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Business results for the third quarter of the year ending March 31, 2020
Operating results
| Net sales |
Operating income |
Ordinary income |
Net income attributable to equities of parent |
|||||
|---|---|---|---|---|---|---|---|---|
| Million yen | % | Million yen | % | Million yen | % | Million yen | % | |
| Third quarter, year ending March 31, 2020 |
27,101 | 9.3 | 1,811 | -1.7 | 1,985 | -1.5 | 1,277 | -4.8 |
| Third quarter, year ending March 31, 2019 |
24,795 | -11.4 | 1,841 | 27.2 | 2,016 | 25.6 | 1,342 | 40.1 |
(Note) Comprehensive income
Third quarter of the year ended March 31, 2020: ¥1,282 million (-2.6%)
Third quarter of the year ended March 31, 2019: ¥1,316 million (31.5%)
| Net income per share | Diluted net income per share | |
|---|---|---|
| Yen | Yen | |
| Third quarter, year ending March 31, 2020 |
86.43 | – |
| Third quarter, year ending March 31, 2019 |
90.80 | – |
Financial position
| Total assets | Net assets | Shareholders’ equity ratio | |
|---|---|---|---|
| Million yen | Million yen | % | |
| Third quarter, year ending March 31, 2020 |
44,539 | 30,589 | 68.7 |
| Year ended March 31, 2019 | 43,729 | 29,898 | 68.4 |
(Reference) Shareholders’ equity
Third quarter of the year ended March 31, 2020: ¥30,589 million
Year ended March 31, 2019: ¥29,898 million
Dividends
| Annual dividends(Yen) | |||||
|---|---|---|---|---|---|
| First quarter-end |
Second quarter-end |
Third quarter-end |
Year-end | Annual | |
| Year ended March 31, 2019 | – | 10.00 | – | 30.00 | 40.00 |
| Year ended March 31, 2020 | – | 10.00 | – | ||
| Year ended March 31, 2020 (Forecast) |
30.00 | 40.00 | |||
Forecast earnings for the year ending March 31, 2020
| 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 | 34,000 | 9.1 | 1,200 | -21.5 | 1,250 | -28.5 | 800 | -36.7 | 54.12 |
Qualitative Information Regarding the Consolidated Results
1. Analytical Review of Operating Results
The Japanese economy in the third quarter of the current fiscal year remained on a modest upward trajectory amid continually improving employment and income levels.
However, the outlook remains unpredictable, including tension around trade friction, the deceleration of the Chinese economy, the problem of the UK’s departure from the EU, and so on.
In the pachinko industry in which our Group is involved, the trend towards reduction is continuing, including new stores and major renovations. This trend is in response to the “Partial Revision of the Regulations Enforcing the Act on Control and Proper Operation of Businesses Affecting Public Morals and the Regulations Concerning Certification and Model Approval for Amusement Machines”, the “Basic Act on Measures Against Gambling Addition”, and the “Revised Health Promotion Act” which strengthens measures against passive smoking. In addition, the situation at pachinko parlors was extremely difficult, with investment in peripheral facilities and the like withheld because priority was given to the removal and replacement of old rules pachislot machines produced under the old regulations whose certification expired in December 2019.
Given this market environment, in the information systems business we added functions to the new “X (Kai)” AI hall computers released in June, continued to promote the replacement of the existing “CII” hall computers with system upgrades, and focused on individual seminars and follow-up activities for stores that have introduced AI hall computers.
Furthermore, we released a new smart watch-type product called “WorkingAssist Wearable Device WW-01” aimed at improving operational efficiency and resolving the worsening labor shortage at pachinko parlors, and began sales in December.
In the control systems business, in addition to the changes to the internal rules for pachinko machines and a decline in the rate of conformity in type tests, in an environment of sluggish new machine sales, we continued to work to reduce the risk of delays in product releases by streamlining development processes and shortening development periods.
In addition, we promoted activities to extend planning and product proposals using new technologies to all pachinko machines. For example, we conducted research on technologies and parts aimed at reducing the cost of display units and tried to form alliances with companies that have technical expertise.
Results in the third quarter of the current fiscal year showed sales of ¥27.101 billion (9.3% up year-on-year), operating income of ¥1.811 billion (1.7% down YoY), ordinary income of ¥1.985 billion (1.5% down YoY) and quarterly net income attributable to parent company shareholders of ¥1.277 billion (4.8% down YoY).
Business results by segment
Information System Segment
In the third quarter in this business field, sales of “REVOLA” information disclosure terminals, whose introduction to pachinko corners advanced, and system upgrades of the new “X (Kai)” AI computers continued to trend strongly.
On the other hand, sales of the “VEGASIA III” and “BiGMO PREMIUM II,” which performed well in the first half of the year, were forced into a struggle in the third quarter due to a sharp decline in new stores and major renovations.
As a result, in this business field we recorded sales of ¥22.057 billion (11.3% up YoY) and a segment profit of ¥3.262 billion (17.0% up YoY).
Control System Segment
In the third quarter in this business field, sales of parts for pachinko machines were favorable, but conditions were very difficult, with results below those for the same period of last year in sales of display units and control units. This was due to factors such as the revision of sales plans at pachinko machine manufacturers in association with the decline in new unit sales in the market overall.
As a result, in this business field we recorded sales of ¥5.066 billion (0.8% up YoY) but a segment loss of ¥80 million (compared with a segment profit of ¥332 million in the previous fiscal year).
(Note) Business segment sales and income figures include intersegment transactions.
2. Analytical Review of Financial Position
Regarding our total assets at the end of the third quarter, tangible fixed assets and intangible fixed assets fell due to reduced inventory assets and reduced accounts receivable accompanying the collection of proceeds from development, and substantial depreciation costs of fixed assets. However, cash, deposits and trade receivables were up due to favorable sales. As a result, our total assets were ¥44.539 billion, an increase of ¥809 million from the previous consolidated fiscal year.
Our liabilities at the end of the third quarter were ¥13.949 billion, ¥118 million higher than at the end of the previous fiscal year. Accrued corporation taxes and accrued consumption taxes went up due to positive operating results.
Our net assets at the end of the third quarter were ¥30.589 billion, ¥691 million higher than at the end of the previous fiscal year. Earned surplus increased because appropriated quarterly net income attributable to parent company shareholders was greater than dividend payments. Shareholders’ equity ratio was 68.7% (0.3 points up from the end of the previous fiscal year).
3. Explanation of Earnings Forecast such as Consolidated Business Results Forecast
Results in the third quarter of the current fiscal year were strong in the information systems business, exceeding the initial forecast, but the difficult business environment continued in the control systems business and overall results were largely in line with the plan.
The results forecast for the second quarter and the full term of fiscal 2020 announced on May 14, 2019 remains unchanged.
The Group will immediately disclose if the forecast must be revised.