Slide 1: FY Ended March 2018 Full Year Results Presentation
FY Ended March 2018 Full Year Results Presentation DAIKOKU DENKI Co., Ltd. (Tokyo Stock Exchange, First Section, 6430) Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved.
Slide 2: Contents
Contents FY Ended March 2018 Full Year Results ------------ p.3 FY Ending March 2019 Full Year Forecasts -------- p.10 p.15 Business Environment -------------------------------------- p.23 Business strategy and measures ------------------------------------ Returning earnings to shareholder
Slide 3: FY Ended March 2018 News Release
FY Ended March 2018 News Release Related News on Financial Results ■2017 Aug. 9 Financial Results for the 1st Quarter of FY2017 Aug. 9 Notice concerning expansion of shareholder special benefit plan for the period ending in March 2018 Nov. 6 Revision of earnings estimates Nov. 13 Financial Results f
Slide 4: FY Ended March 2018 Full Year Results
FY Ended March 2018 Full Year Results Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 3
Slide 5: Consolidated Statements of Income (Summary)
FY Ended March 2018 Full Year Results Consolidated Statements of Income （Summary） Net sales ¥34,093 Million Net sales and Operating income Net sales Operating income ¥1,192 Million Operating income 5,338 Ordinary income ¥1,390 Million Net income attributable ¥785 Million 1,425 1,048 1,192 to owners
Slide 6: Net Sales
Net Sales YoY Change - ¥6,621 Million Information System Segment (Net sales in this segment were 24,827 million yen and segment- operating income was 2,435 million yen.) The information publication terminal “BiGMO PREMIUM” and “IL-X” Series boosted demand during the consolidated fiscal year, and the
Slide 7: Operating Income
Operating Income YoY Change + ¥144 Million Research and development expenditure (Millions ¥) FY Ended YoY Vs. Forecasts March 2018 Change Change Information System Segment 1,470 -770 -430 Control System Segment 108 -712 -192 （Millions ¥） Operating Income Other selling Selling, general and administra
Slide 8: Consolidated Balance Sheets (Summary)
FY Ended March 2018 Full Year Results Consolidated Balance Sheets （Summary） Total liabilities and net assets ¥43,564Million Total liabilities ¥14,312 Million Shareholders' equity (Millions ¥) Total net assets ¥29,251 Million Shareholders' equity Shareholders' equity ratio YoY （Millions ¥） 2017/3 201
Slide 9: Consolidated Statements of Cash Flows
FY Ended March 2018 Full Year Results Consolidated Statements of Cash Flows （Millions ¥） FY2016 FY2017 YoY Change Operating CF 9,339 2,921 -6,418 Investment CF -1,696 -2,411 -715 Financing CF -2,938 -739 +2,199 Cash and cash Free Cash Flow （FCF） 14,062 13,832 -230 equivalents Investment CF Operating
Slide 10: Business results by segment
Business results by segment YoY Change Segment sales - ¥6,625 Million, Segment income + ¥164 Million Vs. Forecasts Segment sales （Millions ¥） （Millions ¥） FY2016 FY2017 YoY Change Change Information System Segment Control System Segment Information System Segment 27,260 24,827 - 2,433 - 3,673 Hardwa
Slide 11: FY Ending March 2019 Full Year Forecasts
FY Ending March 2019 Full Year Forecasts Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 10
Slide 12: Recent industry trends and outlook
Recent industry trends and outlook ■ Recent industry trends 1. The pachinko industry, in which the Daikoku Denki Group (“the Group”) is engaged, faced a severe business environment with a continuing cautious stance for capital investment due to uncertainty about the impact on pachinko hall business
Slide 13: Outlook for FY ending March 31, 2019
Outlook for FY ending March 31, 2019 Net Sales ¥35,000 million (YoY + ¥907 million) ■ Information System Segment ¥26,000 million (YoY + ¥1,173 million) ･ Making an effort to enhance the function that is focused on “easy to understand and easy to see” in information publication terminals, such as “Bi
Slide 14: FY Ending March 2019 Full Year Forecasts
FY Ending March 2019 Full Year Forecasts FY2017 FY2018（Projected） YoY （Millions ¥） Change 1st half 2nd half Total 1st half 2nd half Total Net sales 17,996 16,097 34,093 15,000 20,000 35,000 +907 Gross profit-net 6,097 5,740 11,837 5,900 6,500 12,400 +563 Selling, general and 5,722 4,922 10,644 5,450
Slide 15: FY Ending March 2019 Full Year Forecasts by segment
FY Ending March 2019 Full Year Forecasts by segment YoY Change Segment sales （Millions ¥） （Millions ¥） FY2018 FY2017 YoY Change Information System Segment Control System Segment (Forecasts) Information System Segment 24,827 26,000 +1,173 Hardware 14,413 15,200 +787 9,000 9,322 System 10,414 10,800 +
Slide 16: Business Environment
Business Environment Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 15
Slide 17: Trends in the number of game machines installed in pachinko halls
Trends in the number of game machines installed in pachinko halls The degree of the increase in the number of Trends in 設置台数 the number推移 of game machines machines installed shrank from 2015 to 2016, +5.00% and showed signs of bottoming out around the Number of game machines 設置台数 beginning of 2017.
Slide 18: Recent trends in net sales of pachinko halls
Recent trends in net sales of pachinko halls Hall sales that had been increasingly negative パチンコホール売上高 Trends 推移 halls in net sales of pachinko year-on-year since the end of 2015 bottomed 5.0% out from around summer 2016 and the degree Net sales of pachinko halls パチンコホール売上高 of negativity year-on-yea
Slide 19: Trends in installed game machines per parlor and large parlors
Trends in the number of installed game machines per parlor and percentage of large parlors The percentage of large parlors has increased compared to ten years ago 1店舗当たりの備付台数、大型店の割合 推移 Composition by the number of installed game machines per parlor 450 30.0% The percentage of large parlors with 501
Slide 20: Trends in full-time employees and net sales per parlor
Trends in the number of full-time employees and net sales per parlor 正社員、売上高 Full-time employees, Net sales(per parlor) （１事業所当たり） The number of full-time employees per hall is 売上高＿１事業所当たり Net sales per parlor Full-time employees 正社員＿１事業所当たり decreasing compared to the past. It is assumed that per par
Slide 21: Share of our hall computers in pachinko halls
Share of our hall computers in pachinko halls Our share by hall size, total number of machines installed <Table 1> Comparison of the number of pachinko halls by hall size Total Other companies DK(Daikoku Denki) Hall size Parlors Ratio Parlors Ratio Share Parlors Ratio Share – 100 209 2.0% 197 2.8% 9
Slide 22: Share of our hall computers in pachinko halls
Share of our hall computers in pachinko halls Our share among the "top 50 companies ranked by hall sales" is approximately 43% ホールコンピュータ 弊社シェア（店舗ベース） Share of our hall computers (on a hall basis) 遊技機台数（店舗平均） Number of game machines (Average per hall ) (target:（対象：売上高上位50社） top 50 companies ranked by
Slide 23: Recent revision of regulations regarding pachinko and pachislot machines
Recent revision of regulations regarding "pachinko and pachislot machines,” etc. Recent revision of regulations regarding "pachinko machines,” etc. Regulations were revised in terms of ball pay-out, due to the revision of Regulations Regarding the Enforcement 2018 of the Act on Control and Improveme
Slide 24: Business strategy and measures
Business strategy and measures Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 23
Slide 25: External environment
External environment The Group’s understanding for changes in the market environment The Group understands changes in the market surrounding the pachinko industry, such as regulation revision, to be a good opportunity for the pachinko industry to evolve into one that will be even more widely supp
Slide 26: Strategies
Strategies The Group’s business Main products and services in each segment, and the relationship with customers are as indicated in the diagram below. Every segment advances business development in the games industry. We are aware that the most important challenge is to flexibly respond to a
Slide 27: Business strategy: Information System Segment
Business strategy Information System Segment Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 26
Slide 28: Strategies: Information System Segment
Strategies Information System Segment Sales promotion of various products, such as a CR unit Expanding market share, and and data display device, and an approach to stable acceleration of an earnings I structure that can respond business through expansion of the recurring fee revenue model (manageme
Slide 29: Information System Segment measures
Strategies Information System Segment measures [View of current business environment] The environment surrounding the pachinko industry, in which the Group is engaged, is expected to remain challenging, including the impact of revised regulations, amidst a slight decreasing trend in operations at pa
Slide 30: [Topics] Information System Segment
[ Topics ] Information System Segment NEW February 2018 Two information publication device products were released Liquid crystal terminal for each unit “BiGMO PREMIUM II” 1. Largest in the industry, easy-to-see, 15.6-inch large LCD screen Boost hall with exclusive content for the model through autom
Slide 31: Generic strategy: Information System Segment
Generic strategy Information System Segment (Note) Business segment sales and income figures include intersegment transactions. FY2016 FY2017 FY2018(Projected) (Millions ¥) 1st half 2nd half Total 1st half 2nd half Total 1st half 2nd half Total Net sales 13,126 14,134 27,260 11,757 13,070 24,827 12,
Slide 32: Business strategy: Control System Segment
Business strategy Control System Segment Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 31
Slide 33: Strategies: Control System Segment
Strategies Control System Segment Emphasize the entertainment aspect, and focus on the Contribution to the operations I activation of the game environment through creation of of pachinko halls games that comply with new rules. Promptly respond to the requests of game machine Shorten the customer’s m
Slide 34: Control System Segment measures
Strategies Control System Segment measures [View of current business environment] There will be an increasing need for new proposals that respond to an era with new standards, along with a strengthened intention to reduce development costs for game machines in the market, and it is assumed that plan
Slide 35: Generic strategy: Control System Segment
Generic strategy Control System Segment (Note) Business segment sales and income figures include intersegment transactions. FY2016 FY2017 FY2018 (Projected) (Millions ¥) 1st half 2nd half Total 1st half 2nd half Total 1st half 2nd half Total Net sales 7,093 6,422 13,515 6,262 3,060 9,322 3,000 6,000
Slide 36: Returning earnings to shareholders
Returning earnings to shareholders Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 35
Slide 37: Shareholder special benefit plan
Shareholder special benefit plan We have established a new shareholder special benefit plan! We will present points that can be exchanged for goods, depending on the number of shares and the amount of values held. The number of shares Present points Eligible shareholders 100 ~ 299 shares 3,000 point
Slide 38: Shareholder special benefit plan
Shareholder special benefit plan Examples of goods for the shareholder special benefit plan that can be selected among about 600 items 3,000points 6,000points Umeboshi（pickled plum） Yubari melon jelly Imabari towel Pork loin steak Special Rice (5kg) Electric kettle 12,000points 15,000points Matsusak
Slide 39: Dividends
Dividends <Policy> The Company implements “Special dividends" according to the revenue based on “Consecutive dividends" Stable dividends Interim dividend Year-end dividend Special dividends Year-end dividend The Company pays “Special dividends" according to performance. Stable dividend (¥40) (¥10 in
Slide 40: Reference Data
Reference Data Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 39
Slide 41: Pachinko business scale
Pachinko business scale Shifts in the number of pachinko halls and installed pachinko and pachislot game machines （halls） （thousand machines） 20,000 5,000 4,436.8 店舗数 Number of pachinko halls （-88.4） Peak of total game machines(2004） 4,969,156 machines パチンコ台数 Number of pachinko game 4,000 machines 1
Slide 42: Changes in market total gross profit and performance by year
Changes in the size of market total gross profit and shifts in performance by year Although the market is still in a severe condition, it is forecast to recover approaching the Olympics in Tokyo in 2020 Gross profit of Pachinko Pachinko business scale Gross profit of Pachislot [Changes in the size o
Slide 43: Daikoku Denki's strengths
Daikoku Denki’s strengths Information to support Daikoku Denki is proud of itself for having what did not exist previously the operations of pachinko in the industry. hall associations ■Our own system to collect, analyze and process game machine data “DK-SIS,” a membership-based information provisio
Slide 44: Hall computing system with top share of the market at 35%
Hall computing system that accounts for the top share of the market at 35% Hall computing system Daikoku Denki excelled in the production of electric circuits at its inauguration, and developed a device to count pachinko balls by utilizing this knowledge and technology. Later, the Company was the fi
Slide 45: DK-SIS Daikoku Denki Strategic Information System
DK-SIS Daikoku Denki Strategic Information System "DK-SIS"—an industry-leading strategic information tool that helps to realize improved hall performance Date from halls with Number of DK-SIS members: Information on around Aggregate sales of around 3,638 as of March 31,2017 1,460,000 game machines ¥
Slide 46: Environmental quality
Our company's environmental initiatives (examples) Our company built its headquarters building in May 2011, and relocated (1-43-5 Nagono, Nakamura-ku, Nagoya-shi). This headquarters building features an energy-saving design, and it is possible to reduce CO2 emissions by more than 30% (Note 1). I
Slide 47: Ratio of job openings to applicants
Recent trends in ratio of job openings to applicants Expectation to have a positive impact on future "pocket money" 有効求人倍率、実質賃金 推移 Recent jobs-to-applicants ratio has remained at over 1.0. For instance, jobs- to-applicants ratio by prefecture exceeds 1.0 in all prefectures, and there are 1.80 8.0% q
Slide 48: Shifts in the average amount of a corporate worker's pocket money
Shifts in the average amount of a corporate worker's pocket money Since the 1990s, pocket money of a corporate worker in Japan has shifted in a downward trend. Trend of increase of the base amount is expanding. Partly due to the shortage of manpower, it is highly assumed that the salaries at Jap
Slide 49: Pachinko business scale: statistical survey
Pachinko business scale Dynamic statistical survey of selected service industries - pachinko hall 特定サービス産業動態統計＿パチンコホール＿設置台数（前年比） Number of game machines (YoY Change : Dynamic statistical survey of selected service industries) 特定サービス産業動態統計＿パチンコホール＿売上高（前年比） Net sales of pachinko halls (YoY Change: Dyn
Slide 50: Pachinko business scale: statistical survey by segment
Pachinko business scale Dynamic statistical survey of selected service industries - pachinko hall Net sales of pachinko halls (YoY Change: Dynamic Net sales of pachinko halls (YoY Change: Dynamic 特定サービス産業動態統計＿パチンコホール＿売上高（前年比） statistical survey of selected service industries) 特定サービス産業動態統計＿パチンコホール＿売上
Slide 51: Disclaimer
Disclaimer The contents in this material and comments made during the questions and answers etc. of this briefing session are the judgment and forecasts of the Company’s management based on the currently available information. These contents involve risk and uncertainty, and the actual results may d