FIELDS CORPORATION held a financial presentation for the year ended March 31, 2018 at the E-Space Tower (Shibuya-ku, Tokyo) on May 11, 2018 (Friday) at 12:30 pm.
This page provides our explanation (summary) at the financial presentation.
⇒Page 2 to 4 of Financial Presentation
The Group’s performance progressed steadily in the H1 of the fiscal year, but we announced the revisions to performance forecast in February. This is mainly because we did not receive the model certification results of several titles including large titles in pachinko/pachislot (hereafter, “PS”) business in the H2 of the fiscal year.
In FY3/2018, operating profit rose by 200 million yen compared to the forecast, and this resulted generally in line with plans.
However, ordinary profit (loss) and profit (loss) attributable to owners of parent were partly differed from the plan due to reversal of allowance for doubtful accounts and loss on valuation of investment securities etc.
⇒Page 5 of Financial Presentation
The consolidated business plan for FY3/2019 is shown on the table.
Net sales: 95.0 billion yen (up 33.9 billion yen YoY), operating profit: 2.0 billion yen (up 7.7 billion yen YoY), ordinary profit: 2.5 billion yen (up 7.7 billion yen), profit attributable to owners of parent: 1.5 billion yen (up 9.1 billion yen). SG&A is planned to be improved by 4.1 billion yen YoY.
⇒Page 6 of Financial Presentation
In the H1 of the fiscal year, we paid a dividend of 25 yen as planned, since the profit progressed steadily in that term.
However, we have revised down our year-end dividend forecast for the FY3/2018 from 25 yen to 5 yen per share, since the Company has resulted being in the red for two consecutive years.
Therefore annual dividend is expected to be revised down from 50 yen to 30 yen.
The planned annual dividend for the next fiscal year is to be paid 10 yen at the end of the fiscal year, in view of the standard of profit forecast.
⇒Page 7 of Financial Presentation
The performance of the previous fiscal year got in red for two consecutive fiscal years.
We’d like to review our past business to clarify the issue for future growth.
The figure shows the business model announced when the Company was listed on JASDAQ in March 2003.
The company has proposed making PS machines with better entertainment, has acquired intellectual property (hereafter, “IP”) such as characters and contents, which are well known by people in leisure market, and has developed its business through business alliances with PS manufacturers.
⇒Page 8 of Financial Presentation
FIELDS was born and brought up as a PS machines distribution company, and has promoted business alliance strategies with about five pachinko/ five pachislot manufacturers, based on collaboration with each manufacturer.
The strategies are almost being realized, which is now in the midway.
⇒Page 9 to 10 of Financial Presentation
In 1990, there were about 17 PS manufacturers except for manufacturers as ‘second brand’. The manufacturers increased to 37 in 2018, but among these the independent companies are seemed to be 22 except for second and third brands.
Second brand manufacturers have issues such as securing of personnel, development/manufacturing line, and cost for machines development.
By receiving second brand which manufacturers couldn’t sufficiently make use of, our company became able to develop product planning and utilize IP based on the information from market. Manufacturers also became able to utilize second brands. This effort led the Company to great growth.
⇒Page 11 to 13 of Financial Presentation
Some media report the reduction of PS industry, but our company has found that although the number of pachinko halls decreased by 40% from the peak, the decrease rate in the number of PS machines installed has remained at 6%.
It could be said that pachinko halls’ size became increasingly large with the consolidation of small halls by M&A and management by major companies with sufficient basis.
⇒Page 14 to 16 of Financial Presentation
When the Company listed on JASDAQ in 2003, we explained our business strategy of acquiring share by business alliances with about five major manufacturers, and the present state of business alliance is as shown on the P.16 of Financial Presentation.
We also plan to start business alliance with a new second brand.
⇒Page 17 of Financial Presentation
In pachinko machines sales, the Company will release 2 to 3 titles per manufacturer, 10 to 15 in total five manufacturers in this fiscal year.
In pachislot machines sales, the Company will release 2 to 3 titles per manufacturer, 15 to 20 in total seven manufacturers in this fiscal year.
⇒Page 18 of Financial Presentation
FIELDS is an only PS machines distribution company in Japan with nationwide sales bases.
To secure further sales capabilities, the Company established eight new bases, and its total sales bases have become 34 bases.
⇒Page 19 to 20 of Financial Presentation
The Company established a new company “Japan Premium Broadcast Inc. (JPB)” with two major publishing companies in PS market, “GreenBelt” and “Amusement Japan”.
JPB will start the industry’s first service of video information distribution to pachinko halls.
Those partner companies have rich experiences over 30 years as publishing companies of PS industry. FIELDS had an experience of satellite broadcasting named “Pachinko Information Station”, which provided new PS machines information to pachinko halls 25 years ago. We hope to fulfill a role like a compass by utilizing our strengths for PS industry that has faced with a difficulty.
The distribution contents are planned to be like the three pillars shown on the figure on page 20. JPB will provide information about new PS machines which is important for pachinko halls to invest for attracting customers.
The information will be collectively delivered as package which can utilize for solution of marketing issue, the proposal of PS machines composition and operation method etc.
⇒Page 21 of Financial Presentation
The Company is in a unique position in PS industry where it connects manufacturers and pachinko halls to develop great products and invigorate the PS market.
The Company has 26 branches, eight showrooms and 250 salespersons. Each salesperson comes face to face with pachinko halls and proposes PS machines and others based on big data. The data consists of PS machines operating data from outside, and PS machines composition data of approximately 8,000 pachinko halls which is updated every day by salespersons.
In addition, the Company has made the structure which all salespersons instantly judge the forecasts of machines removal period by their operating condition based on analyses of PS machines operating, and enable them to provide the information to pachinko halls. We recognize such utilization of big data as one of our advantages.
⇒Page 23 of Financial Presentation
The number of machine replacement has been shrinking and each machine tends to be used for a long period.
When pachinko halls replace machines and parts, the hall staffs who have the license as Pachinko and Pachislot Machines Sales Handling Chief need to attend each site of replacement. This causes a big cost for manufacturers and pachinko halls. To resolve this problem, the Company will make the structure that receives orders regarding machines and parts replacement in a lump utilizing approximately 700 Pachinko and Pachislot Machines Sales Handling Chiefs who are enrolled at our Group.
We plan to conduct this effort on our dealing first, and start the service officially to outside with affiliate manufacturers from September 2018.
⇒Page 24 of Financial Presentation
The Company has started a WEB targeting ad service since March 2018. For supporting advertisement activity of pachinko halls, we acquired a patent of the system which is able to advertise directly to the customers who come to specific pachinko halls based on our big data.
We’ve contracted with over 200 pachinko halls in a month from starting the service and we aim to make the contract with 2,000 pachinko halls a year.
⇒Page 25 of Financial Presentation
In the PS secondary distribution market, it is said that 38% of all machines replacement in pachinko halls is used machines. 50% of those used machines are dealt within chain pachinko halls, the rest are traded between other pachinko halls. The PS industry has some issues in PS secondary distribution market and the Company promotes the measures that contribute to health of the used machines distribution.
The Company plans to invite about 100 convenience stores of a leading company a year to parking spaces of pachinko halls.
As of new standard machines, the Company promotes research to meet pachinko halls’ needs, and to propose and make best products to manufacturers. The entertainment aspect of PS machines is valued more than gambling aspect since the payout ratio has been lowered by the revision of rules this time. Therefore, we see that manufacturers demand good copyrighted materials and IP.
The Company has many IP suitable for PS machines. We plan to propose these IP to manufactures and contribute maximally to pachinko halls by utilizing our capability of distribution and sales.
⇒Page 27 to 31 of Financial Presentation
The Company restructures our business to four companies. In PS business, we focus on distribution business of PS machines which has been the Company’s strength since its foundation.
In PS machines development, our affiliated companies including BOOOM Corporation operate seven production lines a year, and also accept orders of development and machines testing application to Security Communications Association.
As of creating IP and merchandising, Tsuburaya Productions Co., Ltd. mainly conducts the business. FIELDS plans to shift Tsuburaya Productions’ production business to studio business in cooperation with its new president, Takayuki Tsukagoshi who assumed in August 2017 from Walt Disney Company (Japan) Ltd. We plan to make a strong business structure for all people in Japan and overseas.
Tsuburaya Productions Co., Ltd. announced new initiative of sales stores in the “Licensing Expo Japan 2018”. We expect that this initiative will contribute to increasing profits since about 900 people of 500 companies interested in its announcement.
If Tsuburaya Productions Co., Ltd. is able to build up studio business model like Disney, our group company Digital Frontier Inc. would play the role like Pixar Animation Studios.
We think to create a synergy effect with our group companies by utilizing each company’s strengths in each business field with other outside companies with high technology.