Article Correction: I had previously posted this article with a misinterpreted counter word that messed up the translation of an entire sentence. Whereas I previously reported that the Ys series had 50,000,000 sales, it was actually in reference to the PS4 having had 50,000,000 sales worldwide. My attempts to validate the number and check my translation to make sure I was reading the number correctly never really clicked for me to look at the counter word.
As such, I’ve updated both the article and the headline to remove my mistake and add in the correct information.
Thank you all for your support and I’ll do my best to make sure this doesn’t happen again. orz.
On 11/10/2016, Falcom released a financial report with the earnings forecast for the rest of the 2016-2017 fiscal year. Along with this year’s Q2 report, Falcom has also released an explanation supplement, as they blew well over the expected earnings. This article will start with the supplementary info, then jump into the full financial report.
In 1,000,000 yen increments
| Total Sales | Operating Profit | Operating Income | Q2 Net Profit | Q2 Net Profit per 1 Share |
|
|---|---|---|---|---|---|
| Forecast Data (A) | 300 | ?40 | ?40 | ?27 | ?2.62 |
| Q2 Results (B) | 456 | ?145 | ?144 | 110 | ?10.76 |
| Fluctuation Sum (B – A) | 156 | 185 | 184 | 137 | — |
| Rate of Change ( % ) | 52.0 | — | — | — | — |
| Ref: Prev. Q2 Results | 542 | 201 | 202 | 144 | 14.10 |
Reason of Change
The Asia release of Ys VIII -Lacrimosa of Dana- and Tokyo Xanadu for PlayStation®Vita and the Asia release of Tokyo Xanadu eX+ for PlayStation®4 saw extremely favorable sales, and as a result, the actual Q2 numbers for sales, operating profit, operating income, and net profits were much higher than originally forecast.
As a result, this will end up changing the full year’s forecast, and an amended forecast will quickly be drawn up and released in the near future.
Q2 2017 Data
Company Name: Nihon Falcom
Code Number: 3723
URL: http://www.falcom.co.jp
Representative (Title: ‘Board Selected President’) – Name: Toshihiro Kondo
Reference Manager: (Title: ‘Company Director’) – Name: Takashi Nakano
TEL: 042-527-0555
Planned Date for Report Presentation: 5/12/2017
2017 Q2 Financial Results
Q2 Period Dates: 10/1/2016 ~ 3/31/2017
Management Results (Total)
In 1 million yen increments
| Total Sales | Operating Profit | Operating Income | Q2 Net Profit | |||||
|---|---|---|---|---|---|---|---|---|
| 9/2017 Q2 | 456 | ?16.0% | 145 | ?28.1% | 144 | ?29.0% | 110 | ?23.7% |
| 9/2016 Q2 | 542 | ?29.5% | 201 | ?51.2% | 202 | ?50.6% | 144 | ?49.2% |
In 1 yen increments
| Net Profit per 1 Share | Potential Stock Adjustments based on Profit per Share |
|
|---|---|---|
| 9/2017 Term Q2 | 10.76 | — |
| 9/2016 Term Q2 | 14.10 | — |
Financial Condition
1 million yen increments
| Total Assets | Net Worth | Capital-to-Asset Ratio (percentage) |
Net Worth per Share (1 yen increments) |
|
|---|---|---|---|---|
| 9/2017 Term Q2 | 4,009 | 3,878 | 96.7% | 377.34 |
| 9/2016 Term | 4,155 | 3,840 | 92.4% | 373.57 |
Reference: Owned Capital
9/2016 Term: 3,878 million yen
9/2015 Term: 3,840 million yen
State of Dividends
(1 yen increments)
| Year Dividends | |||||
|---|---|---|---|---|---|
| Q1 End | Q2 End | Q3 End | End of Year | Total | |
| 9/2016 Term | — | 0.00 | — | 7.00 | 7.00 |
| 9/2017 Term | — | 0.00 | |||
| 9/2017 Term (Forecast) | — | 5.00 | 5.00 | ||
Note: Recent adjustments to share value estimations has not been factored in.
(Editor’s Note: Referring to the supplemental data at the start of this article.)
9/2017 Term Forecast
In million yen increments.
| Total Sales | Operating Profit | Current Profit | EOY Net Income | Net Profit per Share | |||||
|---|---|---|---|---|---|---|---|---|---|
| Financial Year | 1,800 | 22.9 | 750 | 28.4 | 750 | 28.3 | 500 | 29.2 | 48.64 |
Note: Recent adjustments to share value estimations has not been factored in.
(Editor’s Note: Referring to the supplemental data at the start of this article.)
Quarterly Summary Data
In this quarter’s report, Falcom first reaffirms that they specialize in originality in their game contents and services, and are seeking to reach out to customers across the world.
For the Q2 period, sales have remained strong as both Ys VIII -Lacrimosa of Dana- (released in 7/2016 for PS Vita) and Tokyo Xanadu eX+ (released on PS4 in 9/2016) have continued to show favorable responses from users. In May of 2017, Ys VIII -Lacrimosa of Dana- will release for the PlayStation 4, which has sold 50,000,000 units worldwide.
And now, with a cumulative total of 960,000 copies sold worldwide, Sen no Kiseki and Sen no Kiseki II (ed note: Trails of Cold Steel and Trails of Cold Steel II) has their followup title, The Legend of Heroes Sen no Kiseki III, eagerly being worked on for a PlayStation 4 release.
As a result, the manufactured goods section has a number of 39 million yen for this quarter. (A 79.5% reduction from this quarter last year.)
With regards to any licensing work, Ys VIII -Lacrimosa of Dana- saw its Korean release, and Gurumin 3D was released to the 3DS in both English speaking and Japanese regions. In Feb 2017, Ys Origin was released to the PlayStation 4 in Japanese and other languages. In March 2017, Tokyo Xanadu was released for PlayStation Vita, and Tokyo Xanadu eX+ was released for PlayStation 4 in Chinese speaking territories.
A variety of older PC games have been released as download only in English, the PC online story RPG Akatsuki no Kiseki continues, as well collaborations in other games, such as Hortensia Saga (Sega Games), Seven Nights (Net Marble Games), Taiko no Tatsujin (Bandai Namco Games).
In April 2017, Tokyo Xanadu and Tokyo Xanadu eX+ were released in Korea, and in May 2017, both the Chinese and Korean versions of Ys VIII -Lacrimosa of Dana- for PlayStation 4 will see simultaneous releases with Japanese release. (Ed Note: The Korean release info is additional, and the sales numbers are going to be in the Q3 report.)
As a result, the licensing section has a number of 416 million yen. (A 18.7% increase from this quarter last year.)
With all of this, the final results for the Q2 financials are a total sales of 456 million yen (a reduction of 16.0% from last year), an operating profit of 145 million yen (a 28.1% reduction), operating income of 144 million yen (a 29.0% reduction), and a quarterly net profit of 110 million yen. (A 23.7% reduction)
Detailed Financial Summary
Quarterly Balance Sheet
In thousand yen increments
| Prev. Year (2016) | Current Year (2017) | |
|---|---|---|
| Property Division | ||
| Current Assets | ||
| Cash on Hand | 3,812,687 | 9,657,665 |
| Accounts Receivable | 137,653 | 133,881 |
| Manufactured Goods | 1,301 | 1,192 |
| Raw Materials | 1,994 | 1,370 |
| Misc. | 42,278 | 46,205 |
| Current Assets Sum | 3,995,916 | 3,840,315 |
| Fixed Assets | ||
| Tangible Fixed Assets | 4,564 | 9,347 |
| Intangible Fixed Assets | 3,210 | 2,130 |
| Assets from Additional Investments | 152,185 | 169,206 |
| Sum of Fixed Assets | 159,961 | 169,206 |
| Total Assets | 4,155,977 | 4,009,522 |
| Debt Division | ||
| Current Liabilities | ||
| Accounts Payable | 22,952 | 846 |
| Unpaid Corporate Taxes | 150,838 | 44,574 |
| Reward Provisions | 20,250 | 11,250 |
| Miscellaneous | 121,549 | 73,864 |
| Sum of Current Liabilities | 315,590 | 130,535 |
| Total Debts | 315,590 | 130,535 |
| Net Worth Division | ||
| Shareholder Equity | ||
| Capital Stock | 164,130 | 164,130 |
| Capital Surplus | 319,363 | 319,363 |
| Profit Surplus | 3,356,910 | 3,395,610 |
| Treasury Stock | ? 117 | ? 117 |
| Sum of Shareholder Equity | 3,840,286 | 3,878,986 |
| Sum of Net Worth | 3,840,286 | 3,878,986 |
| Liabilities and Net Worth Sum | 4,115,887 | 4,009,522 |
Quarterly Profit and Loss Statement
In thousand yen increments
| Prev. Year (2016) | Current Year (2017) | |
|---|---|---|
| Sales | 542,977 | 456,242 |
| Cost of Sales | 69,317 | 11,809 |
| Sales Expenses and Admin Costs | 271,813 | 299,304 |
| Operating Profit | 201,846 | 145,128 |
| Earnings Outside of Business | ||
| Received Interest | 332 | 18 |
| Received Dividends | 286 | 577 |
| Profits Excluded from Unpaid Dividends | 702 | 1,046 |
| Sum of Earnings Outside of Business | 1,320 | 1,642 |
| Expenses Outside of Business | ||
| Currency Exchange Losses | 285 | 2,703 |
| Sum of Expenses Outside of Business | 285 | 2,703 |
| Operating Income | 202,882 | 144,068 |
| Quarterly Income Before Taxes | 202,882 | 144,068 |
| Corporation, Municiple, and Other Enterprise Taxes | 47,692 | 41,293 |
| Taxes and Adjustments | 10,218 | ? 7,884 |
| Sum of Corporate Taxes | 57,911 | 33,403 |
| Quarterly Net Profit | 144,970 | 110,659 |
Cash Flow Statement
In thousand yen increments
| Prev. Year (2016) | Current Year (2017) | |
|---|---|---|
| Cash Flow from Business Activities | ||
| Quarterly Net Income Before Taxes | 202,882 | 144,068 |
| Depreciation Repayment Costs | 2,694 | 3,159 |
| Reduction of Fluctuations of Reward Reserves (? is decrease) |
?9,000 | ?9,000 |
| Interest and Dividend Receipts | ?618 | ?595 |
| Total Credit Fluctuation Amounts (? is increase) | 547,240 | 3,772 |
| Fluctuation Amount of Stockholder Assets(? is increase) | 1,751 | 733 |
| Fluctuation Amounts of Other Assets (? is increase) |
382 | ?1,584 |
| Reduction of Fluctuations in Purchased Debts (? is decrease) |
?102,836 | ?22,105 |
| Fluctuation Amounts of Arrears (? is decrease) |
?51,997 | ?27,172 |
| Fluctuation Amounts of Unpaid Taxes (? is decrease) |
?22,545 | ?38,571 |
| Fluctuation Amounts of Other Debts (? is decrease) |
?669 | 17,714 |
| Subtotal | 567,282 | 70,418 |
| Amounts Received via Interests and Dividends | 618 | 595 |
| Amount Paid for Corporation Tax | ?81,058 | ?147,977 |
| Cash Flow from Business Activities | 486,843 | ?76,962 |
| Cash Flow from Investment Activities | ||
| Expenses from the Value of Tangible Assets | — | ?6,862 |
| Expenses from the Value of Intangible Assets | ?387 | — |
| Cash Flow from Investment Activities | ?387 | ?6,862 |
| Cash Flow from Financial Activities | ||
| Dividend Payments | ?71,378 | ?71,196 |
| Cash Flow from Financial Activities | ?71,378 | ?71,196 |
| Increased Reduction in Cash and Cash Value Articles (? is decrease) |
415,078 | ?155,021 |
| Balance of Cash and Cash Value Articles at Start of Term | 3,052,949 | 3,812,687 |
| Balance of Cash and Cash Value Articles at End of Quarter | 3,468,027 | 3,657,665 |
[ Falcom IR Report – Forecast Discrepancy Report ]
[ Falcom IR Report – Q2 Financial Results ]