business segment sales and income figures include intersegment transactions.

2. Analytical Review of Financial Position

Total assets at the end of the third quarter were ¥52,360 million, a decrease of ¥1,167 million from the end of the previous consolidated fiscal year. Trade receivables increased compared to the end of the previous fiscal year, also tangible fixed assets increased due to an increase in raw materials used for the production of pachislot machines scheduled to be on sale for the next fiscal year as well as the expansion of the Kasugai Division Office. However cash and deposits were greatly reduced due to accounts payable, payment in cash and deposits, and settlement and dividends payable to the shareholders. Furthermore, a decrease of the inventory in the Information Systems Segment caused a decrease of the total assets compared to the previous fiscal year.

Total liabilities as of the end of third quarter were ¥20,612 million, a decrease of ¥776 million from those at the end of the previous consolidated fiscal year, due to a decrease in accounts payable of loss and accrued income tax, although short-term debt increased as funding.

Total net assets as of December 31, 2015 were ¥31,747 million, a decrease of ¥390 million from those at the end of the previous consolidated fiscal year, mainly because the dividend payment to the shareholders exceeded the quarterly profit.

The Group’s equity ratio was 60.6% (a rise of 0.6 percentage point compared to that at the end of the previous consolidated fiscal year).

3. Explanation of Forward-looking Information, Including Outlook for Consolidated Operating Results

There has been a change in the earnings forecast for the third quarter and the full year of FY2015, which were announced on October 26, 2015. For further information, please check the “Notice of Revision of Earnings Forecast,” which was announced on February 8, 2016.