INTEGRATED REPORT 2017 OUR MISSION STATEMENT Dreams, Fun and Inspiration
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BANDAI NAMCO Group INTEGRATED REPORT 2017 OUR MISSION STATEMENT Dreams, Fun and Inspiration “Dreams, Fun and Inspiration” are the Engine of Happiness. Through our entertainment products and services, BANDAI NAMCO will continue to provide “Dreams, Fun and Inspiration” to people around the world, based on our boundless creativity and enthusiasm. The BANDAI NAMCO Group develops entertainment-related products and services in a wide range of fields, including toys, network content, home video games, arcade games, amusement facilities, and visual and music content. In accordance with our Mid-term Plan, which includes the vision of “NEXT STAGE—Empower, Gain Momentum, Accelerate Evolution,” we are aiming to be No. 1 with strong conviction. On that basis, we are committed to being “the Leading Innovator in Global Entertainment” and recording strong growth. CONTENTS 02 04 06 02 THE BANDAI NAMCO Group— 1 Year of Results (FY2017.3) 08 04 STRATEGIC BUSINESS UNITS (SBUs) — 1 Year of Results (FY2017.3) 10 06 MAJOR IP IN GROUP PRODUCTS AND SERVICES 12 08 BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS 16 10 CHAIRMAN’S MESSAGE 19 12 PRESIDENT’S MESSAGE 16 MESSAGES FROM THE PRESIDENTS OF 34 SBU CORE COMPANIES OUROUR VISION VISION 38 19 SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth 45 The Leading 34 DISCUSSION AMONG OUTSIDE DIRECTORS 49 38 CORPORATE GOVERNANCE Innovator 45 CSR INITIATIVES in Global 48 HUMAN RESOURCES INITIATIVES 49 FINANCIAL SECTION Entertainment 87 CORPORATE DATA 88 OVERVIEW OF MAIN GROUP COMPANIES As an entertainment leader across the ages, About Integrated Report 2017 In editing this report, we made reference to the International Integrated BANDAI NAMCO is constantly exploring new areas Reporting Framework of the International Integrated Reporting Council and heights in entertainment. (IIRC). We aim to be loved by people who have fun and Forward-Looking Statements The forward-looking statements in this report are based on the informa- will earn their trust as “the Leading Innovator tion available to management as of August 2017 and include various risks and uncertainties. Accordingly, actual results may differ materially from in Global Entertainment.” these projections for a variety of reasons. Major factors that could influence actual results include changes in the BANDAI NAMCO Group’s operating environment, market trends, and exchange rate fluctuations. Notes: 1. All figures in this report are rounded to the nearest unit. 2. FY2017.3 and the year under review represent the one-year period ended March 31, 2017. 3. Figures in this report are as of August 2017. CSR IR Our website provides a variety of information about the BANDAI NAMCO Group, such as IR information and CSR initiatives. Please utilize the website in conjunction with this report. www.bandainamco.co.jp/en/ index.html 01 THE BANDAI NAMCO Group FY2017.3 1 Year of Results BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries For the Fiscal Years Ended March 31 Net Sales Operating Profit Overview of Results To strengthen the IP axis strategy, the ¥620.1 billion ¥63.2 billion Company advanced initiatives in a number of areas, such as creating and nurturing new IP, YOY YOY extending target markets, and expanding new 7.7% 27.4% businesses. Overseas, we worked to expand 620.1 63.2 IP lineups, business fields, and areas, including 565.5 575.5 56.3 in Asia and in Europe and the Americas. 507.7 On the business front, the Company 487.2 48.6 49.6 recorded year-on-year increases in the 44.7 Operating Network Entertainment Business, which Net Sales performed well, mainly in network content 22.4 Profit (¥ billion) and overseas home video games, and in (¥ billion) 10.0 10.0 18.1 17.3 16.7 20.6 8.8 8.6 10.2 the Visual and Music Production Business, which delivered a strong performance, Overseas Operating primarily in its key IP. Sales Profit As a result, in FY2017.3 the BANDAI Proportion Margin (%) NAMCO Group achieved record high sales and (%) operating profit on a consolidated net basis. 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Segment Sales Ratio Segment Profit Ratio Visual and Other Visual and Other Music Music Production 4.1% Production 1.0% Toys and Hobby % % 8.6 Toys and Hobby 19.4 15.8% 29.4% Network Network Entertainment Entertainment 57.9% 63.8% Note: Percentage figures are calculated based on sales before elimination of internal transactions. Contributions to Net Sales by Return on Equity (ROE) Return on Assets (ROA) Geographic Region Asia, excluding Japan 13.3% 13.5% Europe 6.6% 348.8 488.0 6.1% 317.3 441.8 448.3 303.5 405.1 Americas 268.0 374.2 248.8 8.0% Total 14.1 14.0 14.0 Total Net 13.2 Assets 13.3 13.5 Assets 11.2 (¥ billion) Japan (¥ billion) 12.2 11.4 9.7 ROA 79.3% ROE (%) (%) Note: Percentage figures are calculated based on external sales. Figures are estimates based on 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 management accounting. 02 THE BANDAI NAMCO Group — 1 Year of Results — 1 Year NAMCO Group THE BANDAI ( FY2017.3 Profit Attributable to Owners of Parent Free Cash Flows* Shareholders’ Equity Ratio ) ¥44.2 billion ¥51.1 billion 71.3% YOY 27.7% YOY 47.7% 357.6 51.1 (¥ billion) 44.2 (¥ billion) 325.1 304.1 71.3 37.6 274.3 34.6 259.0 70.6 32.4 34.6 68.6 30.6 Total 25.1 26.9 Shareholders’ 66.0 66.0 21.6 Equity (¥ billion) Shareholders’ Equity Ratio (%) 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 * Free cash flows = Net cash provided by operating activities + Net cash used in investing activities Debt / Equity Ratio* Cash Dividends per Share Basic Earnings per Share 0.00 times ¥82 ¥201.03 YOY YOY ¥30 ¥43.60 13.3 2 82* (Yen) 201.03 171.10 157.43 62*1 147.40 Interest- 9.2 Bearing Debt Cash Dividends 52 114.05 (¥ billion) per Share 45 0.05 (Yen) 35 40.8 4.4 36.2 33.0 Debt / Equity Consolidated 30.5 30.7 Ratio* 1.9 Dividend (Times) 0.03 0.9 0.00 Payout Ratio 0.01 0.01 (%) 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 * Debt / equity ratio = Interest-bearing debt / *1 FY2015.3 includes a special dividend of ¥10. Total shareholders’ equity *2 FY2017.3 includes a special dividend of ¥20. Sales of Major IPs* (Group total) Game Content R&D Investment and Capital Investment Mobile Suit Gundam 2017 ¥74.3 billion series 2016 ¥78.6 billion 59.0 55.8 54.6 DRAGON BALL 2017 ¥61.1 billion 51.8 series 2016 ¥34.9 billion 43.2 2017 ¥ billion ONE PIECE 30.4 Game Content 2016 ¥23.3 billion R&D Investment (¥ billion) 23.5 KAMEN RIDER 2017 ¥ billion 22.3 21.3 22.3 18.5 19.6 series 2016 ¥18.6 billion Power Rangers 2017 ¥21.0 billion Capital series 2016 ¥19.1 billion Investment (¥ billion) 2013 2014 2015 2016 2017 * IP: Characters and other intellectual property 03 STRATEGIC BUSINESS UNITS (SBUs) — FY2017.3 1 Year of Results BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries For the Fiscal Years Ended March 31 From FY2018.3, BANPRESTO CO., LTD., BANPRESTO SALES CO., LTD., and BANPRESTO (H.K.) LTD., have been transferred from the Network Entertainment SBU to the Toys and Hobby SBU. Toys and Hobby Net Sales Operating Profit Overview of Results (¥ billion) (¥ billion) In Japan, there were favorable results for 230.9 long-established IP products, and the 215.0 17.0 16.6 Company implemented measures to 206.4 193.2 15.0 strengthen the IP axis strategy, such as taking steps to expand its target markets for adults and to enhance its IP lineup. 11.0 Overseas, in the Asian region, products in the Mobile Suit Gundam series and products for adult customers recorded increased popularity. In Europe and the Americas, products in the Power Rangers series gained in popularity, and we implemented measures to strengthen our IP lineup. 2015 2016 2017 2018 2015 2016 2017 2018 Actual Actual Actual Plan Actual Actual Actual Plan Result Result Result Result Result Result Network Entertainment Net Sales Operating Profit Overview of Results (¥ billion) (¥ billion) In home video games, in Europe and the 380.3 370.0 44.3 Americas favorable results were achieved by new titles, such as DARK SOULS III. In 320.9 network content, major titles were popular 296.4 36.0 in Japan and overseas. In amusement 29.3 facilities, existing facilities in Japan made favorable progress, and we implemented 23.9 a range of initiatives, including steps to strengthen new format facilities. In arcade games, results were generated by mea- sures to improve profitability by strength- ening the business foundation. 2015 2016 2017 2018 2015 2016 2017 2018 Actual Actual Actual Plan Actual Actual Actual Plan Result Result Result Result Result Result Visual and Music Production Net Sales Operating Profit Overview of Results (¥ billion) (¥ billion) In the Visual and Music Production 56.3 13.4 Business, the Love Live! series, which is IP for which visual content was developed in 52.0 12.0 50.0 11.7 conjunction with music content and live 43.8 10.1 events, remained popular. In addition, the GIRLS und PANZER series gained popularity, especially for products themed around a movie, and sales of visual and music packaged products, as well as related products, were favorable.