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FY Ended March 2016
Full Year Briefing and
Medium-Term Management Plan
May 27th, 2016
Copyright ©DAIKOKU DENKI Co., Ltd. All rights reserved.
Contents
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FY Ended March 2016 Full Year Results ------------ p.3
p.10
Business Environment -------------------------------------FY Ending March 2017 Full Year Forecasts -------- p.20
Future Activities ----------------------------------------- p.25
p.39
Mid-term business plan -------------------------------------Returning earnings to shareholders ------------------- p.42
1
FY Ended March 2016 News Release
Related News on Financial Results
■2015
Aug. 7
Financial Results for the 1st Quarter of FY2015
Sep. 17 Notice regarding the determination of the shareholders’ hospitality program for the fiscal year ended March 31, 2016
Oct. 26 Revision of earnings estimates
Nov. 11 Financial Results for the 2nd Quarter of FY2015
Dividend of surplus (Interim dividend)
■2016
Feb. 8
Revision of earnings estimates
Notice regarding operating loss incurred due to revaluation of inventory assets
Feb. 10 Financial Results for the 3rd Quarter of FY2015
Mar. 16 Revision of earnings estimates
May 6 Notice regarding the revision of earnings forecast and reversal of deferred tax assets
Dividend of surplus
Notice regarding the formulation of new medium-term management plan
Related News on Business and New Products
■2015
Oct. 5
Began sales of “Pachislot Hyakkaryoran Samurai Girls”(a pachislot game machine) made by Daxel Co., Ltd.
■2016
Mar. 1
Began sales of “Tanteikageki Milky Holmes TD” (a pachislot game machine) made by Daxel Co., Ltd.
2
FY Ended March 2016 Full Year
Results
3
FY Ended March 2016 Full Year Results
Consolidated Statements of Income (Summary)
Net Sales
Net Sales and Operating Income
¥47,004 Million
3,525
Operating Income
¥-894 Million
Ordinary income
¥-749 Million
Net income
5,338
226
¥-1,676 Million
1,425
58,861
FY Ended
March 2015
54,043
FY Ended
March 2016
47,004
Gross profit-net
15,659
14,279
-1,380
-3,721
Selling, general and
administrative expenses
14,233
15,174
941
-1,826
Operating Income
1,425
-894
-2,319
-1,894
Ordinary income
1,566
-749
-2,315
-1,749
874
-1,676
-2,550
-2,226
3,834
5,330
1,496
-470
(Millions ¥)
Net Sales
Net income
Research and
development expenditure
売上高
Net Sales
Operating Income
営業利益
YoY
Vs. Forecasts
Change
Change
-7,039
-5,996
(Note) The planned ratio is the value of earnings projection for the term ending in
March 2016 announced on November 11, 2015, as well as the planned ratio described
in the materials for the briefing of the second quarter closing of the term ending in
March 2016 held on November 26, 2015 targeting institutional investors and analysts.
56,954
54,043
47,096
FY2012
-894
47,004
FY2013
FY2014
FY2015
FY2016
4
Net Sales
YoY Change
-¥7,039 Million
Information System Segment
(Millions of yen)
(Net sales in this segment were 34,076 million yen and segmentoperating income was 2,277 million yen.)
Demand for hall computer replacements stagnated because selfimposed regulations significantly decreased customer motivation to
invest in existing pachinko parlors. As to the data display terminals
including “VEGASIA” (CR unit) and “BiGMO PREMIUM,” the
business was not as active as the previous year when the highest
sales for this business were recorded.
Information System
Segment
-3,028
2014/3期
FY2015
Results
売上高
56,954
2014/3期売上
高, 51015
Control System Segment
制御システム
Control
System
売上高
Segment
-3,964
‐3,949
2014/3期売上
高, 47051
(Net sales in this segment were 12,986 million
yen and segment-operating deficit was 1,319
million yen.)
2015/3期
FY2016
売上高
Results
54,043
The sales of our leading products, the display units,
fell below the previous year affected by a decrease
of number of models and total sales volume. On the
other hand, the sales of control units and peripheral
components recorded higher results than the
previous year due to increased production
efficiency and their incorporation in a higher
number of models. As for pachislot game
machines, despite an initial plan to sell a total of
30,000 units of 4 models, only 5,100 were sold due
to the fact that the completion of 3 models was
delayed to the next fiscal year ending March 2017.
5
Operating Income
YoY
Change
前期比
- ¥2,319 Million
Research and development cost by segment
(Millions ¥)
Research and development cost increased significantly due to our
aggressive investments in the next-generation product
development in the Information Systems Segment.
Information
System Segment
Control
System Segment
FY2015
差引売上総利益,
Results
1425
FY Ended
March 2016
YoY
Change
Vs. Forecasts
Change
3,965
+1,255
+165
1,365
+240
+535
Gross profit-net
差引売上総利益
-1,380
1,425
Research and
development
expenditure
-1,495
FY2016
差引売上総利益,
Results
894
Other selling,
general and
administrative
expenses
+556
-894
Other main items showing a
decrease in selling, general and
They were attributable to a decrease in
provision for allowance for doubtful
accounts, sales promotion expenses
and personnel expenses
6
Consolidated Balance Sheets (Summary)
Total liabilities and net assets
¥47,139Million
Total liabilities
¥17,848 Million
Total Net assets
¥29,291 Million
自己資本・自己資本比率
Shareholders'
equity
Current assets
35,935
YoY
Change
29,582
-6,353
Noncurrent assets
17,592
17,557
-34
Total assets
53,528
47,139
-6,388
Current liabilities
20,473
16,676
-3,797
915
1,171
256
Total liabilities
21,389
17,848
-3,540
Total Net assets
32,138
29,291
-2,847
Total liabilities and net assets
53,528
47,139
-6,388
400
5,500
5,099
30,439
32,138
29,291
27,113
0.01times 0.18times 0.17times
60.0%
62.1%
＋2.1%
Receivables turnover period
79.6days
84.1days ＋4.5days
Inventory turnover period
62.9days
73.1days ＋10.2days
Payable turnover period
98.8days
82.4days - 16.4days
Number of Shares Outstanding 14,783,272 14,783,272
-
FY2016
Shareholders‘ equity ratio
32,260
62.1%
53.7%
FY2015
Debt Equity ratio
55.1%
FY2014
Debt
2016/3
60.0%
FY2013
Noncurrent liabilities
2015/3
FY2012
(Millions ¥)
59.8%
Shareholders‘ equity
自己資本比率
Shareholders‘ equity ratio
自己資本
7
Consolidated Statements of Cash Flows
(Millions ¥)
FY2015
FY2016
YoY Change
Operating CF
817
-4,710
-5,527
Investment CF
- 2,142
- 2,511
- 369
Financing CF
- 1,441
4,065
+ 5,506
Cash and cash
equivalents
12,515
9,358
- 3,157
Free Cash Flow (FCF)
Research and development expenses (Millions ¥)
Research and development expenses
Investment CF
11,753
6,000
Operating CF
2,153
5,330
FCF
5,000
1,365
4,000
3,656
3,589
3,834
9,600
5,682
1,124
2,720
3,000
340
1,074
2,028
2,000
2,824
3,965
1,818
-1,656
-4,608
-1,316
817
-2,143
-1,326
2,710
1,000
-4,710
-2,511
1,628
765
902
FY2012
FY2013
-7,221
0
FY2014
FY2015
FY2016
FY2012
FY2013
FY2014
FY2015
FY2016
8
Business results by segment
YoY Change
(Millions ¥)
FY2015
FY2016
YoY Change
＋1,076
37,104
34,076
- 3,028
Hardware
26,531
23,088
- 3,443
System
10,573
10,988
＋415
Subtotal
37,104
34,076
- 3,028
＋1,076
16,950
12,986
- 3,964
- 9,014
14,217
10,279
- 3,938
2,733
2,707
- 26
16,950
12,986
- 3,964
- 9,014
54,054
47,063
- 6,991
- 7,937
4,244
2,277
- 1,967
- 2,023
-1,105
-1,319
- 214
- 1,819
Segment income
3,139
957
- 2,182
- 3,843
Corporate expenses
-1,713
-1,852
- 139
- 52
Net sales
54,043
47,004
- 7,039
- 7,996
Operating income
1,425
-894
- 2,319
- 3,894
Units and Parts
Pachislot etc.
Subtotal
Segment sales
Net sales
Vs. Forecasts
Change
Similarly, in the Control Systems Segment, the term “units and parts” suggests revenues from sales of OEM
boards and parts for pachinko game machines. The term “pachislot and others” indicates revenues of our
group companies Genki Co., Ltd. (revenues of consumer game machines) and DAXEL Inc. (revenues of
pachislot game machines).
27,184
20,889
31,685
36,065
37,104
34,076
FY2013
FY2014
FY2015
FY2016
16,950
12,986
21,367
25,741
(Note) In the sales composition of the Information System Segment, the term “hard” represents total sales
revenue of products, whereas the term “system” represents sales revenues of systems and services, such as
MG service.
FY2012
Segment income
2,930
1,127
583
4,793
6,069
6,093
4,244
2,277
FY2012
FY2013
FY2014
(1,105)
(1,319)
FY2015
FY2016
9
FY Ending March 2017 Full Year
Forecasts
10
Recent industry trends and outlook
■ Recent industry trends
1. In our pachinko industry, pachinko operations based on rental balls at ¥4 have
continued to decrease slightly.
2. Due to the effect of adding self-regulation imposed on pachinko and pachislot game
machines, pachinko halls, our customers, have been losing their willingness to make
investments in existing halls.
■ Industry trends in the present
1. The pachinko industry is also likely to be exposed to the impact of self-regulation
during the fiscal year ending March 31, 2017. Therefore, the environment surrounding
the industry is expected to be severe continuously for the time being.
11
Outlook for FY ending March 31, 2017
Net Sales ¥50,000 million (increase of ¥29.96 million from the previous consolidated fiscal year)
■ Information System Segment ¥31,000 million
･ Carrying on the sales promotion of CR unit “VEGASIA”
･ Promoting constant sales activities of “BiGMO PREMIUM” with a high reputation on the market
･ Selling a new information publication terminal “REVOLA” that was introduced as pilot testing at
the end of March 2016
■ Control System Segment ¥19,000 million
･Orders received are likely to recover since the market is expected to return to a normal status as
a result of the acceptance of adaptation criteria on gaming machines.
･Placing a focus on “timely proposals” in a market-friendly manner
･Releasing three models of pachislot game machines during the fiscal year ending March 31, 2017,
which were originally to be released in the fiscal year ending March 31, 2016
Other selling, general and administrative expenses
･The Control Systems Segment will incur an increase in sales commissions and advertising expenses on
the pachislot game machine sales and the like, and the consumer game business will also incur an increase in
advertising expenses and the like.
･The Information Systems Segment will incur an increase in outsourcing expenses.
12
FY Ending March 2017 Full Year Forecasts
FY2016
FY2017（Projected）
YoY
Change
(Millions ¥)
1st half
Net sales
2nd half
Total
1st half
2nd half
Total
24,225
22,779
47,004
21,500
28,500
50,000
+2,996
Gross profit-net
7,966
6,313
14,279
7,300
9,900
17,200
+2,921
Selling, general and
7,150
8,024
15,174
7,100
9,100
16,200
+1,026
Operating income
815
△ 1,709
△ 894
200
800
1,000
+1,894
Ordinary income
905
△ 1,654
△ 749
200
800
1,000
+1,749
Net income
421
△ 2,097
△ 1,676
120
480
600
+2,276
2,562
2,768
5,330
1,500
2,900
4,400
-930
Depreciation expense
585
775
1,360
850
850
1,700
+340
Capital investment
569
535
1,104
600
900
1,500
+396
Research and
development expenses
13
Business strategy and measures
14
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
Track records
(examples)
■Proprietary system to collect and manage the data for
each game machine
■Information terminals to clarify the game machine data
to users
■Information services provided to help the hall
management
The source of Daikoku Denki’s strengths lies in “innovative ideas, sales
capabilities and support capabilities.”
Strengths
(examples)
■Daikoku Denki has a traditional corporate culture to
respect innovative ideas and address creative ideas.
■Having offices across the nation
15
15
Strategies
Make efforts towards stable performance through the sales promotion of data display
Ⅰ
tools for each machine centering on "VEGASIA", a CR unit, and "BiGMO PREMIUM"
as well as the expansion of MIRAIGATE services.
Ⅱ
Improve profitability over the medium term through new businesses such as the
strengthening of the development system of pachislot game machines.
Ⅲ
Promote aggressive investments towards the development of "next-generation flagship
product lines" for pachinko halls.
16
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%
Game machine peripheral
遊技機の周辺機器市場
equipment market
220.0
Our share (estimated)
当社シェア(推定)
25.0%
20.6%
18.2%
200.0
180.0
ホールコンピュータ市場
Hall computer market
24.1%
16.1%
15.6%
Our share
(estimated)
市場シェア
20.0%
15.9%
当社シェア（％）
遊技機の周辺機器市場規模（10億円）
240.0
(Billions ¥)
13.8%
約35％
35%
15.0%
160.0
10.0%
140.0
163.2
159.2
120.0
150.5
162.3
174.3
175.1
153.8
5.0%
(データ出所) 当社推定値
100.0
2008
2009
年度
FY
年度
遊技機の周辺機器市場
Game machine peripheral
(10億円)¥)
(Billions
(A)
equipment market (A)
弊社　情報システム
Information System 売上
(10億円)¥)
(Billions
高(B)
Segment (B)
Our share (estimated)
B/A
当社シェア
推定（B÷A）
0.0%
2010
2011
2012
2013
2014
（データ出所）遊技機の周辺機器市場規模は矢野経済研究所調べ
2008
2009 当社シェアは当社推定値
2010
2011
2012
2013
2014
163.2
159.2
150.5
162.3
174.3
175.1
153.8
22.6
25.6
23.5
25.7
31.7
36.1
37.1
13.8%
16.1%
15.6%
15.9%
18.2%
20.6%
24.1%
（データ）
遊技機の周辺機器市場(A)　：　矢野経済研究所調べ
(Source of data)
Game machine peripheral equipment market: Surveyed by Yano Research Institute
弊社情報システム売上高(B) ：　情報システムセグメントの外部売上高
17
17
17
Strengthening parts development system and improving its market share on a mid-term perspective
制御システム事業
（売上高、表示ユニット_当社シェア）
表示ユニット＿当社シェア（推定）
Our share of display unit (estimated)
制御システム売上高（10億円）
17.7%
13.3%
20.0%
14.6%
14.3%
12.9%
25.0%
12.3%
当社シェア（％）
Sales of Control System
制御システム_売上高
Segment
15.0%
10.0%
(Billions ¥)
5.2%
5.0%
29.7
0.0%
27.2
26.3
21.4
20.9
17.0
11.1
0.0
-5.0%
-10.0%
2008
2009
2010
年度
2008
パチンコ　販売台数(A)
Number of pachinko machines sold (A) (Thousand
(千台) units)
弊社
表示ユニット販売台数(B)
Our sales
of display unit (B)
2012
2013
2014
（データ出所）表示ユニットの当社シェアは弊社推定
FY
年度
弊社　制御システム　売上高
Sales of Control System Segment
2011
2009
2010
2011
2012
2013
2014
3,339
3,333
2,900
2,604
2,495
2,065
2,016
(Billions
(10億円)¥)
29.7
26.3
11.1
21.4
27.2
20.9
17.0
(Thousand
units)
(千台)
443
430
151
374
443
301
248
13.3%
12.9%
5.2%
14.3%
17.7%
14.6%
12.3%
表示ユニット＿当社シェア
Our share of display unit 推定　（B÷A）
(estimated) B/A
（データ出所）　パチンコ販売台数
：矢野経済研究所調べ、　弊社
制御システム
制御システムセグメントの外部売上高
(Source of data) Number of pachinko
machines sold : Surveyed by Yano
Research売上高　：　弊社
Institute
18
18
18
Business strategy
19
Generic strategy
NEW
Call-out Lamp 「REVOLA」
“MIRAIGATE,” an information publication terminal under the brand
of Daikoku Denki, has been supported by many pachinko halls and
pachinko fans.
In 2016, the revolution lamp “REVOLA” will spark a new and unprecedented revolution.
This segment display shows larger images of data which fans would like to view in a
simplified manner.
This segment display facilitates visualization and attracts fans even from the
passageway!
The call button (large, shining and easy-to-understand) is the product that has
thoroughly pursued ease-of-use for fans
Fan First
Beauty
Fusion
The wide viewing angle LCD panel, with a focus on the visibility of the play, will
enhance your enjoyment from whatever angle you look at it.
Any data you want to see can be displayed on one screen.
Image ads from the pachinko hall can also be advertised clearly.
High quality contents can be presented in the screen and sound in line with the image
of gaming platform!
A sense of togetherness with the gaming platform will lead to a higher quality of hall
space.
Stylish & Revolutionary
Revolution Lamp
Huge Dekasegu, beautiful LCD, fusion with the gaming platform and stylish design
will create an innovative and high-quality gaming space.
20
Generic strategy
FY2015
(Millions ¥)
1st half
FY2016
2nd half
Total
1st half
FY2017(Projected)
2nd half
Total
1st half
2nd half
Total
Net Sales
18,217
18,887
37,104
16,089
17,987
34,076
14,000
17,000
31,000
(Annual sales of MG service)
1,627
1,753
3,380
1,868
1,963
3,832
2,050
2,150
4,200
Segment Income
2,618
1,626
4,626
1,320
957
2,277
1,200
1,100
2,300
916
1,794
2,710
1,925
2,040
3,965
1,000
1,700
2,700
Research and
■Number of sales
Hall computer
Note) Business segment sales and income figures include intersegment transactions.
72
59
131
54
59
113
50
70
120
BiGMO Series
11,192
5,933
17,125
6,820
6,592
13,412
-
-
-
BiGMO PREMIUM
30,188
28,399
58,587
21,619
33,368
54,987
17,500
22,500
40,000
-
-
-
-
-
-
17,500
22,500
40,000
IL-X Series
42,944
39,803
82,747
41,189
31,831
73,200
22,000
28,000
50,000
CR unit “VEGASIA”
53,007
83 halls
56,554
89 halls
109,561
172 halls
44,094
69 halls
53,915
76 halls
98,009
145 halls
30,600
50 halls
39,400
70 halls
70,000
120 halls
11 halls
6 halls
6 halls
12halls
7 halls
8 halls
15 halls
Call
Lamp
REVOLA
Face authentication system
■Total subscribership
C II Standard
2,585
-
2,668
2,741
-
2,807
2,850
-
2,900
Contents library
1,345
-
1,449
1,502
-
1,575
1,620
-
1,700
DK-SIS members
3,712
-
3,719
3,718
-
3,717
3,721
-
3,730
C II-SIS members
827
-
874
965
-
1,036
1,090
-
1,120
CR unit (pachinko halls)
304
-
393
454
-
527
580
-
700
Third-party stored ball management
636
-
685
726
-
789
800
-
830
21
Business strategy
22
Towards the full-scale expansion of pachislot business
Detective Opera Milky Holmes TD; Disappeared Seven and Miracle Song
This game machine has been co-developed by and with Bushiroad, dealing with a wide
range of media mix contents, such as trading card games, animation, comics and smart
phone application, and DAXEL, creating new needs in its own “ANIME × SLOT”
system distinguishing itself from other peers, releasing high-end models contributing to
the improvement of operation rates.
It provides a new style of game amusement to users, in particular, by offering an
innovative new system enabling users to watch anime at normal game times, as well as
adding new animation stories and music thanks to the RTC function incorporated in the
system, which has not been so familiarized in the pachislot industry.
Sales volume (of May 25 ,2016) about 8,800
Since April 4, 2016, it has arrived onstage
in pachinko halls across the country.
23
Generic strategy
FY2015
1st half
Net Sales
FY2016
2nd half
Total
1st half
FY2016 (Projected)
2nd half
Total
1st half
2nd half
Total
9,675
7,275
16,950
8,144
4,842
12,986
7,500
11,500
19,000
Segment Income
369
-1,474
-1,105
350
-1,669
-1,319
-100
700
600
Research and
720
404
1,124
637
729
1,365
500
1,200
1,700
Note) Business segment sales and income figures include intersegment transactions.
Video processing unit
Sales volume
8
6
14
7
6
13
6
6
12
152,370
95,279
247,649
83,272
41,498
124,770
65,000
91,000
156,000
1
1
2
0
1
1
1
2
3
6,000
1,000
7,000
0
5,100
5,100
9,000
13,500
22,500
■Pachislot business
models
Sales volume
Main development models
CR PACHINKO AKB48
Bara no Gishiki (MAYUYU Ver.)
(C)AKS (C)KYORAKU
Kyoraku Industrial Co., Ltd
CR APPLESEED
(C)2004 Shirou Masamune / Seishinsha・
Appleseed film Partner (C) EXCITE
EXCITE Corporation
CR Drumroid
Newgin Corporation
Pachislot Hyakkaryoran
(C)2010Akira Suzuki / Niθ / HobbyJapan
Hyakkaryoran Partners (C)DAXEL
DAXEL Co., Ltd
24
Mid-term business plan
“Next50” chapter One
25
Business environment
17,500
500 (million machines)
14,000
400
10,500
300
Pachinko Halls
7,000
200
3,500
100
0
Installed Pachinko and
Pachislo Game Machines
0
2007
2008
2009
2007
Pachinko Hall
Installed Pachinko and
Pachislot Game Machines
2010
2008
2011
2012
2009
2013
2010
2014
2011
2015
2012
2013
2014
2015
13,585
12,937
12,600
12,479
12,323
12,149
11,893
11,627
11,310
459
453
451
455
458
459
461
460
458
The number of halls in 2015 was 11,310, showing a gradual downward trend. However, the number of game machines installed was 4,580,000
units, leveling off in the past several years.
26
2015
External
environment
Our mediumterm
initiatives
2016
2019
2020
Hosting the
Tokyo Olympic
Games
Tightening rules
Strategic moves towards the medium-term
growth and strengthening revenue base
Acceleration of the
medium-term growth
27
Estimated changes in the market in the mid-term run
1. In the midst of a severe market environment at present, the recovery of the market is
likely at a comparatively slower pace.
2. Currently, the industry is working on increasing the number of new fans and improving
the amusement quality of pachinko and pachislot game machines. In the future, the
market is likely to change, especially in fans’ preferences.
3. In the future, due to changes in the market as well as growing needs to retain new fans,
pachinko hall management will be increasingly required to address the importance of
data analysis and strategy more than ever.
4. In the future, a new development of pachinko and pachislot game machines will be
increasingly required to address the importance of planning ability and efficient
development in response to changes in the market.
28
Basic policy
Direction and objective
1. We will timely address the self-regulation of pachinko and pachislot game machines
prevailing in the industry, and proceed with initiatives in consideration of the possibility
that the severe business environment could continue for the time being.
2. In the medium-term run, the pachinko and pachislot market is most likely to change in
the wake of this imposed self-regulation. The Group will address such changes through
dialogue with the market,
3. We will commit ourselves to providing services and products of the highest level in the
pachinko industry, aiming to improve the profitability and growth potential through
improvement of the market share and the revenue structure over the medium-term.
4. For the purpose of implementing these initiatives, as a new point of view, we will
promote an ROE-oriented management.
29
Basic policy
Quantitative targets (consolidated)
Targets (consolidated)
Reference
FY2015
FY2016
FY2017
(Projected)
FY2020
(Targets)
Net Sales
¥54,000
million
¥47,000
million
¥50,000
million
¥57,000 million
Operation
Income
¥1,400
million
¥-900
million
¥1,000
million
¥4,000 million
ROE
2.7％
-5.5％
2.1％
More than 7％
30
Business strategy
Investment plan
Projected
Reference
FY2015
FY2016
FY2017
(Projected)
FY2018 ~ FY2020
(3 years total)
Research and
development
expenditure
¥3,800
million
¥5,300
million
¥4,400
million
¥10,000 million
(Total)
Depreciation and
Amortization
¥1,300
million
¥1,100
million
¥1,400
million
¥4,000 million
(Total)
Capital
Expenditures
¥1,400
million
¥1,300
million
¥1,700
million
¥5,000 million
(Total)
31
Business strategy
Business strategy and measures by segment
[FY2020 Medium-term target]
Net Sales
¥38,000 million
（Sales of products ¥3,070 million, Sales of services 7,300million）
Segment income ¥5,000 million
[Medium-term strategy and measures]
A：Retaining the No. 1 share in the hall computers
(i) Releasing the next-generation computer
- Releasing the highest level of system services
- Establishing new analysis tools using big data and creating new value
- Fostering staff having the capability of presenting a proposal to customers
(ii) Replacement strategy for the next-generation computer by taking advantage of the market share
B：Deepening pachinko fan-friendly services
- Accelerating the expansion of pachinko fans (number of users) with the aid of SNS and new services released
on the market
32
Business strategy
2015
2016
2019
Releasing a nextgeneration computer
System
Service
Stuff
Self-analysis
Making
predictions using
big data
A next-generation hall
computer is a system
allowing for prediction
using big data.
Expanding
market share
Common software
Separate
application
Able to choose and use
the optimal service,
application or software
to meet your hall.
Changes in
revenue structure
Support business
Provided by the
planner
The planner will offer
a service to meet your
hall.
Improvement of
customer
satisfaction
33
Business strategy
2015
2016
2019
Services to fans
Free application (SNS)
This application incorporates a variety of
contents and provides comprehensive
pachinko and pachislot information.
Website
This information site enables users to
view payout information and a way to
handle new machines in the membership
halls on their PC, mobile phone or
smartphone.
Population
of fans
11.5 million
×
Our market
share
×
Enhancing contents for
fan services
+
Releasing new services
tailored to the nextgeneration computer
systems
Media services (video)
Latest information on pachinko and
pachislot, and programs on how to win
the game, etc. are on air via SKY
PerfecTV! and Hikari-TV.
Aiming to achieve one
million members in
total fan service
Ensuring a stronger tie
among fans, halls and
Daikoku
Pachi-Robo (Free application)
0.12 million members
0.7 million members (projected)
Website
0.2 million members
Media services
0.1 million members
34
Business strategy
[FY2020 Medium-term target]
Net Sales
¥19,000 million
Segment income ¥1,000 million
[Medium-term strategy and measures]
A: Creating a value of new amusement to contribute to the revitalization of
the pachinko industry
B: Identifying changes in the market sensitively to implement planning and
development generating profits
35
Business strategy
Pachinko business
[Building a system allowing for a flexible response to changes
in the market environment]
(a) Aiming to become a professional group in the industry with a high reputation in proposal
capabilities
(b) Achieving new hardware, taking advantage of planning and development capabilities
(c) Rebuilding a quality assurance system that can provide reassurance and trust
Pachislot business
(a) Achieving a surplus in the single-year as early as possible
Game business
(a) Creating a brand for Genki
(b) Strengthening and achieving new development capabilities and initiatives to develop
new content
36
Business strategy
Business strategy and measures by segment -- Pachinko Business
2015
2016
2019
2020
Strengthening proposal capability on the basis of DK-SIS
Strengthening
differentiation strategy
Enhancing expertise on the development process and technical capabilities to
shorten the development time by six months
Strengthening the business
base
Promoting technical-oriented sales through a combination of sales and development
teams for the purpose of improving the speed of business
Strengthening profitability
Strengthening quality assurance criteria, taking into account the complexity of
specifications and the expansion of software and hardware areas
Improving reliability
Utilizing a new mission-critical system, aiming to improve operational efficiency
Strengthening cost competitiveness
Improving operational
efficiency
37
Business strategy
Business strategy and measures by segment -- Pachislot and game businesses
2015
2016
2019
Anislo (animation collaborated slot machines) to be
welcomed by animation fans
Pachislot
businesses
Improving operational efficiency
Improving planning and
development capabilities
Establishing a revenue base
Developing new markets
Game
businesses
Improving operating
contribution to halls
Cultivating new fans
(new game style)
Anislo = Enhancing world views and production
(planning and development capabilities)
Achieving major titles for customers on a
continuing basis
2020
Improving technology
development capabilities
Standardizing development tools
Deepening business transactions
with customers
Marketing its own titles
Branding its own titles
Improving developer resources and technical
capabilities
Improving profitability
38
Returning earnings to
shareholders
39
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 points (worth 3,000 yen)
Shareholders holding
100 shares or more
as of September 30
of each fiscal year
300 ~ 599 shares
500 ~ 699 shares
700 ~ 999 shares
1,000 shares ~
・Eligible shareholders can select an item among 400 attractive goods, such as gourmets, travel and
consumer electronics.
・Points can be carried forward to another year, and the points will be counted 1.1 times from the
second year!
40
Shareholder special benefit plan
Examples of goods for the shareholder special benefit plan that can be selected among
about 400 items
3,000 points
Raw ham of tuna
6,000 points
Hotel’s ice cream
Special Rice (5kg)
12,000 points
Matsusaka beef
Broiled eels (kabayaki)
20,000 points
Fine wine
Hotel vouchers
Puffer (fugu) dishes (4 servings)
※ Points also can be donated to social contribution activities.
41
Dividends
<Policy> The Company implements "special dividends" according to the revenue based on
"consecutive dividends"
Stable dividends
Special dividends
Interim dividend
Interim dividend
Year-end dividend
Year-end dividend
The Company pays “Special
dividends"
according to performance.
Stable dividend
(¥10 interim dividend and ¥40
year-end dividend).
FY2013
FY2014
FY2015
FY2016
FY2017
Stable dividends
Interim dividend
Year-end dividend
Special dividends
Total
Interim dividend
Year-end dividend
Total
Payout ratio
(%)
FY2013
10
30
40
10
40
90
32.0
FY2014
10
30
40
10
30
80
36.1
FY2015
10
30
40
30
70
118.3
FY2016
10
40
50
50
-
FY2017 (Forecast)
10
40
50
50
123.2
Note) For the fiscal years ending March 2016 and March 2017, we decided to pay ¥50 as a stable dividend portion. In the following fiscal
year or later, depending on the industry-wide or our business outlook in the future, please be advised that there is also a possibility
that the stable dividend portion will be ¥40.
42
Business Environment
43
Changes in the size of market total gross profit and shifts in performance by year
Although market conditions are projected to be severe in the short term, it is expected to recover towards a ¥4 trillion
market size in the medium term
Pachinko business scale
[Changes in the size of total gross profit and performance by year]
(Note) Source of survey materials: Daikoku Denki "DK-SIS"
(Trillion ¥)
5
Minor impact on the market
Market trends in the present envisioned
by the Company
(estimate of the Company)
Gross profit of Pachislot
Gross profit of Pachinko
Impact on the size of gross profit.
Recovery of ¥4 trillion size
of market gross profit
4 Lehman Brothers’
bankruptcy
3
Great East Japan
Earthquake
2.58
3.12
3.19
2.8
2.4
2.58
2.29
2.18
2.02
1.34
1.32
1.3
2013
2014
2015
2
Shift to No. 5 unit
1
1.79
1.2
Market size of pachislot dropped
significantly
1.08
1.38
1.24
1.15
The market size of pachislot is recovering
0
2007
2008
2009
2007
2010
2008
2011
2009
2012
2010
2011
2012
2013
2014
2015
Size of market gross profit (Trillion ¥)
4.37
4.32
4.27
3.95
3.82
3.78
3.63
3.50
3.32
Number of total game machines
(million machines)
459
453
451
455
458
459
461
460
457
13,585
12,937
12,600
12,479
12,323
12,149
11,893
11,627
11,310
5.1
5.0
4.9
4.7
4.7
4.6
4.4
4.3
4.2
Net sales per machine (¥)
29,500
27,300
26,700
24,200
23,700
23,400
22,700
22,100
21,070
Gross profit per machine (¥)
3,960
4,130
4,120
3,780
3,670
3,560
3,400
3,290
3,136
780
830
840
800
780
770
770
760
750
Number of halls (halls)
Operating time per day (hour)
Gross profit per hour (¥)
Consumption
tax hike
Hosting of
Tokyo
Olympics
44
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 salaries at Japanese
companies will continue to grow
for the time being
 In the short term, due to the
impact of
the consumption tax hike, the
amount
of pocket money may decline,
but in
the medium term, it is anticipated
to increase.
45
Pachinko business scale
Shifts in the number of pachinko halls and installed pachinko and pachislot game machines
（halls）
25,000
（thousand machines）
5000
4,580（-17.6）
店舗数
Number of pachinko halls
4000
パチンコ台数
Number of pachinko game
machines
Peak of total game machines(2004）
4,969,156 machines
20,000
Number of pachislot game
パチスロ台数
machines
Peak of Pachinko game machines(1996）
3,906,767 machines
2,918（-35.9）
3000
15,000
11,627
（-266）
5,000
■Number of pachinko halls
11,310 halls
2000
10,000
Peak of Pachislot game machines(2006）
2,003,482 machines
Number of total game machines
遊技機総台数
1,661（+418.3）
1000
（-317 halls YoY）
■ Number of game machines
405.0 machines per hall
（＋9.6 machines YoY）
Total 4.58million machines
0
0
（-17,622 machines YoY）
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
（ Source of data ） 2015 White Paper on Adult Entertainment Business and Moral Offense Control by the Community Safety Bureau of the National Police Agency
46
Changes in gross profit structure
(Comparison of April 2013 - 2016)
■ Gross profit share
49%
14%
2015
2016
¥4 Pachinko
49%
47%
45%
44%
Low rental Pachinko
14%
14%
15%
15%
¥20 Pachislot
34%
35%
36%
37%
Low rental Pachislot
3%
4%
4%
4%
2013
2014
2015
2016
¥4 Pachinko
42%
40%
38%
36%
Low rental Pachinko
24%
24%
26%
27%
¥20 Pachislot
28%
29%
29%
29%
6%
7%
7%
8%
15%
15%
14%
2014
44%
45%
47%
2013
■ Number of machines share
34%
3%
2013/4
¥4 Pachinko
37%
36%
35%
4%
4%
4%
2014/4
2015/4
2016/4
Low rental Pachinko
¥ 20 Pachislot
<Reading and understanding from gross profit share>
○ ¥4 Pachinko to decline continually
○ Low rental Pachinko to increase gradually
○ ¥20 Pachislot to flat from increasing
○ Low rental Pachislot to flat
Advance indicators of pachinko hall creation
(configuration of the number of machines)
Share of ¥4 Pachinko to decline continually
Share of low rental Pachinko to flat
Share of ¥20 Pachislot to increase slightly
Share of low rental Pachislot to increase
47
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 first in the industry to
provide new products and services such as
through a proprietary system to collect and
manage the data of each machine, in addition to
the development of "Data Robot", an
information terminal that displays game
machine data to customers, and "DK-SIS", a
service to provide information that supports hall
management, as well as the launch of the
"MIRAIGATE" brand.
48
DK-SIS Daikoku Denki Strategic Information System
"DK-SIS"—an industry-leading strategic information tool that helps to realize improved hall performance
Strengths
of DK-SIS
● Accumulation of business know-how with a core of data on approximately 1.42 million game machines and
¥10.2 trillion scale of annual sales
● Provision of various consulting services with DK-SIS data as the backbone
● Strategic proposals and sales activities to game machine manufacturers utilizing DK-SIS data
49
Trends in the Number of DK-SIS Members
Transition graph of the number of DK-SIS members
Market share (estimated value)
Number of members
6,000
35.0%
31.0%
29.8%
28.0%
5,000
24.5%
30.0%
26.1%
Performance for the term
ending in March 2016
25.0%
4,000
Number of members
20.0%
3,000
15.0%
2,000
3,463
3,591
3,719
3,676
3,717
1,000
10.0%
3,717
Number of managed machines
1.42 million machines
Sales volume
Data corresponding to ¥10.2 trillion
5.0%
0
0.0%
FY2012
FY2013
FY2014
FY2015
FY2016
（ million machines）
FY2012
FY2013
FY2014
FY2015
FY2016
Number under the
management of DK-SIS
1.12
1.20
1.29
1.37
1.42
Number of total game
machines
4.58
4.59
4.61
4.60
4.58
The only information strategy tool in the
pachinko industry that possesses data on
about 30% of the number of pachinko and
pachislot game machines nationwide
（ Source of data ）
2015 White Paper on Adult Entertainment Business and Moral Offense Control by the Community Safety
Bureau of the National Police Agency
50
[Reference] Pachinko business scale
Dynamic statistical survey of selected service industries - pachinko hall
100%
10%
50%
0%
0%
-10%
-50%
-20%
-100%
弊社_売上高（四半期、前年同期比）
Net sales (YoY Change)
20%
2011/4
2010年4月
2011/7
2010年7月
2010年10月
2011/10
2011年1月
2012/1
2011年4月
2012/4
2011年7月
2012/7
2011年10月
2012/10
2012年1月
2013/1
2012年4月
2013/4
2012年7月
2013/7
2012年10月
2013/10
2013年1月
2014/1
2013年4月
2014/4
2013年7月
2014/7
2013年10月
2014/10
2014年1月
2015/1
2014年4月
2015/4
2014年7月
2015/7
2014年10月
2015/10
2015年1月
2016/1
of game machines, Net sales of pachinko halls (YoY
Number特定サービス産業動態統計_パチンコホール
statistical survey of selected service industries)
Change: Dynamic
売上高・設置台数（前年同月比、％）
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)
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)
Net sales
of our company (YoY Change)
弊社_売上高（四半期_前年比)
（ Source of data ） Dynamic statistical survey of selected service industries - pachinko hall （Ministry of Economy, Trade and Industry : 2015/5/14）
51
[Reference] Pachinko business scale
Dynamic statistical survey of selected service industries - pachinko hall
2011/4
2011/9
2012/2
2012/7
2012/12
2013/5
2013/10
2014/3
2014/8
2015/1
2015/6
2015/11
Net sales of our Control System Segment (YoY
Change)
Net sales of pachinko halls (YoY Change: Dynamic
Net sales of our Control System Segment (YoY Change)
Number of game machines, Net sales of pachinko halls (YoY
Change: Dynamic statistical survey of selected service industries)
Net sales of our Information System Segment
(YoY Change)
2011/4
2011/9
2012/2
2012/7
2012/12
2013/5
2013/10
2014/3
2014/8
2015/1
2015/6
2015/11
Number of game machines, Net sales of pachinko halls (YoY
Change: Dynamic statistical survey of selected service industries)
Net sales of pachinko halls (YoY Change: Dynamic
Net sales of our Information System Segment (YoY Change)
（ Source of data ） Dynamic statistical survey of selected service industries - pachinko hall （Ministry of Economy, Trade and Industry : 2016/5/13）
52
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 differ materially from these contents/comments.
■Contact details for inquiries
Daikoku Denki Co., Ltd.
Inquiries: Investor Relations
E-MAIL [email protected]
53

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