Contents P 1 Key Points of Financial Results by the Numbers SEGA SAMMY in 2014 A Message from P 3 Management Feature Article P5 Implementing Group Structure Reform P7 Segment Information Looking back with a “Key Person” P9 Review of Activities Release of Pachinko CR Hokuto No Ken 6 series and Pachislot ALADDINA II Holding of SEGA Networks Media Conference: Winter 2015 P12 Latest News P13 Group Information Business Report for the fiscal Summer year ended March 31, 2015 Edition From April 1, 2014 to March 31, 2015 SEGA SAMMY HOLDINGS INC. Stock Code 6460 010_0324402982706.indd 2 2015/06/15 13:43:08 Key Points of Financial Results by the Numbers FY2015 (Fiscal year ended March 31, 2015) SEGA SAMMY in 2014 Net sales Both sales and profit fell below the initial forecast, and sales and Total number of digital title downloads earnings decreased year on year, due to unforeseeable factors including operational changes in the model testing operation billion methods in the Pachislot and Pachinko Machines Business. In ¥354.9 addition, in order to improve earning capacity in each business (down 6% year on year) in the future, the Company carried out structural reforms, 228.02 million downloads and promoted rationalization including restructuring inside Operating income the Group, reduction and withdrawal of businesses that With the total number of digital title downloads in were unprofitable or showing a loss, and an Japan and overseas combined reaching over 200 accompanying reduction of personnel. As a result, million, the digital game area is contributing more extraordinary losses amounted to ¥15.9 billion, and more to the Consumer Business. The including impairment loss, provision for overseas composition of total downloads dismantling of fixed assets, loss on the was 160.0 million, and global expansion in discontinuance of independent film the digital area is making a steady billion production, and early extra retirement progress. payments, recording a net loss for ¥17.6 the period. (down 54% year on year) Expenses related to structure reform Net Sales (billions of yen) Operating Income (billions of yen) Net Income (billions of yen) Approximately ¥7.0 billion 420.0* 378.0 354.9 38.5 30.7 Approximately ¥7.0 billion of the ¥15.9 billion in 25.0 19.0 extraordinary loss was recorded as expenses 17.6 related to structural reforms. As a result, the Company expects to realize approximately ¥6.0 billion in fixed cost reduction effects in the fiscal year ending March 31, 2016, compared to the fiscal year ended (11.2) March 31, 2015. 2014/3 2015/3 2016/3 2014/3 2015/3 2016/3 2014/3 2015/3 2016/3 (Forecast) (Forecast) (Forecast) *Net Sales from 2016/3 indicate total amounts Please see page 13 for detailed financial information. 1 010_0324402982706.indd 1 2015/06/15 13:43:08 Key Points of Financial Results by the Numbers Business Segments of SEGA SAMMY The Group’s affiliated companies were restructured into three business groups from April 2015. The Company will enhance management efficiency while promoting faster decision-making, improving efficiency in areas with overlapping functions, creating a structure to enable appropriate investment of management resources and responding to changes in the business environment. *Net sales and operating income for new segments are estimated values. Former Segments (fiscal year ended March 31, 2015) New Segments (fiscal year ended March 31, 2015) *Net sales for new segments indicate total amounts. Pachislot and Pachinko Machines Business Pachislot and Pachinko Machines Net Sales ¥149.1 billion Operating Income ¥25.7 billion Net Sales ¥152.6 billion Operating Income ¥25.9 billion Description of business Pachislot / pachinko Amusement Machine Sales Business Net Sales ¥39.6 billion Operating Loss ¥2.5 billion Entertainment Contents Business Amusement Center Operations Net Sales ¥199.6 billion Operating Income ¥0.0 billion Net Sales ¥41.4 billion Operating Loss ¥0.9 billion Description of business Digital game area / packaged game area / amusement machine sales area / amusement center operations area / animation film and toy area Consumer Business Net Sales ¥111.0 billion Operating Income ¥4.0 billion Resort Business Other Net Sales ¥14.9 billion Operating Loss ¥2.3 billion Description of business Integrated resort / resort / theme parks Net Sales ¥13.6 billion Operating Loss ¥2.0 billion Please see page 5 for information on Group structure reform. Please see page 7 for results by segment. 2 010_0324402982706.indd 2 2015/06/15 13:43:09 A Message from Management Q Please look back and evaluate the fiscal year ended March 31, 2015. Chairman of the Board and Chief Executive Officer SEGA SAMMY HOLDINGS INC. Chairman, Representative Director ooking at the results for the fiscal year ended operation methods of pachislot machines. and CEO of Sammy Corporation L March 31, 2015, consolidated net sales de- Furthermore, due to a total of approximately ¥15.9 Chairman, Representative Director creased 6% year on year to ¥354.9 billion, billion that arose as extraordinary loss for the full year, and CEO of SEGA Holdings Co., Ltd. operating income decreased 54% year on year to including expenses related to structure reform, and the Hajime Satomi ¥17.6 billion, and ordinary income decreased 58% to disposal of partial deferred tax assets, the amount of ¥16.9 billion. Sales and earnings were down compared total income taxes increased, resulting in a net loss of to the previous fiscal year primarily due to revision of ¥11.2 billion compared with net income of ¥30.7 billion sales schedules owing to changes in the model testing in the previous fiscal year. Please look back and evaluate the structure reform Q carried out in the fiscal year ended March 31, 2015. n the fiscal year ended March 31, 2015, sales back on the growth trend. and profit both fell far below the initial forecast, In the fiscal year ended March 31, 2015, we I due to unforeseeable factors including changes clarified our core businesses, conducted a drastic to the model testing operation method in the Pachis- review of unprofitable and underperforming busi- lot and Pachinko Machines Business. Results were nesses, created the foundation for management of severe in businesses other than Pachislot and our business portfolio, and optimized allocation of Dear Shareholders, Pachinko Machines as well, falling short of the initial personnel. It is truly unfortunate that the efforts forecast. We recognize that improvement of profit- involved in the process were painful, as we were During the fiscal year ended March 31, 2015, the decline in ultimate ability in existing businesses is an urgent task in forced to make the decision to implement personnel demand after the increase in the consumption tax rate bottomed out, order to firmly ground our investment capacity in the reductions through measures such as soliciting and the Japanese economy continued a gradual recovery due to the impact of decreasing crude oil prices and various other policies. integrated resort business in Japan. In this climate, voluntary retirements in some areas. However, we However, the economy still remained in the condition requiring further the Group Structure Reform Division was established promoted reduction of fixed costs and worked on time for full recovery due to uncertainty towards a downswing in a year ago, with myself as a Chairman, and has improving profitability while carrying out Group overseas economies, arising from factors such as the slowdown of examined various measures with the goal of improv- restructuring and laying the foundation for further growth in the economies of emerging countries. ing the Group’s profitability and putting the Group restructuring in the future. In this climate, the Group has implemented various management measures to create a framework that can deal speedily and flexibly with changes in the business environment, and has also fully committed to building a solid management foundation that can accelerate future growth. The Group will invest in growth, while continuing to pay appropriate dividends to its shareholders, in Q Please tell us about future efforts of the structure reform. accordance with its profits. The Group will continue to offer high-quality entertainment to people of all ages around the world. Thus, the Group n terms of future efforts of the structure reform, standards for starting or withdrawing from projects aims to “establish a presence in all business fields and we aim to maximize profitability of our entire or each business. becoming the No.1 comprehensive global entertainment I business portfolio, based on continued imple- Furthermore, regarding the impact of structure companies.” We look forward to your continued support mentation of thorough cost management in each reform implementation on results, we recorded an in our endeavors. business, in addition to quickly putting establishing extraordinary loss of ¥15.9 billion in the fiscal year June 2015 3 010_0324402982706.indd 3 2015/06/15 13:43:11 A Message from Management ended March 31, 2015, which was a factor contrib- structure reform. As for the effect of fixed costs uting to the recording of a net loss for the period. Of reduction, we expect to be able to achieve the that, approximately ¥7.0 billion was extraordinary reduction target set at ¥6.0 billion at the time of the loss originating from the decision to go ahead with second quarter settlement. Q What are the full-year targets and initiatives for the fiscal year ending March 31, 2016? n the fiscal year ending March 31, 2016, we Moreover, in the area of digital games for smart- and withdrawing from businesses and replacing I revised our business segments from the phones and other devices, we plan further profit businesses, while assessing the trends of each previous four segments into three new seg- growth centered on the contribution by new titles business area under the new Group structure.