SEGA SAMMY HOLDINGS INC. Stock Code 6460 Key Points of Financial Results by the Numbers First Half of FY2015 (Fiscal Year Ending March 31, 2015) SEGA SAMMY
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Winter Business Report for the six months ended September 30, 2014 Edition From April 1, 2014 to September 30, 2014 Contents P Key Points of Financial Results by the Numbers 1 SEGA SAMMY in 2014 Interim P 3 A Message from Management P 2014 winter Segment 5 Information SEGA SAMMY P Looking back with a “Key Person” REPORT 7 Review of Activities up to the Second Quarter Casinos and the SEGA SAMMY Group Strong Performance in the Digital Game Area of Consumer Business P 11 Latest News P 13 Group Information SEGA SAMMY HOLDINGS INC. Stock Code 6460 Key Points of Financial Results by the Numbers First Half of FY2015 (Fiscal year ending March 31, 2015) SEGA SAMMY Interim Net sales Operating income in 2014 First half First half Net Sales (billions of yen) Operating Income (billions of yen) Net Income (billions of yen) First Half Full Year First Half Full Year First Half Full Year 30.7 billion billion 370.0 38.5 378.0 (Forecast) ¥154.2 ¥3.4 Full year (Announced on October 31, 2014) Full year (Announced on October 31, 2014) 18.0 (Forecast) 11.3 4.0 (Forecast) 162.2 154.2 12.3 3.4 (2.0) billion billion 2014/3 2015/3 2014/3 2015/3 2014/3 2015/3 ¥370.0 ¥18.0 During the first half of the fiscal year ending March 31, 2015, despite both sales and earnings exceeded the initial forecast thanks to robust unit sales of pachinko machines in the Pachislot and Pachinko Unit of pachislot machines sold for full year Machine Business, both sales and earnings decreased year on year due to reviewing of the sales schedule in some products in the Pachislot and Pachinko Machine Business. Additionally, Fiscal year ending Net sales of digital game area model testing operation method of pachislot machines in the Pachislot and Pachinko March 31, 2015 374,800 units Initial forecast Machine Business has been changed. In response to these changes, the sales schedules of some pachislot titles were revised, resulting in a down- Revised forecast ward revision of full-year consolidated results forecast for units Year on year % 222,998 +24 the fiscal year ending March 31, 2015 on In the pachislot machine business, the full year forecast for unit sales have The sales of digital game area in the Consumer Business October 31, 2014. been revised from 374 thousand units to 222 thousand units, due to the ne- have been expanding at a good rate. During the first half cessity of having to adapt to the changes in operation methods of model of the fiscal year ending March 31, 2015, net sales testing, which is a part of the approval process. Meanwhile, in the pachinko amounted to ¥21.9 billion, an increase of 24% from machine business, as orders for the new Hokuto No Ken series, CR Hokuto ¥17.6 billion year on year. As digital game area continue Please see page 13 for detailed financial information. No Ken 6 Ken-ou was strong, the full year forecast for unit sales of pachinko to record robust sales primarily in Japan, full year net machines has been revised from 250 thousand units to 267 thousand units. sales are also expected to exceed last year’s result. 1 Key Points of Financial Results by the Numbers Business Segments of SEGA Amusement Machine SAMMY and Composition of Sales Business % Net sales by Business Segment 11.7 Net Sales ¥18.0 billion (-) Operating Income ¥0.1 billion (-) Other 4.2 % Net Sales ¥6.4 billion (down 10 % year on year) SEGA CORPORATION Development, Operating Loss billion (-) ¥1.0 Sammy Corporation production and sales Development, production of amusement machines and sales of pachislot Development and and pachinko machines operation of amusement centers Development and sales Amusement Center of game software Operations 13.5 % (down % year on year) Group Management Philosophy Net Sales ¥20.8 billion 5 By providing entertainment lled with dreams and excitement to people (-) throughout the world, we will strive Operating Loss ¥0.2 billion to enrich our society and culture. SEGA TOYS CO., LTD. TAIYO ELEC Co., Ltd. Planning, production and sales of toys Development, production and sales of pachinko During the first half of the fiscal year ending March 31, 2015, despite both sales and earnings exceeded and pachislot machines the initial forecast thanks to robust unit sales of pachinko machines in the Pachislot and Pachinko Machine Business, both sales and earnings decreased year on year due to reviewing of the sales schedule in some products in the Pachislot and Pachinko Machine Business. Additionally, TMS ENTERTAINMENT, LTD. Planning and production model testing operation method of pachislot machines in the Pachislot and Pachinko distribution of animation Machine Business has been changed. In response to these changes, the sales Sammy Networks Co., Ltd. schedules of some pachislot titles were revised, resulting in a down- Distribution service of Pachislot and game-related content for ward revision of full-year consolidated results forecast for mobile phones and PCs. Consumer the fiscal year ending March 31, 2015 on Pachinko Machine Business % % October 31, 2014. Business 39.3 31.3 Net Sales ¥60.6 billion (down 15 % year on year) Net Sales ¥48.2 billion (up 10 % year on year) Operating Income ¥7.3 billion (down 52 % year on year) Operating Income ¥0.9 billion (down 18 % year on year) Please see page 5 for results by segment. 2 A Message from Management President and Chief Executive Officer SEGA SAMMY HOLDINGS INC. Please look back and evaluate the first half of the Chairman, Representative Director and CEO of Sammy Corporation Q. Chairman, Representative Director and CEO of fiscal year ending March 31, 2015. SEGA CORPORATION Hajime Satomi uring the first half of the fiscal year ending have relatively higher margins decreased, which led March 31, 2015, consolidated net sales de- to the decrease in earnings. D creased 5% year on year to ¥154.2 billion, op- In addition, PHOENIX RESORT CO., LTD., a erating income decreased 72% year on year to ¥3.4 Group subsidiary, posted ¥2.7 billion in provisions for billion, and ordinary income decreased 77% year on dismantling of fixed assets in extraordinary loss for year to ¥3.3 billion, a decrease in both sales and some of the facilities of PHOENIX SEAGAIA RE- earnings compared with the same period in the pre- SORT, which PHOENIX RESORT CO., LTD. oper- vious fiscal year . ates. This resulted in net loss of ¥2.0 billion com- In the Pachislot and Pachinko Business, com- pared with net income of ¥11.3 billion in the same pared year on year, unit sales of pachinko machines period in the previous fiscal year. increased and unit sales of pachislot machine which What is the outlook for the SEGA SAMMY Group Q. for the fiscal year ending March 31, 2015? ased on business performance trends during methods for pachislot machines have been changed B the first half of the fiscal year ending March 31, at the Security Communications Association (“Ho- 2015, on October 31, 2014, the Group revised tsukyo”), which conducts model testing for pachinko its initially announced full-year consolidated results and pachislot machines, which is a part of the ap- forecasts downwards. The new results forecasts are; proval process. Dear Shareholders, net sales of ¥370.0 billion (a decrease of ¥80.0 bil- The changes to the testing methods became ef- During the first half of the fiscal year ending March 31, 2015, the Japanese lion from the previous forecast), operating income of fective from September 16, 2014, and as a result, ¥18.0 billion (a decrease of ¥17.0 billion from the the Group reviewed specifications for some pachislot economy saw upturns in company results and improvements in employment previous forecast), ordinary income of ¥17.0 billion (a titles scheduled for release in or after the third quar- conditions, led by the effects of monetary and financial policies. While the Jap- decrease of ¥18.0 billion from the previous forecast), ter, as well as sales schedules, etc. anese economy continued in gradual recovery trend, uncertainty still prevailed and net income of ¥4.0 billion (a decrease of ¥17.0 Because of this, annual unit sales projection of due to worries over stagnation in personal spending originating from an in- billion from the previous forecast). pachislot machines for this year was revised from crease in the consumption tax rate. In this climate, the SEGA SAMMY Group In the Pachislot and Pachinko Machines Business, 374 thousand units to 222 thousand units. On the has implemented various management measures to create a framework that the Group’s pillar for profits, the Group is required by other hand, for pachinko machines, because of ro- can deal speedily and flexibly with changes in the business environment, and the Act on Control and Improvement of Amusement bust performance of Pachinko CR Hokuto No Ken 6 has also fully committed to building a solid management foundation that can Business, etc. and other related laws and regulations Ken-ou, launched in the third quarter, annual unit accelerate future growth. The Group will invest in growth, while continuing to to undergo multiple approval processes in order to sales projection have been raised from 250 thou- sell products. sand units to 267 thousand units. pay appropriate dividends to its shareholders, in accordance with its profits. Recently, the Group have been informed by the In addition, in the Amusement Machines Sales The Group will continue to offer high-quality entertainment to people of all Japan Pachislot Machine Industry Association Business, Amusement Center Operations, and the ages around the world.