NAKAYOKU ANNUAL REPORT 2015 |
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| ANNUAL REPORT 2015
It’s more than just a word; it’s the foundation of everything we do, and we’re proud to say we’ve been creating bonds for over 50 years. At Sanrio we believe that a gift is more than just a gift. Rather, a gift is a means of expressing our heartfelt feelings for others. This philosophy guides all Sanrio activities, whether we’re designing a stationery set, a theme park, a retail store or an animated television series. From Sanrio boutiques showcasing the ultimate Sanrio collection to smaller assortments in other shopping environments, we invite all our friends and guests to experience the magic of this simple word.
NAKAYOKU
N A K AY O K U
NAKAYOKU ANNUAL REPORT 2015 |
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Everybody wants to spend their days being happy. It is a common wish of just about anyone on the face of the Earth. The common thread running through all our various business is the idea of giving gifts “from the heart” and “of the heart.” In order to get along with one another, we need to respect and to love. Whether one is sad, down, happy or whatever: we want to help people share their important feelings with one another.
NAKAYOKU
ONE GIFT
NAKAYOKU ANNUAL REPORT 2015 |
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Our business puts importance on the spiritual side of things. We make things which will help foster social and sentimental communication, we offer entertainment to add fun and fullness to everyday life, and we seek to help friendships flourish. That is why all of us at Sanrio shall continue, with one heart and mind, to offer the very best social communication business possible, and to help build a bridge between the hearts and minds of everyone. This is the reason for our business. And it is a business of which we are very proud.
NAKAYOKU
ONE HEART
LETTER TO SHAREHOLDERS ANNUAL REPORT 2015 |
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H E L LO
annual report
Good relationships and understanding between countries and people, and the notion of treating one another with respect, are increasingly believed to be the heart of happiness -- not just here, but around the world. It is for this we are proud to be known, and at this which we continue to strive to be the very best. Enjoy our gift to you,
Shintaro Tsuji Shintaro Tsuji, President and CEO
LETTER TO SHAREHOLDERS
Sanrio’s activities, since its inception, have all been rooted in social communication. We are convinced that regardless of this social current, people would nonetheless find joy and hope in beautiful things such as the blooming of a flower or a bird’s cheerful song.
ANNUAL REPORT 2015 |
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FINANCIAL HIGHLIGHTS RESULTS OF OPERATION The Sanrio Group sales fell 1.2% year-on-year to 55.0 billion yen in the first nine months of the current fiscal year, and operating profit fell 25.4% to 10.4 billion yen. Strong sales in China and Japan were unable to cover the shortfall in product licensing income from the US and Europe, which both continued to be sluggish.
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FINANCIAL HIGHLIGHTS
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Following foreign exchange gains of 0.7 billion resulting from a weak yen in the same period of the previous fiscal year, a slight gain resulting from a small currency swing was achieved in the current first nine months. As a result, ordinary profit decreased 28.4% to 10.6 billion. Meanwhile, net profit before income taxes and other adjustments fell 24.1% year-on-year to 11.4 billion after factoring in a 0.8% billion gain on sales of investment securities amid buoyant stock markets. Taxes payable declined overall due to profit falling in the US and Europe, where tax rates are high, more than offsetting a rise in Asia, where they are low; net profit to owners of parent fell 22.2% year-on-year, to 7.8 billion. Under conditions for domestic business, in addition to the sales from the rise in numbers of US tourists visiting Japan, the market for new characters is growing. Due to the expansion of new character Gudetama, we are targeting higher sales and profits in the 4th quarter.
Growing Operating Income*
Furthermore, since the accounting period for all overseas subsidiaries runs from January to December, the first 9 months under review for these subsidiaries covers the period from January to September 2015.
2015 estimated 2014 2013 2012
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1Q
4Q
17,049
73,400
2Q
2015 SALES TOTAL
35,458
3Q
0
20
40
2014
2015
US economist Philip Kotler stated, “A company cannot be successful by simply selling products. A company must develop products desired by customers.� He also states that a company cannot survive without innovation, which entails planning and developing new products.
2013
Today, Sanrio has a team of nearly 150 employees dedicated to innovation. Our team of innovators works night and day on new plan development that is leading to the launch of over 50 types of new products per week.
2012
Accurately identifying the products, designs, and brands desired by customers around the world and continuously developing new products to meet those demands is no easy task. Through dedication and hard work, we are succeeding in delivering hit products at each division. Sanrio will continue our commitment to developing new products that meet the needs of our friends throughout the world. We ask all our shareholders for your cooperation and support.
FINANCIAL HIGHLIGHTS
FINANCIAL GROWTH
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55,092
2012-2015 SALES Total in Thousands of Yen
CONSOLIDATED RESULTS R O es pe ul ra ts tio of ns
ANNUAL REPORT 2015 |
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Dec. 2014 Dec. 2015
OPERATING PROFIT
SALES Millions of Yen
%
Millions of Yen
Fi Po na si nci tio al n FINANCIAL NOTES
Millions of Yen
%
NET PROFIT
OWNERS OF PARENT
Millions of Yen
NET PROFIT
%
Yes
55,092
(1.2)
10,422
(25.4)
10,676 (28.1)
7,899 (22.2)
91.85
55,742
(2.7)
13,980
(16.4)
14,912
10,155
116.13
Note: Comprehensive income (millions of yen)
Dec. 2014 Dec. 2015
%
ORDINARY PROFIT
(4.7)
Nine months ended Dec. 31, 2015: 5,205 (down 50.6%) Nine months ended Dec. 31, 2014: 10,541 (down 31.2%)
TOTAL ASSETS
NET ASSETS
EQUITY RATIO
Millions of Yen
Millions of Yen
Millions of Yen
108,771
57,740
52.8
122,124
66,269
54.0
Reference: Shareholders’ equity (millions of yen)
0.1
As of Dec. 31, 2015: 57,423
As of Mar. 31, 2015: 65,981
Misc. Notes 1 Changes in consolidated subsidiaries during the period (changes in scope of consolidation): None Newly added: - Excluded: 2 Application of special accounting methods for presenting quarterly consolidated financial statements: None 3 Changes in accounting policies and accounting-based estimates, and restatements A Changes in accounting policies due to revisions in accounting standards, others: Yes B Changes in accounting policies other than A above: None C Changes in accounting-based estimates: None D Restatements: None 4 Number of outstanding shares (common stock) A Number of outstanding shares at the end of the period (including treasury stock) As of Dec. 31, 2015: 89,065,301 shares As of Mar. 31, 2015: 89,065,301 shares B Number of shares of treasury stock at the end of the period As of Dec. 31, 2015: 4,218,035 shares As of Mar. 31, 2015: 1,911,534 shares C Average number of shares outstanding during the nine month period Dec. 31, 2015: 86,000,486 shares Dec. 31, 2014: 87,453,994 shares Note 1: Information regarding the implementation of quarterly review procedures The current quarterly financial statements in this summary are exempted from quarterly review procedures based on the Financial Instruments and Exchange Act. At the time of disclosure of this report, the review procedures for these quarterly financial statements have not been completed. Note 2: Cautionary statement with respect to forward-looking statements and other special items Forecasts regarding future performance in these materials are based on assumptions judged to be valid and information currently available to the Company. These materials are not promises by the Company regarding future performance. Actual results may differ significantly from these forecasts for a number of factors. Please refer to 1. Qualitative Information on Quarterly Consolidated Financial Performance.
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ASSETS
2014
2015
NET ASSETS
2014 2015
Shareholders’ equity Capital ............................................................................................... 10,000 10,000 Capital surplus.................................................................................... 3,423 3,423 Retained earnings...........................................................................53,087 54,240 Treasury stock................................................................................(4,800) (11,788) Total shareholder’s equity.............................................................61,710 55,875 Accumulated other comprehensive income Net unrealized gain (loss) on other securities......................... 1,145 938 Deferred hedge gain (loss).................................................................. 13 (10) Foreign currency translation adjustments.............................. 5,643 2,872 Remeasurements of defined benefit plans........................... (2,531) (2,252) Total accumulated other comprehensive income................ 4,270 1,547 Stock acquisition rights.........................................................................................165 165 Non-controlling interests....................................................................................... 121 151 Total net assets................................................................................................ 66,269 57,740 Total liabilities and net assets..............................................................................122,124 108,771
FINANCIAL NOTES
Current assets Cash and deposit.............................................................................54,816 40,620 Trade notes and accounts receivable........................................ 11,567 11,832 Merchandise and finished goods................................................ 3,734 4,686 Work in process....................................................................................... 24 41 Raw materials and supplies................................................................158 135 Other accounts receivable.............................................................. 1,947 1,217 Other....................................................................................................... 2,196 2,016 Allowance for doubtful accounts ............................................... (133) (132) Total current assets..........................................................................74,311 60,420 Fixed assets Tangible fixed assets Buildings and structures, net........................................... 7,137 7,079 Land......................................................................................10,009 9,987 Other, net ...............................................................................1,745 1,997 Total tangible fixed assets .............................................18,891 19,064 Intangible fixed assets ................................................................... 5,254 5,362 Investments and other assets Investment securities......................................................... 11,153 12,936 Deferred tax assets............................................................ 3,018 2,693 Other...................................................................................... 11,560 10,344 Allowance for doubtful accounts............................... (2,162) (2,123) Total investments and other assets..........................23,569 23,850 Total fixed assets.............................................................................. 47,714 48,278 Deferred assets.......................................................................................................... 97 73 Total assets........................................................................................................ 122,124 108,771
| ANNUAL REPORT 2015
CONSOLIDATED BALANCE
FINANCIAL NOTES
ANNUAL REPORT 2015 |
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CONSOLIDATED INCOME STATEMENT OF INCOME
2014
2015
Sales ................................................................................................................................. 55,742 55,092 Cost of sales ................................................................................................................... 17,392 18,911 Gross profit .................................................................................................................. 38,350 36,180 Provision of reserve for adjustment of returned goods............................................. 19 Net gross profit on sales.......................................................................................... 38,350 36,161 Selling, general and administrative expenses...................................................24,369 25,739 Operating profit............................................................................................................ 13,980 10,422 Non-operating profit Interest income......................................................................................................... 317 330 Dividend income......................................................................................................120 146 Foreign exchange gains....................................................................................... 732 28 Other income............................................................................................................ 167 194 Total non-operating profit............................................................................... 1,336 700 Non-operating expenses Interest expense......................................................................................................245 193 Commission for syndicate loan..............................................................................4 112 Other............................................................................................................................ 153 139 Total non-operating expenses.......................................................................... 404 445 Ordinary profit................................................................................................................14,912 10,676 Extraordinary gains Gain on sales of fixed assets...................................................................................0 0 Gain on sales of investment securities...........................................................545 834 Total extraordinary gains....................................................................................545 835 Total extraordinary losses...............................................................................................334 30 Net profit before income taxes and other adjustments.................................. 15,123 11,481 Income taxes – current................................................................................................. 4,651 3,110 Income taxes – deferred ................................................................................................ 290 442 Total income taxes..........................................................................................................4,941 3,553 Net profit..........................................................................................................................10,181 7,928
NET PROFIT
2014
Net profit..........................................................................................................................10,181 Other comprehensive income Net unrealized gain (loss) on other securities..............................................146 Deferred hedge gain (loss).................................................................................... 14 Foreign currency translation adjustments.................................................. (40) Remeasurements of defined benefit plans, net of tax.............................239 Total other comprehensive income.................................................................359 Comprehensive income...............................................................................................10,541 Comprehensive income attributable to... Owners of parent............................................................................ 10,510 Non-controlling interests..................................................................... 30
2015 7,928 (206) (24) (2,770) 279 (2,722) 5,205 5,176 29
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PRINCIPAL BUSINESS ACTIVITIES
Planning and sale of social communication gifts Production, promotion and distribution of movies Planning and presentation of live performances Planning and operation of theme parks, restaurants Planning and sale of greeting cards Planning and sale of books Copyright licensing
BOARD OF DIRECTORS
Yuko Sakiyama, Kosho Nomura, Norio Kitamura, Yuko Tsuji, Yoichiro Shimomura, Jiro Kishimura, Mitsuaki Shimaguchi, Yoshiharu Hayakawa, Haruki Satomi Directors Yoshio Furuhashi, Shoji Omori, Michio Ishikawa, Yasuo Takenouchi Executive Auditors
1-11-1, Osaki, Shinagawa-Ku, Tokyo 141-8603 P 03-3779-8111
BRANCHES IN JAPAN Distribution Center Kansai Branch Kyushu Branch
JAPAN SUBSIDIARIES
Sanrio Entertainment Co. Kokoro Co., Ltd. Sanrio Far East Co., Ltd. Sanrio Car Lease Co., Ltd. Sanrio Enterprise Co., Ltd. Sanrio Music Co., Ltd. Sanrio Wave Co., Ltd. Pantry Co., Ltd. Nal Co., Ltd.
JAPAN SUBSIDIARIES
Sanrio, Inc. (USA) THOIP (UK) Mister Men Ltd. (UK) Mister Films Ltd. (UK) Sanrio Global Ltd. (UK) Sanrio UK Finance Ltd. (UK) Sanrio do Brasil (Brazil) Sanrio Chile SpA. (Chile) Sanrio GmbH (Germany) Sanrio Korea Co. (Korea) Sanrio Taiwan Co. (Taiwan) Sanrio Co. (Hong Kong) Sanrio Trading Co. (China)
SANRIO COMPANY, LTD., EST. AUGUST 10, 1960
CORPORATE INFO.
Shintaro Tsuji, President Chief Executive Officer Susumu Emori, Kazuyoshi Fukushima, Rehito Hatoyama, Takahide Nakaya, Saburo Miyauchi Managing Directors
HEAD OFFICE
| ANNUAL REPORT 2015
CORPORATE INFO.
ANNUAL REPORT 2015 |
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NAKAYOKU
ANNUAL REPORT 2015