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Poletowin Pitcrew Holdings, Inc.
Annual Review 2015 For the Year Ended January 31, 2015
◆Company Profile
Poletowin Pitcrew Holdings, Inc., was formed in February 2009 as the holding company of Pole To Win
Co., Ltd. (PTW), founded in 1994 as Japan’s first independent testing outsourcee, and PITCREW CO.,
LTD., established in 2000 as the industry’s first Internet monitoring specialist company. Poletowin
Pitcrew Holdings, listed on the First Section of the Tokyo Stock Exchange, had 19 consolidated
subsidiaries as of April 1, 2015.
The Group provides various support services guided by the corporate philosophy of “Create Customer
Value.” The Group’s mission is to make effective use of high-quality systems, yet ultimately rely on
human capabilities to perform checks, in contributing to the business growth of client companies.
The Group consists of two main businesses: A Testing/Verification & Evaluation Business that carries
out defect detection (finding bugs) in support of improvement in product quality of software and
hardware, and an Internet Monitoring Business that supports healthy development of the Internet by
detecting any fraudulent activity, as well as any illegal or harmful information, that may be embedded in a
variety of content.
◆Corporate Philosophy
・Create Customer Value: All that a person is capable of, all that a technology is capable of
◆Vision
・Global Excellence: From foremost in Japan to foremost in the world
・Create Added Value: Provide services maximizing proprietary systems
and all that a person is capable of
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◆Overview of Fiscal Year Ended January 31, 2015
1. Factors in higher revenues and earnings
Net sales increased 6.3%, to a record ¥14,753 million. Overseas sales rose on solid orders
from overseas game developers and a lower yen. The Company also benefited from
expanded business process outsourcing work amid e-commerce market growth. Operating
income decreased 13.2%, however, to ¥1,861 million, owing to reduced domestic
testing/verification & evaluation business revenues and investments in domestic and Asian
business units.
2. Segment Highlights
Testing/Verification & Evaluation Business sales increased 4.7% year on year, to ¥11,278
million. Operating income was down 10.0%, to ¥1,775 million. The Company steadily
expanded business units in Europe, United States, and India, supporting major global
deployments for overseas game developers. Orders were lower in the defect detection
business because development lead times stretched out for PlayStation 4 titles, while a
change in pachi-slot testing regulations pushed back defect detection orders.
Sales in the Internet Monitoring Business were up 9.1%, to ¥3,325 million, although
operating income fell 33.6%, to ¥121 million. Demand rose for merchandise checks amid
growing Internet shopping and auction traffic, for Internet advertising reviews based on
the Pharmaceutical Affairs Act and the Act against Unjustifiable Premiums and Misleading
Representations, and for user support. The operating income decline stemmed from the
Group extensively opening, relocating, or adding floor space at business sites to expand
operations and streamline efficiency.
3. Shareholder returns
The Company maintains a basic policy of targeting a consolidated payout ratio of 25%.
The annual dividend for the year was ¥16.00 per share.
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◆Consolidated Financial Highlights
(Millions of yen) FY2011/1 FY2012/1 FY2013/1 FY2014/1 FY2015/1
Net sales 6,865 8,364 10,866 13,879
,,86
14,753
Operating income 770 1,275 1,835 2,144 1,861
Ordinary income 769 1,280 1,885 2,290 1,879
Net income 381 651 932 1,205 1,000
Comprehensive income - 652 930 1,613 1,226
Net assets 2,479 4,353 6,154 7,494 8,421
Total assets 3,535 5,415 7,866 9,228
10,518
Net assets per share (¥) 13,710.07 511.44 324.85
394.28 442.27
Net income per share (¥) 2,111.19 86.01 53.35
63.55 52.60
Diluted net income per share (¥) - 82.56 51.86
61.82 51.84
Equity ratio (%) 70.1 80.4 78.2 81.2 80.1
Return on equity (ROE) (%) 16.7 19.1 17.7 17.7 12.6
P/E multiple - 14.5 15.3 26.5 15.2
Cash flows from operating activities 612 803 1,199 1,239 1,326
Cash flows from investing activities (114) (119) (1,561) (256) (686)
Cash flows from financing activities (55) 1,014 848 (274) (298)
Cash and cash equivalents at end of period 2,018 3,712 4,199 4,959 5,343
Number of employees (persons) 336 341 562 558 775 Notes: 1. Net sales exclude consumption and other taxes.
2. Diluted net income per share for the 2nd term ended January 31, 2011, was omitted as the Company stock was unlisted at the time and average market capitalization of the balance of stock options during the period was unavailable as a result.
3. P/E multiples for the 2nd term were omitted as the Company stock was unlisted at the time.
4. The Company conducted a stock split on July 13, 2011, at a ratio of 20 shares of common stock per share of common stock. 5. From the 4th term, the Company applied the Accounting Standard for Earnings Per Share (Accounting Standards Board of Japan (ASBJ)
Statement No. 2, June 30, 2010), the Guidance on Accounting Standard for Earnings Per Share (ASBJ Guidance No. 4, June 30, 2010), and Practical Solution on Accounting for Earnings Per Share (ASBJ Practical Issues Task Force No. 9, June 30, 2010).
6. The Company conducted stock splits in the fiscal years ended January 31, 2013 and 2014, at a ratio of two shares of common stock per share of
common stock. However, the figures for net assets per share, net income per share and diluted net income per share were calcu lated on the assumption that these stock splits were conducted at the beginnings of the previous fiscal years.
Forward-looking statements: Earnings forecasts in this Annual Review are based on information currently available to the Company and on certain assumptions deemed to be
reasonable. These statements do not guarantee that the Company will achieve its earnings forecasts. In addition, actual business and other results may differ substantially due to various factors.
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◆Message from the President
In the fiscal year ended January 31, 2015, the
Testing/Verification & Evaluation Business Steadily
expanded social game defect detection orders and
transactions with overseas clients. The Internet
monitoring business generated growth in e-commerce
support operations amid market expansion. The
Company thus posted record consolidated net sales.
Net income declined, however, owing to reduced
domestic operational rates and investments in
domestic and Asian business units. The annual
dividend for the year was ¥16.00 per share.
In the year ahead, we will leverage our robust
business ties in the video game, Internet and
e-commerce sectors to generate growth by going
beyond the Testing/Verification & Evaluation and
Internet Monitoring business frameworks to cultivate
business process outsourcing services for those
clients.
We look forward to the ongoing support and
encouragement of our shareholders for these efforts.
Naoto Konishi
President
Poletowin Pitcrew Holdings, Inc.
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◆Interview with the President about Group Business Strategies
Q1: Consolidated net sales rose 6.3% to a record ¥14,753 million in the fiscal year ended
January 31, 2015, but operating income declined 13.2% to ¥1,861 million. Tell us about the
factors in this performance and about the business climate.
A1: In the Testing/Verification & Evaluation Business, which accounted for around three quarters of
revenues, overseas sales exceeded projections because European, American, and Indian business units
steadily expanded transactions with local clients. A weaker yen also contributed to performance. In Japan,
major consumer electronic game console manufacturers entered the social game market, resulting in solid
orders for mobile content defect detection (finding bugs) services. At the same time, there was a
temporary slowdown in the development pace among manufacturing customers owing to modified
◆Future Business Strategies
1. Bolster business process outsourcing services, for which demand is strong among
existing clients, establishing a strong position in that area in the video game,
Internet, and e-commerce sectors
⇒Bolster services beyond Testing/Verification & Evaluation and Internet
Monitoring Frameworks
2. Develop new markets for core Testing/Verification & Evaluation and Internet
Monitoring services
⇒Advance into the education, appliance, publishing, life and non-life insurance,
and other fields
3. Bolster business development in overseas video game market, which offers great
growth potential
⇒Draw on the experience with large orders in leveraging capabilities of nine
studios in six countries, languages, and time differences to drive growth
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pachi-slot model testing approaches at the designated testing institution, pushing back defect detection
orders for pachi-slot equipment. The Group received defect detection orders for game software for
consumer electronic game consoles centered on titles for the Nintendo 3DS and PlayStation 3, and
gradually secured more orders for PlayStation 4 titles. Orders were lower than anticipated, however, as
new consumer electronic game software development lead times frequently stretched out.
Testing/Verification & Evaluation Business sales therefore increased 4.7% year on year, to ¥11,278 million.
Operating income was down 10.0%, to ¥1,775 million, however, reflecting lower contributions from highly
profitable domestic operations and investments in Asian business units.
In the Internet Monitoring Business, another key operating segment Internet Monitoring Business, the
Group increased user support services in merchandise checks for Internet shopping, auction sites, and free
market apps and in reviews of advertisements based on the Pharmaceutical Affairs Act.
Internet Monitoring Business sales thus rose 9.1% to ¥3,325 million. Segment operating income was
down 33.6%, however, to ¥121 million, reflecting site openings, relocations, and floor space additions at
business sites to expand and streamline operations.
Q2: In January 2015, you acquired a company from a field outside the Group’s traditional
business areas. Please outline that purchase and your business strategies for the future,
including those overseas.
A2: The Testing/Verification & Evaluation Business traditionally focused on the video game sector, while
the Internet monitoring business centered on online services. Both businesses cover the social games area
that has emerged in recent years, blurring that distinction. The two businesses also serve the amusement
equipment and e-commerce in keeping with Group efforts to provide a one-stop, full service platform.
The market environment is rapidly changing for the Group, so its business strategies will encompass the
following three approaches. The first is to go beyond current business frameworks to bolster business
process outsourcing services, for which demand is strong among existing clients in the video game,
Internet, and e-commerce sectors where the Group already has robust business ties. We would endeavor
to increase our business process outsourcing services shares in those sectors. As part of that approach, we
made QBIST Inc. a consolidated subsidiary in January 2015. That company produces instruction manuals
and playing guides. We seek to shift away from our focus on Testing/Verification & Evaluation and
Internet Monitoring services to position ourselves as a strong business process outsourcing service
provider for the video game, Internet, and e-commerce sectors.
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The second approach is to cultivate core Testing/Verification & Evaluation and Internet Monitoring
services in new markets. There is strong demand outside the sectors that we already accommodate. In
recent years, we have expanded services to encompass the education, appliances, publishing, life and nonlife
insurance, and other sectors. The Group will continue to leverage core services in which it has the most expertise
to cultivate new markets and serve more sectors while expanding its business.
The third approach is to step up marketing in the overseas video game market, which offers great growth
potential. Although it focused initially on serving Japanese companies in deploying operations
internationally, the Group has increased business with locally based companies through M&As and other
means, thus steadily increasing overseas sales. Foreign video and social game software developers offer
far greater scope for localization and user support services than Japanese counterparts. The Group will
therefore expand transactions with existing clients while reinforcing new business development.
◆Future Business Strategy Approaches
3. Future Business Strategies
3-5. Future Business Strategy Approaches (3)
Ne
w m
ark
ets
Exis
ting
ma
rke
ts
Existing services New services
! Cultivate new markets with core services
Go beyond video game and Internet sectors with core defect detection and monitoring services
Cultivate new businesses
Including medical
professional recruitment,
barrier free-related
businesses, and B2C
businesses Education E-learning materials defect detection
Appliances Digital appliance verification
Publishing E-book defect detection
Life/non-life insurance Agency website reviews
! Expand shares of existing markets
Expand shares in existing markets, particularly cultivating e-commerce and overseas game markets
Video games
Amusement equipment
Online media
E-commerce
Defect detection User experience Localization Post monitoring Call centers Advertising reviews Server monitoring
Cultivate new business process outsourcing services in new markets
Video games Instruction manual and playing guide production
Amusement equipment Development assistance and new model reputation surveys
Online media Facebook and Twitter support
E-commerce Free market apps, cross-border e-commerce, and back office representation
! Reinforce business process outsourcing services in existing markets
Cultivate these services comprehensively in core sectors beyond testing/verification and Internet monitoring frameworks
Barrier-free tools
Information provision
sharing tools
• Looking to generate an average 20% annual growth over next three years • Seeking to boost revenues and earnings by expanding business areas based on
growth strategies
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◆Business Segments and Business Companies
Business Segments Key Businesses Company Names
Testing/Verification &
Evaluation Business
Pre-launch defect detection (finding bugs), including for consumer electronic games, social games, smartphone applications, pachinko and pachi-slot machines, and IT appliances, and localization of in-game text, manuals, and other materials for overseas game titles
Pole To Win Co., Ltd. Pole To Win Shanghai Co., Ltd. SARUGAKUCHO Inc. Pole To Win America, Inc. Pole To Win Networks Co., Ltd. Pole To Win Asia Pte. Ltd. Pole To Win Europe Glasgow Limited Pole To Win India Private Limited Pole To Win Europe Limited Pole To Win Korea Co., Ltd. QBIST Inc. GAME MASTER Inc.
Internet Monitoring Business
Checking merchandise and reviewing advertisements for Internet shopping and auctions, providing support for inquiries from end-users of games and e-commerce sites, and checking youth Internet usage
PITCREW CO., LTD. PITCREW X-LAB CO., LTD. PITCREW COREOPS CO., LTD.
Others Producing barrier-free subtitles and providing medical staffing services
Pacer CO., Ltd. Daiichi Shorin Co., Ltd. IMAid Inc. Palabra Inc.
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Operations ancillary and pertaining to the control and management of business activities of the Company and the Group’s 19 consolidated subsidiaries
Poletowin Pitcrew Holdings, Inc.
◆Business Bases in Testing/Verification & Evaluation and Internet Monitoring
11 business units in Japan and 9 overseas
4-7. Business Sites
Shanghai
(China) San Francisco (U.S.)
London (U.K.)
!11 business units in Japan and 9 overseas
Austin (U.S.)
Glasgow (U.K.)
Singapore
Baltimore (U.S.)
4. Corporate Data
Gwangju
(Korea)
(As of January 31, 2015)
Sapporo
YokohamaNagoya
Gifu
Kyoto
Osaka
Fukuoka
KitakyushuTokyo
Okinawa
Sendai
Bangalore (India)
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◆Group Business Overview
During the year under review, the Japanese economy remained somewhat weak but looked set for a mild
recovery owing to an ongoing improvement in the employment and income climates and the impacts of
lower oil prices and government policies. At the same time, the nation faced such downward risks as
weakening consumer sentiment and slowdowns in economies overseas.
It was against that backdrop the Poletowin Pitcrew Holdings Group’s core Testing/Verification &
Evaluation Business experienced ongoing growth in the social games market, which major developers of
software for consumer electronic game consoles also entered, amid the rising popularity of smartphones
and tablet PCs. To increase opportunities to steadily recoup their development expenses, social game
developers increasingly deployed their offerings globally, just as has happened with consumer electronic
game software. As a result, demand expanded for localization in multiple languages and for user support,
augmenting services in detecting defects (bugs). At the same time, sales were favorable in the consumer
electronic game market for new next-generation game consoles launched around the world. Looking
ahead, the launch of new content for each platform is expected to expand globally as game platforms
diversify, as exemplified by the distribution of games using game consoles, smartphones and tablet PCs,
as well as via the cloud.
In markets related to the Group’s Internet Monitoring Business, online shopping, flea market apps,
video, e-book, and other forms of e-commerce are catching on. This, in turn, is pushing up demand for
monitoring postings and other types of user support services to make safe and reliable Internet access
ubiquitous. In the e-commerce market, there is growing demand for handling merchandise checks, the
review of Internet advertising based on the Pharmaceutical Affairs Act, the Act against Unjustifiable
Premiums and Misleading Representations, and other laws and regulations, and for handling the rights
infringement investigations and end-user inquiries and so forth. A recent rise in the incidence of Internet
usage problems among the young has prompted municipal boards of education to put efforts into
monitoring youth Internet usage and providing Internet literacy education for students, parents and
guardians. As a result, monitoring work has increased, as have educational activities, including through
seminar lecturers.
The Group provides checking, testing, monitoring and inspection services that require human input on
a contractual basis to corporate clients. The demand for such services has been growing as these clients
have diversified and expanded overseas, and as business processes have become more advanced and
sophisticated. During the period under review, Pole To Win Co., Ltd., relocated its Sapporo Studio to
larger premises in August to accommodate order expansion. PITCREW CO., LTD., established its Sendai
Support Center in April, its first site in the Tohoku region, and moved its Sapporo Support Center to a
location with more floor space. PITCREW COREOPS CO., LTD, opened the Sendai BCP Center in April
and relocated and increased floor space at the Okinawa BCP Center in May to secure more people outside
Metropolitan Tokyo and accommodate operational growth. Overseas, Pole To Win America, Inc., moved
its Hunt Valley studio to Baltimore in April, while Pole To Win India Private Limited increased floor
space in December. One of the Company’s business strategies is to expand overseas sales by accelerating
its global deployment. Collaboration has thus stepped up between nine delivery centers in six countries
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and Japanese Group companies to provide a one-stop, full service platform in such areas as defect
detection (finding bugs), localization (translation), Internet monitoring, and user support.
As a result of these factors, consolidated net sales for the term were ¥14,753 million (up 6.3%). Operating
income was ¥1,861 million (down 13.2%), however, reflecting increased personnel spending and the
establishment, relocation, and expansion of business units in Japan and abroad. Ordinary income was
¥1,879 million (down 17.9%), largely because of lower foreign exchange gains. Net income was ¥1,000
million (down 17.0%), owing to a temporary loss stemming from office relocations.
◆Overview of Segment Performance
●Testing/Verification & Evaluation Business
Overseas revenues exceeded 20% of segment sales during the period under review, reflecting
collaboration between nine delivery centers in six countries and Japanese Group companies in supporting
the global deployments of domestic and foreign game makers. The Group received defect detection orders
for game software for consumer electronic game consoles centered on titles for the Nintendo 3DS and
PlayStation 3, and gradually secured more orders for PlayStation 4 titles. Orders were lower than
anticipated during the term, however, as new software development lead times frequently stretched out.
In defect detection work for finding bugs in amusement (pachinko and pachi-slot) equipment, makers
worked eagerly on new models with enhanced entertainment features to secure end user support,
generating stable orders. That said, they had to accommodate modified pachi-slot model testing
approaches at the designated testing institution, pushing back defect detection orders for pachi-slot
equipment.
The growing popularity of smartphones has resulted in a sharp increase in the social games that users
download directly as native applications. Major developers of software for consumer electronic game
consoles are also creating social games. These trends led to the Group securing solid orders for mobile
content defect detection (finding bugs) services.
As a result, Testing/Verification & Evaluation Business sales increased 4.7% year on year, to ¥11,278 million.
Operating income was down 10.0%, to ¥1,775 million, reflecting lower contributions from highly profitable
domestic operations and increased personnel expenses. ●Internet Monitoring Business
In the Internet Monitoring Business, the Group received increased orders for e-commerce support
services from Internet companies, reflecting their vigorous efforts to cultivate business in the e-commerce
market. The orders were for merchandise check services for Internet shopping, auction sites, and free
market apps and for reviews of advertisements based on the Pharmaceutical Affairs Act, the Act against
Unjustifiable Premiums and Misleading Representations, and other laws and regulations, and also
reflected increased demand for handling charges and product arrival inquiries from end-users. Also up
were user support orders for major social games.
During the term, the Group received orders from 22 municipal governments and four private schools
for services to monitor online bullying among the young. It also obtained a mandate from the Ministry of
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Economy, Trade and Industry to assist with a survey on developing a proper Internet usage environment
for the young as part of information and services infrastructure for the national economy and society.
PITCREW Co., Ltd., and Pole to Win Networks CO., LTD., launched the One-Stop Debugging
(Testing) and Customer Support Service as part of efforts to bolster business process outsourcing services
for the video game, Internet, and e-commerce sectors.
Internet Monitoring Business sales thus rose 9.1% to ¥3,325 million. Operating income was down 33.6%,
however, to ¥121 million, reflecting site openings, relocations, and floor space additions at business sites to
expand and streamline operations. ●Others
In this segment, Palabra Inc. instituted a subtitle training curriculum to prepare for the advent of
barrier-free motion pictures, producing barrier-free subtitles audio guides for television program and
video production firms on contract. IMAid Inc. offers medical staffing services.
Segment sales increased 145.5% to ¥148 million. There was an operating loss of ¥23 million, down from
¥104 million a year earlier.
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◆Management Structure
●Corporate Governance
Recognizing the need to conduct Group-wide management reflecting the Company’s structure as a
holding company, we aim to practice corporate governance optimal to developing the Group’s business.
To this end, we believe that it is important to fulfill our social responsibilities through our business
activities, while seeking to enhance our corporate value over the long term, as we build relationships of
trust with all stakeholders, including shareholders, suppliers, employees and local communities. From this
perspective, we consider our key corporate governance priorities to be the following: ensuring corporate
management premised on compliance with laws and regulations and all other relevant rules; enhancing
the appropriateness, soundness and transparency of management; and establishing a framework for timely
and appropriate disclosure of information. We are developing a corporate governance structure with
emphasis on these key priorities.
●Corporate Governance Structure
In accordance with the Companies Act of Japan, the Company has a Board of Directors, Board of
Corporate Auditors, and Independent Auditor, along with an Internal Audit Office. In addition, the
Company receives advice on its corporate governance system as necessary from a lawyer with whom it
has entered into an advisory agreement.
The Board of Directors comprises eight directors, and holds regular monthly meetings to ensure
effective management oversight among the directors. In addition, extraordinary meetings of the Board of
Directors are convened as necessary to facilitate rapid decision-making. Barring any special reasons,
these meetings are held with full attendance by directors and corporate auditors. Group companies also
hold regular monthly meetings of their respective boards of directors.
As stated above, the Board of Directors serves as a check on the business execution of the directors.
Oversight of the operation of the Board of Directors and the business execution of the directors is also
conducted through audits by the corporate auditors.
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In regard to the Company’s internal control system, the Company ensures the appropriateness of business
operations by establishing decision-making and reporting systems through the formulation and
implementation of various internal rules.
The Company has established the Rules on Legal Compliance stipulating the handling of compliance
issues for the purpose of rigorously enforcing compliance and enhancing public trust in the Company.
The Group has also entered into advisory agreements with external experts on legal affairs, taxation, labor
affairs and other matters in order to put in place a framework for obtaining guidance and advice in the
daily course of business.
●Internal and Independent Audits
The Internal Audit Office acts based on annual auditing plans and under the direct supervision of the
president. The office has one person. Its audits cover compliance, risk management, and the adequacy and
efficiency of business processes for the Company and all Group operations.
The office exchanges information with independent auditors and cooperates with them by providing
them with periodic reports about internal auditing progress.
The Company maintains a Board of Corporate Auditors system in which there are one full-time and
three part-time members; three of these people are external. These auditors attend meetings of the Board
of Directors and monitor director performance. These auditors additionally attend board and other
important meetings of Group companies and strictly monitor director performance while exchanging
information and opinions with each other, deliberating on important matters for all Group companies and
assessing business conditions for the Company and Group companies while sharing issues relating to
them.
The Internal Audit Office and independent auditors periodically exchange information and cooperate
to enhance the implementation of audits.
●Financial Audits
The Company’s Independent Auditor is Ernst & Young ShinNihon LLC. ●Outside Director and Auditors
Outside the Company are one director and three auditors.
To ensure that the outside director and auditors can monitor management objectively, the Company
maintains a system in which the Internal Audit Office and Independent Auditor periodically exchange
information, thereby helping to enhance oversight and audit implementation.
●CSR
The Group fulfills its corporate social responsibilities in the course of business and ensures that it
contributes to the communities in which it operates.
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Barrier-free Initiatives
Examples of these efforts include Pole To Win Co., Ltd., supporting the activities of
SALSAGUMTAPE, a barrier-free rock band, and Palabra Inc. helping to sponsor film festivals
through its production of subtitles. Information Literacy
PITCREW CO., LTD., draws on more than a decade of experience in Internet monitoring to teach
junior and senior high school students about information literacy relating to Internet usage. Social Contributions
Following the March 2011 Great East Japan Earthquake through September that year, we ran a service
that provided homestay opportunities for displaced people.
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◆Management’s Discussion and Analysis
●Net Sales and Earnings
Net Sales
Net sales increased ¥873 million, or 6.3%, to ¥14,753 million. In the Testing/Verification & Evaluation
Business, the main contributor to this rise was that overseas subsidiaries steadily expanded transactions
with local clients. This offset the impact of a change in pachi-slot testing regulations that pushed back
defect detection orders for amusement equipment. The prime drivers in the Internet Monitoring Business
were that orders rose for merchandise check services for Internet shopping, auction sites, and free market
apps, for reviews of advertisements, and user support services owing to vigorous efforts to cultivate
business in the e-commerce market.
Gross Profit
The cost of sales increased ¥752 million, or 8.3%, to ¥9,864 million. This was because personnel
expenses rose with sales and that there was higher spending on business establishments, relocations,
expansions, and floor space costs at domestic and overseas business units.
Gross profit thus increased 2.5%, to ¥4,888 million.
Operating Income
Selling, general and administrative expenses increased ¥404 million, or 15.4%, to ¥3,027 million, a key
factor being. Factors in this rise included higher startup expenses for a Korean business unit.
Operating income thus decreased 13.2%, to ¥1,861 million.
Ordinary Income
Non-operating income decreased ¥118 million, or 81.3%, to ¥27 million, mainly because foreign
exchange gains declined. There were ¥9 million in non-operating expenses, compared with none a year
earlier, as the Company incurred compensation expenses.
Ordinary income therefore decreased 17.9%, to ¥1,879 million. Net Income
The Company posted ¥4 million in extraordinary income, compared with an extraordinary loss a year
earlier, reflecting a gain on donation of non-current assets. Extraordinary losses decreased ¥59 million, or
59.2%, to ¥40 million. This was because of the absence of another impairment loss, which outweighed
higher business site relocation expenses.
Income before income taxes and minority interests was thus ¥1,843 million. After adjusting for
deferred income taxes, total income taxes were ¥842 million. Net income therefore decreased 17.0%, to
¥1,000 million.
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●Cash Flows
Cash and cash equivalents (hereinafter referred to as “cash”) as of January 31, 2015, were ¥5,343 million,
up ¥383 million from January 31, 2014.
Net cash provided by operating activities was ¥1,326 million, from ¥1,239 million in the previous
fiscal year. The main contributors to cash were ¥1,843 million in income before income taxes and
minority interests, partly offset by ¥1,017 million in income taxes paid.
Net cash used in investing activities was ¥686 million, from ¥256 million a year earlier. The main uses
of cash were ¥248 million in purchase of property, plant and equipment and a ¥262 million purchase of
investments in subsidiaries.
Net cash used in financing activities was ¥298 million, from ¥274 million in the previous fiscal year.
The main factor in this change was ¥304 million in cash dividends paid. ●Financial Position
Total Assets
Current assets rose ¥924 million or 13.1% from January 31, 2014, to ¥7,960 million. This was mainly
attributable to a ¥383 million increase in cash and deposits and a ¥430 million increase in notes and
accounts receivable-trade. Noncurrent assets stood at ¥2,557 million, ¥365 million or 16.7% higher than at January 31, 2014. Key
factors were increases of ¥128 million in property, plant and equipment, ¥106 million in investment
securities, and ¥80 million in goodwill.
As a result, total assets increased by ¥1,290 million or 14.0% year on year, to ¥10,518 million.
Liabilities
Current liabilities stood at ¥2,036 million at January 31, 2015, ¥356 million or 21.2% higher than at
January 31, 2014. This was mainly attributable to increases of ¥250 million in accounts payable-other and
¥172 million in other (including accrued consumption taxes), which offset a ¥164 million decrease in
income taxes payable.
Noncurrent liabilities increased ¥6 million or 12.1%, to ¥60 million. This was due mainly due to a ¥51
million increase in the net defined benefit liability, which exceeded a ¥44 million decrease in the
provision for retirement benefits.
As a result, total liabilities increased ¥362 million or 20.9% year on year, to ¥2,097 million.
Net assets
Net assets increased ¥927 million or 12.4%, to ¥8,421 million. This was mainly attributable to
increases of ¥696 million in retained earnings and ¥221 million in foreign currency translation
adjustments.
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●Basic Policy on Earnings Distribution
The Company considers shareholder returns an important management issue. Management is taking into
account the Group’s overall financial position, including by factoring in the internal reserves needed to
cultivate its businesses to maintain growth in the years ahead, in maintaining a basic policy of targeting a
consolidated payout ratio of 25% on net income for the payment of one yearly dividend at the end of the
year.
Management aims to allocate retained earnings to invest for future business development.
●Outlook for the Fiscal Year Ending January 31, 2016
The Testing/Verification & Evaluation Business traditionally focused on the video game sector, while the
Internet monitoring business centered on online services. Both businesses cover the emerging social
games area, blurring that distinction. The two businesses also serve the amusement equipment and
e-commerce in keeping with Group efforts to provide a one-stop, full service platform. We will go beyond
the Testing/Verification & Evaluation and Internet Monitoring service frameworks to develop and provide
business process outsourcing services for game development and management and e-commerce. This
approach underpinned our January 2015 move to make QBIST Inc. a consolidated subsidiary. That
company produces instruction manuals and playing guides. We seek to expand business process
outsourcing services in existing markets, establishing strong positions for such capabilities in the video
game, Internet, and e-commerce arenas. Segment projections for the year ending January 31, 2016, are as follows.
●Testing/Verification & Evaluation Business
In Japan, we seek to expand our shares in the amusement equipment, smartphone apps and social games,
and consumer electronic game console markets. The pace of pachi-slot equipment development is set to
pick up after slowing in the previous fiscal term owing to revised in model testing regulations, and we
anticipate higher defect detection orders in the year ahead. Leading developers of software consumer
electronic game consoles are working intensively on social games, so we look to boost defect detection
operations for native applications. We will strive to bolster our sales capabilities in the marketplace and
deploy human resources policies that enable us to build close ties with customers and enhance our
services, thereby ensuring that we can sustainably and stably deliver top-quality services.
Overseas, we will strengthen collaboration between nine delivery centers in six countries and with
domestic delivery centers to assist with the global business expansions of overseas and Japanese
companies. We will take advantage of prospects for further globalization in games and Internet services
by expanding orders for testing/verification, localization, and user support services by local staffers. We
will extend our marketing of core testing/verification and user support services beyond the games arena.
18
●Internet Monitoring Business
The number of users of Internet shopping and auction, flea market apps, e-book, and other e-commerce
services has increased with the spread of smartphones and tablet PCs. E-commerce markets represented
just 3% of sales in Japan and 7% of sales in the United States, and have significant upside potential.
Given that the future of the e-commerce business depends on the security and convenience of site
operations, the Group seeks to expand orders for merchandise checks, advertising representation reviews,
and end-user inquiries. While we have primarily provided inbound user support to date, we aim to boost
the capabilities of our call and contact centers to accommodate the growing need to deliver active support
and outbound services in response to consumer feedback through Facebook, Twitter, and other social
media channels. We will cultivate and hire people who can identify customer needs and plan and deliver
high-value-added services in the fast-changing Internet sector. ●Others
In its Cinematheque Movie Classes, Palabra Inc. is training subtitle creators to prepare for the advent of
barrier-free motion pictures, and has started producing barrier-free subtitles for television program and
video production firms under contract. IMAid Inc. is offering medical staffing services. We will explore
and cultivate new businesses in the medical field.
As a result of these factors, for the year ending January 31, 2016, the Group projects consolidated net
sales of ¥17,881 million (up 21.2%), operating income of ¥2,293 million (up 23.2%), ordinary income of
¥2,304 million (up 22.6%), and net income of ¥1,387 million (up 38.6%).
The earnings forecasts are based on information currently available to the Company and on certain
assumptions deemed to be reasonable. These statements do not guarantee that the Company will achieve
its earnings forecasts. In addition, actual business and other results may differ substantially due to various
factors.
19
◆Consolidated Balance Sheets
(Millions of yen)
Fiscal 2014
(As of January 31, 2014) Fiscal 2015
(As of January 31, 2015)
Assets
Current assets
Cash and deposits 4,959 5,343
Notes and accounts receivable-trade 1,698 2,128
Deferred tax assets 76 63
Other 301 429
Allowance for doubtful accounts (0) (4)
Total current assets 7,036 7,960
Noncurrent assets
Property, plant and equipment
Buildings and structures 239 379
Accumulated depreciation (82) (137)
Buildings and structures, net 156 241
Machinery, equipment and vehicles 2 3
Accumulated depreciation (2) (3)
Machinery, equipment and vehicles, net 0 0
Tools, furniture and fixtures 497 657
Accumulated depreciation (358) (474)
Tools, furniture and fixtures, net 138 183
Total property, plant and equipment 295 424
Intangible assets
Goodwill 1,425 1,506
Software 28 33
Software in progress - 12
Other 2 2
Total intangible assets 1,456 1,554
Investments and other assets
Investment securities 50 157
Lease and guarantee deposits 314 370
Deferred tax assets 68 42
Other 16 20
Allowance for doubtful accounts (10) (11)
Total investments and other assets 440 579
Total noncurrent assets 2,191 2,557
Total assets 9,228 10,518
20
(Millions of yen)
Fiscal 2014
(As of January 31, 2014) Fiscal 2015
(As of January 31, 2015)
Liabilities
Current liabilities
Accounts payable-other 865 1,115
Accrued expenses 44 68
Income taxes payable 527 363
Provision for bonuses 11 34
Other 231 454
Total current liabilities 1,680 2,036
Noncurrent liabilities
Provision for retirement benefits 44 -
Net defined benefit liability - 51
Deferred tax liabilities 7 6
Other 1 2
Total noncurrent liabilities 53 60
Total liabilities 1,734 2,097
Net Assets
Shareholders’ equity
Capital stock 1,233 1,236
Capital surplus 1,279 1,282
Retained earnings 4,579 5,276
Total shareholders’ equity 7,092 7,794
Accumulated other comprehensive income
Valuation difference on available-for-sale securities 11 15
Foreign currency translation adjustments 389 611
Total accumulated other comprehensive income 401 626
Total net assets 7,494 8,421
Total liabilities and net assets 9,228 10,518
21
◆Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
(Millions of yen)
Fiscal 2014
(From February 1, 2013, to January 31, 2014)
Fiscal 2015 (From February 1, 2014,
to January 31, 2015)
Net sales 13,879 14,753
Cost of sales 9,112 9,864
Gross profit 4,767 4,888
Selling, general and administrative expenses 2,622 3,027
Operating income 2,144 1,861
Non-operating income
Interest income 1 1
Dividends income 0 0
Foreign exchange gains 120 1
Consumption tax adjustment 1 2
Insurance premiums refunded cancellation 5 3
Subsidy income 1 4
Insurance proceeds 3 -
Commission fees
Gain on adjustment of accounts payable
Other
2
-
8
3
6
3
Total non-operating income 145 27
Non-operating expenses
Compensation expenses - 9
Other - 0
Total non-operating expenses - 9
Ordinary income 2,290 1,879
Extraordinary income
Gain on retirement of noncurrent assets - 0
Gain on donation of non-current assets - 4
Other - 0
Total extraordinary gains - 4
Extraordinary losses
Loss on retirement of noncurrent assets 0 12
Office transfer expenses 8 27
Loss on cancellation of development 36 -
Impairment loss 46 -
Other 8 1
Total extraordinary losses 100 40
Income before income taxes and minority interests 2,190 1,843
Income taxes-current 1,016 796
Income taxes-deferred (31) 46
Total income taxes 984 842
Income before minority interests 1,205 1,000
Net income 1,205 1,000
22
◆Consolidated Statement of Comprehensive Income
(Millions of yen)
Fiscal 2014
(From February 1, 2013, to January 31, 2014)
Fiscal 2015 (From February 1, 2014,
to January 31, 2015)
Income before minority interests 1,205 1,000
Other comprehensive income
Valuation difference on available-for-sale securities 3 3
Foreign currency translation adjustments 404 221
Total other comprehensive income 408 225
Total comprehensive income 1,613 1,226
Comprehensive income attributable to:
Owners of the parent 1,613 1,226
23
◆Consolidated Statements of Changes in Net Assets
Fiscal 2014 (From February 1, 2013, to January 31, 2014)
(Millions of yen)
Shareholders’ equity
Capital stock Capital surplus Retained earnings Total shareholders’ equity
Balance at the beginning of current period 1,228 1,275 3,657 6,161
Changes of items during the period
Issuance of new shares 4 4 9
Dividends from surplus (284) (284)
Net income 1,205 1,205
Net changes of items other than
shareholders’ equity
Total changes of items during the period 4 4 921 930
Balance at the end of current period 1,233 1,279 4,579 7,092
Accumulated other comprehensive income
Total net assets
Valuation difference on available-for-sale
securities
Foreign currency translation adjustment
Total accumulated other comprehensive
income
Balance at the beginning of current period 8 (15) (6) 6,154
Changes of items during the period
Issuance of new shares 9
Dividends from surplus (284)
Net income 1,205
Net changes of items other than
shareholders’ equity 3 404 408 408
Total changes of items during the period 3 404 408 1,339
Balance at the end of current period 11 389 401 7,494
24
Fiscal 2015 (From February 1, 2014, to January 31, 2015)
(Millions of yen)
Shareholders’ equity
Capital stock Capital surplus Retained earnings Total shareholders’ equity
Balance at the beginning of current period 1,233 1,279 4,579 7,092
Changes of items during the period
Issuance of new shares 2 2 5
Dividends from surplus (304) (304)
Net income 1,000 1,000
Net changes of items other than
shareholders’ equity
Total changes of items during the period 2 2 696 702
Balance at the end of current period 1,236 1,282 5,276 7,794
Accumulated other comprehensive income
Total net assets
Valuation difference on available-for-sale
securities
Foreign currency translation adjustment
Total accumulated other comprehensive
income
Balance at the beginning of current period 11 389 401 7,494
Changes of items during the period
Issuance of new shares 5
Dividends from surplus (304)
Net income 1,000
Net changes of items other than
shareholders’ equity 3 221 225 225
Total changes of items during the period 3 221 225 927
Balance at the end of current period 15 611 626 8,421
25
◆Consolidated Statements of Cash Flows (Millions of yen)
Fiscal 2014 (From February 1, 2013,
to January 31, 2014)
Fiscal 2015 (From February 1, 2014,
to January 31, 2015)
Cash flows from operating activities
Income before income taxes and minority interests 2,190 1,843
Depreciation and amortization 145 177
Amortization of goodwill 195 178
Impairment loss 46 -
Increase in allowance for doubtful accounts 6 5
Increase in provision for bonuses 0 23
Increase in provision for retirement benefits 2 -
Increase in retirement benefits liability - 6
Interest and dividends income (1) (1)
Foreign exchange (gains) losses (68) (1)
Loss on retirement of noncurrent assets 0 12
Increase in notes and accounts receivable-trade (334) (265)
Increase in accounts receivable-other (8) (16)
Increase in accounts payable-other 56 144
Increase in accrued expenses 7 21
Increase in deposits received 0 64
Other, net 90 148
Subtotal 2,330 2,341
Interest and dividends income received 1 1
Income taxes paid (1,091) (1,017)
Net cash provided by operating activities 1,239 1,326
Cash flows from investing activities
Purchase of property, plant and equipment (176) (248)
Purchase of intangible assets (13) (31)
Purchase of investments in subsidiaries resulting in change in
scope of consolidation - (262)
Purchase of investment securities (0) (100)
Payments of loans receivable (1) (0)
Collection of loans receivable 1 2
Payments for lease and guarantee deposits (78) (68)
Proceeds from collection of lease and guarantee deposits 11 23
Net cash used in investing activities (256) (686)
Cash flows from financing activities
Proceeds from issuance of common stock 9 5
Cash dividends paid (284) (304)
Net cash provided by (used in) financing activities (274) (298)
Effect of exchange rate change on cash and cash equivalents 51 43
Net increase in cash and cash equivalents 760 383
Cash and cash equivalents at beginning of period 4,199 4,959
Cash and cash equivalents at end of period 4,959 5,343
26
◆Company Information (As of January 31, 2015)
●Company Name: Poletowin Pitcrew Holdings, Inc.
●Date of Establishment: February 2, 2009
●Listing Date: October 26, 2011 (changed stock market listing to the
First Section of the Tokyo Stock Exchange in November 6, 2012)
●Business Year: From February 1 to January 31
●Paid-in Capital: 1,236 million yen
●Number of Employees: 2,387 (including 775 full-time employees)
●Head Office: 11th Floor, Shinjuku NS Building, 2-4-1, Nishi-Shinjuku,
Shinjuku-ku, Tokyo 163-0811, Japan
●Telephone: +81-3-5909-7911
●Consolidated Subsidiaries: Pole To Win Co., Ltd.
(As of April 1, 2015) PITCREW CO., LTD.
Pacer CO., Ltd.
SARUGAKUCHO Inc.
Pole To Win Networks Co., Ltd.
Pole To Win Shanghai Co., Ltd. (Local subsidiary in China)
Pole To Win America, Inc. (Local subsidiary in the U.S.)
Pole To Win Asia Pte. Ltd. (Local subsidiary in Singapore)
Pole To Win Europe Glasgow Limited (Local subsidiary in the U.K.)
Pole To Win India Private Limited (Local subsidiary in India)
Pole To Win Europe Limited (Local subsidiary in the U.K.)
Pole To Win Korea Co., Ltd. (Local subsidiary in Korea)
PITCREW X-LAB CO., LTD.
PITCREW COREOPS CO., LTD.
Daiichi Shorin Co., Ltd.
IMAid Inc.
Palabra Inc.
QBIST Inc.
GAME MASTER Inc.
◆Directors and Corporate Auditors (As of April 23, 2015)
●Chairman Tamiyoshi Tachibana
●President Naoto Konishi
●Directors Mitsutaka Motoshige
Kozo Matsumoto
Tetsuji Tsuda
Teppei Tachibana
Joji Yamauchi
Hajime Saito (outside)
●Standing Corporate Auditor Kiyoshi Ohuchi
●Corporate Auditors (outside) Hideo Takada
Tadao Tsuya
Hisaaki Shirai
27
◆Stock Information (As of January 31, 2015)
●Number of Shares Authorized: 56,000,000
●Number of Shares Issued: 19,041,200
Note: The exercise of subscription rights to shares increased the number of issued and outstanding shares by 34,000.
●Number of Shareholders: 6,343 (up 3,267 from the end of the previous term)
●Major Shareholders (Top 10)
Shareholder name Number of shares held Share-holding ratio
(Thousands) (%)
Tamiyoshi Tachibana 1,960 10.30
Mitsutaka Motoshige 1,925 10.11
Japan Trustee Services Bank, Ltd. 1,231 6.47
(Securities Investment Trust Account)
Kozo Matsumoto 1,216 6.39
The Master Trust Bank of Japan, Ltd. 811 4.26
(Trust Account)
Teppei Tachibana 603 3.17
The Nomura Trust & Banking Co., Ltd. 526 2.77
(Trust Account)
Masuo Uesugi 351 1.85
Tetsuji Tsuda 344 1.81
THE BANK OF NEW YORK 133524 317 1.67
●Share Distribution
*Note: Excluding 3,000 fractional shares. *Note: Excluding 103 shareholders
owning only fractional shares.