News Releases

Consolidated Financial Results for the 3rd Quarter of the FY2016

(Rounded down to the nearest million)

Business results for the third quarter of the year ending March 31, 2017

Operating results

(Percentage figures denote year-over-year changes.)
  Net
sales
Operating
income
Ordinary
income
Profit attributable to
owners of parent
Million yen % Million yen % Million yen % Million yen %
Third quarter, year
ending March 31, 2017
33,396 -14.2 1,751 13.2 1,889 14.1 1,216 92.2
Third quarter, year
ending March 31, 2016
38,931 -12.8 1,546 -63.4 1,656 -61.6 632 -77.0

(Note) Comprehensive income
Third quarter of the year ended March 31, 2017: ¥1,273 million (97.7%)
Third quarter of the year ended March 31, 2016: ¥644 million (-76.9%)

  Net income per share Diluted net income per share
Yen Yen
Third quarter, year
ending March 31, 2017
82.26
Third quarter, year
ending March 31, 2016
42.81

Financial position

  Total assets Net assets Shareholders’ equity ratio
Million yen Million yen %
Third quarter, year
ending March 31, 2017
48,949 29,825 60.9
Year ended March 31, 2016 47,139 29,291 62.1

(Reference) Shareholders’ equity
Third quarter of the year ended March 31, 2017: ¥29,825 million
Third quarter of the year ended March 31, 2016: ¥29,291 million

Dividends

  Annual dividends(Yen)
First
quarter-end
Second
quarter-end
Third
quarter-end
Year-end Annual
Year ended March 31, 2016 10.00 40.00 50.00
Year ended March 31, 2017 10.00    
Year ended March 31, 2017
(Forecast)
      40.00 50.00
(Note) Revision of the most recently released dividend forecasts: No

 

Forecast earnings for the year ending March 31, 2017

  Net sales Operating
income
Ordinary
income
Net income
attributable to
equities of
parent
Net income
per share
Million yen % Million yen % Million yen % Million yen % Yen
Entire – year 41,000 -12.8 300 500 200 13.53
(Note) Revision of the most recently released performance forecasts: Yes

 

 

Qualitative Information Regarding the Consolidated Results

1. Analytical Review of Operating Results

The Japanese economy has been slowly recovering during this consolidated third fiscal quarter, as recovery continues in employment and income environments. However, the economic climate continues to remain uncertain due to a downturn in the Chinese economy and concerns about policy trends of the new US administration.

In the pachinko industry, in which the Daikoku Denki Group (“the Group”) is engaged, the environment surrounding these businesses remains challenging, such as the removal/callback of “pachinko machines whose performance may differ from that of inspected units” by the end of December 2016, and a slump in operation of new standard pachislot game machines.

Under such circumstances, the Information System Segment made proposals about staging a pachinko space with a new information publication terminal, “REVOLA,” about the CR unit with a face recognition camera, “VEGASIA,” which makes possible high value added data analysis, and about “DK Wi-Fi Service” (released in October 2016) which presents a new play style to pachinko fans, but the year-end sales battle was generally negative for investment in peripherals.

The Control System Segment continued to address efforts to make a proposal for differentiation in terms of game elements by enhanced planning ability, and to review the development process for the purpose of cost reduction by shortening the development period.

As a result, for this consolidated third fiscal quarter, the sales volume amounted to 33,396 million yen (down 14.2% from the same period last year), the operating income was 1,751 million yen (up 13.2% from the same period last year), and the ordinary income was 1,889 million yen (up 14.1% from the same period last year). The net income for the quarter attributable to shareholders of the parent company amounted to 1,216 million yen (up 92.2% from the same period last year).

Business results by segment

Information System Segment

During the third consolidated quarter, the sales volume of major product sales in this segment has decreased on the whole compared to the same period last year, amid significantly decreasing numbers of new opened and renovated halls, although the number of member pachinko halls of MG Service, such as the analysis tool “CII-SIS Service,” which the pachinko hall management companies use to formulate daily sales strategy, and sale of a new information publication terminal “REVOLA” remain steady.

As a result, the net sales in this segment was 22,520 million yen (down 19.2% from the same period last year), and the segment income was 3,202 million yen (down 8.1% from the same period last year).

Control System Segment

The sales volume of display units and peripheral components have decreased significantly during the third consolidated quarter compared to the same period last year, since it continues to take time to issue a model test report for pachinko machines, and sales plans were reviewed by pachinko machine manufacturers, so the sale of several machines has been postponed to next year or later.

The operation of “Pachislot Witch Craft Works,” whose market launch was in November 2016, was relatively good in pachinko halls, although the number of machines put on the market stayed at approximately 3,500 units due to the sluggish operation of new standard pachislot game machines.

Pachislot game machines now have two models, including the “Detective Opera Milky Holmes TD – Vanished 7 and the Song of a Miracle” released in April, 2016 (8,800 units were brought to the market), and sales of pachislot game machines have increased considerably compared to the same period last year.

As a result, the net sales in this segment were 10,923 million yen (down 1.4% from the same period last year), and segment loss was 114 million yen (first half segment loss: 649 million yen).

2. Analytical Review of Financial Position

Total assets at the end of this third consolidated fiscal quarter were 48,949 million yen, an increase of 1,809 million yen from the end of the previous consolidated fiscal year. The main factor for this includes a significant increase in cash and deposits, and trade receivables, despite a decrease in inventories due to slot sales, a decrease in accounts receivable-other by refund of taxes, and a decrease in fixed assets due to the sale of idle assets.

Total liabilities at the end of this third consolidated fiscal quarter amounted to 19,123 million yen, an increase of 1,275 million yen when compared to that at the end of the previous consolidated fiscal year. The main factor for this includes an increase in trade payables and advance received, despite the payment of a short-term borrowing and a decrease in amount payable for R&D costs from the amount at the end of the previous fiscal year.

The net assets at the end of this third consolidated fiscal quarter were 29,825 million yen, an increase of 534 million yen from the end of the previous consolidated fiscal year. The main factors for this include the allocated net profit, which was larger than the amount of paid dividends. Accordingly, the Group’s equity ratio was 60.9% (a drop of 1.2 points when compared to that at the end of the previous consolidated fiscal year).

3. Explanation of Earnings Forecast such as Consolidated Business Results Forecast

The earnings forecast for the full fiscal year ending March 2017 has changed from the forecast announced on May 13, 2016. For details, please refer to “Notice on revision of Earnings Forecast” announced today (February 13, 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, 2016).