Consolidated Operating Results for the Year Ended March 31, 2013
RESULTS OF CONSOLIDATED OPERATIONS
|Net sales||Operating income||Ordinary income||Net income|
|Million yen||%||Million yen||%||Million yen||%||Million yen||%|
|Year ended March 31, 2013||58,861||25.0||7,023||99.2||7,244||104.5||4,161||150.3|
|Year ended March 31, 2012||47,096||36.6||3,525||−||3,541||894.1||1,663||−|
(Note) Comprehensive income
Year ended March 31, 2013: ¥4,167 million (147.4%)
Year ended March 31, 2012: ¥1,684 million (−%)
|Net income to
income to total
income to net
|Year ended March 31, 2013||281.53||−||14.5||13.7||11.9|
|Year ended March 31, 2012||112.50||−||6.3||7.2||7.5|
CONSOLIDATED FINANCIAL POSITION
|Total assets||Net assets||Shareholders’
|Million yen||Million yen||%||Yen|
|Year ended March 31, 2013||56,706||30,439||53.7||2,059.02|
|Year ended March 31, 2012||49,087||27,113||55.1||1,828.13|
(Reference) Shareholders’ equity
Year ended March 31, 2013: ¥30,439 million
Year ended March 31, 2012: ¥27,026 million
CONSOLIDATED CASH FLOWS
|Million yen||Million yen||Million yen||Million yen|
|Year ended March 31, 2013||9,600||2,153||-7,003||18,406|
|Year ended March 31, 2012||5,682||-4,607||-493||13,655|
|Year ended March 31, 2012||−||10||−||30||40|
|Year ended March 31, 2013||−||20||−||70||90|
|Year ended March 31, 2014
to net assets
|Year ended March 31, 2012||591||35.6||2.2|
|Year ended March 31, 2013||1,330||32.0||4.6|
|Year ended March 31, 2014
Forecast earnings for the year ending March 31, 2014
|Net income||Net income
|Million yen||%||Million yen||%||Million yen||%||Million yen||%||Yen|
|First half ending
|Entire – year||51,000||-13.4||4,000||-43.0||4,000||-44.8||2,000||-51.9||135.29|
Material changes in subsidiaries during this period (Changes in scope of consolidations resulting from change is subsidiaries)
Yes (Number of subsidiaries excluded from consolidation: 1, Name of subsidiaries excluded from consolidation: DIXEO Inc.)
Changes in accounting policies and accounting estimates, retrospective restatement
Changes in accounting policies based on revisions of accounting standard: Yes
Changes in accounting policies other than ones based on revisions of accounting standard: No
Changes in accounting estimates: Yes
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, 2013: 14,783,900
March 31, 2012: 14,783,900
2. Number of treasury stock at the end of fiscal year
March 31, 2013: 488
March 31, 2012: 334
3.Average number of shares
March 31, 2013: 14,783,517
March 31, 2012: 14,783,579
Analysis of Operating Results
Operating results for this period
During the consolidated fiscal year ended March 31, 2013 (from April 1, 2012 to March 31, 2013), the Japanese economy remained in the difficult conditions due to appreciation of the yen in addition to the slowdown of global economy, even though it showed a modest recovery supported by demand associated with reconstruction in the aftermath of the Great East Japan Earthquake. However, since the Abe administration came into office in December 2012, signs of economic recovery have emerged as the economic stimulus measures such as monetary easing and an increase in public spending have boosted stock prices and caused depreciation of yen to improve export-oriented activities.
The pachinko business, a part of the amusement industry in which the Daikoku Denki Group (“the Group”) is engaged, has not experienced the ripple effects. Concretely, in pachislot game machines, the operation of mass-marketed models has not reached a satisfactory level, and in pachinko game machines, the operation of pachinko game machines with a playing cost of 4-yen per pachinko ball has declined consistently, putting pachinko halls, our customers, in a tough business environment. Furthermore, the Safety Division of the Community Safety Bureau, the National Police Agency issued a notice urging a “Thorough Improvement of Advertising Activities” in July 2012, which developed a trend to reviews the conventional advertisements and services.
According to the “Present Status of the regulation of Businesses Affecting Public Morals in 2012” surveyed by the Community Safety Bureau, the National Police Agency, the total number of installed game machines was 4,592,036 units, as a result of a decrease of 65,212 units in pachinko game machines and an increase of 74,481 units in pachislot game machines. Consequently, the average number of installed game machines per store was increased by 6.1 units to 378.0 units.
Under these market environments, the Information System Segment promoted sales of “VEGASIA”, a new CR unit with enhanced functions in conjunction with the “C II” hall computing system, as well as the information publication devices for fans. The Control System Segment pushed forward with planning and development activities towards “contribution to customers” and research and development on the subject of dealing with the environmental issues, and also presented proposals to customers.
Consequently, as consolidated results for the fiscal year, we recorded net sales of ¥58,861 million (up 25.0% year on year), operating income of ¥7,023 million (up 99.2%), ordinary income ¥7,244 million (up 104.5%). Consolidated net income amounted to ¥4,161 million (up 150.3%).
Business results of segments are as follows:
The company made a change to the classification of the reporting segments from the year. For year on year comparisons below, the figures of the previous year have been reclassified in accordance with the changed segmentations.
The Information System Segment
During the current year, the Information System Segment enhanced and strengthened the “C II Standard”, a hall supporting service system using the MIRAIGATE network. “VEGASIA”, a new CR unit which was launched in April 2012, was favorably accepted with a high evaluation for enhanced functions through integration with the hall computing system. In addition, the sales of “BiGMO”, a data display tool per machine, and “IL-X,” a data call-out lamp was strong as the market accepted their innovative user-friendly performance in displaying the characteristics of various game machines to the fans.
As a result, sales of the segment for the year were ¥31,685 million (up 23.1% year on year) and segment income was ¥6,069 million (up 26.6%).
The Control System Segment
During the current consolidated year, the Control System Segment redefined the scope of services and roles among the Group companies and concentrated on planning and proposal activities of the hardware and software. Sales of video processing units were buoyant and sales of peripheral components such as liquid crystal panels, memories and motors also increased.
As a result, sales of the segment for the year were ¥27,184 million (up 27.2% year on year), and segment income was ¥2,930 million (up 402.0%).
(Note) Figures of the segment performance include intersegment transactions.
Although the Japanese economy is expected to recover gradually, reflecting improvements in the environment for export- and effects from the economic and monetary measures, it may take a while before the pachinko business, a part of the amusement industry in which the Group is engaged, will benefit from this trend.
Given such market environments, the Group forecasts the Information System Segment to achieve sales of ¥31 billion, down 2.2% from the previous year. Concretely, the Information System Segment will further promote sales of “VEGASIA”, a CR unit that was launched in April 2012 and highly acclaimed in the market, “BiGMO” “IL-X”, a data display tool per machine that aims to enhance amusement functions for fans in pachinko halls, .In addition, improving customer satisfaction by strengthening MIRAIGATE network services further and building a more powerful support structure for hall management to, the Group plans to commence active investments in the development of core product groups for the next generation.
The Group forecasts the Control System Segment to achieve sales of ¥20 billion (down 26.4% year on year). Putting the first priority on “contribution to customers,” the segment will review the organization structure to improve the planning capabilities and development quality, and try to enhance customer confidence.
Consequently, , the Group anticipates consolidated net sales of ¥51 billion (down 13.4% year on year), consolidated operating income of ¥4 billion yen (down 43.0%), consolidated ordinary income of ¥4 billion (down 44.8%), and consolidated net income of ¥2 billion (down 51.9%).
Note on the outlook:
Forecasts in this report are judged based on information available at the time when 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. If i its earnings forecast requires to be revised, the Group will 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 ¥39,789 million, an increase of ¥7,873 million from the end of the previous consolidated fiscal year. The main factors for the increase were an increase in inventory which are to be sold in the next consolidated fiscal year or later, and an increase in cash and deposits, and trade receivables due to strong performance for the second half of the year compared to the preceding year.
Noncurrent assets at the end of the year were ¥16,916 million, a decrease of ¥253 million from the end of the previous year, mainly attributable to impairment loss on property, plant and equipment.
Liabilities at the end of the d year amounted to ¥26,267 million, an increase of ¥4,293 million from the end of the previous year. The main factors for the increase were an increase in trade payables due to a large amount of purchases in the second half of the year compared to the previous year and an increase in income taxes payable due to improved business performance, while short-term debts were repaid in the year.
Net assets at the end of the year were ¥30,439 million yen, an increase of ¥3,325 million from the end of the previous year, due mainly to retained earnings increased by net income for the year while the Group paid dividends. Consequently, total assets at the end of the consolidated year were ¥56,706 million, an increase of ¥7,619 million from the end of the previous year, and the Group’s equity ratio was 53.7% (down 1.4% year on year).
Status of Cash flow
Cash and cash equivalents (“cash”) at the end of the consolidated year were ¥18,406 million, an increase of ¥4,750 million from the end of the previous year.
The situation of each cash flow for the year is as follows:
(Cash flow from operating activities)
Cash obtained from operating activities for the year was ¥9,600 million yen (an increase of ¥3,917 million year on year). The main factors of the increase were an increase in trade receivables and inventory, and an increase in income before income taxes attributable to increased trade payables and robust operating results.
(Cash flow from investing activities)
Cash obtained from investing activities for the year was ¥2,153 million (¥4,607 million was used in investing activities for the previous year). The main factor was a large amount of proceeds from withdrawal of time deposits.
(Cash flow from financing activities)
Cash used for financing activities for the year was ¥7,003 million, (an increase of ¥6,509 million year on year). The main factor of the increase was due to repayment of short-term debts.
Basic policy for profit allocation and the dividends for the current and next consolidated 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 ¥90 per share for the year (interim dividend of ¥20, year-end dividend of ¥70).
The Group also plans to pay dividends of ¥40 per share for the next year; (interim dividend of ¥10, year-end dividend of ¥30).
Basic Management Policy of the Group
The Group has, since its inception, adhered to “providing satisfaction to pachinko fans.” as the source of the business ideas, and has been striving for developing new systems and services everybody can enjoy in the amusement world. In the future, the Group will also maintain the basic policy to contribute to the society, by offering market-creating products and services that go a step ahead of customers’ needs through its continuous efforts to keep up with the changes of the times, mainly in computer fields, leveraging its original ideas and technologies. In addition, the Group is also engaged in business activities based on its corporate quality policy that “customer support is a key driver to boost business performance on an ongoing basis” because the Group has the solid belief that sustained growth in business can be attainable through the establishment of a stable and strong brand-name which retains a steady support from its customers.
Pursuant to these policies, the Group will offer “amusement infrastructures” generating a new phase of growth in the pachinko business.
Target Management Indicator
The Group sets operating income margin as a key management indicator, based on the idea that enhancing the profitability through the promotion of management efficiency and high added value will surely improve its enterprise value and shareholder value.
Medium- to Long-Term Corporate Management Strategy
As an information system company supporting the pachinko industry, the Group considers proposing the most superior information infrastructures, which can create a new growth in the industry as its mission.
Based on the belief that an expansion of pachinko fan base (attracting customers) will lead to the growth of the business, the Group will build up trustful relationships with pachinko halls, game machine manufacturers and pachinko-fans and establish the business model that enables all of these three parties to gain benefits and satisfaction.
For these purposes, the Group will support pachinko halls throughout the country in terms of business management and hall administration by the effective use of game machines and providing information system instruments such as hall computers for the attraction of pachinko-fans. Meanwhile, the Group will continue to propose game machine manufacturers with more attractive video processing units and control units. For pachinko-fans, the Group will further strengthen the services including mobile phones, internet and broadcasting, and offer them more effective hall information.
Issues to be Addressed by the Group
The Information System Segment
The Group will strengthen the MIRAIGATE network, improve customer satisfaction, and enhance functions and convenience for each product.
The Control System Segment
The Group will pursue optimization for customers, taking into account its contribution to customers.
- The Group will carry out planning marketing strategies and strengthening planning and development in order to receive orders of customer key models.
- The Group will strive to rebuild a quality assurance system aiming at a full-scale shift from on-demand based measures to proactive ones.
- The Group will strive to build up a hybrid development line in collaboration with the Group companies for the enhancement of the development line.