In the fiscal year ended March 31, 2015, net cash decreased 1.4 billion yen year on year, to 21.2 billion yen. Despite higher net income from a rise in cash reserves, the decline was due to increased borrowings of approximately 3 billion yen used for investment in development in accordance with strengthening our lineup of titles in development aimed at growth from the next fiscal year forward.
However, in terms of trends in past fiscal years, in the fiscal year ended March 31, 2002, when I was appointed as a director, net cash (cash minus interest bearing debt) was negative 11.1 billion yen. In the fiscal year ended March 31, 2015, net cash was 21.2 billion yen, revealing that our cash position has improved 32.3 billion yen in the past 13 years.
Net Cash on a Historical Basis
For Capcom to efficiently generate net cash, we formulated two new financial strategies focused on generating cash flows through process management. The first is to thoroughly manage return on investment. Accordingly, we manage a database able to compare the ROI status of each title by category, such as brand or producer, while ascertaining and analyzing the investment profitability of each project. The second strategy is to maximize working capital efficiency. To this end, we are expanding the invested capital management system of each business and creating a framework to manage our investment turnover period and turnover ratio in a more visible manner.
As Capcom aims for sustainable growth and improved corporate value over the medium- to long-term, we established the following ROE targets as an index of capital efficiency.
|Moving average for three fiscal years ended Mar 2015||Moving average for three fiscal years ending Mar 2017|
In light of the 6.7% average recorded during the past three fiscal years ending March 31, 2015, we made raising the average to 8–10% the foremost goal during the three fiscal year period ending March 31, 2017.
To achieve this goal, I believe there are three ROE components we need to address.
|Net margin (%)||8.2||3.2||3.4||10.3|
|Financial leverage (multiplier)||1.66||1.66||1.51||1.41|
The most critical component we must give priority to is net margin improvement.
During the past three years, changes to the Digital Contents business and enhancements to our operation and management structures have substantially improved the net margin. Going forward, we will aim for further margin improvements through the steady execution of growth strategies and enhancements to our lineup of titles.
Regarding TAT and financial leverage, we are cognizant that these are issues we need to address going forward. To this end, we will raise funds mainly through debt financing within the commitment line. We will consider the use of treasury stock during discussions at Board of Directors meetings and make an effort to conduct management focused on capital efficiency.
|Messages from Management (PDF:664KB/10 pages)|