Slide 1: FY Ended March 2017 Full Year Results Presentation
FY Ended March 2017 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 2017 Full Year Results ------------ p.3 FY Ending March 2018 Full Year Forecasts -------- p.10 Future Activities ----------------------------------------- p.16 Returning earnings to shareholders ------------------- p.33 p.37 Business Environment --------------------
Slide 3: FY Ended March 2017 News Release
FY Ended March 2017 News Release Related News on Financial Results ■2016 Aug. 9 Financial Results for the 1st Quarter of FY2016 Notice concerning expansion of shareholder special benefit plan for the period ending in March 2017 Nov. 4 Revision of earnings estimates Nov. 11 Financial Results for the
Slide 4: FY Ended March 2017 Full Year Results
FY Ended March 2017 Full Year Results Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 3
Slide 5: Consolidated Statements of Income (Summary)
FY Ended March 2017 Full Year Results Consolidated Statements of Income （Summary） Net Sales ¥40,714 Million Net Sales and Operating Income Net Sales Operating Income ¥1,048 Million 7,023 Operating Income 5,338 Ordinary income ¥1,374 Million Net income attributable ¥502 Million 1,425 1,048 to owners
Slide 6: Net Sales
Net Sales YoY Change -¥6,290 Million Information System Segment (Net sales in this segment were 27,260 million yen and segment- （Millions of yen） operating income was 3,011 million yen.) On the back of sluggish demand for hall computers due to a decrease in new store openings and depressed motivatio
Slide 7: Operating Income
Operating Income YoY 前期比 Change ¥1,942 Million （Millions ¥） Research and development cost by segment Research and development expenses were considerably reduced compared to the previous year. (Research and development expenses temporarily increased in the previous year, as next-generation product de
Slide 8: Consolidated Balance Sheets (Summary)
FY Ended March 2017 Full Year Results Consolidated Balance Sheets （Summary） Total liabilities and net assets ¥46,828Million Total liabilities ¥17,676 Million Shareholders' equity Total Net assets ¥29,151 Million Shareholders' equity Shareholders' equity ratio YoY （Millions ¥） 2016/3 2017/3 Change 62
Slide 9: Consolidated Statements of Cash Flows
FY Ended March 2017 Full Year Results Consolidated Statements of Cash Flows （Millions ¥） FY2015 FY2016 YoY Change Operating CF -4,710 9,339 +14,049 Investment CF - 2,511 -1,696 +815 Financing CF 4,065 -2,938 -7,003 Cash and cash 9,358 14,062 +4,704 equivalents Research and development expenses Free
Slide 10: Business results by segment
Business results by segment YoY Change （Millions ¥） FY2015 FY2016 YoY Change Vs. Forecasts Change Net sales Information System Segment 34,076 27,260 - 6,816 - 3,740 Information System Segment Control System Segment Hardware 23,088 16,698 - 6,390 - 3,587 System 10,988 10,562 - 426 - 153 27,184 20,889
Slide 11: FY Ending March 2018 Full Year Forecasts
FY Ending March 2018 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. Lower intent to invest has been recognized in the recent pachinko hall market through movements associated with removal/callback of "pachinko machines whose performance may differ from that of inspected units." 2. Currently, the industry
Slide 13: FY Ending March 2018 Full Year Forecasts
FY Ending March 2018 Full Year Forecasts FY2016 FY2017（Projected） YoY （Millions ¥） Change 1st half 2nd half Total 1st half 2nd half Total Net sales 20,187 20,527 40,714 19,000 20,000 39,000 -1,714 Gross profit-net 7,523 6,421 13,953 6,800 6,600 13,400 -553 Selling, general and 6,926 5,978 12,904 6,7
Slide 14: Outlook for FY ending March 31, 2018
Outlook for FY ending March 31, 2018 Net Sales ¥39,000 million (YoY -¥17.14 million) ■ Information System Segment ¥28,500 million (YoY +¥12.40 million) ･ Promotion of strengthening sales of the data display device, “REVOLA,” which is highly acclaimed in the market ･ Start of full-scale sale of new C
Slide 15: FY Ending March 2018 Full Year Forecasts by segment
FY Ending March 2018 Full Year Forecasts by segment YoY Change Net sales (Millions ¥) FY2016 FY2017 YoY Change Information System Segment Control System Segment Information System Segment 27,260 28,500 +1,240 Hardware 16,698 17,500 +802 13,515 10,500 System 10,562 11,000 +438 Subtotal 27,260 28,500
Slide 16: Mid-term business plan "Next50" (~FY2019)
Mid-term business plan “Next50”（～FY2019） Quantitative targets The Group will address changes in 0.05 ROE ROE the market and strengthen the 0 Net Sales 売上高 Operation income 営業利益 7% business base. 2.70% 1.70% -5.50% 570 540 470 40 407 14 10 -9 FY2019 FY2014 2015年3月期(実) FY2015 2016年3月期（実） FY2016 2017
Slide 17: Business strategy and measures
Business strategy and measures Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 16
Slide 18: External environment: Removal of game machines
External environment Removal of game machines ■The overview of removal of game machines last year and before is as follows. ■It can be said that the removal of game machines is an effort for the market that can get support from more people in the long run. Before This time Oct.1996～Jan.1998 Jul.2004
Slide 19: External environment: Removal of game machines and hall sales
External environment Removal of game machines and sales of pachinko halls Jul.2004～Jun.2006 Great East Japan （%） Removal of machines whose 2004年7月～2006年6月 Earthquake 東日本大震災 certification has expired 「みなし機の撤去」 20.0 (removal of pachislot machines （検定期間を過ぎたパチスロ機種の Removal of game machines and for whi
Slide 20: External environment: Dependence (addiction) issue
External environment Dependence (addiction) issue Following enactment of the Bill of Integrated Resort Promotion, measures for addiction disorder such as gambling are being widely promoted for public competitions and pachinko. The industry regards dependence (addiction) as a pressing issue. Curre
Slide 21: Reorganization
Business strategy and measures Reorganization Our company changed the structure on April 1, with the aim of establishing a strong profit structure that is not influenced by a change in the market environment. Purport Organization We aim to create business by exploring and The Business Development
Slide 22: Strategies: Expand MG services
Strategies Expand various services (MG service) through our company’s own network 2012 MG service sales CR unit（Sales management 2017 by a third party） Nationwide fan trend data release service 2016 REVOLA content 2010 5,000 2013 Various hall support BiGMO premium content service through 4,900 netwo
Slide 23: Our company's environmental initiatives
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 24: Daikoku Denki's strengths
Daikoku Denki’s strengths Daikoku Denki is proud of itself for having what did not exist previously in the industry. ■Machinery and equipment counting the pachinko balls ■Proprietary system to collect and manage the data for Track records each game machine (examples) ■Information terminals to clarif
Slide 25: Strategies
Strategies Make efforts towards stable performance through the sales promotion of CR unit and Ⅰ information publication terminal as well as the expansion of MG services. Launch the product/service flexibly responding to changing industry trends onto the Ⅱ market in a timely manner. Promote aggressiv
Slide 26: Information System Segment: raising market share
Information System Segment Raising the market share 情報システム事業 Information System Segment （市場規模、当社シェア） 30.0% 240.0 Hall computer market ホールコンピュータ市場 Game machine peripheral Our share 24.1% 遊技機の周辺機器市場 当社シェア(推定) 遊技機の周辺機器市場規模（10億円） equipment market (estimated) 22.6% 25.0% 220.0 20.6% 200.0 18.2% 20.0% Our
Slide 27: Control System Segment: improving market share
Control System Segment Strengthening parts development system and improving its market share on a mid-term perspective 制御システム事業 Control System Segment （売上高、表示ユニット_当社シェア） Sales of Control System Our share of display unit (estimated) 25.0% 制御システム_売上高 表示ユニット当社シェア(推定) Segment 17.7% 20.0% （Billions ¥） 制御
Slide 28: Business strategy: Information System Segment
Business strategy Information System Segment Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 27
Slide 29: CR unit VEGASIA III
NEW CR unit 「VEGASIA Ⅲ」 Sales release in June 2017 The next generation CR unit, "VEGASIA III,” to which considerable refinements were added from "VEGASIA II" that NEW gained support from customers because of its high degree of perfection as a CR unit, will be released in June 2017. 1. Fan trends It
Slide 30: Generic strategy: Information System Segment
Generic strategy Information System Segment FY2015 FY2016 FY2017(Projected) (Millions ¥) 1st half 2nd half Total 1st half 2nd half Total 1st half 2nd half Total Net Sales 16,089 17,987 34,076 13,126 14,134 27,260 13,000 15,500 28,500 (Annual sales of MG service) 1,868 1,963 3,832 2,044 2,099 4,143 2
Slide 31: Business strategy: Control System Segment
Business strategy Control System Segment Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 30
Slide 32: Generic strategy: Control System Segment
Generic strategy (*) In the control system segment, "sales of development costs" to game machine manufacturers are posted as “cancellation of Control System Segment research and development expenses.” Sales of development costs for the year ending March 2018 are planned to be 200 million yen for the
Slide 33: Pachislot business
Pachislot business NEW “Heaven‘s Lost Property Forte” ・ “Yuki Yuna is a Hero” The number of issues of original Work being much talked about now, and whose comics exceeded four million, second-season TV anime will be aired in October KADOKAWA's major hit anime 2017. with two seasons of TV anime ART,
Slide 34: Returning earnings to shareholders
Returning earnings to shareholders Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 33
Slide 35: 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 36: Examples of goods for the 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 Sound Track Box Premium ice cream Imabari towel Pork loin steak Special Rice (5kg) Stainless electric kettle 12,000points 15,000points Matsus
Slide 37: 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 Interim dividend Year-end dividend The Company pays “Special dividends" according to performance. Stable divid
Slide 38: Business Environment
Business Environment Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved. 37
Slide 39: Changes in market total gross profit and shifts in 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
Slide 40: Hall gross margin and market size of game machines and peripherals
External environment Relationship between hall's total gross margin and market size of game machine and peripherals Information System Segment Our share 当社_情報システム_売上高(10億円) 当社シェア（推定） sales（1,000Millions ¥） (estimated %) 当社_情報システム_売上高 Fans' game playing fees become hall sales in the 40 25.0% game ma
Slide 41: Jobs-to-applicants ratio and real wages
External environment Jobs-to-applicants ratio and real wages It is understood in the game machine industry that a fans' game playing fee is closely related to pocket money, and the source of funds for pocket money is wages. The recent jobs-to-applicants ratio indicates a strong sense of a shortage
Slide 42: Shifts in average corporate worker's pocket money
Reference) 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 sala
Slide 43: Pachinko business scale
Pachinko business scale Shifts in the number of pachinko halls and installed pachinko and pachislot game machines （halls） （thousand machines） 25,000 5000 4,525.2 Number of pachinko halls 店舗数 （-54.9） Peak of total game machines(2004） 4,969,156 machines Number of pachinko game パチンコ台数 20,000 4000 machi
Slide 44: Hall computing system with top 35% market share
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 ● Accumulation of business know-how with a core of data on approximately 1.45 million game machines and ¥9.5 trillion scale of annual sales Streng
Slide 46: Trends in the Number of DK-SIS Members
Trends in the Number of DK-SIS Members Transition graph of the number of DK-SIS members Number of members Market share (estimated value) 6,000 40.0% 31.0% 32.0% 35.0% Performance for the term 5,000 29.8% 28.0% 30.0% ending in March 2017 26.1% 25.0% Number of members 3,709 4,000 3,000 20.0% Number of
Slide 47: [Reference] Pachinko business scale
[Reference] Pachinko business scale Dynamic statistical survey of selected service industries - pachinko hall 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＿設置台数（前年比） Net sales of pachinko halls (YoY Change: Dynamic statistical s
Slide 48: [Reference] Pachinko business scale: segment sales
[Reference] 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 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） statistical
Slide 49: 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