Sega Sammy Holdings Inc
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2014 summer Contents SEGA SAMMY P 1 Key Points of Financial Results by the Numbers REPORT SEGA SAMMY in 2013 A Message from P 3 Management Segment P 5 Information Looking back with a “Key Person” P9 Review of Activities Launch of pachinko and pachislot game for Bakemonogatari Making of ATLUS.CO.,LTD into a subsidiary P12 Latest News P13 Group Information Business Report for the fiscal Summer year ended March 31, 2014 Edition From April 1, 2013 to March 31, 2014 SEGA SAMMY HOLDINGS INC. Stock Code 6460 010_0324402982606.indd 2 2014/06/13 21:17:31 Key Points of Financial Results by the Numbers FY2014 (Fiscal year ended March 31, 2014) SEGA SAMMY in 2013 Net sales Unit of pachislot machines sold Due to strong sales of mainstay titles in the Pachislot and Pachinko Machine Business and strong performance in the digital areas in the Fiscal year ended billion Consumer Business, both sales and operating income increased March 31, 2013 units year on year significantly. However, due to effects of a delay in the 202,221 ¥378.0 sales schedule for some pachislot titles and the weak perfor- (up 18% year on year) mance of the Amusement Machine Sales Business, net sales and operating income fell short of initial forecasts. The Fiscal year ended Operating income Company recorded extraordinary income of approxi- March 31, 2014 mately ¥15.7 billion due to factors including a gain on 301,575 units sales of investment securities, while an extraordi- nary loss of approximately ¥8.7 billion resulting While the initial forecast was not achieved due to the revision of the sales from factors including a loss on liquidation of schedule for multiple titles including Pachislot SOUTEN-NO-KEN 2, subsidiaries and affiliates from the comple- particularly for the mainstay titles of the Sammy brand such as tion of the liquidation of some of the Pachislot Hokuto No Ken Chapter of Resurrection, Pachislot billion subsidiaries in the U.S. and Europe was also recorded. As a result, the Eureka Seven 2, Pachislot Juoh, and Pachislot Bakemono- ¥38.5 Company recorded net gatari, performance was positive for the titles sold (up 103% year on year) income of ¥30.7 overall, and the units of machines sold increased billion. significantly over the previous fiscal year. Research and development expenses/ Content production expenses Net Sales (billions of yen) Operating Income (billions of yen) Net Income (billions of yen) Fiscal year ending March 31, 2015 (Forecast) 450.0 38.5 Fiscal year ended Fiscal year ended 35.0 33.4 March 31, 2013 March 31, 2014 378.0 30.7 321.4 ¥45.2 billion ¥59.2 billion* billion* 21.0 ¥69.6 19.0 The company will invest in research and development expenses and content production expenses to improve * From fiscal year ended March 31, 2014, amortization cost of digital titles is included quality in our core Pachislot and Pachinko Machine in research and development expenses (until Business and to expand digital field in the strongly fiscal year ended March 31, 2013, amortiza- tion cost of digital titles was included in growing Consumer Business. 2013/3 2014/3 2015/3 2013/3 2014/3 2015/3 2013/3 2014/3 2015/3 depreciation and amortization). (Forecast) (Forecast) (Forecast) Please see page 13 for detailed financial information. 1 010_0324402982606.indd 1 2014/06/13 21:17:31 Key Points of Financial Results by the Numbers Other Net Sales ¥14.5 billion (up 8% year on year) Pachislot and Pachinko % Machine Business 3.8 Operating Loss ¥1.2 billion (-) % Business Segments of SEGA 48.1 SAMMY and Composition of Net Net Sales ¥181.8 billion sales by Business Segment (up 28% year on year) Operating Income ¥45.2 billion (up 92% year on year) Group Management Philosophy Consumer Business By providing entertainment lled with dreams and excitement to people throughout the world, we will strive to enrich our society and culture. 26.4% Net Sales ¥99.8 billion (up 19% year on year) Operating Income ¥2.0 billion (-) Amusement Center Operations Amusement Machine Sales Business Net Sales ¥43.2 billion (up 1% year on year) Net Sales ¥38.6 billion (down 1% year on year) 11.4% Operating Income ¥0.0 billion (-) 10.2% Operating Loss ¥1.2 billion (-) Please see page 5 for results by segment. 2 010_0324402982606.indd 2 2014/06/13 21:17:32 A Message from Management Chairman of the Board and Chief Executive Officer SEGA SAMMY HOLDINGS INC. Chairman, Representative Director and CEO of Sammy Corporation Chairman, Representative Director and CEO of SEGA CORPORATION Hajime Satomi Q Please look back and evaluate the fiscal year ended March 31, 2014. n the fiscal year ended March 31, 2014, sales Furthermore, in November, a business transfer with and operating income increased significantly Index Corporation was conducted, a portion of I over the previous fiscal year, mainly due to shares of Sanrio Co., Ltd. were sold, and other factors such as the strong sales of mainstay pachis- measures were conducted. lot titles in the Pachislot and Pachinko Machine Busi- In the fiscal year ended March 31, 2014, both sales ness and the strong performance of the digital field and earnings increased year on year in the Pachislot in the Consumer Business. As a result, net sales and Pachinko Machine Business. For pachislot increased 18% year on year to ¥378.0 billion, machines, despite significant increase year on year operating income increased 103% to ¥38.5 billion, in unit sales for several mainstay titles released that and ordinary income increased 94% to ¥40.5 billion. performed strongly, the initial forecast was not Meanwhile, net income dropped 8% year on year to achieved due to rescheduling of the sales for multiple ¥30.7 billion as a result of recording extraordinary titles including mainstay title Pachislot Souten-No- income of ¥15.7 billion due to factors including a Ken 2. For pachinko machines, despite strong sales gain on sales of investment securities accompanying of the mainstay title Pachinko CR Hokuto No Ken 5 the sales of Sanrio Co., Ltd. shares and an extraor- Hyakuretsu, titles other than the mainstay titles dinary loss of ¥8.7 billion due to factors including a performed weakly due to the stagnant market loss on liquidation of subsidiaries and affiliates from environment, and as a result, the number of units realization of foreign currency translation adjustments sold fell below the unit sales of previous fiscal year Dear Shareholders, resulted from the completion of the liquidation of and of the initial forecasts. During the fiscal year ended March 31, 2014, there were growing some of the subsidiaries in the U.S. and Europe. In the Amusement Machine Sales Business, sales fell hopes that the Japanese economy would break out of deflation and Nonetheless, we fell short of initial forecasts due to a year on year and loss was recorded as a result of experience economic recovery amid the trend toward yen depre- rescheduling of sales of some pachislot machines to weak sales due to restraint towards investment in ciation and rising stock prices backed by the effects of monetary the fiscal year ending March 31, 2015 and the weak new titles among amusement center operators. In and financial policies. However, uncertainty still prevailed due to performance of the Amusement Machine Sales Busi- the Amusement Center Operations Business, factors such as worries over the effect of increase in the consump- ness. earnings dropped year on year, due to lackluster tion tax rate to the economy. The main reason for net income of the current fiscal performance at existing amusement centers. In this climate, the SEGA SAMMY Group has implemented year to fell short of the previous fiscal year is that the In the Consumer Business, the segment turned various management measures to create a framework that can deal Group recorded deferred tax asset related to the tax profitable as sales increased as a result of improved speedily and flexibly with changes in the business environment, loss which resulted from the completion of liquida- profitability in the digital field. and has also fully committed to building a solid management tion of some of the subsidiaries in the U.S. for the In the packaged software field, despite release of foundation that can accelerate future growth. The Group will invest amount that would be deductible from the future several new titles, performance was weak as a result in growth, while continuing to pay appropriate dividends to its taxable income in the previous fiscal year. of the harsh market environment. Furthermore, in the shareholders, in accordance with its profits. Let us explain about the main management mea- digital field, which the Company positioned as a The Group will continue to offer high-quality entertainment to sures implemented in the fiscal year ended March growth field, performance was strong for titles such people of all ages around the world. Thus, the Group aims to 31, 2014. SEGA SAMMY CREATION INC., a manu- as PHANTASY STAR ONLINE 2, Puyopuyo!! Quest, “establish a presence in every business field, and becoming one of facturer which develops machines for casinos, was and CHAIN CHRONICLE. the world’s foremost global entertainment companies.” We look established in June 2013. In addition, we announced forward to your continued support in our endeavors. the issuance of straight corporate bonds in July. June 2014 3 010_0324402982606.indd 3 2014/06/13 21:17:33 A Message from Management Q What are the targets and issues for the fiscal year ending March 31, 2015? n the fiscal year ended March 31, 2014, while Company to generate stable earnings and at the to the market environment, improving the profitability I sales and operating income increased year on same time reduce the initial investment burden for of existing businesses, and making preparations for year, unfortunately, the results fell far short of the operators, such as promoting revenue sharing model the full-fledged IR business in the future.