GREE FY2018 Annual Securities Report

Key insights

6 takeaways

01
GREE’s net sales grew 19.2% to 77,925 million yen in FY2018, driven primarily by increased mobile game coin consumption.See it on page 20
02
Profit attributable to owners of the parent fell to 4,708 million yen from 12,116 million yen in the previous year, impacted by a 3,150 million yen impairment loss on goodwill and the absence of prior-year extraordinary income.See it on page 57
03
The company maintains a strong financial position with an 89.9% equity ratio, 87,196 million yen in cash, and zero long-term interest-bearing debt.See it on page 6
04
GREE is executing a strategic transition toward an 'Engine, IP, and Global' model, diversifying into advertising media and live entertainment to reduce reliance on core mobile gaming platform partnerships with Apple and Google.See it on page 9
05
Management identified service obsolescence, cybersecurity threats, and international regulatory changes as the primary operational risks to the business.See it on page 15
06
Corporate governance is managed through an executive officer system and independent outside directors, with financial audits conducted by Ernst & Young ShinNihon LLC.See it on page 46

Summary

GREE, Inc.’s fiscal year 2018 annual report outlines a period of financial stabilization and strategic transition for the Japan-based mobile gaming and digital media company. The primary objective of the report is to detail the company’s performance, governance, and risk management frameworks as it shifts toward an Engine, IP, and Global strategy. By diversifying into advertising media and live entertainment, the company seeks to establish new revenue pillars beyond its core mobile gaming business, which remains heavily reliant on platform partnerships with Apple and Google.

Financially, the company experienced a year of growth in top-line revenue, with net sales rising 19.2% to 77,925 million yen, largely driven by increased mobile game coin consumption. However, profit attributable to owners of the parent declined significantly to 4,708 million yen, down from 12,116 million yen in the prior year, primarily due to the absence of extraordinary income from subsidiary sales recorded in 2017 and a 3,150 million yen impairment loss on goodwill. Despite these fluctuations, the company maintains a robust balance sheet, characterized by an 89.9% equity ratio, a strong cash position of 87,196 million yen, and an absence of long-term interest-bearing debt.

Operational risks remain a central focus, with the company identifying service obsolescence, cybersecurity threats, and evolving international regulatory requirements as critical challenges. To mitigate these, GREE employs a rigorous corporate governance structure featuring an executive officer system, independent outside directors, and comprehensive internal control systems. The company continues to prioritize shareholder value through a consistent dividend policy and employee incentive programs, such as the Stock Grant ESOP Trust, while ensuring financial transparency through independent audits conducted by Ernst & Young ShinNihon LLC.