Investors

FIELDS CORPORATION held a financial presentation for the first half of the fiscal year ending March 31, 2015 in OTEMACHI 1st SQUARE CONFERENCE (Chiyoda-ku, Tokyo) on November 4, 2014 (Tuesday) at 11:30 am.
This page provides an overview of our explanation (summary) at the financial presentation.

Takashi Oya, President & COO

Overview of the first half of the year ending March 31, 2015

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In the first half, consolidated net sales totaled ¥20.3 billion and the operating loss was ¥4.0 billion.

The number of pachinko machines sold fell by 36,000 compared to the same period in the previous year, to the 73,000 range, while the number of pachislot machines sold declined by 33,000, to the 28,000 range.
We launched “CR EVANGELION 8” in the first half of the previous fiscal year, and plan to launch “CR EVANGELION 9” in the third quarter of this fiscal year. We shifted the launch schedule for the “Salaryman Kintaro” pachislot machine from the first half to the second half.
In the second half, we are considering launching 2 titles that have already passed the model certification test, including “Salaryman Kintaro,” 1 title that is currently undergoing the model certification test, 2 titles that will file for type testing by November 30 and another approximately 2 titles.

We can best explain our future IP strategy by providing chronological data on the extent to which we are developing IP in media. On that note, we will disclose the total number of IP and number of IP to be developed in media. We plan to develop a total of 144 IP in 75 media forms during this fiscal year.

1. Summary of Results for the First Half of the Year Ending March 31, 2015 (Consolidated)

Consolidated P/L

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In the first half, consolidated net sales totaled ¥20.3 billion, operating loss was ¥4.0 billion and net loss was ¥2.5 billion.
Number of pachinko/pachislot machines sold was in line with forecast or slightly exceeded forecast for individual titles. We shifted 1 pachislot title to the lineup for the second half.
We are on target to meet the full-year forecasts.

Consolidated B/S

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The table shows the consolidated balance sheet.
There are no points particularly worthy of note.

Consolidated cash flow

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The table shows the consolidated cash flow.
There are no points particularly worthy of note.

2. Status of IP Development

Status of IP development

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Our IP initiatives in the first half are shown in the table.
HERO’S IP and Tsuburaya IP, among others, are shown together as the IP of Fields Group. Currently, animation versions are being made for 18 of 51 of our IP.

Topics (1): Examples of HERO’S IP development

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Fields and DLE Inc. are currently working on animation versions of “SWORDGAI,” currently serialized in “HERO’S Monthly” comic. Currently, we have received offers from several media outlets, including TV, and plan to collaborate with a greater number of partners in the future to expand into more media.

Topics (2): Examples of collaboration IP development

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“APPLESEED ALPHA,” planned and produced in collaboration with the US-based Sony Pictures, premiered in October at the Tokyo International Film Festival after a animation release throughout the US. A theater release throughout Japan is planned for January 2015.

(Reference) Pachinko and Pachislot field

Current conditions in pachislot sales market

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There were no major changes in the number of pachislot machines sold and the number of titles sold compared to the same period in the previous fiscal year.
In the second half, the number of machines sold and the number of titles sold could fall short of levels in the previous year as a result of changes in the model certification test method.

Status of pachislot machine installation (percentage of installations by specification)

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The percentage of AT(new middle-high spec) machines installed has increased rapidly since 2013 in the pachislot market. However, AT machines do not yet drive operations and gross profit.
As a result of changes in the model certification test, the percentage of normal machines and ART(middle spec) machines could increase, creating opportunities to expand our fan base.

Current conditions in pachinko machine sales market

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The number of pachinko machines sold is in line with the same period in the previous fiscal year, and the number of titles sold is also on par with the first half of 2 years ago. In the second half, we expect the number of machines sold and the number of titles sold to be in line with the previous period, and the number of machines sold annually to also be roughly on par with the previous period.

Status of pachinko machine installation (percentage of installations by specification)

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The percentage of MAX(high spec) and Amadigi type machines installed has increased, and the percentage of Middle high machines is decreasing.
Currently, operations and gross profit are trending at a certain level, but it is crucial to raise the percentage of Middle high machines installed and attract light users in order to boost operations and gross profit.

Product lineup in the year ending March 31, 2015

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The Company is currently marketing the “Salaryman Kintaro” pachislot machine. In the second half, we plan to launch several titles.
In the pachinko field, “CR ayumi hamasaki 2” was launched in October, and currently we are marketing “CR EVANGELION 9.” In addition, we plan to launch 1 major title.

Tetsuya Shigematsu, Senior Managing Director

3. Future IP Development

Principle behind cyclical business model

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Fields expands its IP in a wide range of media, such as comics, anime, animation/live media, interactive media, consumer products, pachinko and pachislot generating revenue in this way.
We do not operate in a single media form, but rather strive to maximize IP value and raise corporate value by expanding our business in a comprehensive manner with a focus on IP.

Image of future IP development

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Currently, our IP totals 144, including Fields’ IP, collaboration IP and other companies’ IP. We plan to develop these IP in 75 media formats in the year ending March 31, 2015.
We anticipate major business development in the years ending March 31, 2015 and 2016, as many IP will be brought to the animation and merchandising developed.

Status of development in merchandising field

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As a merchandising expansion of Fields IP, we are developing the Ultraman series for both the Japanese and overseas markets. We have had inquiries from North America, Europe and Asia regarding animation versions and commercialization of new works and original IP. In addition, “KOTOKOTO –The World of Words–,” a social game using our IP, was released in September and had already been downloaded more than 600,000 times by the end of October.
In merchandising development for collaboration IP and other companies’ IP, we will continue to develop games and goods for AKB48. In addition, we are jointly developing “Freezing Vibration(tentative),” a social game based on a comic, with GREE, Inc., and plan to release it this winter.

Topics (3): Social game “KOTOKOTO –The World of Words–”

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As noted above, this social game had been downloaded more than 600,000 times by the end of October, showing an initial momentum comparable to a major game. We will reinforce mechanisms for revenue generation, which is currently an issue, and continue striving to generate revenue.

Yuzuru Ono, Products Division Manager, Pachinko/Pachislot Business Management Division

(Reference) Supplementary notes on changes to pachislot model certification test method

Laws and regulations for pachinko industry

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An overview of the laws and regulations for the pachinko industry is provided in the materials.
The functions of pachinko/pachislot machines are regulated by the Rules on Approval of Pachinko/Pachislot Machines and Certification of Models in the National Public Safety Commission’s pachinko/pachislot machine rules, and the Security Communications Association testing organization carries out the testing. The model certification test method has changed for pachislot machines for which applications are filed from September 16, 2014.

Changes to test method for model certification test for pachislot machines

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There are 3 types of model certification tests for pachislot machines: short duration, medium duration and long duration. The test method has been changed to require a 55% minimum payout rate for long duration.
With payout function about the same, entertainment functions such as performance and game functions will determine a machine’s commercial popularity.

Results of pachislot machine type tests

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Testing of machines whose applications were filed prior to the new test’s adoption has also become more rigorous, with a conformance rate in the September Security Communications Association model certification test of 6.5%.