FIELDS CORPORATION held a financial presentation for the second quarter of the year ending March 31, 2018 at TKP Tokyo-ekimae Conference Center (Chuo-ku, Tokyo) on November 10, 2017 (Friday) at 11:30 am.
This page provides an overview of our explanation (summary) at the financial presentation.
1. Summary of results for the first half of the year ending March 31, 2018 (Consolidated)
⇒Page 2 of Financial Presentation
In the second quarter, progress is being made as planned towards our full-year forecasts.
Pachinko and pachislot sales reached 99,000 units for 15 models in 6 months. In cross-media business platform, we advanced 5 visual adaptations. In general, we proceeded with measures to boost our cash position by strengthening our governance structure and selling idle assets to prepare for the future of the market.
In the progress in the Medium-term Management Plan, we continue to strengthen the sales structure for pachinko and pachislot for the next fiscal year and the year following, also brushing up models and expanding product lines. In cross-media business platform, we focused investment on titles that were likely to be profitable and continued expansion.
⇒Page 3 of Financial Presentation
The table shows the consolidated P/L.
Net sales rose by 8.5 billion yen to 35.2 billion yen, and operating loss improved by 3.4 billion yen to 2.7 billion yen.
The number of pachinko and pachislot machines rose 26,000 units YoY to 99,000 units.
⇒Page 4 of Financial Presentation
IP business net sales and gross profit by platform are as shown in the diagram.
Net sales rose by 8.5 billion yen to 35.2 billion yen, 82% of which was pachinko and pachislot business platform.
Gross profit rose by 1.7 billion yen to 6.9 billion yen, 80% of which was pachinko and pachislot business platform.
We believe that our management challenges are to continue to raise absolute value including the pachinko and pachislot business platform and to increase its composition ratio in the cross-media business platform.
⇒Page 5 of Financial Presentation
Changes in SG&A expenses are as shown in the graph.
Since appointed as the President and COO last year, we are promoting management efficiency. Although not all items will achieve results in one year, overall SG&A expenses decreased by 1.7 billion yen from the same period of the previous year. Due to expansion of showrooms and improved presentation capabilities of salesperson, we are now able to sell pachinko and pachislot machines with lower advertising expenses. Consequently, advertising expenses decreased by 0.7 billion yen from the same period of last year. Over the full year, we will proceed with increasing the number of models sold while cutting advertising expenses.
⇒Page 6 of Financial Presentation
The ordinary income base YoY comparison is as shown in the diagram.
Unit sales of pachinko and pachislot machines improved by 1.4 billion yen, with that related to subsidiaries increasing by 1 billion yen. SG&A expenses decreased by 1.7 billion yen due to improved management efficiency. Others decreased by 0.7 billion yen, which is one reason why cross-media in the previous term was over-emphasized in the first half.
⇒Page 7 of Financial Presentation
Consolidated B/S and C/F are as shown in the chart.
Revenue of 7.4 billion yen was generated on C/F through the sale of Rodeo shares and the sale of land in Osaka that was an idle asset.
We are steadily maintaining our cash position at over 20 billion yen.
2. Consolidated performance forecast for the year ending March 31, 2018
⇒Page 8 of Financial Presentation
The Consolidated performance forecast for the 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.
In the pachinko and pachislot business platform, we have prepared multiple models that can be sold in the second half, and will focus on these sales.
⇒Page 9 of Financial Presentation
Implements for achievement of consolidated performance forecast are as follows.
In the pachinko and pachislot machine business platform, in the second half, we plan to sell 9 titles as a general selling source, and 12 models including non-general selling sources. Model certification tests are currently lined up with some model certification tests underway, and we expect to see getting results of these from November to December.
In the cross-media business platform, we have plans for 5 visual adaptations during the second half. “Infini-T Force“ is being broadcast since October, and in conjunction with this, sales for related books issued by our Group have risen approximately 30%.
We also intend to continue to expand earnings from “AKB48“ through games and merchandising.
3. Progress of the Medium-term Management Plan
⇒Page 10 of Financial Presentation
Measures to achieve the Medium-term Management Plan are as follows.
In the pachinko and pachislot business platform in particular, we are promoting the brush up of models, securing lines with affiliated manufacturers, and establishing sales cooperation systems with companies other than partner manufacturers. We are also advancing initiatives in fields other than pachinko and pachislot machine sales, in an effort to further expand revenue from the market as a whole. In order to strengthen our sales structure, we will expand sales sites such as showrooms. In addition, we transformed our development subsidiary into a wholly-owned subsidiary in consideration of the market environment.
In the cross-media business platform, we deployed the latest 6 IP visuals, but we are proceeding cautiously with regards to how to secure income with merchandising from such investments and IP used as a basis for visuals.
Although the “Ultraman series“ is still performing strongly, we will continue to further expand its deployment in Japan and strengthen development overseas.
While looking to development of HERO'S works in electronic comic market, we took a stake in No9 Inc., which operates an electronic comic platform called “Manga Trigger.“
⇒Page 11 of Financial Presentation
The progress in major IP is as shown in the diagram.
Our director, Kamagata will give a briefing later regarding visuals adaptations in the second half, “KILLING BITES,“ “BEATLESS“ and “DARLING in the FRANXX,“ as well as game development with AKB48.
⇒Page 12 of Financial Presentation
Progress in global business development is as shown in the diagram.
We are focusing on licensing-out overseas in addition to domestic development and collaboration with overseas platformers.
⇒Page 13 of Financial Presentation
For our financial strategy, we have converted idle assets into cash and will continue to maintain a stable financial base.
Regarding dividends, we are proceeding as per the business forecast and there is no change to the interim dividend of 25 yen and the annual dividend of 50 yen.
4. Topics for the second quarter of the year ending March 31, 2018
◊ Original IP × Visual business platform
⇒Page 14 of Financial Presentation
I will introduce cross-media business platform topics.
“DARLING in the FRANXX“ will begin broadcasting on TV from January 2018. The production involves many talented staff, and is being handled by Aniplex Inc. and our Group company, Lucent Pictures Entertainment, Inc.
Even in cross-media expansion, top performers of anime, music and comic fields, which are said to “Cool-Japan“ have been brought together in this project and we look forward to further developments in the future.
◊ FIELDS related IP × Visual business platform
⇒Page 15 of Financial Presentation
Next I will introduce “KILLING BITES“ and “BEATLESS.“
“KILLING BITES“ is a visual series developed from comic which our Group company HERO'S INC. owns the copyright of original work. Also “BEATLESS“ is a visual series developed from IP which we own the copyright of original work.
Both will be broadcast from January 2018, and we plan to develop both the visual adaptations and games together with major global companies.
◊ AKB48 × Game business platform
⇒Page 16 of Financial Presentation
Finally, I will introduce AKB48.
In October 2017, distribution began of “AKB48 StageFighter2,“ for which we conducted IP licensing and development collaboration. Currently, we are conducting events using the JR Yamanote Line, and moving forward, we will implement various measures aimed at revenue expansion.
Although not game-related in addition to AKB48, we have obtained merchandising rights for its sister groups. We intend to actively promote expansion of merchandise for AKB48 and its sister groups.
◊ Medium- to Long-term IP lineup (updated)
⇒Page 17 of Financial Presentation
The medium- to long-term IP lineup is as shown in the diagram.
In the visual industry, usually a game related to a visual adaptation belongs to the company that produces the anime. Consequently, with the works shown in the materials, the Group partially owns pachinko and pachislot rights and game development rights.
We intend to secure the rights from visual adaptation as a starting point and to promote global deployment of the visuals and game development, thereby expanding revenue.
◊Pachinko and pachislot market trends (sales market forecast for 3 years)
⇒Page 18 of Financial Presentation
The 3 year sales market outlook is as shown in the graph.
For the year ending March 31, 2018, we forecast pachinko sales of 1.58 million units and pachislot sales of 660,000 units.
We anticipate a sharp rise in demand in the fiscal year ending March 31, 2021 with the removal of the old regulation machines at the end of January 2021.
The introduction of pachinko and pachislot machines management systems may open up new markets for pachinko. We expect that pachinko and pachislot machines management systems will expand the degree of freedom for gaming space and hope to further expand the scope of space production projects.
◊ Pachinko and pachislot market trends (states to date)
⇒Page 19 of Financial Presentation
The immediate sales market trend is as shown in the graph.
From April to September, the sales results for pachinko are 720,000 units and for pachislot the result is 490,000 units. September was the deadline for the installation of the new regulation 5.5 pachislot machines, which is where demand was concentrated.
◊ Product lineup in first half
⇒Page 20 of Financial Presentation
The product line-up to the second quarter is as shown in the diagram.
Sales in the first half reached 99,000 units for 15 titles. In particular, we sold a large number of regulation 5.5 pachislot machines in September, resulting in sales results generally as budgeted.
◊ Product lineup from the third quarter
⇒Page 21 of Financial Presentation
The product lineup from the third quarter is as shown in the diagram.
FIELDS is also a distribution-oriented trading company, with business alliances with various manufacturers, and a significant lineup of titles.
In pachislot, we sell “PACHISLOT BLACK LAGOON3,“ which is a regulation 5.9 machine, but orders have exceeded initial plans.
In pachinko, we previously sold the “CR EVANGELION 2018 model,“ which has achieved favorable sales and good results for operation after introduction.
◊ Future objectives
⇒Page 22 of Financial Presentation
Our future plans are as described in the materials.
First, we will provide “high-quality pachinko and pachislot machines that contribute to operations.“ We will also offer IP proposals and plans to manufacturers, conducting comprehensively operations to ensure these go on-line and deliver sales. You can look forward to titles that we will prepare for sale in this way from 2019.
There are many areas aside from pachinko and pachislot machines for which we also have high expectations.
We proposed promotional measures for the “CR EVANGELION 2018 model“ using AR, which was implemented at about 70 companies. We also exhibit digital signage at showrooms, and have received requests from customers for its introduction. There are also growing demands from customers for proposals aside from pachinko and pachislot machines. FIELDS aims for commercialization to meet such needs during the current term and hopes to achieve a record budget in the next fiscal year.