May 15, 2014 Heiwa Corporation

Transcription

1 May 15, 2014 Heiwa Corporation

2 Contents Overview 3 4 Full-year Plan for FY <Supplementary Information> Market Environment (Pachinko and Pachislot Machine Business) Market Environment (Golf Business) Performance Trend Number of Machines Sold / Titles Released in Number of Golf Course Users / Average Revenue per Customer Copyright Heiwa Corporation

3 Overview Net sales: billion yen, +2.5% year on year Operating income: 36.9 billion yen, +7.2% year on year Both sales and income increased from the previous year Pachislot machine sales greatly contributed to the results Pachinko and pachislot machine business Buoyant sales of pachinko title Lupin The Third: Kesareta Lupin Cumulative orders received by the end of April 2014 exceeded 120,000 units. Orders are on-going. Number of pachinko machines sold in : 190,000 units (YoY-50,000 units) Number of pachislot machines sold in : 120,000 units (YoY+50,000 units) Construction of new head office building completed Concentration of development centers at a single location Both sales and profit decreased owing to bad weather and a decline in revenue per customer Golf business Held HEIWA PGM CHAMPIONSHIP in Kasumigaura golf tournament Acquired 6 golf courses in The number of golf courses the Group owns and operates increased from 127 to 132 (as of March 31, 2014) Copyright Heiwa Corporation

4 Toshinobu Moromizato Representative Director & Executive Vice President

5 Consolidated Statements of Income () Both sales and profit increased year on year Compared with the plan, sales were virtually unchanged but profit increased Buoyant pachislot machines sales (high margin) contributed to good results (Millions of yen) 200, , , , , ,000 80,000 60,000 40,000 20,000 0 Pachinko machine sales Pachislot machine sales Golf business sales 177,111 78,998 20,932 Operating income 182,400 74,479 75,400 72,600 66,105 31,600 34,434 33, ,570 39,763 73,145 13/3 14/3 Plan 14/3 36,909 (Millions of yen) FY2013 Plan YoY Cf. Plan Net sales 177, , , % -0.5% Pachinko machines Pachislot machines 78,998 72,600 66, % -8.9% 20,932 31,600 39, % 25.8% Golf business 74,479 75,400 73, % -3.0% Other 2,700 2,800 2, % -8.7% Operating income 34,434 33,900 36, % 8.9% Pachinko machines Pachislot machines 19,177 16,500 14, % -10.1% 6,317 9,500 15, % 60.9% Golf business 12,162 10,300 9, % -4.0% Other % -8.6% Not allocated (3,485) (2,600) (3,283) Operating income ratio 19.4% 18.6% 20.3% +0.9pt +1.7pt Ordinary income 35,577 31,700 35, % 11.7% Net income 20,123 19,000 20, % 7.2% EBITDA* 41,929 42,100 45, % 7.3% *EBITDA=Operating income + depreciation and amortization + amortization of goodwill Copyright Heiwa Corporation

6 (Millions of yen) 40,000 R&D expenditure 36,000 32,000 28,000 24,000 20,000 16,000 12,000 8,000 4,000 SGA Expenses / Depreciation & Amortization / Capital Investment () SGA expenses increased owing to higher advertising and promotional expenditure and higher R&D expenditure. R&D expenditure increased compared with the plan. R&D expenditure is on a upward trend in order to increase overall quality of products. 0 Labor cost Selling General expenses expenses 30,864 7,554 7,884 15,425 8,963 34,300 7,600 9,400 17,300 11,200 36,095 7,621 8,994 19,478 12,864 13/3 14/3 Plan 14/3 (Millions of yen) Depreciation & amortization Capital investment (Millions of yen) Copyright Heiwa Corporation FY2013 FY2013 Plan Plan YoY YoY Cf. Plan SGA expenses 30,864 34,300 36, % 5.2% Labor cost 7,554 7,600 7, % 0.3% Selling expenses Advertising expenses Sales comissions General expenses R&D expenditure 7,884 9,400 8, % -4.3% 3,197 4,600 3, % -16.2% 2,690 3,000 3, % 19.1% 15,425 17,300 19, % 12.6% 8,963 11,200 12, % 14.9% Depreciation & amortization / Capital investment Cf. Plan 7,575 8,300 8, % 0.5% 9,414 11,900 12, % 9.1%

7 Pachinko and Pachislot Machine Business (Machine Sales ) Number of machines sold Pachinko machines (Units) FY2013 Plan Change from FY2013 Difference from Plan 320, , ,948-2k -12k 252, , ,146-55k -32k (Number of titles released) (8) (8) (8) Pachislot machines 67, , , k +20k (Number of titles released) (6) (5) (5) (-1) Major pachinko titles Title Sales (units) Release Sengoku Otome 3: Ran 27,575 May 2013 Lupin The Third: Kesareta Lupin *1 84,750 Nov 2013 Rio Rainbow Road 14,981 Jan 2014 *1 Cumulative sales of Lupin The Third: Kesareta Lupin exceeded 120,000 units as of April 30, Major pachislot titles Antonio Inoki ga Densetsu ni suru Pachislot Machine *2 Title Sales (units) Release 25,377 Mar 2013 (Previous year) Sengoku Otome Kengeki ni Mau Shiroki Kensei 24,719 Aug 2013 Shuyaku wa Zenigata 2 44,337 Feb 2014 *2 Cumulative sales of Antonio Inoki ga Densetsu ni suru Pachislot Machine are 44,372 units. Copyright Heiwa Corporation

8 Pachinko and Pachislot Machine Business () Pachinko Pachislot Total Machine sales were lower than the previous year and both sales and profit decreased. Machine sales were brisk and both sales and profit increased greatly. Profitability increased too thanks to the impact of reuse. Sales and profit increased year on year led by buoyant sales of pachislot machines. Development departments, which were dispersed, are now concentrated at the new head office Aim to enhance operational efficiency and strengthen development capabilities (Millions of yen) FY2013 YoY Net sales 99, , % Pachinko machines 78,998 66, % Pachislot machines 20,932 39, % Gross profit 45,429 54, % Pachinko machines 33,703 30, % Pachislot machines 11,726 23, % Gross profit ratio 45.5% 51.7% +6.2pt Operating income 25,494 30, % Pachinko machines 19,177 14, % Pachislot machines 6,317 15, % Operating income ratio 25.5% 28.4% +2.9pt Breakdown of machine sales (Units) FY2013 Change from FY2013 Total 320, ,948-2,063 Pachinko machines 252, ,146-55,265 Body 179, ,059-51,371 Gauge board 72,981 69,087-3,894 Pachislot machines 67, , ,202 Chassis 29,472 77, ,244 Combined unit 38,128 43,086 +4,958 Copyright Heiwa Corporation

9 Golf Business () Sales and profit decreased year on year. Affected by unsettled weather and a decrease in revenue per customer Selling, general and administrative expenses increased in line with the holding of HEIWA PGM CHAMPIONSHIP in Kasumigaura Acquired 6 golf courses during the period from October 2013 to March 2014 The number of golf courses the Group owns and manages increased from 127 to 132 (as of March 31, 2014) (Millions of yen) FY2013 YoY Net sales 74,479 73, % Gross profit 19,612 18, % Gross profit ratio 26.3% 24.7% -1.6pt Number of golf course users/ Revenue per customer Number of golf course users Revenue per customer (yen) FY2013 YoY 7,197,495 7,097, % 9,243 9, % Operating income Operating income ratio 12,162 9, % 16.3% 13.5% -2.8pt Copyright Heiwa Corporation

10 Factors contributing to change in operating income (consolidated basis) (Millions of yen) 45,000 40,000 35,000 30,000 25,000 20,000 34,434 FY2013 Pachinko machine Gross profit -2,919 Decreased sales volume Pachislot machine Gross profit +12,214 Increased sales volume Golf business Gross profit -1,518 Other Gross profit Labor cost Selling expenses ,110 <Selling expenses> General expenses -4,053 Pachinko and Pachislot Machine Business: Sales commissions increased in line with the increase of pachislot machine sales volume. Golf Business: Advertising expenses increased for holding of a competition and sponsorship <General expenses> Pachinko and Pachislot Machine Business: R&D expenditure increased 36,909 Copyright Heiwa Corporation

11 Consolidated Balance Sheets (Summary) (Millions of yen) FY2013 Change Remarks Current assets 137, ,086 10,100 Noncurrent assets Noncurrent assets 279, ,420 11,348 Total assets 417, ,506 21,448 increased due to acquisition of golf courses Current liabilities 69,227 69, Noncurrent liabilities 206, ,787 6,139 Issuance of bonds (PGMH) Total liabilities 275, ,003 6,127 Net assets 141, ,502 15,320 Liabilities and total net assets 417, ,506 21,448 Cash and deposits, and investment securities (Millions of yen) FY , ,051 Interest-bearing debt 172, ,506 Shareholders equity 128, ,772 Shareholders equity ratio 30.8% 32.6% D/E ratio (interest-bearing debt/shareholders equity) 1.18 Improvement of 0.16 percentage points Shareholders equity ratio increased 1.8 percentage points. Copyright Heiwa Corporation

12 Katsuya Minei Representative Director and President

13 Consolidated Statements of Income (Plan) FY2015 Plan Plan calls for increases in both sales and profit backed by increasing machine sales by Pachinko and Pachislot Machine Business Net sales: billion yen, up 13% Operating income: 44.4 billion yen, up 20% (Millions of yen) 225, , , , , ,000 75,000 50,000 25,000 0 Pachinko machine Pachislot machine Golf Business sales sales sales Operating income 181,570 66,105 39,763 73, ,000 87,600 38,600 77,100 36,909 44,400 14/3 15/3 Plan (Millions of yen) FY2015 2Q cumulative Full year 2Q cumulative Full year Net sales 85, , , , % Pachinko machines Pachislot machines Operating income 24,363 66,105 46,700 87, % 19,745 39,763 19,200 38, % Golf business 39,605 73,145 41,700 77, % Other 1,343 2,555 1,500 2, % Pachinko machines Pachislot machines 21,752 36,909 28,500 44, % 7,911 14,836 12,300 19, % 7,680 15,282 8,700 15, % Golf business 7,414 9,891 8,500 12, % Other % Not allocated 1,360 3,283 1,300 3,000 Operating income ratio 25.6% 20.3% 26.1% 21.6% +1.3pt Ordinary income 21,317 35,405 27,800 42, % Net income 12,578 20,361 17,400 25, % EBITDA* 25,337 45,177 32,800 54, % YoY Copyright Heiwa Corporation 2014 EBITDA=Operating income + depreciation + amortization of goodwill 13

14 FY2015 Plan (Millions of yen) 44,000 40,000 36,000 32,000 28,000 24,000 20,000 16,000 12,000 SGA Expenses / Depreciation & Amortization / Capital Investment (Plan) 8,000 4,000 0 Higher selling, general and administrative expenses Advertising expenses will increase because of strengthened advertising by Pachinko and Pachislot Machine Business. Upward trend of R&D expenditure will continue for the purpose of enhancing overall product quality Labor cost Selling expenses General expenses R&D expenditure 36,095 7,621 8,994 19,478 39,200 7,700 11,000 20,500 12,864 14,500 14/3 Result 15/3 Plan (Millions of yen) (Millions of yen) Depreciation & amortization Copyright Heiwa Corporation FY2015 2Q cumulative Full year 2Q cumulative Full year SGA expenses 15,323 36,095 18,600 39, % Labor cost 3,413 7,621 3,500 7, % Selling expenses Advertising expenses Sales comissions General expenses R&D expenditure 4,082 8,994 4,700 11, % 1,633 3,856 1,500 4, % 1,641 3,572 2,100 4, % 7,827 19,478 10,400 20, % 4,748 12,864 7,500 14, % Depreciation & amortization / Capital investment FY2015 2Q cumulative Full year 2Q cumulative Full year 3,621 8,339 4,300 9, % Capital investment 7,136 12,987 7,100 13, % YoY YoY

15 Machine Sales Plan FY2015 Plan (Units) Number of machines sold Pachinko machines (Number of titles released) Pachislot machines (Number of titles released) 2Q cumulative Full-year results 2Q cumulative FY2015 Full-year plan 140, , , ,000 78, , , ,000 Change from the previous year +52k units +52k units (6) (8) (6) (9) (+1) 62, ,802 60, ,000 (2) (5) (4) (7) (+2) Major pachinko titles Major pachislot titles Title Release Super Street Fighter Ⅳ CR EDITION Apr 2014 Doki! Marugoto Mizugi Onna Darake no Suiei Taikai: Idol Darake de Komacchaung!!! May 2014 Cowboy Bebop Jul 2014 Title Release Magic Monster 3: Bucchigiri! Makai Grand Prix Apr 2014 Sengoku Otome:Kengeki ni Mau Shiroki Kensei -Saigoku Sansen version Jun 2014 (C) HEIWA/OLYMPIA/Character design by SHIROGUMI INC. Copyright Heiwa Corporation

16 Pachinko and Pachislot Machine Business Initiatives Evaluation of Lupin The Third: Kesareta Lupin Total orders received: Over 120,000 units, orders are on-going High machine utilization rate for 25 weeks in a row (Balls) 60,000 50,000 40,000 30,000 20,000 Machine utilization (High evaluation) Evaluation by purchase decision-makers about utilization rate and gross margin (top 5 companies) 10, (Week) Lupin The Third :Kesareta Lupin Market average Source: Global Amusement KK Attractiveness of the content (Lupin The Third) is brought into full play. Specifications attuned to market needs Presentation and direction to maintain expectation and the thrill Copyright Heiwa Corporation

17 Pachinko and Pachislot Machine Business Initiatives Development process Led by the producer (resources are integrated), Thorough refining at the planning phase Content Concept Scenario Effect combination Specs Devices, etc. are determined Concept Visual plan Confirmation of the plan Model design Prototype evaluation Modification Application Market release Planning phase Flexible development structure Marketing Reflect the aspects that were highly regarded in the market and the market trend in new models Models offering a higher level of sophistication Copyright Heiwa Corporation

18 Pachinko and Pachislot Machine Business Initiatives Content acquisition and fostering Recognition: High Lupin The Third Super Street Fighter IV Antonio Inoki Lupin The Third Affinity with pachinko/pachislot machines: Low Capitalizing on newly acquired IP Foster existing IP Antonio Inoki Super Street Fighter IV, etc. Foster Sengoku Otome Nangoku Sodachi Mahjong Monogatari, etc. Affinity with pachinko/pachislot machines: High (C) HEIWA Mahjong Monogatari Sengoku Otome (C) HEIWA/Character design by SHIROGUMI INC. Secondary use Recognition: Low Production of anime Participation in exhibitions, such as Comic Market Production of comic books, karaoke distribution, etc. Copyright Heiwa Corporation

19 Golf Business Initiatives Aggressive strategy with careful selection of investment targets M&A Maximize profit Acquire 30 courses in 3 years at the pace of 10 courses a year on average Focus on courses located near the metropolitan area with a promising market (golfer population) Maintain/improve performance even in the situation where unit price is unlikely to increase Thorough price control Thorough expense control Effective marketing based on customer data We started operation of Asahigaoka Country Club Nikko Course sin Feb 2014 Enhance member satisfaction Provide an opportunity to participate in the HEIWA PGM CHAMPIONSHIP golf tournament Provide opportunities to play at partner golf courses overseas Ko Olina Golf Club (Oahu, Hawaii), Ora Country Club (Jeju, Korea), Siam Country Club Pattaya Old Course, Siam Country Club Pattaya Plantation Course (Pattaya, Thailand) Member exclusive website opened Copyright Heiwa Corporation

20 Dividends Dividend policy Maintain stable dividend payment taking into consideration the business plan, financial position, results of operations, etc. in a comprehensive manner Use internal reserve for investment to strengthen R&D capabilities, capital investment, IT investment, etc. FY2015 Interim dividend Year-end dividend (ordinary dividend 30 yen, special dividend 10 yen) Total 30 yen 40 yen 70 yen dividend Increase Interim dividend Year-end dividend Total 40 yen 40 yen 80 yen Returning profits to shareholders is a key management issue. We will do our utmost to maintain a high level of dividend payment. Copyright Heiwa Corporation

21

22 Market Environment (Pachinko and Pachislot Machine Business) 1 18,000 Number of pachinko parlors / Number of machines installed per parlor (Parlors) (Units) (Million units) Pachinko machine installations / Pachislot machine installations 16,000 14,000 12,000 10,000 8,000 14,674 13, ,937 12,479 11,893 12,652 12,323 12,149 11, ,000 4,000 2, forecast 0 (CY) forecast (CY) Number of machines installed per parlor Number of parlors Pachinko machines Pachislot machines forecast Number of parlors 14,674 13,585 12,937 12,652 12,479 12,323 12,149 11,893 11,743 Number of machines installed per parlor (units) Pachinko machine installations (million units) Pachislot machine installations (million units) Note: Data source: National Police Agency. Data on a calendar year basis (from Jan to Dec) Figures for 2014 are the Company s estimates. Copyright Heiwa Corporation

23 Market Environment (Pachinko and Pachislot Machine Business) 2 Pachinko machine sales Pachislot machine sales (Million units) (FY) 0.00 (Million units) (FY) forecast forecast forecast forecast Number of machines sold (Million units) forecast 2014 forecast Pachinko machines Pachislot machines Note: Data source: Yano Research Institute. Data on a fiscal year basis (from April to March of the next year). Data for 2013 and 2014 are the Company s forecast. Copyright Heiwa Corporation

24 Market Environment (Golf Business) Market size Golfer population / Spend per visit (Trillions of yen) (Million people) (Yen) ,000 14, ,740 12,190 12,900 12,240 13,020 14, , , , ,000 10,000 8, , , , Golf business market size (CY) Golfer population Spend per visit 0 (CY) Market size (trillion yen) Golfer population (million) Spend per visit (yen) 12,740 14,590 11,350 12,190 11,010 12,900 12,240 11,960 13,020 Note: Data source: Japan Productivity Center. Data on a calendar year basis (from January to December) Copyright Heiwa Corporation

25 Financial Performance Trend (Millions of yen) FY2011 FY2012 FY2013 2Q cumulative Full year 2Q cumulative Full year 1Q 2Q cumulative 3Q cumulative Full year 1Q 2Q cumulative 3Q cumulative Net sales 43,488 85,880 44,779 95,120 53,437 93, , ,111 44,375 85, , ,570 Full year Pachinko machines 27,868 52,106 29,119 58,252 27,698 44,745 68,598 78,998 11,121 24,363 46,838 66,105 Pachislot machines 15,006 32,610 15,385 22,591 4,842 7,519 12,786 20,932 12,076 19,745 21,795 39,763 Golf business 13,228 20,209 40,002 60,056 74,479 20,549 39,605 59,818 73,145 Other 613 1, , ,436 2,070 2, ,343 1,958 2,555 Operating income 8,481 15,276 15,198 20,741 13,999 21,346 31,293 34,434 12,291 21,752 29,032 36,909 Pachinko machines 5,581 8,726 10,169 17,023 7,947 12,388 18,640 19,177 3,803 7,911 12,738 14,836 Pachislot machines 4,042 8,962 6,279 7,613 2,818 3,201 3,180 6,317 4,783 7,680 7,770 15,282 Golf business (908) 4,237 7,532 11,979 12,162 4,435 7,414 10,669 9,891 Other Not allocated (1,464) (2,968) (1,384) (3,215) (1,047) (1,875) (2,637) (3,485) (763) (1,360) (2,294) (3,283) Operating income ratio 19.5% 17.8% 33.9% 21.8% 26.2% 22.8% 21.8% 19.4% 27.7% 25.6% 22.3% 20.3% Ordinary income 13,152 24,687 20,079 28,282 15,719 24,585 33,717 35,577 12,202 21,317 28,380 35,405 Net income 9,495 20,451 13,525 20,516 10,323 16,835 22,016 20,123 7,111 12,578 15,782 20,361 SGA expenses 11,629 23,875 10,579 24,180 7,142 14,367 21,804 30,864 7,904 15,323 24,763 36,095 Labor cost 1,954 4,407 1,976 5,851 1,794 3,479 5,303 7,554 1,747 3,413 5,261 7,621 Selling expenses 3,093 6,488 3,534 6,448 1,790 3,497 5,434 7,884 2,191 4,082 6,315 8,994 Advertising expenses Sales comissions 1,169 2,612 1,588 2, ,443 2,390 3, ,633 3,271 3,856 1,439 2,931 1,502 2, ,261 2,065 2, ,641 2,224 3,572 General expenses 6,581 12,978 5,067 11,880 3,557 7,390 11,067 15,425 3,965 7,827 13,186 19,478 R&D 4,932 9,774 3,444 7,889 1,835 3,787 5,934 8,963 2,502 4,748 8,138 12,864 Depreciation & amortization 1,490 3,362 1,152 3,963 1,699 3,525 5,504 7,575 1,760 3,621 5,923 8,339 Capital investment 1,139 2, ,301 3,129 4,711 9,223 9,414 3,233 7,136 10,039 12,987 Copyright Heiwa Corporation

26 Number of Machines Sold Titles Released in Number of machines sold (Units) FY2011 FY2012 FY2013 2Q cumulative Full year 2Q cumulative Full year 1Q 2Q cumulative 3Q cumulative Full year 1Q 2Q cumulative 3Q cumulative Full year Total 140, , , ,027 99, , , ,011 72, , , ,948 Number of pachinko machines sold 90, ,219 93, ,308 85, , , ,411 35,422 78, , ,146 Body 61, ,611 38,652 99,030 82, , , ,430 7,717 22,251 78, ,059 Gauge board 28,364 60,608 54,706 88,278 2,428 12,060 48,515 72,981 27,705 55,761 62,900 69,087 Number of pachislot machines sold 50, ,091 52,414 78,719 13,818 23,326 42,093 67,600 37,486 62,153 68, ,802 Chassis 36,108 61,512 26,445 30, ,445 8,820 29,472 37,471 48,647 50,081 77,716 Combined unit 14,215 49,579 25,969 48,043 12,900 21,881 33,273 38, ,506 18,711 43,086 Titles released in Pachinko Release Title Units sold 1Q Sengoku Otome 3: Ran 27,575 Tsunatori Monogatari: Sakasero! Daikinboshi no Hana! Copyright Heiwa Corporation ,220 2Q Love-jo Plus 13,992 BIG SHOOTER X 8,331 Flame of Rekka 10,344 Hyakka Ryoran: Samurai Girls 14,891 3Q Lupin The Third: Kesareta Lupin 84,750 4Q Rio Rainbow Road 14,981 Total 197,146 Pachislot Release Title Units sold 1Q 2Q Cat s Eye: Mission to Recapture the Collection Sengoku Otome: Kengeki ni Mau Shiroki Kensei 12,098 24,719 3Q Love-jo 6,114 4Q City Hunter 8,142 Shuyaku wa Zenigata 2 44,337 Total 120,802 26

27 Number of Golf Course Users Average Revenue per Customer Number of golf course users (Persons) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Total FY , , , , , , , , , , , ,263 6,888,201 FY , , , , , , , , , , , ,389 6,486,313 FY , , , , , , , , , , , ,359 7,197, , , , , , , , , , , , ,624 7,097,816 Revenue per customer (Yen) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Average FY ,128 10,198 9,804 9,468 8,778 9,399 10,027 10,228 9,875 9,092 8,504 8,773 9,605 FY2012 9,188 9,666 9,483 9,269 8,543 9,356 10,114 10,266 9,899 9,002 8,509 9,288 9,429 FY2013 9,686 9,522 9,342 8,734 8,171 9,184 9,640 9,922 9,727 9,000 8,436 9,347 9,234 9,468 9,527 9,531 8,664 8,143 8,853 9,456 10,033 9,516 8,558 7,814 9,101 9,123 Copyright Heiwa Corporation

28 Contact / Disclaimer Contact Corporate Planning Group, Heiwa Corporation TEL: Website: Disclaimer This document contains forward-looking statements concerning future plans, forecasts, targets, and estimates of Heiwa Corporation and its affiliated companies. These forward-looking statements represent assumptions and beliefs based on information currently available and involve potential risks and uncertainties. Therefore, we wish to caution you that actual results may differ materially from the forward-looking statements contained in this document due to various factors, including but not limited to, future business environment, economic conditions, and financial market conditions. Copyright Heiwa Corporation