News Releases

Consolidated Financial Results for the 2nd Quarter of the FY2021

(Rounded down to the nearest million)

Business results for the second quarter of the year ending March 31, 2022

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 %
Second quarter, year
ending March 31, 2022
12,047 8.5 863 919 678
Second quarter, year
ending March 31, 2021
11,099 -40.5 -185 -18 -48

(Note) Comprehensive income
Second quarter of the year ended March 31, 2022: ¥679 million (-%)
Second quarter of the year ended March 31, 2021: ¥-39 million (-%)

  Net income per share Diluted net income per share
Yen Yen
Second quarter, year
ending March 31, 2022
45.91
Second quarter, year
ending March 31, 2021
-3.30

(Note1) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the beginning of the first quarter of the fiscal year ending March 31, 2022. Figures for the second quarter of the fiscal year ending March 31, 2022 are figures after the accounting standards, etc. have been applied.
(Note2) We changed the results presentation method from the first quarter of the current fiscal year, so net sales and operating income for consolidated operating results (cumulative) are recorded as figures after recombination reflecting the display method and the rate of change in the same quarter of the previous year.

Financial position

  Total assets Net assets Shareholders’ equity ratio
Million yen Million yen %
Second quarter, year
ending March 31, 2022
38,917 30,964 79.6
Year ended March 31, 2021 41,084 30,662 74.6

(Reference) Shareholders’ equity
Second quarter of the year ended March 31, 2022: ¥30,964 million
Year ended March 31, 2021: ¥30,662 million

Dividends

  Annual dividends(Yen)
First
quarter-end
Second
quarter-end
Third
quarter-end
Year-end Annual
Year ended March 31, 2021 10.00 30.00 40.00
Year ended March 31, 2022 25.00      
Year ended March 31, 2022
(Forecast)
    30.00 55.00
(Note) Revision of the most recently released dividend forecasts: No

Forecast earnings for the year ending March 31, 2022

  Net sales Operating
income
Ordinary
income
Net income
attributable to
owners of parent
Net income
per share
Million yen % Million yen % Million yen % Million yen % Yen
Entire – year 26,000 11.4 850 40.0 1,000 1.3 650 6.1 43.97
(Note) Revision of the most recently released performance forecasts: No

 

Qualitative Information Regarding the Consolidated Results for the second Quarter

Explanation of Operating Results

During the first half of the consolidated fiscal year under review (April 1 to September 30, 2021), the Japanese economy remained in a state of uncertainty due to concerns about the effects of production stoppages, delivery delays, and soaring procurement prices due to a shortage of semiconductors. This was despite signs of economic recovery, centered on the manufacturing industry, amid a difficult situation in which stagnant personal consumption and slow economic activity continued, with the declaration of a state of emergency issued in multiple prefectures and other priority measures taken to prevent the spread of infections.

In the pachinko industry in which our group is involved, a state of emergency was declared in multiple regions, but pachinko parlors continued to operate while taking thorough measures against infections. The state of operation of games machines (compared to the same period of the previous fiscal year) averaged 97% for the period from July to September and 100% for the most recent month, September, alone. This was not as high as the level prior to COVID-19, but equivalent to the same period of last year. Partly due to the impact of hit models, which gained strong support, pachinko machines trended strongly in particular, with figures for July to September of 103% on average, and 105% for September alone (our company “DK-SIS” data comparison).

In the games machine market, the replacement of old regulation machines whose installation deadline is the end of January 2022 with new regulation machines is progressing in stages. As of the end of September 2021, the rate of progress of replacement with new regulation pachinko machines was steady at 80%, reflecting their strong operation, but the rate was sluggish at 58% for pachislot machines, whose operation has been sluggish (our company estimates). However, in regard to pachislot machines, standard 6.2 machines, whose number of games in advantageous sections has been relaxed since September 2021, has appeared on the market, and attention is being drawn to its future operation.

The tendency to refrain from large capital investment in pachinko parlors continued, including the opening of new pachinko parlors and large-scale remodeling work, but small-scale remodeling work changing part of pachinko parlors from pachislot machines to pachinko machines tended to increase.

As for future trends in the industry, the return of fans is expected, centered on pachinko machines, which are in steady operation, but the future is uncertain due to concerns about the recurring spread of COVID-19 infections and the various impacts of semiconductor shortages on games machines and equipment.

In this market environment, in the information systems business, we promoted the spread of “Market-SIS,” a commercial area analysis service that provides the customer attraction situation in surrounding areas, strengthened proposals for the use of the “X (Kai)” AI hall computer, and worked to promote replacements from existing hall computers through system upgrades. In July, we published the 2021 edition of the “DK-SIS White Paper” (2020 data), marking its 18th year of publication this year. In this report, we compile and analyze operating data from about 1.44 million machines sent daily from pachinko parlors, and present the annual results of analysis. It is used by industry stakeholders as an index in their efforts to perceive the future. In the 2021 edition, we have compiled and analyzed sales data for 2020, when there were large changes such as the impact of COVID-19 infections and the emergence of games machines with new game features such as “Play Time,” describing the current state of the pachinko industry and forecasts of future trends. Furthermore, in September, continuing from last year, we held an online “Web Exhibition & Seminar” with many pachinko parlor management companies participating, offering proposals for games machine management methods essential for improving business results and explaining specific points to identify for successful models.

In control systems business, we worked to reduce costs by strengthening development management and improving operational efficiency through a major reorganization implemented at the beginning of the fiscal year, and we also promoted proposal activity to games machine manufacturers aimed at the acquisition of new contracts. In addition, in order to expand the scope of business, we manufactured one pachislot model on contract.

As a result, cumulative results in the second quarter of the current fiscal year showed sales of ¥12.047 billion (8.5% up compared to the same period of the previous fiscal year), operating income of ¥863 million (compared with an operating loss of ¥185 million in the same period of the previous year), ordinary income of ¥919 million (compared with an ordinary loss of ¥18 million in the previous fiscal year) and quarterly net income attributable to parent company shareholders of ¥678 million (compared with a quarterly net loss attributable to parent company shareholders of ¥48 million in the same period of the previous year).

It should be noted that we changed the results presentation method from the first quarter of the current fiscal year, so comparisons with the same quarter of the previous fiscal year have been made using the figures in the quarterly consolidated financial statements for the second quarter of the previous fiscal year after the rearrangement.

Segment results are as follows.

[Information System Segment]

During the first half of the consolidated fiscal year under review in the business field, replacement of old regulation machines with new regulation machines, whose deadline for installation is the end of January 2022, was prioritized, and the difficult situation of business operators refraining from opening new stores and other large-scale capital investment continued. In this market environment, sales of “products for pachinko parlors, etc.,” such as “REVOLA,” an information disclosure terminal for pachinko machines, and the “VEGASIA” CR unit were steady in association with an increase in small-scale remodeling work changing part of pachinko parlors from pachislot machines to pachinko machines. In addition, the introduction of the “one-stop self-service counter” POS system, which enables one-stop operations from prepaid card balance settlement to prize exchanges without the help of hall staff, also progressed well as a measure against infections and for labor-saving.

As a result, in this business field we recorded sales of ¥9.187 billion (12.0% up compared to the same period of the previous fiscal year) and a segment profit of ¥1.346 billion (149.3% up compared to the same period of the previous fiscal year).

[Control System Segment]

In the first half of the consolidated fiscal year under review in the business field, as the games machine market gradually recovered, sales of “display and control units for games machine manufacturers” were above those for the same period of the previous fiscal year due to sales for pachinko machines trending well and starting contract manufacturing of pachislot machines as an expansion of business areas, but sales of “parts and others” were below those for the same period of the previous fiscal year.

As a result, in this business field we recorded sales of ¥2.866 billion (1.1% down compared to the same period of the previous fiscal year) and a segment profit of ¥265 million (702.0% up compared to the same period of the previous fiscal year).

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

Explanation of Financial Position

Total assets at the end of the first half of the current consolidated fiscal year decreased by ¥2.167 billion from the end of the previous consolidated fiscal year to ¥38.917 billion because of a decrease in goods and products due to a review of purchasing plans and other factors as we were unable to carry out previous sales activities while the impact of COVID-19 infections was prolonged, and decreases in tangible and intangible fixed assets due to factors including the recording of depreciation expenses following a review of the fixed asset acquisition plan based on the uncertain impact of COVID-19 infections.

Our liabilities at the end of the second quarter of the current fiscal year were ¥7.953 billion, ¥2.468 billion lower than at the end of the previous consolidated fiscal year because purchasing liabilities and other outgoings decreased due to a revision of purchasing plans and development plans, and we repaid short-term borrowings.

Our net assets at the end of the second quarter of the current fiscal year were ¥30.964 billion, ¥301 million higher than at the end of the previous consolidated fiscal year due to the recording of quarterly net income despite the payment of year-end dividends. Shareholders’ equity ratio was 79.6% (5.0 points up from the end of the previous consolidated fiscal year).

Explanation of Earnings Forecast such as Consolidated Business Results Forecast

There are no changes to the consolidated results forecast for the fiscal year ending March 2022 from the full-term consolidated results forecast disclosed on May 13, 2021.

With regard to profit and loss in the first half of the consolidated fiscal year under review, all forms of income exceeded expectations as a result of promoting efforts to reduce costs and the improvement of business operations, including a review of work styles, and efficiency. However, the situation at pachinko parlors, the customers of our group, continues to be difficult, and they are prioritizing the replacement of old machines with new machines and refraining from large-scale capital investment, such as opening new stores. There are also concerns about the various impacts due to the further spread of COVID-19 infections and the shortage of semiconductors, and it is currently difficult to make reasonable predictions about the impacts on the company’s business. We will make prompt disclosures if a review of the consolidated results forecast becomes necessary in future.

In addition, there have been no material changes to the content disclosed in the latest securities report (submitted on June 30, 2021) concerning risks that may have an impact on results.