SEGA SAMMY HOLDINGS Discussion Points

The SAMMY Group endeavors to reflect the viewpoints of diverse stakeholders in management strategy by providing the Group’s management team with feedback on the various requests and opinions received from shareholders, investors, and other stakeholders. These Discussion Points comprise excerpts from Integrated Report 2018 that are designed to provide the starting points of discussions as well as summarized information on market conditions and environmental, social, and governance factors that are intended to supplement the main report. SEGA SAMMY HOLDINGS Overview of the SEGA SAMMY Group’s Businesses

The SEGA SAMMY Group offers moving experiences across a wide range of fields. Our businesses include the Pachislot and Machines Business; the Entertainment Contents Business, comprising digital games, packaged games, amusement machines, amusement center operations, animation, and toys; and the Resort Business, focused on realizing successful inte- grated resorts.

Pachislot and Pachinko Entertainment Contents Resort Machines Business Business Business

• Pachislot machines • Digital games area • Hotels and golf courses • Pachinko machines • Packaged games area • Integrated resorts • Contents for smartphones and PCs • Amusement machines sales area • Amusement center operation area • Animation and toys area

Detective Conan: Zero the Enforcer ©Phoenix Resort ©2018 GOSHO AOYAMA/DETEC- TIVE CONAN COMMITTEE All Rights Reserved. ©SEGA Pachinko CR Shin Hokuto Muso Chapter 2 ©Buronson & Tetsuo Hara/ NSP 1983, Approved Pachislot Hokuto No Ken ©PARADISE SEGASAMMY Co., Ltd., No.KOK-115 Shindensetsu souzou All rights reserved. © 2010-2013 Koei ©Buronson & Tetsuo Hara/ “” D.I.Y. Moving Games Co., Ltd. NSP 1983,©NSP 2007 ANPANMANGO-CAR UFO CATCHER TRIPLE ©Sammy Approved No.YBJ-918 ©Takashi Yanase/ ©SEGA ©Sammy Froebel-kan,TMS,NTV

Medium-to-Long-Term Performance Trends (Fiscal 2015–Fiscal 2019)

Growth due to intro- Cost structure Business structure Return to earnings Effect of regulatory duction of No. 6 reform reform growth trend revision pachislot machines

Net sales ¥390.0 billion 366.8 366.9 347.9 323.6

Operating income 8.0 margin 5.4% 5.1 5.5 4.7 29.5 Operating income ¥21.0 billion 17.4 17.6 17.7

’15 ’16 ’17 ’18 ’19 (Plan) (FY)

1 【Road to 2020】ロゴデザイン案（修正） 2017/5/8 サミー㈱盤面デザイン GR KOTAKE

■design concept■ ３つの矢印は「株主・従業員・協力会社」のステークホルダーを表しています。 ３者が一体になり、同じ方向を向き、同じ目標に向かっていく様子をイメージしました。

INTEGRATED REPORT 2018

使用フォント /Geo 957 Extended Bold Italic

Road to 2020 provides a medium-term road map aimed at the realization of our long-term vision and covers fiscal 2018 through fiscal 2020. We are advancing measures that are based on Road to 2020 and which we have embedded into a mission pyramid that comprises the unchanging components of our DNA: a value, a mission (raison d’être), a vision (ideal self), and a goal (specific target).

Value (Mindset / DNA) “Creation is Life” × “Always Proactive, Always Pioneering”

Mission “Continuing to create moving experiences” (Raison d’être) —Making life more colorful—

Be a Game Changer

Pachislot and Vision Entertainment Contents Resort (Ideal self) Pachinko Machines

Sammy…the wellspring of new ideas as an Be a Game Changer Be an Experiential Innovator innovator in the industry

Operating income margin: At least 15% ROA*1: At least 5% Goal Operating Net sales: At least ¥300.0 billion Succeed in IR businesses (Specific target) income margin: Operating income: At least ¥30.0 billion Enhance brand value At least 30%*2 Operating income margin: At least 10%

*1 ROA = Profit attributable to owners of parent ÷ Total assets *2 Operating income margin of the Pachislot and Pachinko Machines Business excluding other and eliminations

Review of Fiscal 2018 Based on Road to 2020

Pachislot and Pachinko Machines Business Entertainment Contents Business Resort Business

• Responded to regulatory revision • Reorganized intellectual property • Opened PARADISE CITY • Advanced reuse studios • Completed largest renewal of Phoenix • Improved development efficiency • Enhanced global rollouts Seagaia Resort since its opening • Acquired gaming machine licenses in

Billions of yen / % Billions of yen / % the U.S. State of Nevada Billions of yen 258.0 13.0 148.2

205.7 208.0 9.9 10.0 122.0 7.1 105.6 17.7 5.4 5.2 15.2 26.3 11.3

18.5 14.8 13.5 11.9 11.1 –2.2 –2.5 –3.0

’17 ’18 ’19 (Plan) (FY) ’17 ’18 ’19 (Plan) (FY) ’17 ’18 ’19 (Plan) (FY) Net sales Operating income Operating income margin Net sales Operating income Operating income margin Net sales Operating loss Although regulatory revision impacted Earnings have been trending upward since We continued advance investment with a results in fiscal 2018, in fiscal 2019 we aim structural reform. We aim to expand the view to entering the integrated resort to expand the business through the intro- business by marketing new digital game business in Japan. duction of No. 6 pachislot machines. titles in fiscal 2019.

2 SEGA SAMMY HOLDINGS Road to 2020 Business Strategies

Pachislot and Pachinko Machines Business

Business Strategy that Turns Change into Opportunities The regulatory revisions in February 2018 have broadened opportunities to tap into demand from people during their free time. In light of this, from the second half of fiscal 2019 through fiscal 2020, we plan to release a series of new pachislot machines (No. 6 machine models) that appeal to a broad base of customers. In pachinko machines, a major strength is our lineup of several models based on older regulations that have already been approved. In fiscal 2019, our sales strategy will focus on older models, starting with Pachinko CR Shin Hokuto Muso Chapter 2. While keeping an eye on trends in new models at other companies, we will continue to develop new-format machines with our sights set on a strategy for fiscal 2020. Pachinko CR Shin Hokuto Muso Chapter 2 ©Buronson & Tetsuo Hara/NSP 1983, Approved No.KOK-115 ZEEG, a Key Driver of Road to 2020 © 2010-2013 Koei Tecmo Games Co., Ltd. ©Sammy Reuse is key to achieving our targets under Road to 2020, and our central player in reuse is ZEEG Co., Ltd. a joint venture established between Sammy and Universal Entertainment Corporation. ZEEG is advancing efforts to gener- ate significant synergies by improving product capabilities that combine the technologies of both companies, and by creating an efficient earnings struc- ture by reducing procurement costs. For example, Universal Entertainment Corporation uses cabinets recov- ered from Sammy, expanding the scale of reuse beyond reuse on an individual company level. This will also lead to a significant reduction in procurement costs. We expect profits to improve (through the use of general-purpose cabinets) as more companies participate in this platform. ZEEG has also started to develop software development kit (ZSDK) with an eye on the future of the pachinko and pachislot machine industry.

©ZEEG

• Reuse Flow

ZEEG’s Area of Development and production Trade in by each company at manufacturers Responsibility

Sammy Sammy Component companies Universal Universal Distribution (Suppliers) Entertainment Entertainment centers of each company Direct Other manufacturers Pachinko hall Other manufacturers delivery

Components supplied on a unit and machine cabinet basis

ZSDK Initiative Utilizing ZEEG cabinets increases the reused component ratio and the ratio of cabinets used, thereby cutting purchase costs on an The ZSDK initiative aims to enable the reuse of software components in addi- individual component basis tion to hardware components by unify- ing software development tools and selling it as a package in the future.

3 INTEGRATED REPORT 2018

Entertainment Contents Business

SEGA’s Passion for World-Class Creativity Persona5 SEGA Games Co., Ltd., has a passion for quality that is evident in all facets Persona5 Unit Sales / Downloads cumulative unit sales of its business. By leveraging this passion in overseas businesses being strengthened under Road to 2020, the company’s earnings are gradually Over 2.2 million improving on a global scale. Persona5, released by . CO., LTD., became a hit title, with more than 2.2 million copies sold around the world. Moreover, overseas sales of this title were more than double domestic sales.

® The PlayStation 4 version of Persona5 ranked No. 1 overall on a game Persona5 review website in 2017. 6: The Song of Life has sold as many copies ©ATLUS ©SEGA Release of English version All rights reserved. (North America, Europe) overseas as it has in Japan. The title mostly represents a Japanese world view, but its quality has won over fans overseas as well. The steady repeat Release of Hangul version sales reflect our growing reputation for product quality. (Korea) ATLUS. CO., LTD., has studios in the U.S. with excellent localization Release of traditional Chinese version capabilities, which have been winning over strong support from fans of the (Hong Kong, Taiwan) game around the world and this also drives firm growth in sales. Release of Japanese version (Japan)

System for Designating Responsibility for Profit in Projects 2Q 3Q 4Q 1Q 2Q Fiscal 2017 Fiscal 2018 In the packaged games area, we aim for all developers to autonomously control development costs while creating games that thrive on the market. Therefore, we have clarified responsibilities for profits (operating income) in each develop- Earn Profits Globally with Localization ment project, and this has led to significant improvement in the profitability of that Wins over Fans in Foreign Countries packaged games in recent years.

Global versions of Persona5

ATLUS localization studio in Japanese California version of Persona5

Global versions Japanese version of Yakuza 6: The of Ryu ga Gotoku 6: Song of Life Inochi no Uta

Resort Business

Acquiring Expertise to Ensure Success of the Integrated Resort Business With our sights set on participating in the integrated resort business in Japan, we will acquire know-how in the operation of resort complexes through PHOENIX RESORT while accumulating expertise in the development and operation of integrated resorts through our business partnership with the PARADISE GROUP of South Korea. Further, we are refining our strategies that are focused on participation by identifying and conducting value chain analysis based on more than 118 key components of casino operations.

• Coordination in the Integrated Resort Business PARADISE CITY SEGA SAMMY HOLDINGS Incheon project members: 87 personnel in total Sharing know-how with Japan Integrated Resort a view to domestic Japan Market (57 overseas, 30 in Japan) * As of October 1, 2018 Business Department integrated resorts Planning • Business • Management • Operational Management management support management Section • Marketing • Hotels • Commercial Sharing know-how with a view to • Casino planning • Surveillance facilities domestic integrated resorts PHOENIX RESORT • Entertainment

4 SEGA SAMMY HOLDINGS Market Conditions of the Pachislot and Pachinko Machine Business

Long-Term Trends

Approval Process Approval Process for Pachinko and Pachislot Machines Before launching a machine, manufacturers are required to navigate an 1. Application for Security Communica- approval process in accordance with the Enforcement Regulation of prototype testing tions Association 2. Issuance of certification Entertainment Establishments Control Law. The law and the internal of prototype testing Public Safety Commission 3. Application for testing regulations of industry bodies have been revised frequently with a view in each prefecture to the sound development of the industry. Each revision has affected 4. Issuance of certification of prototype testing Pachinko halls the pachinko and pachislot machine market. 5. Contract / delivery

Machine 6. Application for approval 7. Approval 8. Commence- Continued Long-Term Downtrend in Pachislot and manufacturers ment of operations Pachinko Machine Market District police station The number of players peaked in 1995 and began trending downward due to casual players leaving the market in response to an increasing number of machines featuring more complicated gameplay or strong gambling elements. As a result, the pachinko and pachislot machine Market Size and Pachinko and market entered a period of long-term decline. Following the enactment Pachislot Player Numbers Trillions of yen / Millions of player of the revision of regulations pertaining to the Entertainment Establishments Control Law (hereinafter “regulatory revision”) in July 2004, the market has faced a challenging operating environment owing 54.0 52.2 51.8 51.5 51.8 51.8 to the following three factors. 21.7 51.2 48.7 49.0 46.7 46.5 47.4 48.5 49.0 50.4 17.9 49.3 1) Pachinko hall operators’ declining investment capacity due to a 17.1 16.6 15.8 17.2 16.7 14.5 decline in the number of players 17.4 12.6 11.1 11.5 10.7 9.7 9.4 9.0 2) Control of excessive gambling elements through regulatory 34.8 32.3 33.9 33.6 30.4 30.1 28.8 28.2 25.9 25.0 24.5 revision and increase in various types of costs 25.4 25.6 23.2 20.4 19.5

3) Decline in the number of players owing to the diversification of 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 entertainment that accompanied the expansion of the market Pachinko and pachislot market (Trillions) leisure market (Trillions) 17 (CY) Number of pachinko and pachislot players (Millions) for game apps for smart devices Source: White Paper on Leisure Industry 2018, Japan Productivity Center The above conditions have created a vicious cycle, wherein the deterioration of pachinko hall operators’ financial positions has resulted in a delay in measures to invigorate the market which, in turn, has had Breakdown of Pachinko Players by Age Group a negative impact on the pachinko and pachislot machine market. Based on 9 million players

While the number of pachinko halls is declining owing to the shutting 10’s 0.3% down of small-scale operators, as reflected in the increase in the number 20’s 30’s 40’s 50’s 60’s 70’s Women of pachinko and pachislot machines per hall, large operators are open- 7.3% 15% 22% 13% 12% 6% 24% ing large-scale halls, resulting in the emergence of an increasingly well-defined oligopoly in the market and this secures certain sales Men channels for pachinko and pachislot machine manufacturers.

Pachinko Hall Numbers and Machine Installations, Unit Sales, and Annual Machine Installations per Hall Turnover for Pachinko and Pachislot Machines Pachinko halls / Units Millions of units / Times

1.15 1.19 15,617 1.11 1.07 15,165 14,674 13,585 0.94 0.91 0.85 0.84 12,937 12,652 12,479 0.83 12,323 12,149 11,893 0.75 11,627 11,310 5.68 5.82 0.71 10,986 10,596 5.47 0.62 4.95 4.93 4.91 4.89 4.49 0.54 4.58 4.51 4.55 4.57 4.58 4.60 4.59 4.57 0.46 4.24 4.09 0.38 3.87 3.85 3.81 4.52 4.43 3.45 4.33 395.4 405.0 411.9 418.7 3.24 356.2 365.0 371.9 378.0 387.8 2.84 318.2 323.1 336.5 337.9 349.8 2.43 2.01 1.64

04 05 06 07 08 09 10 11 12 13 14 15 16 17 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 (Forecast) 18 Pachinko hall numbers Machine installations per hall 17 (CY) Pachinko and pachislot machines installed Unit sales Annual turnover (times) (CY) Source: Police Agency Sources: National Police Agency, Yano Research Institute (Figures for fiscal 2018 are the Company’s estimates or forecasts.)

5 INTEGRATED REPORT 2018

Recent Trends

Approval Process for Pachinko and Pachislot Machines Advancing Oligopoly and Increasing Interconnection in the Industry In the pachinko and pachislot machine manufacturing industry, machine sales are worth approximately ¥759.1 billion*1. In the pachinko machine market, pachinko machines are sold by 36*2 companies. In the pachislot machine market, pachislot machines are sold by 67*3 companies. In response to the challenging business environment faced by pachinko hall operators, a pronounced bias has emerged in market demand toward titles and manufacturers that promise reliable returns on investment. The joint venture between Universal Entertainment Corporation and has also provided momentum toward cooperation within the industry aimed at invigorating the market and improving efficiency.

*1 Fisal 2017(settlement dates from July to June) Source: Yano Research Institute Ltd. *2 Source: Yano Research Institute Ltd. *3 The number of pachislot machine manufacturers is the Group’s estimate.

8. Commence- Annual Pachislot Machine Unit Sales and Market Share ment of operations 2015 2016 2017 Position Manufacturers Unit sales Share Manufacturers Unit sales Share Manufacturers Unit sales Share 1 Universal Entertainment 165,000 17.0% Sammy 215,736 24.3% Company (K) 107,000 17.7% 2 Sammy 142,337 14.7% Universal Entertainment 203,000 22.9% Company (D) 100,000 16.5% 3 Heiwa / Olympia 113,997 11.8% Kita Denshi 90,500 10.2% Sammy 85,041 14.1% 4 Kita Denshi 100,000 10.3% Heiwa / Olympia 80,953 9.1% Company (U) 43,000 7.1% 5 SANKYO 80,125 8.3% Enterrise 57,000 6.4% Company (Y) 38,000 6.3%

Annual Pachinko Machine Unit Sales and Market Share 2015 2016 2017 Position Manufacturers Unit sales Share Manufacturers Unit sales Share Manufacturers Unit sales Share 1 Sansei R&D 300,000 15.9% 306,000 19.8% Company (S) 330,000 23.4% 2 SANKYO 296,346 15.7% Sansei R&D 209,000 13.5% Company (S) 171,919 12.2% 3 SANYO 275,000 14.6% Heiwa / Olympia 192,761 12.5% Sammy 140,013 9.9% 4 Heiwa / Olympia 234,616 12.4% SANKYO 172,954 11.2% Company (K) 140,000 9.9% 5 NEWGIN 220,000 11.7% NEWGIN 160,000 10.4% Company (S) 130,000 9.2% 6 Sammy 199,014 10.5% Sammy 138,321 9.0%

Changes in the Market Environment from No. 6 Model Machines and Promotion of Reuse of Machines Although it restricts gambling aspects, the regulatory revision enforced in February 2018 has not only introduced maximum payout rates but also minimum payout rates. This change will allow companies to develop pachinko and pachislot machines with gameplay geared more approachable fun casual players. With respect to pachislot machines, changes in voluntary regulations have enabled the development of pachislot machines that can be enjoyed in a shorter period of time. As for pachinko machines, it has become possible to use new settings, meaning that companies can offer players a wider range of gameplay. For pachislot machines in particular, shorter play times for players of new-format machines create the potential for unearthing new demand. In recent years, the time needed to play pachislot machines has been lengthening. These longer play times were causing casual players to leave the pachislot machine market and were preventing the participation of new players. Given that it creates opportunities to provide players with pachinko and pachislot machines that can be played casually for short periods of time, the recent regulatory revision could lead to a return of former players and attract new players, thereby putting a brake on the decline in the pachinko and pachislot machine player population and the contraction of the pachinko and pachislot machine market.

Outline of February 2018 Regulatory Revision Estimate for Reaching 300 Tokens Using Pachislot Machine with (Enacted on February 1, 2018) AT Function*2

Playable in a short time 1. Ball output regulations Limits on gambling elements 6.25 minutes No. 6 model*3 2. Addition of specifications Number Number for machines to enable obtained: obtained: easy checking of ball 300 2,400 Manufacturer 1 output data* 12.5 minutes No. 5.9 model*4 3. Introduction of settings Number Number (multi-stage payout ratio) obtained: obtained: 300 3,000 for pachinko machines

*1 Enables play without touching balls or medallions (electromagnetic record- One game 75 games 150 games 1,500 games ing and payment) *2 One game assumes to be finished in five seconds *3 No. 6 model assumes medals increase per game is 4.0 *4 No. 5.9 model assumes medals increase per game is 2.0 (Maximum increase under voluntary regulations)

(AT: Abbrevation for pachislot machines’ assist time)

6 SEGA SAMMY HOLDINGS Market Conditions of the Entertainment Contents Business and the Resort Business

Game Contents Market

Market Grew by Roughly 20% Game Contents Market by World Region

Sales in the global game contents market grew by roughly 20% year ¥487.8 billion Other on year in 2017, to approximately ¥10.9 trillion, with packaged games ¥4,133.5 billion 5% for home consoles and PC accounting for roughly ¥1.2 trillion and ¥842.8 billion Europe digitally distributed games accounting for approximately ¥9.7 trillion (of 20% Asia ¥4,921.9 2016 Total 46% billion which, mobile apps about ¥4.5 trillion). Other ¥8,997.7 8% Year-on-year growth in the packaged games market was limited billion Europe despite the release of a new game console that emerged as a global 21% 2017 Total hit. PC games, on the other hand, global expansion of PC game distri- United States Asia 28% ¥10,896.4 45% bution platforms drove market growth and sales in the digital games billion market grew by roughly 20% year on year, contributing to the growth ¥2,532.8 ¥2,305.1 billion billion of the game contents market as a whole. ¥1,843.6 billion By region, the game contents market was worth an estimated ¥2,826.7 United States billion 26% ¥4.92 trillion in Asia (of which, mobile apps ¥3.0 trillion), ¥2.8 trillion in the U.S. (of which, mobile apps ¥1.0 trillion), and ¥2.3 trillion in Europe Source: Famitsu Game White Paper 2018 * The countries and regions used for the calculation of other areas are different for 2016 and 2017. (of which, mobile apps ¥0.5 trillion). All of these regions saw year-on- (Prepared based on information as of June 2018) year growth of 10%–20%. Asia, that recorded sales of mobile games exceeding ¥3 trillion, to became the largest market.

Record-High Game Sales in Japan Domestic Game App (Smart Devices + SNS) Market The Japanese game market has shown continuous growth, with sales Billions of yen 1,139.7 reaching a record high of ¥1.56 trillion in 2017. 1,058.0 1,081.5 969.0 928.3 In the home console game market, the release of a new console 715.4 contributed greatly to growth and combined hardware and software 606.9 (including downloaded content) sales rose for the first time in five years, 385.6 climbing 128% year on year, to roughly ¥440 billion. The online platform 224.9 game market topped annual sales of ¥1.12 trillion and accounted for 118.7 5.5 29.0 roughly 70% of all Japanese game market sales. ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 (Estimate) (Forecast) The Japanese game app market grew by 9% year on year, to Source: Famitsu Game White Paper 2018 (CY) roughly ¥1.06 trillion, in 2017. Combined sales in China and South Korea were roughly ¥1.96 trillion, sales in North America were just over ¥1.0 trillion, and sales in Europe were approximately ¥540 billion. Japan’s Home and Online Game Contents Markets Therefore, Asia has built the largest market for game apps, accounting Billions of yen for roughly 60% of global sales. The number of gamers worldwide rose by roughly 5 million year on year in 2017, to approximately 49 million, the highest level in the

past five years. The number of PC gamers rose by 150% year on year, 1,203.1 1,127.3 1,147.4 999.4 1,038.6 partly owing to growth in the popularity of e-sports. Further growth in 698.3 788.6 494.3 the game contents market is expected as devices and content making 176.5 213.0 296.3 364.8 349.6 346.6 339.9 use of leading-edge technologies such as virtual reality (VR) continue 303.1 305.4 291.1 238.8 246.8 253.8 261.7 230.1 226.9 to emerge. 250.5 216.4 175.5 179.7 177.9 155.3 142.1 130.0 117.0 202.3 202.5 200.3 08 09 10 11 12 13 14 15 16 17 18 19 (Estimate) (Forecast)

Online game platforms Home video game software (including online games) (CY) Home video game consoles Source: Famitsu Game White Paper 2018

7 INTEGRATED REPORT 2018

Amusement Machine Sales and Amusement Center Operations Markets

Clear Recovery Trend Number of Amusement Centers and After shrinking for some time amid the trend of diversification of leisure Amusement Machine Installations Centers / Machines installed activities, the amusement center operations market reached a bottom 6,648 in fiscal 2014. While the number of game centers in operation contin- 6,181 5,772 5,439 ues to decline, the industry has benefited from demand from overseas 4,856 4,542 4,381 tourists visiting Japan and measures to improve efficiency and broaden 461,465 446,225 432,351 403,553 the user base have been successful. From fiscal 2015, game center 377,825 362,099 354,463 sales rose for the second consecutive year, showing a clear recovery trend. In fiscal 2016, sales increased by 6% year on year, to ¥460 billion, linking to liberalization of regulations pertaining to the Entertainment ’11 ’12 ’13 ’14 ’15 ’16 ’17 (CY) Establishments Control Law. Sales in the amusement machine sales Amusement centers Amusement machines installed Source: National Police Agency market also turned upward for the first time in five years in fiscal 2016, linking to the uptrend in the amusement center operations market. Amusement Machine Unit Sales / Revenues from Amusement machine manufacturers are taking measures to energize Amusement Center Operations Billions of yen the market and attract new users, such as adopting new business models such as revenue-sharing models, and introducing the use of

487.5 electronic money. 470.0 456.4 422.2 433.8 462.0

184.8 179.1 175.0 161.1 156.9 157.3

’11 ’12 ’13 ’14 ’15 ’16 (CY) Amusement machine unit sales Revenues from amusement center operations Source: JAIA, Amusement Industry Survey 2016

Resort Complex and Integrated Resorts

Moves toward Realization of Integrated Summary of the IR Implementation Bill Resorts in Japan Begin in Full-fledge Since the commencement of the Visit Japan Campaign in 2003, visi- tors to Japan have been increasing, and improving business conditions Number of 3 locations nationwide for resort hotels. Moreover, further increases in visitors are likely in the locations run up to the 2020 Olympic and Paralympic Games. In recent years, conditions in Asia’s casino market have been ¥6,000 (applicable to Japanese challenging due to such factors as the Chinese government’s policies. Admission citizens and non-Japanese fee Currently, however, the market is showing signs of a recovery trend. ­citizens residing in Japan) As for Japan, the Act on the Establishment of Specified Integrated Resort Areas (an IR Implementation Bill) was enacted in July 2018. Up to 3 times in 7-day period and Restriction up to 10 times in 28-day period Going forward, casino openings are expected upon completion of a on number of (applicable to Japanese citizens series of stages. These include the establishment and announcement admissions and non-Japanese citizens resid- of implementation policies by the government and municipal authori- ing in Japan) ties, the acceptance of applications and selection of IR operators by municipal authorities, the approval and public notification of plans for Casino tax 30% of casino revenues specified areas by the government, the determinations of municipal authorities and IR operators, and the granting of licenses.

8 SEGA SAMMY HOLDINGS ESG Data and External Evaluation

Personnel and Labor Data

Scope • FY2016: 16 domestic companies; Fiscal 2017: 16 domestic companies, 2 overseas companies (composition of employees only) FY2018: 15 domestic companies and 2 overseas companies (composition of employees only) • SSHD, SE, SGC SGN, DL, TMS, SAMMY, TOYS, SLS, SHD, SGC, JMS, PSR, SIC, Jnext, BTF and SNW * Data coverage for fiscal 2018: About 90% of the sales ratio and 70% of the regular employment ratio

Composition of Employees 2018 (15 Domestic Companies) 2018 (2 Overseas Companies) Total Male Female Total Male Female Number of employees 6,028 4,912 1,116 271 196 75 Regular employees 5,489 4,529 960 271 196 75 Non-regular employees 463 331 132 — — — Foreign nationals 76 52 24 — — — Average age 39.7 40.4 36.9 — — — Average length of service (years) 12.1 12.5 10.3 — — —

Composition of Management-Level Staff 2016 2017 2018 Number of female management-level staff 56 78 81 Percentage of female management-level staff (%) 5.4 6.7 5.0

Composition in Fiscal 2018 Total Managers Division Managers Executive Officers Directors Number of management-level staff by position 1,108 686 323 56 43 Male 1,049 640 311 56 42 Female 59 46 12 0 1 Ratio of females (%) 5.3 6.7 3.7 0 2.3

Recruiting 2016 2017 2018 Total Male Female Total Male Female Total Male Female Number of new graduates 95 62 33 124 74 50 139 86 53 Turnover rate of new employees (%) 30.0 28.1 35.5 23.9 17.3 46.7 20.4 16.4 28.1 (within 3 years from employment) Number of mid-career recruits 200 159 41 212 161 51 226 169 57 Rehired employees after retirement 19 18 1 43 35 8 43 40 3

Data on the System Supporting both Professional and Private Lives 2016 2017 2018 Total Male Female Total Male Female Total Male Female Number of employees who have taken maternity / childcare leave 59 — 59 45 — 45 55 — 55 Number of employees who have taken childcare leave 77 6 71 82 12 70 95 21 74 Number of employees who returned to work after childcare leave 53 5 48 57 12 45 56 20 36 Percentage of employees who returned to work after childcare leave (%) — 83.3 88.9 — 100 90.9 — 100 98.6

Work–Life Balance Occupational Health and Safety 2016 2017 2018 2016 2017 2018 Average overtime hours per month (hours) 17.3 17.3 21.9 Number of industrial injuries 6 1 0 Number of days of paid leave taken (days) 8.2 8.2 11.5 Rate of lost-worktime injuries 0.6 0.1 0 Percentage of paid leave taken (%) 45.6 46.2 63.7 Total number of employees who took volunteer leave 35 57 46 Total number of days for volunteer leave taken (days) 74 92 70

9 INTEGRATED REPORT 2018

Environmental Data

Scope of Aggregation Reporting organizations for the aggregation of data: 15 companies (for fiscal 2015 and 2016, 16 companies including SEGA LIVE CREATION.) • SSHD/SHD/SAMMY/TOYS/TMS/SNW/PSR/SE/SIC/SGC/ELEC/SLS/DL/MARZA/JMS

CO2 Emissions (Scope 1) CO2 Emissions (Scope 2) Total Energy Input t-CO2 t-CO2 GJ

13,485

10,658 110,316 2,216,589 100,449 2,050,423 1,832,927 1,897,720 8,613 8,712 86,944 85,140

’15 ’16 ’17 ’18 ’15 ’16 ’17 ’18 ’15 ’16 ’17 ’18 (FY) (FY) (FY)

Electricity Usage Industrial Waste Discharged Water Usage MWh t m³

198,119 185,803 2,466 173,879 167,381 1,075,035 945,162 1,860 886,828 911,771

1,242 1,188

’15 ’16 ’17 ’18 ’15 ’16 ’17 ’18 ’15 ’16 ’17 ’18 (FY) (FY) (FY) * Aggregated data includes an estimate based on floor space.

* Gross decrease in CO2 emissions is mainly attributable to reduced fuel and electricity consumption.

* Adjusted CO2 emission factors for each power company in previous years are used for purchased electricity.

Status of Eco-Friendly Initiatives at Sammy’s Kawagoe Factory

2016 2017 2018 Pachinko and pachislot machine recycle rate Recycle rate 97.28% 97.21% 95.99% Use of environment-friendly raw materials Amount of wood used 1,077 t 1,494 t 566 t Of which, PEFC-certified wood* 45 t (4.2%) 84 t (5.6%) 38 t (6.8%)

* PEFC-certified wood: This refers to wood certified by the Programme for the Endorsement of Forest Certification. This wood is appropriately procured from forests that have received third-party certification as sustainably managed forests. Our use of PEFC-certified wood has declined due to a decrease in the volume of products that we manufacture for which PEFC-certified wood is usable. All of the components we procure use water-based adhesives, which place less burden on the environment.

External Evaluations

Selected for Inclusion in SRI Indexes Adopted by the GPIF as ESG Indexes SEGA SAMMY HOLDINGS was selected as a constituent for socially responsible investment (SRI) indexes adopted by the Global Pension Investment Fund (GPIF) as ESG indexes: the MSCI Japan ESG Select Leaders Index and the MSCI Japan Empowering Women Index (WIN). The Company qualified for inclusion in the MSCI Japan ESG Select Leaders Index as a constituent of the MSCI Japan IMI Top 500 Index that particularly excels in ESG. Our selection for inclusion in the MSCI Japan Empowering Women Index was predicated upon the quality of our disclosure of information in accordance with the Act of Promotion of Women’s Participation and Advancement in the Workplace compared to other constituents in the MSCI Japan IMI Top 500 Index.

Abbreviations of Group Companies SSHD: SEGA SAMMY HOLDINGS INC., SHD: SEGA Holdings Co., Ltd., SAMMY: Sammy Corporation, TOYS: CO., LTD., TMS:TMS ENTERTAINMENT Co., Ltd., SNW: Sammy Networks Co., Ltd., PSR: PHOENIX RESORT CO., LTD., SE: SEGA ENTERTAINMENT CO., Ltd., SIC: SEGA Interactive Co., Ltd., SGC: SEGA Games Co., Ltd., ELEC: TAIYO ELEC Co., Ltd., SLS: SEGA LOGISTICS SERVICE CO., LTD., DL: DARTSLIVE Co., Ltd., MARZA: INC., JMS: Japan Multimedia Services Corporation, OP: OASIS PARK Co., Ltd., GINZA: GINZA Corporation, RODEO: RODEO Co., Ltd., SSC: SEGA SAMMY CREATION INC., BTF: Butterfly Corporation, PSS: PARADISE SEGA SAMMY Co. Ltd., SSGE: SEGA SAMMY GOLF ENTERTAINMENT INC., Jnext: J-NEXT Co.,Ltd. · Some activities include Group companies other than those listed above.

10 SEGA SAMMY HOLDINGS INC. Sumitomo Fudosan Osaki Garden Tower, 1-1-1 Nishi-Shinagawa, Shinagawa-ku, Tokyo 141-0033, Japan www.segasammy.co.jp/english/

Printed in Japan