Business report for the consolidated FY ended March 2010
(1) Analysis of business results
The Group increased operating revenues by 6.6% year-over-year to 3,655,042,000 yen for the current consolidated fiscal year. As for profits, the Group recorded operating income of 390,462,000 yen, up 1,987.3% from the previous consolidated fiscal year representing growth of about 21 times, while posting ordinary profit of 411,246,000 yen, up 1,150.6% from the previous consolidated fiscal year for growth of about 12.5 times, mainly due to the contribution of non-operating revenues of 21,179,000 yen. Therefore, net income before income taxes was 403,314,000 yen (net loss before income taxes of 108,393,000 yen for the previous consolidated fiscal year).
As a result, net income after income taxes was 282,212,000 yen for the current consolidated fiscal year (net loss after income taxes of 53,363,000 yen for the previous consolidated fiscal year).
As for sales by business segment for the current consolidated fiscal year, sales for the core internet sales business decreased to 1,802,895,000 yen, down 27.1% from the previous consolidated fiscal year, which was mainly attributable to the software package and hardware distributor ValuMore Corporation’s exclusion from the scope of consolidation starting in the second half of the current consolidated fiscal year or on October 1, 2009.
The internet sales business is related to weak private consumption and the interest in software declined, with the exception of antivirus software. In the software download distribution area, sales declined for the Proregi service to 1,277,576,000 yen, down 13.8% from the previous consolidated fiscal year, and sales declined for the Share-Regi service area to 26,908,000 yen, down 14.7%. As stated above, sales for the software packages/hardware distribution decreased by 48.0% from the previous consolidated fiscal year to 498,410,000 yen. This was because the contribution of consolidated subsidiaries to sales was limited until the interim period.
Note: As for the method of recording operating revenues from software download distribution, the Shareregi service records only commissions from users and developers (collect a certain commission per use from users and the selling price of the software multiplied by a certain commission rate from developers) while the Proregi service posts the selling price of the software as sales.
Meanwhile, sales for the online game business, which the Group focuses on as a new management pillar, substantially increased by 143.4% from the previous consolidated fiscal year to 1,513,774,000 yen for the current consolidated fiscal year. This was attributable to traditional online games (games downloading client software) and the start of operations for browser games (online games running on browsers and unnecessary to download) at the specialized portal site Browser Game Time, which started operation during the current consolidated fiscal year, as well as a rapid increase in users of mobile games playable without applications (appli) as services for cell phones launched as one of the browser game businesses in August 2009 following the start of distribution of mixi appli mobile on October 27, 2009. In the online game business, six titles were offered as traditional online games, including Sangoku-Heroes, which was officially offered in April 2009, while three titles were provided as browser games, including Dragon Crusade, and three titles were available as new mobile games including Kiss to My Prince during the current consolidated fiscal year.
As a result, the online game business accounted for 41.4% of operating revenues for the current consolidated fiscal year, compared with 18.1% for the previous consolidated fiscal year. In terms of profits, a large sales increase absorbing the increase in the allocated portion of fixed costs enabled such business to return to profitability.
In addition, sales for the website advertising business decreased by 6.3% from the previous consolidated fiscal year to 204,957,000 yen due to the weak economy. Web advertising on the site operated by the Company, in particular keyword advertising, had driven the website advertising business; however, sales peaked two years ago and then rapidly declined by 29.0% from the previous consolidated fiscal year. Keyword advertising accounted for 25.6% of sales for the website advertising business (33.8% for the previous consolidated fiscal year)
Finally, sales for the category of other business increased by 16.2% from the previous consolidated fiscal year to 133,414,000 yen. This was driven by download distribution total support services for soft house, which accounts for 83% of sales of the other business, where sales increased by 32.3% from the previous consolidated fiscal year.
(2) Prospects for the next period
As for future prospects, the Group endeavors to further strengthen the online game business, which we have focused on as the new pillar of management, and we plan to launch several new titles for all game sections. Consequently, the Group expects operating revenues of 4,600 million yen, operating income of 600 million yen, ordinary profit of 600 million yen, and net income of 343 million yen for the next full year. The mobile section of the online game business starting offering services during the current period, and conservative projections are recorded based on past actual results because the section has a substantial swing factor for business results.
Press Releases » 2010