Consolidated Operating Results for the Year Ended March 31, 2012
RESULTS OF CONSOLIDATED OPERATIONS
|Net sales||Operating income||Ordinary income||Net income|
|Million yen||%||Million yen||%||Million yen||%||Million yen||%|
|Year ended March 31, 2012||47,096||36.6||3,525||−||3,541||894.1||1,663||−|
|Year ended March 31, 2011||34,483||-33.5||226||-95.1||356||-92.7||-342||−|
(Note) Comprehensive income
Year ended March 31, 2012: ¥1,684 million (−%)
Year ended March 31, 2011: ¥-325 million (−%)
|Net income to
income to total
income to net
|Year ended March 31, 2012||112.50||−||6.3||7.2||7.5|
|Year ended March 31, 2011||-23.14||−||-1.3||0.7||0.7|
(Reference) Equity in earnings of affiliates:
Year ended March 31, 2012: ¥-17 million
Year ended March 31, 2011: ¥-14 million
CONSOLIDATED FINANCIAL POSITION
|Total assets||Net assets||Shareholders’
|Million yen||Million yen||%||Yen|
|Year ended March 31, 2012||49,087||27,113||55.1||1,828.13|
|Year ended March 31, 2011||49,015||26,020||52.9||1,755.57|
(Reference) Shareholders’ equity
Year ended March 31, 2012: ¥27,026 million
Year ended March 31, 2011: ¥25,953 million
CONSOLIDATED CASH FLOWS
|Million yen||Million yen||Million yen||Million yen|
|Year ended March 31, 2012||5,682||-4,607||-493||13,655|
|Year ended March 31, 2011||-2,791||-1,016||465||13,080|
|Year ended March 31, 2011||−||10.00||−||30.00||40.00|
|Year ended March 31, 2012||−||10.00||−||30.00||40.00|
|Year ended March 31, 2013
to net assets
|Year ended March 31, 2011||591||−||2.2|
|Year ended March 31, 2012||591||35.6||2.2|
|Year ended March 31, 2013
Forecast earnings for the year ending March 31, 2013
|Net income||Net income
|Million yen||%||Million yen||%||Million yen||%||Million yen||%||Yen|
|First half ending
|Entire – year||55,000||16.8||4,000||13.5||4,000||12.9||2,300||38.3||155.57|
Material changes in subsidiaries during this period (Changes in scope of consolidations resulting from change is subsidiaries)
No(Number of subsidiaries excluded from consolidation: 0, Name of subsidiaries excluded from consolidation: −)
Changes in accounting policies and accounting estimates, retrospective restatement
Changes in accounting policies based on revisions of accounting standard: No
Changes in accounting policies other than ones based on revisions of accounting standard: No
Changes in accounting estimates: No
Retrospective restatement: No
Number of shares outstanding (common stock)
1. Number of issued and outstanding shares at the end of fiscal year (including treasury stock)
March 31, 2012: 14,783,900
March 31, 2011: 14,783,900
2. Number of treasury stock at the end of fiscal year
March 31, 2012: 334
March 31, 2011: 315
3.Average number of shares
March 31, 2012: 14,783,579
March 31, 2011: 14,783,626
Analysis of Operating Results
Operating results for this period
During the consolidated fiscal year, the Japanese economy remained in a tough situation, especially in employment conditions, although there were signs of gradual recovery in manufacturers’ production in the wake of the Great East Japan Earthquake.
In the pachinko business, a part of the amusement industry in which the Daikoku Denki Group (“the Group”) is engaged, there was a growing concern over a decrease in the visitors and operation of pachinko halls because pachinko hall operators in some regions suspended operations by rotation to respond to the shortage of power supply after the earthquake. However, no major impact was seen in the pachinko business in May and afterward. Some pachinko hall operators made small-scale capital investments during their non-business days, which led to a continuous shift from pachinko game machines to popular pachislot game machines.,. On the other hand, since the “Revision of Administration Policy on Advertisement Regulations” issued by the Community Safety Bureau, the National Police Agency became effective in August 2011, operators have shown a reluctant movement toward advertisement and event implementation in hall operations.
According to the “Present Status of Businesses Affecting Public Morals in 2011” surveyed by the Community Safety Bureau, the National Police Agency, the total number of installed game machines was 4,582,784, as a result of a decrease of 55,962 units in pachinko game machines and an increase of 84,346 units in pachislot game machines. Under these market environments, the Information System Segment promoted several proposals including, in particular, “BigMO,” a data display tool, plainly communicating a game element of diversified pachislot to the fans, “IL-AW,” a call-out lamp and “C II,” a hall computing system that serves as a core system.
The Control System Segment sought to improve the quality and efficiency of development operations and strove to propose hardware and software projects in game machines.
As a result, the Company’s cumulative consolidated results for the year were ¥47,096 million in net sales(up 36.6% year-on-year), ¥3,525 million in operating income (up ¥3,298 million year-on-year), and ¥3,541 million in ordinary income (up 894.1% year-on-year).Consolidated net income for the year amounted to ¥1,663 million (up ¥2,005 million year-on-year).
Business results by segment are as follows.
Information System Segment
During the consolidated fiscal year, the Information System Segment promoted expansion of “C II Standard,” a hall management service system using the MIRAIGATE network. “BiGMO,” a data display tool, was highly regarded along with the introduction of large-sized models of pachislot game machines, which also contributed to the introduction of “C II,” a hall computing system.
As a result, sales in the segment were ¥25,741 million (up 9.6% year-on-year), and segment income was ¥4,793 million (up 57.3%year-on-year).
Control System Segment
During the consolidated fiscal year, the number of models ande unit sales of pachinko game machines decreased until September 2011 in the pachinko game machines market, due to shortage in the supply of semiconductors affected by the Great East Japan Earthquake. However, as the models in which t the Control System Segment were engaged received positive reviews in the market, the unit sales continues to surge.
As a result, sales in the segment were ¥20,463 million (up 115.5%year-on-year), and segment income amounted to ¥873 million (up ¥1,902 million year-on-year).
Amusement Content Segment
During the consolidated fiscal year, the Amusement Content Segment was mainly engaged in the development of large-sized models in consumer games that were ordered in the previous consolidated fiscal year. As a result, sales in the segment were ¥905 million (down 42.0%year-on-year), and segment loss amounted to ¥289 million (down ¥230 million year-on-year).
(Note) Figures of segment results include intersegment transactions.
Outlook for the next consolidated fiscal year
The Japanese economy is expected to recover, reflecting the effects from several policies taken by the government. However, the Group anticipates that the future outlook for the economy will remain uncertain due to concerns about rising crude oil prices, power supply restrictions, etc.
Given such market environments, the Group forecasts the Information System Segment to achieve sales of ¥28 billion, up 8.8% from the preceding fiscal year. The segment, through data display tools including BiGMO, which received a high evaluation, will try to improve the quality of hall environments for fans, and also will try to establish a follow-up structure for hall management utilizing network services. The Group forecasts the Control System Segment to achieve sales of ¥26 billion, up 27.1% from the preceding fiscal year. The Control System Segment will make efforts to improve performance by enhancing planning and proposal capability and pursue of development quality through a review of the structure. The Group forecasts the Amusement Content Segment to achieve sales of ¥1 billion, up 10.5% from the preceding fiscal year. The segment will aim to improve development capability so as to increase entrusted development.
As a result of these initiatives, the Group forecasts consolidated net sales of ¥55 billion (up 16.8% year-on-year), consolidated operating income of ¥4 billion (up 13.5% year-on-year), consolidated ordinary income of ¥4 billion (up 12.9% year-on-year), and consolidated net income of ¥2.3 billion (up 38.3% year-on-year).
*Notes on forecasts and projections:
Forecasts regarding future performance in this report are based on judgments made in accordance with information available at the time this report was prepared and may therefore contain potential risks and uncertainties.
As for future outlook, the Group will continuously collect and analyze the data. In cases where it is necessary to revise its earnings forecast, the Group will officially announce the revision immediately.
Analysis of Financial Position
Status of Assets, Liabilities and Net assets
Current assets at the end of the consolidated fiscal year were ¥31,916 million, an increase of ¥367 million from the end of the previous consolidated fiscal year. The main factors for the increase were an increase in cash and deposits reflecting favorable consolidated net sales, although inventories decreased because the sale of the products originally scheduled to be sold during the previous consolidated fiscal year, was finally realized during this consolidated fiscal year.
Noncurrent assets at the end of the consolidated fiscal year were ¥17,170 million, a decrease of ¥295 million from the end of the previous consolidated fiscal year, mainly attributable to sales and redemption of memberships in investment and other assets, as well as the refund of deposits associated with the transfer of our Higashi Nihon branch.
Liabilities at the end of the consolidated fiscal year were ¥21,973 million, a decrease of ¥1,021 million from the end of the previous consolidated fiscal year. The main factors for the decrease were a decrease in trade payables associated with the products scheduled for sale in the next consolidated fiscal year and an absence of accounts payable for the facilities expenses for the new head office building.
Nnet assets at the end of the consolidated fiscal year were ¥27,113 million yen, an increase of ¥1,093 million from the end of the previous consolidated fiscal year, due mainly to an increase in retained earnings thanks to net income generated during the term, while dividends were paid. Consequently, total assets at the end of the consolidated fiscal year were ¥49,087 million, an increase of ¥71 million from the end of the previous consolidated fiscal year, and the Group’s equity ratio was 55.1% (up 2.2 percentage point compared to the end of the previous consolidated year).
Status of Cash flow
Cash and cash equivalents (“cash”) at the end of the consolidated fiscal year were ¥13,655 million, an increase of ¥574 million from the end of the previous consolidated fiscal year.
Each cash flow for the consolidated fiscal year under review is as follows:
Cash flow from operating activities
Cash obtained from operating activities for the consolidated fiscal year was ¥5,682 million yen (\2,791 million was used in operating activities in the same period of the previous year). The main reasons of this change were that income before income taxes increased thanks to favorable operating results and inventories recorded at the end of the previous consolidated fiscal year were finally realized during this consolidated fiscal year, even though there were a decrease in trade payables and payments for corporate taxes.
Cash flow from investing activities
Cash used for investing activities was ¥4,607 million, an increase of ¥3,591 million from the previous consolidated fiscal year. The main factors for the increase were an increase in the amount of time deposits and acquisition of noncurrent assets including the new head office building.(Cash flow from financing activities)
Cash used in financing activities was ¥493 million (\465 million was provided from financing activities in the previous consolidated fiscal year). The main factor for the increase was the payment of dividends.
Basic policy for profit allocation and the dividends for the current and next fiscal year
The Group identifies the return of profits to the shareholders as the most important corporate management policies while expanding its business scale. Therefore, the Group sets out stable dividends as the basic policy, taking into consideration of a comprehensive assessment of business environments, earnings conditions and payout ratio, etc. Amount and timing of the dividend will be carefully examined and determined at the Board of Directors’ meeting. The Group has also the policy to utilize retained earnings for new business development and operational efficiency in long-term perspective in order to improve market competitiveness and profitability.
To return profits to the shareholders, the Group determined to pay dividends of ¥40 per share for the year (interim dividend of ¥10, year-end dividend of ¥30).
The Group also plans to pay dividends of ¥40 per share for the next year; (interim dividend of ¥10,year-end dividend of ¥30).