FIELDS CORPORATION held a financial presentation for the first quarter of the year ending March 31, 2018 in OTEMACHI 1st SQUARE CONFERENCE (Chiyoda-ku, Tokyo) on August 1, 2017 (Tuesday) at 11:30 am.
This page provides an overview of our explanation (summary) at the financial presentation.
1. Summary of Results for the First Quarter of the Year Ending March 31, 2018 (Consolidated)
⇒Page 2 of Financial Presentation
Regarding our financial results for the first quarter, we reported net sales of ¥12.4 billion and an operating loss of ¥2.9 billion. These results are in line with our initial projections.
In the second quarter, business has been proceeding well. In the pachislot machine market, sales have been concentrated on installation of new machines to meet the September deadline for installation of new machines under the old regulation, and competition has been intense.
⇒Page 3 of Financial Presentation
The table shows the consolidated P/L statement for the first quarter of the year ending March 31, 2018.
In light of the deadline for installation of new pachislot machines, recent regulatory amendments, and other factors, we believe that demand for pachinko machines will increase in relative terms, and sales will be concentrated on pachinko titles in the second half of the fiscal year.
⇒Page 4 of Financial Presentation
On an ordinary income/loss basis, gross profit fell by ¥500 million compared to the same period of the previous year as a result of a decline in unit sales of pachinko and pachislot machines and other factors. Due to the effects of efforts to raise management efficiency that began last fiscal year, selling, general and administrative expenses improved by ¥600 million and non-operating expenses improved by ¥100 million. As a result, ordinary losses improved by ¥180 million compared to the same period of the previous year.
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The table shows the consolidated B/S.
Land in Osaka and other idle assets were sold, increasing cash on hand.
The Company is also receiving support from financial institutions and has no capital needs for the time being. If business proceeds well, we will be able to establish a sizeable balance sheet including our cash position.
⇒Page 6 of Financial Presentation
The table shows the consolidated cash flow.
As a result of the sale of Rodeo Co., Ltd. shares to Sammy Corporation and the sale of land in Osaka and other assets, cash flows from investing activities increased. The Rodeo shares were sold, but we are undertaking initiatives with Sammy in new formats.
2. Outlook for Consolidated Financial Results for the Fiscal Year Ending March 31, 2018
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The outlook for consolidated financial results for the fiscal year ending March 31, 2018 is as indicated in the table.
There are no changes to the outlook for the entire fiscal year announced at the beginning of the term.
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The pachinko/pachislot lineup through the end of the second quarter is shown in the table.
The following new additions have been made to the pachislot lineup: "Pachislot Ys Ⅰ&Ⅱ" and "PACHISLOT TATAKAE! SALARY-MAN" from Sammy Corporation and "Kai-Dou-Sei Million Arthur" and "THE AMAZING SPIDER-MAN" from Mizuho Corp. Regarding the machines from Mizuho Corp., there is agreement that the developed regulation 5.5 machines will be sold by FIELDS CORPORARION or by Universal Entertainment.
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Although this information is for reference purposes only, sales of the Pachinko GANTZ machine, which was released in the previous fiscal year, have been robust operating, and additional orders were received this fiscal year. As a result, cumulative sales have exceeded 30,000 units.
3. Topics Regarding the First Quarter of the Fiscal Year Ending March 31, 2018
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The main initiatives pursuant to the business model are indicated in the chart.
There have been major developments regarding (1) the HERO‘S IP and visual business platform, and (2) the PS business platform. An explanation is provided on the following pages.
⇒Page 11 of Financial Presentation
"SWORDGAI," a Monthly HERO’S series product, will be simultaneously distributed worldwide in the spring of 2018. This distribution-first format is a scheme whereby license agreements are executed with SVOD business operator and profits are generated through merchandising while recovering the bulk of production expenses.
In addition, we plan to use distribution-first to release three or four other products during this fiscal year. Major products are included, and we will report on the details in the second quarter and later.
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Draft revisions to laws, ordinances, and rules related to the Amusement Business Law were announced in July 2017.
The main areas of change are as follows: (1) regulations on pachinko ball output, (2) addition of manager operations, (3) addition of specifications for controlled machines, and (4) introduction of pachinko settings. The regulations regarding pachinko ball output are shown in the table, but it appears that more time will be required for large numbers of balls to be released, that is, the gaming aspect will be made more relaxed.
Also, new game machines that comply with the current regulations may be installed for three years from compliance with the Security Communications Association, and it appears that 60 to 80 pachinko machines and 50 to 60 pachislot machines will comply with the Security Communications Association by the time of transition to the new regulations in February 2018.
Under these circumstances, we are currently engaged in a process of trial and error regarding how to secure machines under the current regulations and how to sell them until January 2021. At this time, the Company anticipates that it will be able to secure 20 pachislot machines under the current regulations.
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During this period of transition for the industry, we will maximize its unique abilities including various proposals, marketing, and collaboration with pachinko/pachislot machine manufacturers to enhance FIELDS’ presence.
We believe that the ideal status of pachinko will undergo major changes as a result of revisions to laws, ordinances, and rules related to the Amusement Business Law, and we are discussing how we can advance pachinko as a positive form of leisure and developing a direction for the industry to take, and we will make proposals to pachinko halls located nationwide through our branch offices and forums.
⇒Page 17 of Financial Presentation
As a distribution and trading company, FIELDS will continue to cooperate with pachinko/pachislot machine manufacturers and provide quality products to pachinko halls. To do this, in addition to existing collaborative manufacturers, we will build cooperative structures with Sammy Corporation and Newgin Co., Ltd.
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As a result of the initiatives discussed above, the title lineup in the current term is about a total of 33 pachinko/pachislot machines. We will hold leading titles in the second half as well. Thus, we recognize the results for the first quarter roughly in line with full-year projections announced the beginning of this period.