Consolidated Financial Results for the Fiscal Year Ended December 31, 2017 [J-GAAP]
February 14, 2018 Name of listed company: Mobile Create Co., Ltd. Listed on: Tokyo Stock Exchange, 1st Section and
Fukuoka Stock Exchange
Securities code: 3669 URL: http://www.mcinc.jp
Representative: Yuji Murai, President and CEO
Contact: Kazuhisa Kibe, Director, Manager of Management Planning Office
TEL: +81-97-576-8181 Scheduled date of holding the ordinary general meeting of shareholders: March 27, 2018
Scheduled date to start dividends distribution: March 28, 2018 Scheduled date of filing the financial report: March 28, 2018 Supplementary documents for this summary of financial statements: Yes
Explanation meeting for financial results: Yes (for institutional investors and analysts) (Figures shown are rounded down to the nearest million yen.)
1. Consolidated results for the year ended December 31, 2017 (January 1, 2017 – December 31, 2017)
(1) Consolidated operating results (Percentage figures show changes from the previous year.) Net sales Operating profit Ordinary profit Profit attributable to
owners of parent Millions of yen % Millions of yen % Millions of yen
enyen
% Millions of yen %
Year ended December 31, 2017 8,108 ― 359 ― 412 ― 186 ―
Year ended December 31, 2016 5,007 ― 233 ― 233 ― 122 ―
Note: Comprehensive income: Year ended December 31, 2017: ¥474 million (― %) Year ended December 31, 2016: ¥357 million (― %)
Profit per share Diluted profit per share
Return on shareholders’
equity
Ordinary profit to total assets
Operating profit to net sales
Yen Yen % % %
Year ended December 31, 2017 8.05 8.00 4.0 3.8 4.4
Year ended December 31, 2016 5.28 5.26 2.7 2.3 4.7
(Reference) Equity in earnings of affiliates: Year ended December 31, 2017: ¥ ― million Year ended December 31, 2016: ¥ ― million Note: Effective from the fiscal period ended December 31, 2016, the Company has changed its fiscal year-end from May 31 to December 31. Accordingly, the fiscal period ended December 31, 2016 is a transitional period. Consolidated financial results for the period comprise seven months of results for the Company and consolidated subsidiaries that previously had May 31 fiscal year-ends (June 1, 2016 to December 31, 2016) and nine months of results for consolidated subsidiaries that previously had March 31 fiscal year-ends (April 1, 2016 to December 31, 2016). Consequently, no percentage comparisons have been provided for the previous year.
(2) Consolidated financial position
Total assets Net assets Shareholders’ equity ratio Net assets per share
Millions of yen Millions of yen % Yen
As of December 31, 2017 11,419 7,703 41.0 202.19
As of December 31, 2016 10,437 7,296 43.4 195.76
(Reference) Equity capital: As of December 31, 2017: ¥4,682 million As of December 31, 2016: ¥4,533 million
(3) Consolidated cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Cash and cash equivalents at end of
year
Millions of yen Millions of yen Millions of yen Millions of yen
Year ended December 31, 2017 861 (834) 47 1,546
Dividends per share Total dividends (annual) Dividends payout ratio (consolidated) Dividends on net assets (consolidated) First quarter -end Second quarter -end Third quarter -end
Year-end Annual
Yen Yen Yen Yen Yen Millions of yen % %
Year ended December 31, 2016 ― 0.00 ― 3.00 3.00 69 56.8 1.5
Year ended December 31, 2017 ― 0.00 ― 5.00 5.00 115 62.1 2.5
Year ending December 31,
2018 (Forecast) ― 0.00 ― ― ― ―
Note: The Company intends to establish a joint holding company through a share transfer on July 2, 2018, conditional on approval at the Annual General Meeting of Shareholders scheduled for March 27, 2018.
Consequently, no year-end dividend forecast has been shown, as the Company is due to be delisted from the Tokyo Stock Exchange and the Fukuoka Stock Exchange on June 27, 2018.
3. Consolidated financial forecast for the fiscal year ending December 31, 2018 (January 1, 2018 – December 31, 2018) (Percentage figures show changes from the same period in the previous year.)
Net sales Operating profit Ordinary profit Profit attributable to owners of parent
Profit per share
Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen
First six months 4,133 11.6 127 22.2 131 (9.0) 43 (11.9) 1.86
Full year 8,600 6.1 450 25.3 458 10.9 200 7.3 8.64
Note: The Company intends to establish a joint holding company through a share transfer on July 2, 2018. The above consolidated financial forecast for the fiscal year ending December 31, 2018 is the consolidated financial forecast for Mobile Create Co., Ltd.
Notes:
(1) Significant changes to subsidiaries during the term (Transfers of specific subsidiaries with changes in the scope of consolidation): No
New: ― Excluded: ―
(2) Changes in accounting policies, accounting estimates and restatement of revisions
1) Changes in accounting policies due to revision of accounting standard, etc.: None 2) Changes in accounting policies other than 1): None
3) Changes in accounting estimates: None
4) Restatement of revisions: None
(3) Number of outstanding shares (common stock): 1) Number of shares issued and
outstanding (including treasury stock) As of December 31, 2017 23,157,600 shares As of December 31, 2016 23,157,600 shares 2) Number of treasury stock As of December 31, 2017 - shares As of December 31, 2016 - shares 3) Average number of shares issued and
outstanding in each period
Year ended December 31,
2017 23,157,600 shares
Year ended December 31,
2016 23,157,600 shares
(References) Overview of the non-consolidated business results
Non-consolidated results for the year ended December 31, 2017 (January 1, 2017 – December 31, 2017)
(1) Non-consolidated operating results (Percentage figures show changes from the previous year.)
Net sales Operating profit Ordinary profit Net income Millions of yen % Millions of yen % Millions of yen % Millions of yen %
Year ended December 31, 2017 3,838 ― 303 ― 326 ― 221 ―
Year ended December 31, 2016 2,132 ― 100 ― 99 ― 57 ―
Net income per share Diluted net income per share
Yen Yen
Year ended December 31, 2017 9.57 9.50
Year ended December 31, 2016 2.50 2.49
Total assets Net assets Equity ratio Net assets per share
Millions of yen Millions of yen % Yen
As of December 31, 2017 5,600 3,881 67.6 163.46
As of December 31, 2016 5,540 3,696 65.3 156.17
(Reference) Equity capital: As of December 31, 2017: ¥3,785 million As of December 31, 2016: ¥3,616 million
* This Summary of Financial Statements (Tanshin) is outside the scope of audit procedures.
* Explanation of appropriate use of forecasts of financial results; other important items
The forward-looking statements in this document, including forecasts, are based on information available at the time of disclosure and on certain assumptions deemed to be reasonable by the Company, and are not intended to guarantee the achievements by the Company. Actual results may differ materially from forward-looking statements due to a number of factors. For more details about these assumptions and other conditions that form the basis of these forecasts, please refer to page 3 of the supplementary materials, “1. Analysis of operating results, etc., (4) Business outlook.”
Contents
1. Analysis of operating results, etc. ... 2
(1) Analysis of operating results ... 2
(2) Analysis of financial position ... 2
(3) Analysis of cash flows ... 2
(4) Business outlook ... 3
(5) Basic policy on distribution of profits and dividends for fiscal 2017 and fiscal 2018 ... 3
2. Basic stance on selection of accounting standards ... 4
3. Consolidated financial statements and related notes... 5
(1) Consolidated balance sheets ... 5
(2) Consolidated statements of income and comprehensive income ... 7
(Consolidates statements of income) ... 7
(Consolidated statements of comprehensive income) ... 8
(3) Consolidated statements of changes in net assets ... 9
(4) Consolidated statements of cash flows ... 11
(5) Notes on consolidated financial statements ... 13
(Notes related to the going concern assumption) ... 13
(Basic important matters for preparing the consolidated financial statements) ... 13
(Segment information, etc.) ... 15
(Per share information) ... 18
1. Analysis of operating results, etc.
(1) Analysis of operating results
In the fiscal year under review, corporate earnings and employment conditions in the Japanese economy improved at a moderate pace, supported by sustained economic growth in the US and a pickup in the economies of China and Southeast Asia. However, the outlook for the real economy remained unclear due to rising military tension surrounding North Korea and political trends in Europe, centered on the UK’s decision to leave the EU.
In this climate, the Group pushed ahead with efforts to build new business models to drive growth in existing businesses and move into new business fields.
In the Mobile Communications segment, the Company worked to expand its stock business, centered on business-use IP wireless systems. As a result, the total number of systems under contract rose past the Group’s target of 100,000 systems. Also, in order to expand new businesses, the Company continued to make upfront investments in its nationwide taxi dispatch app, Rakuraku Taxi, the first full-fledged consumer service offered by the Group, and in overseas businesses.
In the Equipment segment, orders were initially weak due to a temporary decline in new investment in the automotive sector, which was caused by uncertainty in overseas economies at the start of the fiscal year, but automotive-related orders recovered sharply from the second half of the fiscal year.
As a result of the above, the Group reported fiscal 2017 net sales of ¥8,108,124,000, operating profit of ¥359,079,000, ordinary profit of ¥412,882,000, and profit attributable to owners of parent of ¥186,450,000.
Performance in the Mobile Create Group’s business segments was as follows. (Mobile Communications segment)
This segment reported net sales of ¥4,331,450,000 and operating profit of ¥224,875,000. Flow Business
Sales of electronic settlement systems and digital signage increased. In taxi dispatch systems, sales fell short of start-of-year targets due to an ongoing drop-off in demand after the transition to digital taxi wireless systems.
As a result, sales in the Flow Business was ¥2,152,643,000. Stock Business
The total number of systems under contract reached roughly 106,000, helping the Stock Business exceed its start-of-year revenue target.
As a result, sales in the Stock Business was ¥2,178,807,000. (Equipment segment)
At the start of the fiscal year, automotive-related orders were weak for a time, but recovered sharply from the second half of the fiscal year. The Company also implemented business restructuring to tighten up process management and cost control and to improve plant capacity utilization. As a result, the segment reported net sales of ¥3,776,674,000 and operating profit of ¥138,798,000.
(2) Analysis of financial position (Assets)
As of December 31, 2017, total assets stood at ¥11,419,995,000, up ¥982,385,000 from the end of the previous fiscal year. This result mainly reflected increases of ¥225,090,000 in inventories and ¥241,266,000 in property, plant and equipment.
(Liabilities)
Total liabilities amounted to ¥3,716,622,000, up ¥575,157,000 from the previous fiscal year-end. This was mainly attributable to increases of ¥276,472,000 in notes and accounts payable - trade, ¥100,000,000 in short-term loans payable, and ¥117,908,000 in current portion of long-term loans payable.
(Net assets)
Total net assets stood at ¥7,703,373,000, up ¥407,228,000 from the end of the previous fiscal year. This was largely the result of increases of ¥241,562,000 in non-controlling interests and ¥186,450,000 in retained earnings, the latter owing to the posting of profit attributable to owners of parent for the fiscal year, offsetting a decline of ¥69,472,000 in retained earnings due to the payment of dividends.
(3) Analysis of cash flows
Cash and cash equivalents as of December 31, 2017 stood at ¥1,546,456,000, an increase of ¥72,461,000 from the end of the previous fiscal year. Cash flows for the fiscal year under review were as follows:
Operating activities provided net cash of ¥861,285,000. Primary reasons for the growth in net cash were ¥412,882,000 in profit before income taxes, ¥479,885,000 in depreciation and an increase of ¥276,472,000 in notes and accounts payable - trade. On the other hand, main reasons for the decline in net cash were an increase of ¥225,090,000 in inventories and ¥121,071,000 in income taxes paid.
(Cash flows from investing activities)
Investing activities used net cash of ¥834,897,000. The main contributor of cash was proceeds from sales of property, plant and equipment of ¥113,317,000. Main uses of cash included ¥540,031,000 for the purchase of property, plant and equipment, and ¥383,011,000 for the purchase of intangible assets.
(Cash flows from financing activities)
Financing activities provided net cash of ¥47,098,000. The main contributor of cash was proceeds from long-term loans payable of ¥300,000,000 and an increase in short-term loans payable of ¥100,000,000. Uses of cash consisted mainly of ¥224,883,000 for repayments of long-term loans payable and ¥69,904,000 for cash dividends paid.
Trends in cash flow indicators are summarized below. Year ended May 31, 2014
Year ended May 31, 2015
Year ended May 31, 2016
Year ended December 31,
2016
Year ended December 31,
2017
Equity ratio (%) 65.5 62.0 44.8 43.4 41.0
Market value-based equity ratio (%) 343.7 252.8 98.1 82.3 73.2
Cash flow to interest-bearing debts (year) 0.7 43.5 1.7 - 2.0
Interest coverage ratio (times) 106.0 2.4 57.6 - 66.8
Equity ratio: Equity capital / total assets Market value-based equity ratio: Market capitalization / total assets
Cash flow to interest-bearing debts: Interest-bearing debts / cash flow from operating activities Interest coverage ratio: Cash flow from operating activities / interest payments Notes:
1. All items are calculated using consolidated figures.
2. Total market capitalization is share price x number of shares outstanding as of the end of the fiscal year.
3. Interest-bearing debt is all liabilities on which interest is paid shown under liabilities on the consolidated balance sheet. 4. Cash flow is “Cash flow from operating activities” shown on the consolidated statements of cash flow.
5. Interest payments are “Interest expenses paid” shown on the consolidated statement of cash flow.
6. Cash flow to interest-bearing debts and the interest coverage ratio have not been shown for the fiscal year ended December 31, 2016, as operating cash flow was negative.
(4) Business outlook
The Company will continue to focus on growing existing businesses and on moving into new business fields, including building a business model for the expanding IoT market.
In the Mobile Communications segment, the Company has set a new target of 200,000 total systems under contract to support the Stock Business going forward. The Company will also strengthen its product development framework and develop businesses focused on services that use big data and AI technology. In the Equipment segment, the Company will continue to expand the strong-performing automotive-related business and push ahead with the development of new businesses through collaboration with the Mobile Communications segment.
These business projects will involve some upfront investment, but we expect them to contribute to sales and profits in the future. Our goal is to increase the Group’s corporate value by building new business models.
For the fiscal year ending December 31, 2018 (fiscal 2018), we forecast net sales of ¥8,600 million, operating profit of ¥450 million, ordinary profit of ¥458 million and profit attributable to owners of parent of ¥200 million.
(5) Basic policy on distribution of profits and dividends for fiscal 2017 and fiscal 2018
Returning profits to shareholders is an important management goal for the Company. Our basic policy is to pay stable dividends to shareholders while ensuring sufficient internal reserves to fund future business development and reinforce the business.
Taking into account earnings trends, shareholder returns and a range of other factors, the Company plans to pay a year-end dividend of ¥5.00 per share for fiscal 2017.
scheduled for March 2018.
The Company intends to pay a year-end dividend through joint holding company FIG and will disclose information based on earnings trends and other factors as soon as possible.
2. Basic stance on selection of accounting standards
3. Consolidated financial statements and related notes
(1) Consolidated balance sheets
(Thousands of yen) As of December 31, 2016 As of December 31, 2017 Assets
Current assets
Cash and deposits 1,473,994 1,546,456
Notes and accounts receivable - trade 2,991,429 2,960,640
Lease investment assets 80,195 75,700
Finished goods 410,936 225,747
Work in process 530,415 828,946
Raw materials 532,164 643,913
Deferred tax assets 27,474 106,155
Others 77,709 143,527
Allowance for doubtful accounts (22,611) (19,053)
Total current assets 6,101,708 6,512,033
Non-current assets
Property, plant and equipment
Buildings and structures 1,653,267 1,911,200
Accumulated depreciation (860,646) (857,916)
Buildings and structures, net 792,620 1,053,284
Machinery, equipment and vehicles 435,936 452,674
Accumulated depreciation (359,680) (307,787)
Machinery, equipment and vehicles, net 76,255 144,886
Tools, furniture and fixtures 433,754 448,374
Accumulated depreciation (347,939) (363,915)
Tools, furniture and fixtures, net 85,814 84,458
Rental assets 149,381 185,468
Accumulated depreciation (46,092) (74,103)
Rental assets, net 103,289 111,364
Land 1,471,968 1,413,649
Leased assets 165,374 165,374
Accumulated depreciation (103,005) (128,966)
Leased assets, net 62,369 36,408
Construction in progress 10,467 －
Total property, plant and equipment 2,602,786 2,844,052
Intangible assets
Software 415,685 409,899
Software in progress 61,048 173,260
Leased assets 32,967 20,268
Others 76,189 64,197
Total intangible assets 585,891 667,626
Investments and other assets
Investment securities 851,092 987,188
Net defined benefit asset 167,433 271,895
Deferred tax assets 32,976 32,899
Others 101,879 110,090
Allowance for doubtful accounts (6,159) (5,790)
Total investments and other assets 1,147,223 1,396,283
Total non-current assets 4,335,901 4,907,962
(Thousands of yen) As of December 31, 2016 As of December 31, 2017
Liabilities
Current liabilities
Notes and accounts payable - trade 909,688 1,186,161
Short-term loans payable 400,000 500,000
Current portion of bonds 18,200 20,800
Current portion of long-term loans payable 184,488 302,396
Lease obligations 44,475 38,041
Income taxes payable 95,128 163,753
Provision for bonuses 30,565 30,737
Provision for product warranties 14,168 18,031
Others 370,967 368,317
Total current liabilities 2,067,682 2,628,237
Non-current liabilities
Bonds 320,800 300,000
Long-term loans payable 601,118 558,327
Lease obligations 57,047 22,220
Deferred tax liabilities 78,096 150,930
Provision for directors' retirement benefits 7,518 14,407
Net defined benefit liability 9,203 13,822
Others － 28,677
Total non-current liabilities 1,073,782 1,088,384
Total liabilities 3,141,464 3,716,622
Net assets
Shareholders’ equity
Capital stock 1,004,678 1,004,678
Capital surplus 991,792 994,388
Retained earnings 2,527,028 2,644,006
Total shareholders’ equity 4,523,498 4,643,073
Accumulated other comprehensive income
Valuation difference on available-for-sale securities 36,061 69,273
Foreign currency translation adjustment 1,894 1,014
Remeasurements of defined benefit plans (28,233) (31,033)
Total accumulated other comprehensive income 9,722 39,253
Subscription rights to shares 79,590 96,150
Non-controlling interests 2,683,333 2,924,895
Total net assets 7,296,145 7,703,373
(2) Consolidated statements of income and comprehensive income (Consolidated statements of income)
(Thousands of yen) Year ended December 31,
2016
Year ended December 31, 2017
Net sales 5,007,252 8,108,124
Cost of sales 3,590,423 5,774,652
Gross profit 1,416,828 2,333,472
Selling, general and administrative expenses 1,183,744 1,974,392
Operating profit 233,083 359,079
Non-operating income
Interest income 3,790 6,375
Dividend income 8,566 10,219
Commissions received 2,703 6,277
Subsidy income － 43,513
Rental income received 2,807 1,048
Gain on sales of non-current assets 33 7,870
Others 6,170 14,204
Total non-operating income 24,073 89,509
Non-operating expenses
Interest expenses 12,352 13,823
Bond issuance cost 5,726 －
Business commencement expenses 1,029 －
Loss on retirement of non-current assets 3,252 13,308
Others 1,693 8,575
Total non-operating expenses 24,053 35,707
Ordinary profit 233,103 412,882
Extraordinary income
Gain on sales of non-current assets 179,778 －
Total extraordinary income 179,778 －
Extraordinary losses
Impairment loss 6,024 －
Total extraordinary losses 6,024 －
Profit before income taxes 406,857 412,882
Income taxes – current 71,750 170,198
Income taxes – deferred 12,153 (85,073)
Total income taxes 83,903 85,125
Profit 322,954 327,757
Profit attributable to non-controlling interests 200,628 141,306
(Consolidated statements of comprehensive income)
(Thousands of yen) Year ended December 31,
2016
Year ended December 31, 2017
Profit 322,954 327,757
Other comprehensive income
Valuation difference on available-for-sale securities 84,291 57,747
Foreign currency translation adjustment 2,764 (880)
Remeasurements of defined benefit plans (52,709) 90,112
Total other comprehensive income 34,347 146,979
Comprehensive income 357,301 474,736
(Breakdown of comprehensive income)
Comprehensive income attributable to owners of parent 142,124 255,673
Comprehensive income attributable to non-controlling
interests 215,176 219,063
(3) Consolidated statements of changes in net assets
Year ended December 31, 2016 (June 1, 2016 – December 31, 2016)
(Thousands of yen) Shareholders’ equity Accumulated other comprehensive income
Subscription rights to shares Non-controll ing interests Total net assets Capital stock Capital
surplus Retained earnings Total shareholders’ equity Valuation difference on available-for- sale securities Foreign currency translation adjustment Remeasurem ents of defined benefit plans Total accumulated other comprehensive income Balance at beginning of current period
1,004,678 991,821 2,520,490 4,516,990 (2,550) (870) (59,216) (62,637) 71,245 2,462,577 6,988,175
Changes of items during period
Dividends
from surplus (115,788) (115,788) (115,788)
Profit attributable to owners of parent
122,325 122,325 122,325
Purchase of treasury stock by consolidated subsidiaries
(29) (29) (29)
Change in ownership interest of parent due to transactions with non-controllin g interests Net changes of items other than shareholders’ equity
38,612 2,764 30,982 72,360 8,344 220,756 301,461
Total changes of items during period
― (29) 6,537 6,508 38,612 2,764 30,982 72,360 8,344 220,756 307,969
Balance at end of
Year ended December 31, 2017 (January 1, 2017 – December 31, 2017)
(Thousands of yen) Shareholders’ equity Accumulated other comprehensive income
Subscription rights to shares Non-controll ing interests Total net assets Capital stock Capital
surplus Retained earnings Total shareholders’ equity Valuation difference on available-for- sale securities Foreign currency translation adjustment Remeasurem ents of defined benefit plans Total accumulated other comprehensive income Balance at beginning of current period
1,004,678 991,792 2,527,028 4,523,498 36,061 1,894 (28,233) 9,722 79,590 2,683,333 7,296,145
Changes of items during period
Dividends
from surplus (69,472) (69,472) (69,472)
Profit attributable to owners of parent
186,450 186,450 186,450
Purchase of treasury stock by consolidated subsidiaries
(73) (73) (73)
Change in ownership interest of parent due to transactions with non-controllin g interests
2,670 2,670 2,670
Net changes of items other than shareholders’ equity
33,211 (880) (2,799) 29,531 16,560 241,562 287,653
Total changes of items during period
― 2,596 116,977 119,574 33,211 (880) (2,799) 29,531 16,560 241,562 407,228
Balance at end of
current period 1,004,678 994,388 2,644,006 4,643,073 69,273 1,014 (31,033) 39,253 96,150 2,924,895 7,703,373
(4) Consolidated statements of cash flows
(Thousands of yen) Year ended
December 31, 2016
Year ended December 31,
2017 Cash flows from operating activities
Profit before income taxes 406,857 412,882
Depreciation 254,203 479,885
Impairment loss 6,024 －
Share-based compensation expenses 8,707 17,284
Increase (decrease) in allowance for doubtful accounts (1,574) (3,926)
Decrease (increase) in net defined benefit asset 4,443 25,196
Increase (decrease) in provision for product warranties (4,930) 3,863
Increase (decrease) in net defined benefit liability 2,107 4,618
Increase (decrease) in provision for bonuses (32,434) 172
Increase (decrease) in provision for directors' retirement benefits 1,636 6,889
Interest and dividend income (12,357) (16,594)
Interest expenses 12,352 13,823
Bond issuance cost 5,726 －
Subsidy income － (43,513)
Loss (gain) on sales of non-current assets (179,778) (7,870)
Loss on retirement of non-current assets 3,252 13,308
Decrease (increase) in notes and accounts receivable - trade (1,000,563) 30,788
Decrease (increase) in inventories (55,606) (225,090)
Increase (decrease) in notes and accounts payable - trade 106,329 276,472
Decrease (increase) in lease investment assets (925) 4,494
Increase (decrease) in advances received (2,028) 20,188
Others 41,494 (66,407)
Subtotal (437,065) 946,465
Interest and dividend income received 13,137 16,594
Interest expenses paid (16,211) (12,894)
Proceeds from subsidy income － 32,190
Payments for directors' retirement benefits (11,219) －
Income taxes paid (18,581) (121,071)
Net cash provided by (used in) operating activities (469,939) 861,285
Cash flows from investing activities
Purchase of property, plant and equipment (168,811) (540,031)
Proceeds from sales of property, plant and equipment 423,993 113,317
Purchase of intangible assets (108,308) (383,011)
Proceeds from redemption of investment securities 10,000 －
Proceeds from sales of investment securities － 3,183
Purchase of investment securities (1,941) (56,106)
Purchase of shares of subsidiaries resulting in change in scope of
consolidation (68,890) －
Proceeds from subsidy income － 40,000
Others (8,715) (12,248)
(Thousands of yen) Year ended
December 31, 2016
Year ended December 31,
2017 Cash flows from financing activities
Net increase (decrease) in short-term loans payable (300,000) 100,000
Proceeds from long-term loans payable 300,000 300,000
Repayments of long-term loans payable (74,132) (224,883)
Proceeds from issuance of bonds 294,273 －
Redemption of bonds (119,100) (18,200)
Cash dividends paid (115,280) (69,904)
Repayments of lease obligations (26,216) (39,839)
Others (29) (73)
Net cash provided by (used in) financing activities (40,485) 47,098
Effect of exchange rate change on cash and cash equivalents 169 (1,025)
Net increase (decrease) in cash and cash equivalents (432,929) 72,461
Cash and cash equivalents at the beginning of period 1,906,924 1,473,994
(5) Notes on consolidated financial statements (Notes related to the going concern assumption)
There is no related information.
(Basic important matters for preparing the consolidated financial statements) 1. Items related to the scope of consolidation
All subsidiaries are consolidated. Number of consolidated subsidiaries: 7 Name of consolidated subsidiaries:
M.R.L Co., Ltd.
Okinawa Mobile Create Co., Ltd. Tran Corporation
ciDrone Co., Ltd. Mobile Create USA, Inc.
Ishii Tool & Engineering Corporation OPTSP Co., Ltd.
2. Notes related to fiscal years and other details of consolidated subsidiaries
The Company’s consolidated subsidiaries, except for OPTSP Co., Ltd. (November 30), have the same fiscal year-ends as the consolidated closing date.
Financial documents based on the financial closing date of OPTSP Co., Ltd. have been used to consolidate the results of that company. However, adjustments have been made to the consolidated financial statements to reflect significant business transactions with OPTSP Co., Ltd. that occurred between the financial closing date of that company and the consolidated financial closing date.
3. Items related to accounting standards
(1)Valuation standards and methods for assets 1) Securities
Available-for-sale securities With market value
Market value method based on market prices on the fiscal year closing date.
(All valuation differences are booked directly to net assets, while cost of sales is calculated using the moving average method.)
Without market value
Moving average cost method 2) Inventories
Evaluated using the cost method (book value is reduced based on decline in profitability). a. Products
Mainly the gross average method b. Work in progress
Specific identification method and gross average method c. Materials
Mainly the gross average method
(2)Depreciation and amortization methods for depreciable assets 1) Property, plant and equipment (other than lease assets)
Straight-line method for buildings and rental assets purchased on or after April 1, 1998 and for building fixtures and structures purchased on or after April 1, 2016; declining-balance method for other property, plant and equipment.
Buildings and structures 10 – 38 years Tools, furniture and fixtures 2 – 20 years 2) Intangible assets (other than lease assets)
a. Software for sale
Software for sale is amortized based on expected sales volume or an equally allocated amount over the estimated useful life of the software (3 years), whichever is larger.
b. Software for use by the Company
Straight-line method based on estimated useful life of 5 years. 3) Lease assets
Assets associated with non-ownership-transfer finance lease transactions
Straight-line method. Useful life is used as the lease term and the residual value equals zero (residual value guarantee amount is used if the transaction includes an agreed residual value guarantee).
(3)Accounting standards for allowances and provisions 1) Allowance for doubtful accounts
Allowance for doubtful accounts is provided for at an amount determined based on the historical experience of bad debt with respect to general receivables, plus an estimate of unrecoverable amounts determined by reference to specific doubtful receivables from customers experiencing financial difficulties.
2) Provision for bonuses
Provision for bonuses is provided for the payment of bonuses to employees at the Company and certain consolidated subsidiaries at the expected payment amount for the fiscal year.
3) Provision for product warranties
Provision for product warranties is provided for expenses related to free after-sales service repairs based on the historical guarantee cost ratio.
4) Provision for directors’ retirement benefits
In preparation for the payment of directors’ retirement benefits, certain consolidated subsidiaries post 100% of the necessary amount to be paid at the end of the fiscal year in accordance with internal rules.
(4)Method of accounting for retirement benefits
As a provision for employee retirement benefits, the Company has recorded liabilities related to retirement benefits based on estimated retirement benefit liabilities as of December 31, 2017.
Also, as a provision for employee retirement benefits, certain consolidated subsidiaries have recorded liabilities related to retirement benefits and pension assets based on estimated retirement benefit liabilities and pension assets as of December 31, 2017.
Method of attributing expected retirement benefits to periods
To calculate retirement benefit liabilities, the Company uses the benefit formula method for attributing expected retirement benefits to the period up to December 31, 2017.
Method of accounting for expenses for actuarial differences and prior service costs
The Company records expenses for prior service costs using the straight-line method at the time they are incurred over a fixed number of years within employees’ average remaining service period (5 years).
The Company records expenses for actuarial differences as proportionally distributed amounts using the straight-line method at the time they are incurred during each consolidated fiscal year over a fixed number of years within
employees’ average remaining service period (5 years). Expenses for actuarial differences are recorded in the consolidated fiscal year after they are incurred.
(5)Standard to record income and expenses
Net sales and cost of sales are recorded when a lease fee is received. (6)Basis for translating foreign currency assets and liabilities to Japanese yen
Monetary assets and liabilities denominated in foreign currencies are translated to Japanese yen at the spot exchange rate on the consolidated closing date, and translation adjustments are recorded as income or losses. Assets and liabilities of overseas subsidiaries are translated to Japanese yen at the spot exchange rate on their closing dates, with profits and expenses translated at the average rate during the accounting period. Translation adjustments are recorded within foreign currency translation adjustments under net assets.
(7)Scope of funds in the consolidated statements of cash flows
Funds include cash at hand, demand deposits at banks and highly liquid short-term investments with negligible risk of fluctuation in value and maturities of less than three months from the date of acquisition.
(8)Additional information related to the preparation of consolidated financial statements Accounting treatment of consumption and other taxes
Consumption and other taxes are recorded net of tax.
(Segment information, etc.)
(Segment information)
Year ended December 31, 2016 (June 1, 2016 – December 31, 2016) 1. Overview of reportable segments
(1) Classification of reportable segments
The Group’s business companies are responsible for business activities, conducting operations and formulating strategies for products and services in their fields.
Consequently, the Group has classified its business segments along product and service lines, resulting in two reportable segments, the Mobile Communications segment and the Equipment segment.
(2) Products and service lines of reportable segments
The Mobile Communications segment mainly develops and sells mobile management systems and provides related communication and application services and maintenance support.
The Equipment segment mainly manufactures and sells manufacturing equipment and molds for the semiconductor and automotive sectors and develops, manufactures, maintains and sells unmanned drones and robot control systems.
2. Information regarding sales, income (loss), assets, liabilities and other items by reportable segment
(Thousands of yen)
Reportable segment
Total Adjustment
Carried on
consolidated
financial
statements Mobile
Communications Equipment
Net sales
Sales to external customers
Intersegment sales and
transfers
2,321,521 2,685,730 5,007,252 ― 5,007,252
― 15,329 15,329 (15,329) ―
Total 2,321,521 2,701,059 5,022,581 (15,329) 5,007,252
Segment income (loss) 52,777 180,032 232,809 274 233,083
Segment assets 4,632,282 5,809,613 10,441,896 (4,286) 10,437,610
Other items
Depreciation and amortization 193,798 60,405 254,203 ― 254,203
Increase in property, plant and
Notes:
1. Adjustments of segment income of ¥274,000 and segment assets of (¥4,286,000) are due to the elimination of intersegment transactions.
2. Some adjustments were made between segment income (loss) and operating profit recorded in the consolidated statements of income.
Year ended December 31, 2017 (January 1, 2017 – December 31, 2017) 1. Overview of reportable segments
(1) Classification of reportable segments
The Group’s business companies are responsible for business activities, conducting operations and formulating strategies for products and services in their fields.
Consequently, the Group has classified its business segments along product and service lines, resulting in two reportable segments, the Mobile Communications segment and the Equipment segment.
(2) Products and service lines of reportable segments
The Mobile Communications segment mainly develops and sells mobile management systems and provides related communication and application services and maintenance support.
The Equipment segment mainly manufactures and sells manufacturing equipment and molds for the semiconductor and automotive sectors and develops, manufactures, maintains and sells unmanned drones and robot control systems.
2. Information regarding sales, income (loss), assets, liabilities and other items by reportable segment
(Thousands of yen)
Reportable segment
Total Adjustment
Carried on
consolidated
financial
statements Mobile
Communications Equipment
Net sales
Sales to external customers
Intersegment sales and
transfers
4,331,450 3,776,674 8,108,124 ― 8,108,124
4,153 36,772 40,926 (40,926) ―
Total 4,335,603 3,813,446 8,149,050 (40,926) 8,108,124
Segment income (loss) 224,875 138,798 363,674 (4,594) 359,079
Segment assets 4,560,610 6,886,831 11,447,442 (27,446) 11,419,995
Other items
Depreciation and amortization 353,915 125,969 479,885 ― 479,885 Increase in property, plant and
equipment and intangible assets 338,562 588,073 926,636 (3,594) 923,042 Notes:
1. Adjustments of segment income of (¥4,594,000), segment assets of (¥27,446,000) and increase in property, plant and equipment and intangible assets of (¥3,594,000) are due to the elimination of intersegment transactions.
2. Some adjustments were made between segment income (loss) and operating profit recorded in the consolidated statements of income.
(Related information)
Year ended December 31, 2016 (June 1, 2016 – December 31, 2016) 1. Information by product and service
This information has been omitted, as it is the same as segment information. 2. Information by region
(1)Net sales
(2)Property, plant and equipment
Information has been omitted, as property, plant and equipment in Japan accounts for more than 90% of the amount of property, plant and equipment in the consolidated balance sheets.
3. Information by major customer
(Thousands of yen)
Client name Net sales Name of related segment
Daiichi Jitsugyo Co., Ltd. 1,411,514 Equipment
Year ended December 31, 2017 (January 1, 2017 – December 31, 2017) 1. Information by product and service
This information has been omitted, as it is the same as segment information. 2. Information by region
(1)Net sales
Information has been omitted, as net sales to third-party customers in Japan exceeded 90% of net sales in the consolidated statements of income.
(2)Property, plant and equipment
Information has been omitted, as property, plant and equipment in Japan accounts for more than 90% of the amount of property, plant and equipment in the consolidated balance sheets.
3. Information by major customer
(Thousands of yen)
Client name Net sales Name of related segment
Daiichi Jitsugyo Co., Ltd. 2,022,630 Equipment
(Information on non-current asset impairment losses by reportable segment) Year ended December 31, 2016 (June 1, 2016 – December 31, 2016)
(Thousands of yen)
Reportable segment
Total Corporate/Elimination Total Mobile
Communications Equipment
Impairment loss ― 6,024 6,024 ― 6,024
Year ended December 31, 2017 (January 1, 2017 – December 31, 2017) There is no related information.
(Information on goodwill amortization amounts and outstanding amortization balances by reportable segment) Year ended December 31, 2016 (June 1, 2016 – December 31, 2016)
Information has been omitted, as amounts for goodwill amortization and outstanding amortization balance are immaterial.
Year ended December 31, 2017 (January 1, 2017 – December 31, 2017)
Information has been omitted, as amounts for goodwill amortization and outstanding amortization balance are immaterial.
(Information on gains on negative goodwill by reportable segment) Year ended December 31, 2016 (June 1, 2016 – December 31, 2016)
There is no related information.
(Per share information)
(Yen)
Year ended December 31, 2016 Year ended December 31, 2017
Net assets per share 195.76 202.19
Profit per share 5.28 8.05
Diluted profit per share 5.26 8.00
Notes:
1. Basis for calculating profit per share and diluted profit per share is as follows:
Year ended December 31, 2016 Year ended December 31, 2017 Profit per share
Net income (thousand yen) 122,325 186,450
Amounts not attributable to owners of common
stock (thousand yen) ― ―
Net income associated with common stock
(thousand yen) 122,325 186,450
Average number of shares of common stock
during fiscal year (shares) 23,157,600 23,157,600
Diluted profit per share
Adjustment to net income (thousand yen) ― ―
Increase in number of common stock (shares) 76,593 158,572
(of which, subscription rights to shares) (76,593) (158,572)
Summary of residual shares not included in calculations of diluted profit per share due to no dilutive effect
― ―
2. Basis for calculating net assets per share is as follows:
As of December 31, 2016 As of December 31, 2017
Net assets (thousand yen) 7,296,145 7,703,373
Amount deducted from total net assets
(thousand yen) 2,762,923 3,021,046
(Of which, subscription rights to shares) (79,590) (96,150)
Year-end net assets related to common stock
(thousand yen) 4,533,221 4,682,327
Number of common stock at period-end used to
calculate net assets per share (shares) 23,157,600 23,157,600
