News Releases

Consolidated Financial Results for the 1st Quarter of the FY2017

(Rounded down to the nearest million)

Business results for the first quarter of the year ending March 31, 2018

Operating results

(Percentage figures denote year-over-year changes.)
  Net
sales
Operating
income
Ordinary
income
Net income
attributable to
equities of parent
Million yen % Million yen % Million yen % Million yen %
First quarter, year
ending March 31, 2018
7,288 -34.3 -330 -266 -195
First quarter, year
ending March 31, 2017
11,087 -4.4 1,337 119.5 1,399 111.1 908 163.9

(Note) Comprehensive income
First quarter of the year ended March 31, 2018: ¥-179 million (-%)
First quarter of the year ended March 31, 2017: ¥935 million (165.2%)

   Net income per share Diluted net income per share
Yen Yen
First quarter, year
ending March 31, 2018
-13.21
Year ending March 31, 2017 61.47

Financial position

  Total assets Net assets Shareholders’ equity ratio
Million yen Million yen %
First quarter, year
ending March 31, 2018
42,115 28,381 67.4
Year ended March 31, 2017 46,828 29,151 62.3

(Reference) Shareholders’ equity
First quarter of the year ended March 31, 2018: ¥28,381 million
Year ended March 31, 2017: ¥29,151 million

Dividends

  Annual dividends(Yen)
First
quarter-end
Second
quarter-end
Third
quarter-end
Year-end Annual
Year ended March 31, 2017 10.00 40.00 50.00
Year ended March 31, 2018        
Year ended March 31, 2018
(Forecast)
  10.00 30.00 40.00
(Note) Revision of the most recently released dividend forecasts: No

 

Forecast earnings for the year ending March 31, 2018

  Net sales Operating
income
Ordinary
income
Net income Net income
per share
Million yen % Million yen % Million yen % Million yen % Yen
First half endin
September, 2018
19,000 -5.9 100 -83.5 100 -85.8 50 -84.8 3.38
Entire – year 39,000 -4.2 1,300 24.0 1,300 -5.4 800 59.1 54.12
(Note) Revision of the most recently released performance forecasts: No

Qualitative Information Regarding the Consolidated Results for the First Quarter

Explanation of Operating Results

The Japanese economy continued to be on a moderate recovery track during this consolidated first fiscal quarter, with improved corporate earnings and employment and income environments, although there was concern over potential impacts on economic climates due to uncertainties about overseas economies, such as US and European government trends, and a slowdown in the economies of emerging nations.

The pachinko industry, in which the Daikoku Denki Group (“the Group”) is engaged, faced a severe business environment, with a spreading cautious stance on capital investment in peripheral equipment in newly opened and existing halls due to uncertain economic prospects, such as an expected suppression of speculative performance because of the pressing task of addressing the issue of addiction at pachinko parlors due to the enactment of the Draft Bill for Integrated Resort Promotion.

In this market environment, the Information System Segment convened an exhibition and seminar entitled, “MIRAIGATE 2017 (SHINKA)” in major cities across the country.
In the exhibition, the new CR unit, “VEGASIA III,” which mounted a face recognition camera as standard equipment, and “Fan-SIS,” which will be the industry’s first information disclosure service for fan trend data, were announced, and were able to attract interest from many visitors.
In the seminar, tumultuous industry trends, plus trends in new standard machines and characteristics of good performance models were explained, and a lecture about problem-solving measures was delivered.

The Control System Segment closely observed trends in game machine manufacturers for regulatory changes, while reviewing the model development schedule and sales plan accordingly.
Also, it worked on a game machine planning proposal and development of new products, with the future market environment in mind.

As a result, during this consolidated first fiscal quarter, the net sales amounted to 7,288 million yen (down 34.3% year-on-year). The operating deficit was 330 million yen (operating income of 1,337 million yen in the same period last year), and the ordinary deficit was 266 million yen (ordinary income of 1,399 million yen in the same period last year). The net deficit for the quarter attributable to shareholders of the parent company amounted to 195 million yen (net income for the quarter attributable to shareholders of the parent company of 908 million yen in the same period last year).

Segment results are as follows.

[Information System Segment]

Amid a severe market environment with decreasing numbers of newly opened and renovated halls, the number of units sold during the consolidated first fiscal quarter in this segment, such as of “REVOLA” and “BiGMO PREMIUM,” information disclosure terminals that can be introduced with little work, was at the same level as in the same period last year. However, the number of CR units, “VEGASIA series” that requires a large-scale work, sold was significantly below the level in the same period last year.
Also, selling, general and administrative costs increased due to delayed posting of research and development costs from the previous period, etc.
As a result, the net sales in this segment were 5,551 million yen (down 22.7% year-on-year) and the segment-operating income was 126 million yen (down 88.7% year-on-year).

[Control System Segment]

Control units for pachinko machines and their parts sold well during the consolidated first fiscal quarter in this segment, but the number of display units sold was below the level sold in the same period last year.
As for pachislot game machines, 8,800 units were brought to the market in the same period last year, but there were no sales during this consolidated first fiscal quarter.
As a result, the net sales in this segment were 1,744 million yen (down 55.5% year-on-year) and the segment-operating deficit was 26 million yen (segment-operating income of 672 million yen in the same period last year).

(Note) Above figures for each segment include the amounts of inter-segment transactions.

Explanation of Financial Position

Total assets at the end of this consolidated first fiscal quarter were 42,115 million yen, a decrease of 4,712 million yen from the end of the previous consolidated fiscal year. The main factor for this includes a decrease in cash and deposits, and trade receivables, despite an increase in inventories, whose sales are scheduled in and after this second quarter.
Total liabilities at the end of this consolidated first fiscal quarter amounted to 13,734 million yen, a decrease of 3,941 million yen from the end of the previous consolidated fiscal year. The main factor for this includes a decrease in research and development costs, software-related accounts payable, and electronically recorded monetary claims.

Net assets at the end of this consolidated first fiscal quarter were 28,381 million yen, a decrease of 770 million yen from the end of the previous consolidated fiscal year. The main factors for this include a decrease in retained earnings due to posting of the net deficit for the quarter attributable to shareholders of the parent company, and payment of dividends.
The Group’s equity ratio was 67.4% (a rise of 5.1 points when compared to that at the end of the previous consolidated fiscal year).

Explanation of Earnings Forecast such as Consolidated Business Results Forecast

Future uncertainty in the business environment surrounding the Group is increasing, but the business performance in the consolidated first fiscal quarter is progressing largely as initially planned.
The earnings forecasts for the second quarter and for the full fiscal year ending March 2018 have remained unchanged from the forecasts announced on May 15, 2017.
There are no significant changes of risks for segments that affect business performance from the disclosure through the recent securities report (submitted on June 29, 2017).