FY Ended March 2013 Full Year Results Presentation
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FY Ended March 2013 Full Year Results Presentation May 13th, 2013 SEGA SAMMY HOLDINGS INC. [Disclaimer] The contents of this material and comments made during the questions and answers etc of this briefing session are the judgment and projections of the Company’s management based on currently available information. These contents involve risk and uncertainty and the actual results may differ materially from these contents/comments. © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Contents 【FY Ended March 2013 Full Year Results / FY Ending March 2014 Full Year Forecasts】 Consolidated Income Statements 3 Future Activities FY Ended March 2013 Highlights 4 Pachislot and Pachinko Machines 24 Amusement Machine Sales 25 Major Business Measures 5 Operating Income Primary Factors Amusement Center Operations 26 6 Behind Fluctuations Consumer Business 27 Net Income 7 Resort Complex Business 28 Costs and Expenses 8 Appendix 29 Consolidated Balance Sheet 9 Consolidated Cash Flows 10 Segment Results / Forecast Pachislot and Pachinko Machines 11 Amusement Machine Sales 15 Amusement Center Operations 17 Consumer Business 19 - 1 - © SEGA SAMMY HOLDINGS INC. All Rights Reserved. FY Ended March 2013 Full Year Results/ FY Ending March 2014 Full Year Forecasts © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Consolidated Income Statements (Summary) (JPY Billion) FY Ended March 2012 FY Ended Mach 2013 FY Ending Mach 2014 Results Full Year Results Full Year YoY Forecasts YoY Full year YoY Through 2Q Results Through 2Q Results Change Through 2Q Change Forecasts Change Net Sales 152.6 395.5 136.5 321.4 -18.7% 198.0 +45.1% 485.0 +50.9% Pachislot and Pachinko Machines 74.8 212.1 54.3 142.2 -33.0% 109.0 +100.7% 270.0 +89.9% Amusement Machine Sales 19.3 49.9 18.7 39.1 -21.6% 18.0 -3.7% 45.5 +16.4% Amusement Center Operations 23.2 44.6 21.7 42.7 -4.3% 23.0 +6.0% 45.5 +6.6% Consumer Business 33.4 85.6 35.3 83.8 -2.1% 41.0 +16.1% 109.5 +30.7% Other 1.6 3.0 6.3 13.4 +346.7% 7.0 +11.1% 14.5 +8.2% Operating Income 15.1 58.3 7.8 19.0 -67.4% 17.5 +124.4% 73.0 +284.2% Pachislot and Pachinko Machines 20.6 71.0 10.4 23.5 -66.9% 25.2 +142.3% 74.0 +214.9% Amusement Machine Sales 1.5 7.4 0.8 1.9 -74.3% -0.1 - 2.7 +42.1% Amusement Center Operations 1.6 0.3 0.8 1.1 +266.7% 0.4 -50.0% 0.2 -81.8% Consumer Business -6.0 -15.1 -0.7 -0.7 - -3.7 - 3.9 - Other 0.2 0.2 -0.1 -0.4 - -0.3 - -0.3 - Eliminations -2.9 -5.4 -3.2 -6.3 - -4.0 - -7.5 - Operating Margin 9.9% 14.7% 5.7% 5.9% -8.8pt 8.8% +3.1pt 15.1% +9.2pt Ordinary Income 14.7 58.1 7.2 20.9 -64.0% 17.0 +136.1% 72.0 +244.5% Extraordinary Gain 1.1 3.3 0.3 10.1 - 3.0 - 3.3 - Extraordinary Loss 5.3 18.5 0.3 5.4 - 0.0 - 4.8 - Income before income taxes and minority interests 10.4 42.9 7.3 25.6 -40.3% 20.0 +174.0% 70.5 +175.4% Net Income 3.9 21.8 3.8 33.4 +53.2% 9.0 +136.8% 47.0 +40.7% Dividends per share (JPY) 20 40 20 40 - 20 - 40 - Earnings per share (JPY) 15.79 86.73 15.74 137.14 - 37.18 - 194.17 - Net Assets per share (JPY) 1,115.46 1,167.59 1,125.09 1,304.44 - - - - - - 3 - © SEGA SAMMY HOLDINGS INC. All Rights Reserved. FY Ended March 2013 Results Highlights ・Sales and operating income significantly decreased compared to the results of the previous fiscal year mainly due to revising the sales schedule for mainstay products in the Pachislot and Pachinko Machines Net Sales/Profits Business. Other ・The net income increased compared to the results of the previous fiscal year due to the total amount of corporate tax and other taxes decreased, resulting from the recording of deferred tax assets. ・Pachislot unit sales decreased compared to the results of the previous fiscal year due to revising the Pachislot and sales schedule for several titles in the pachislot machines. Pachinko Machines ・Pachinko unit sales decreased compared to the results of the previous fiscal year due to weak sales of titles other than mainstay titles impacted by the market environment. ・Sales and profits significantly decreased compared to the results of the previous fiscal year due to there Segment breakdown Amusement being no sales of mainstay titles. Machine Sales ・Strong income from utilization of revenue sharing model. ・Existing sales dropped against the previous year which resulted in the sales decrease year on year but Amusement Center income increased due to the decrease of depreciation from the change of accounting policies. Operations ・Renewal opening of Tokyo JOYPOLIS (July 14, 2012) ・Establishment of Sega Entertainment Corp. (as of October 1, 2012) ・Narrowed down the number of titles from the Europe /US packaged business which resulted in the sales decrease year on year but loss went down from the reduction of the operating expense as part of streamline organization. Consumer Business ・Number of registered IDs for online RPG “Phantasy Star Online 2” topped cumulative 2.5 million IDs as of March 10, 2013. ・Establishment of SEGA Networks, Ltd. (as of July 2, 2012) ・Sales significantly increased year-on-year due to conversion of Phoenix Resort K.K. into a consolidated Others subsidiary. - 4 - © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Major Business Measures ・Name of developer:Paradise Sega Sammy (Disclosed on May 11th , 2012) ・Site:IBC-I 2nd Phase District, Woonseo-dong, Jung-gu, Incheon, South Korea ■ Resort Complex Development in South ・Business Description:Development of resort complex comprised of casinos, hotels, shopping malls, convention Korea centers, offices, etc. ・Site area:336,000㎡ (Joint Venture with Paradise Group) ・Opening (plan): 2016 ・Investment amount (plan):800 billion KRW (of which, 140 billion KRW of investment by SEGA SAMMY) ・・Share of stocks hold by SEGA SAMMY:45% ・Name of Developer:SEGA SAMMY BUSAN INC. ・Site (planned):1502 U-dong, Haeundae-gu, Busan Metropolitan City, South Korea (Disclosed on January 4th ,2013) ・Business Description:Development of a complex comprised of hotel, entertainment facilities, commercial facilities, etc. Development of Complex in Busan ■ Site area 9,911.20 Metropolitan City, South Korea ・ : ㎡ ・Total Floor Space:148,879.34㎡ ・Investment amount:385.8 billion KRW (amount for land acquisition: 113.6 billion KRW, assumed investment amount for buildings: 272.2 billion KRW) ・Opening (plan):September, 2016 ・Name of Company:THQ Canada Inc. (current Relic Entertainment,Inc.) (Disclosed on January 25th ,2013) ・Address:Vancouver, British Columbia, Canada ■ Acquisition of THQ Canada Inc. and ・Business Description:Development and provision of PC game titles some IPs owned by THQ Inc ・Number of employees:117 (as of December 31, 2012) ・Main Titles:“Company of Heroes” , “Warhammer 40k Dawn of War” ・Value of acquisition:USD $26.6mil < Total number of shares acquired> ・Total number of shares acquired: 10,000,000 shares ■ Acquisition of treasury stocks ・Total acquisition costs: 16,192,991,300 yen ・Acquisition period: From June 7, 2012 through July 31, 2012 *Total number of Treasury Stocks (as of March 31 , 2013) ⇒Total number of issued and outstanding shares: 266,229,476 shares ⇒Total number of Treasury Stocks: 24,169,675shares - 5 - © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Operating Income – Primary Factors Behind Fluctuations (Major Causes) JPY Billion) Pachislot Pachislot ( AM Machine AM Center Consumer AM Machine AM Center Consumer Pachinko Pachinko ・Unit sales decreased due to Operating revising the sales Income schedule for mainstay +4.6 pachislot titles +0.8 0.9 - Operating ・Pachinko unit Income ・Sales of several sales decreased ・Increase in mainstay titles ・Increase in unit sales operating through sales ・Launch of titles utilizing revenue expense such of mainstay sharing model as depreciation packaged game cost titles +50.5 ・Reduced ・Continuous operating contribution to -47.5 expenses earnings from 73.0 resulting from mainstay ・No sale of structural reform digital game 58.3 mainstay titles ・Depreciation Operating titles Income decreased due to changing of ・Increase in unit accounting sales through policies +14.4 sales of several mainstay -5.5 19.0 pachislot titles +0.8 ・Increase in pachinko unit sales FY 2012 FY 2013 FY 2014 Results Consolidated Operating Income-39.3Billion yen Results Consolidated Operating Income+54.0Billion yen Forecasts - 6 - © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Net Income (JPY Billion) FY Ended March 2012 FY Ended March 2013 FY Ending March 2014 Ordinary Income 58.1 20.9 72.0 Extraordinary Gain 3.3 10.1 3.3 Gain on transfer of benefit obligation Gain on sales of fixed assets 3.0 relating to employees’ pension fund 6.3 Other 0.3 Gain on sales of securities 1.9 Other 1.9 Extraordinary loss 18.5 5.4 4.8 Impairment loss 2,9 Loss on liquidation of affiliates 4.8 Loss on liquidation of affiliates 1.7 Other 0.8 Income before income taxes 42.9 25.6 70.5 and minority interests Total Income Taxes 21.1 ▲7.8 23.5 (incl. Minority Interest Income) Decrease from the booking of deferred tax assets Net income 21.8 33.4 47.0 - 7 - © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Costs and Expenses Results/Forecast (JPY Billion) FY Ended March 2012 FY Ended Mach 2013 FY Ending Mach 2014 Results Full Year Results Full Year YoY Forecasts YoY Full year YoY Through 2Q Results Through 2Q Results Change Through 2Q Change Forecasts Change R&D Expense / 19.7 53.3 19.1 45.2 -15.2% 24.1 +26.2% 54.9 +21.5% Content Production Expense Cap-ex 9.4 36.1 21.6 32.8 -9.1% 17.1 -20.8% 32.5 -0.9% Depreciation 6.4 16.1 7.4 18.1 +12.4% 13.2 +78.4% 25.5 +40.9% Advertising 7.6 17.2 5.6 13.1 -23.8% 10.0 +78.6% 19.5 +48.9% Results of FY Ended March 2013 Forecast of FY Ending March 2014 ■R&D Expense/Content