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Latest Performance

Consolidated business results for the nine months ended December 31, 2018 (April 1, 2018 to December 31, 2018)

Operating results (Percentage figures denote YoY changes)

(Unit: Millions of yen) Nine Months Ended
December 31, 2017
Nine Months Ended
December 31, 2018
YoY Change %
Net sales 45,266 37,615 (16.9)
Operating profit (3,612) (1,261) -
Ordinary profit (3,858) (1,314) -
Profit attributable to owners of parent (4,133) (14)

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Consolidated Balance Sheets (summary)

(Unit: Millions of yen) Year ended March 31, 2018 Nine months ended
December 31, 2018
Increase /
Decrease
Assets
Total current assets 42,175 47,039 4,863
Total non-current assets 30,160 19,337 (10,822)
Total assets 72,336 66,376 (5,959)
Liabilities
Total current liabilities 22,480 19,014 (3,466)
Total non-current liabilities 14,346 12,109 (2,237)
Total liabilities 36,827 31,123 (5,703)
Net assets
Total net assets 35,509 35,253 (256)
Total liabilities and net assets 72,336 66,376 (5,959)

Consolidated Statement of Cash Flows (summary)

(Unit: Millions of yen) Nine months ended
December 31, 2017
Nine months ended
December 31, 2018
Increase /
Decrease
Cash flows from operating activities (2,534) (380) 2,154
Cash flows from investing activities 3,349 3,855 506
Cash flows from financing activities (1,004) (814) 190
Effect of exchange rate change on cash and cash equivalents 0 0 0
Net increase (decrease) in cash and cash equivalents (189) 2,661 2,850
Cash and cash equivalents at beginning of period 23,090 24,373 1,282
Cash and cash equivalents at end of period 22,901 27,034 4,133


1.Qualitative information on the quarterly financial results

(1) Analysis of operating results and consolidated earnings forecasts

i.) Overview of operations for the nine months ended December 31, 2018 (April 1, 2018 to December 31, 2018)

In the pachinko and pachislot (hereinafter, “PS”) industry, the Amendment of the Regulation for Enforcement of the Amusement Businesses Law* (hereinafter, Amusement Business Law) was enforced on February 1, 2018. Manufacturers are working proactively to develop PS machines based on the new regulations (hereinafter, “new-regulation machines”). In pachinko halls and among PS fans, consumers are anticipating the advent of a new form of popular entertainment—pachinko games that feature a variety of game functions thanks to the introduction of new-regulation machines and that can be enjoyed with peace of mind while limiting spending to an appropriate amount.

Against this backdrop, new-regulation pachinko machines were launched in August 2018, followed by pachislot machines in October. These new-regulation machines have earned a certain level of approval, but partly because the market is currently in a transition period, the number of machines passing the model certification test has been low. Consequently, the number of machines that have been launched has fallen short of market expectations, and market penetration will take time.

During the fiscal year under review, the FIELDS CORPORATION Group is taking the initiative in promoting large-scale management reforms. We are transitioning to a management structure under which businesses are managed by four companies (each company represents one business unit). Under the new structure, we aim to leverage the individual strengths of each business unit and foster synergies among them, achieving steady profitability increases. Under the new structure, distribution of PS machines will be concentrated on the Company, acting as the PS distribution unit. This move is aimed at improving the earnings structure. At the same time, we are stepping up a host of cost-reduction measures in our effort to optimize operating expenditures.

Given the market situation, we positioned the first half of the fiscal year (April to September) as a time for the PS distribution unit, which spearheads the FIELDS CORPORATION Group, to focus mainly on remodeling PS machines to be compliant with the new regulations. The Company also focused on the sale of old-regulation and later-remodeled machines, selling a total of 43,000 units. These efforts were the main reason for the consolidated operating loss of about ¥3.9 billion in the first half of the fiscal year.

In the third quarter (October to December), sales totaled 47,000 units, as we concentrated on sales of new main-title machines, including remodeled new-regulation machines. As a result of these business activities, consolidated operating profit during the third quarter (October to December) was about ¥2.6 billion. In a return to profitability, consolidated ordinary profit amounted to about ¥2.7 billion.


Consolidated operating performance for the first nine months included net sales of ¥37,615 million (-16.9% YoY), an operating loss of ¥1,261 million (a YoY improvement of ¥2,350 million), and an ordinary loss of ¥1,314 million (a YoY improvement of ¥2,543 million). Loss attributable to owners of parent came to ¥14 million (a YoY improvement of ¥4,119 million) due to the booking of extraordinary income of ¥748 million in gain on step acquisitions in the third quarter (October to December) accompanying the consolidation of NANASHOW Corporation as a subsidiary.


ii.) Explanation of consolidated earnings forecasts

The Company made no revisions to the consolidated earnings forecasts for the fiscal year ending March 31, 2019 disclosed on May 11, 2018, when it announced "Summary of Financial Information and Business Results for the Year Ended March 31, 2018 (Consolidated)." Expected progress in the fourth quarter of the fiscal year under review (January to March 2019) is as follows.

The PS distribution unit currently sells two pachinko and two pachislot titles. We expect to begin selling one additional pachinko title and one pachislot title. Although the number of units sold will vary according to PS market trends, at present we maintain our consolidated forecasts for the full fiscal year.

*: Regulation Partially Amending the Ordinance for Enforcement of the Act on Control and Improvement of Amusement Business and the Regulations for the Verification of Licenses, Formats and Other Aspects of Pachinko and Pachislot Machines, which were enforced on February 1, 2018.

(2) Analysis of financial position

  1. Assets
    Current assets amounted to ¥47,039 million, up ¥4,863 million from the end of the previous fiscal year. The principal factor behind this was an increase in cash and deposits, raw materials and supplies, and work in process.
    Property, plant and equipment amounted to ¥5,106 million, down ¥173 million from the end of the previous fiscal year. The principal factor behind this was a decrease in buildings and structures.
    Intangible assets amounted to ¥3,284 million, up ¥1,899 million from the end of the previous fiscal year. The principal factor behind this was an increase in goodwill.
    Investments and other assets amounted to ¥10,946 million, down ¥12,548 million from the end of the previous fiscal year. The principal factor behind this was a decrease in long-term loans receivable.
    As a result of the above, total assets amounted to ¥66,376 million, down ¥5,959 million from the end of the previous fiscal year.

  2. Liabilities
    Current liabilities amounted to ¥19,014 million, down ¥3,466 million from the end of the previous fiscal year. The principal factor behind this was a decrease in notes and accounts payable-trade, and short-term loans payable.
    Non-current liabilities amounted to ¥12,109 million, down ¥2,237 million from the end of the previous fiscal year. The principal factor behind this was a decrease in long-term loans payable.
    As a result of the above, total liabilities amounted to ¥31,123 million, down ¥5,703 million from the end of the previous fiscal year.

  3. Net assets
    Net assets amounted to ¥35,253 million, down ¥256 million from the end of the previous fiscal year. This primarily reflected a decrease in retained earnings.

  4. Analysis of cash flows
    During the nine months of the fiscal year under review, cash and cash equivalents (hereinafter referred to as “cash”) increased by ¥2,661 million from the end of the previous fiscal year, amounting to ¥27,034 million.

  5. Cash flows from operating activities
    Net cash used in operating activities amounted to ¥380 million (¥2,534 million of expenditure for the same period of the previous fiscal year). This was mainly due to a profit before income taxes of ¥161 million, a decrease in notes and accounts payable-trade of ¥4,416 million, a loss on sales of shares of subsidiaries and associates of ¥1,348 million, a decrease in notes and accounts receivable-trade of ¥1,346 million, a depreciation of ¥841 million, a decrease in accounts receivable-other of ¥746 million, an amortization of equity investment of ¥694 million and an increase in accrued consumption taxes of ¥539 million.

  6. Cash flows from investing activities
    Net cash provided in investing activities amounted to ¥3,855 million (¥3,349 million of revenue for the same period of the previous fiscal year). This was mainly due to proceeds from purchase of shares of subsidiaries resulting in change in scope of consolidation of ¥2,818 million and proceeds from sales of shares of subsidiaries and associates of ¥1,800 million and purchase of non-current assets of ¥764 million.

  7. Cash flows from financing activities
    Net cash used in financing activities amounted to ¥814 million (¥1,004 million of expenditure for the same period of the previous fiscal year). This was mainly attributable to repayments of long-term loans payable totaling ¥1,935 million, an increase in short-term loans payable totaling ¥1,305 million, and cash dividends paid totaling ¥168 million.