Fiscal 2020 Interim Business Report (From April 1, 2019 to September 30, 2019) ©SEGA Stock Code: 6460 HEADLINES Consolidated Results Down Up Up 3% 43% 2.8 pts. year on year year on year year on year Net sales Operating income Operating income margin ¥165.5 billion ¥14.6 billion 8.8% Results by Business Segment Pachislot and Pachinko Entertainment Contents Business Resort Business Machines Business Net sales Net sales Net sales ¥44.1 billion ¥115.8 billion ¥5.5 billion down 25% year on year up 8% year on year up 8% year on year Operating income Operating income Operating loss ¥7.8 billion ¥12.7 billion ¥1.5 billion down 19% year on year up 108% year on year year on year — 1 ｜ SEGA SAMMY HOLDINGS INC. 遊技機事業におけるマルチブランド展開 パチンコ・パチスロの販売台数 Interim Highlights ■ パチスロ遊技機 ■ パチンコ遊技機 Launched Total War™: THREE 万台 P Hokuto No Ken 8 Haou KINGDOMS Sold Over 40 In September 2019, Sammy Corporation 1 Million Units in its First Week launched P Hokuto No Ken 8 Haou, the latest pachinko machine title in the Hokuto The latest game in the Total War TM series, Total War TM: THREE No Ken series. The new offering has a KINGDOMS is earning endorsement from many players not only in 30 movable light-guiding board frame and other North America and Europe but also in China and other parts of Asia. new visual effects as well as a Kyukyoku The title is themed on the Records of the Shinken RUSH feature, which keeps the Three Kingdoms (a Chinese historical text) 20 payout “feel” traditionally associated with and is produced by The Creative Assembly the Hokuto No Ken series while creating a Limited, a development studio under the novel type of exhilaration. The new install- management of SEGA Europe Ltd. Only 10 ment includes episodes of the Hokuto No one week after download services began Ken trilogy, comprising Ken-oh Hen, Tentei worldwide on May 23, 2019, sales surpassed P Hokuto No Ken 8 Haou Hen, and Syura No Kuni Hen and the new 1 million units—making this installment the ©Buronson & Tetsuo Hara/NSP Total War: THREE KINGDOMS 0 1983,©NSP 2007 Approved stages based on Kenshiroden ZERO. fastest-selling title in the history of the series. ©SEGA. Developed by No.YSE-020 ©Sammy The Creative Assembly, Ltd. ’08 ’09 ’10 ’11 ’12 年3月期 計画 WHO are YOU? Golf Tournament at Surprise Toys Become a Major Hit The North Country Club WHO are YOU? is the surprise toys that SEGA TOYS CO., LTD., is Succeeded currently marketing and the fun of it is in opening them and being taken aback. Using water to wash the furry balls, which have In Chitose, Hokkaido, The North Country Golf Club hosted the unknown identities, transforms them into various different animals. Nagashima Shigeo Invitational Sega Sammy Cup Golf Tournament Proving their high popularity, these toys have shipped over 8 million over four days, from August 22 to 25, 2019. Winner Ryo Ishikawa units in more than 30 countries world- went wire-to-wire, defending a first-day lead to post a 20-under score wide. November 2019 saw the launch of that tied the tournament record and WHO are YOU? Real Rescue, which with was four strokes clear of second place. 35 effects almost seems to be alive. We This marked Ishikawa’s second victory will ceaselessly evolve our offerings at the tournament, which he first under the WHO are YOU? brand, the WHO are YOU? Real Rescue claimed in 2014. Designed &© 2019 Worlds Apart Ltd. leader in surprise toys. All Rights Reserved. ©SEGA SAMMY HOLDINGS INC. SEGA SAMMY HOLDINGS INC. ｜ 2 TO OUR SHAREHOLDERS Notice of Dividends Interim cash dividends Year-end cash dividends ¥40 ¥40 ¥40 ¥40 ¥40 (Plan) 20 20 20 20 20 (Plan) 20 20 20 20 20 2016 2017 2018 2019 2020 (FY) At a meeting of the Board of Directors held on October 31, 2019, the Board decided to pay dividends for fiscal 2019 as shown below. Interim cash dividends: ¥20.00 per share Hajime Satomi Year-end cash dividends: ¥20.00 per share (Plan) Chairman and Group CEO (Representative Director) Full-year cash dividends: ¥40.00 per share (Plan) SEGA SAMMY HOLDINGS INC. Effective date (Payment start date): December 2, 2019 Achieving the initial medium-term management targets of Road countermeasures for gambling addiction and other types of to 2020 has become challenging because changes in the addiction and other issues. P4 business environment and other factors have led to lower-than- Further, we are developing the Resort Business from a expected results in the Pachislot and Pachinko Machines medium- to long-term perspective. The process of transforming Business and in the Digital Games area of the Entertainment Japan into a major tourism destination in which integrated Contents Business. In response to this, we identified strategic resorts are an important component is progressing steadily. tasks and made steady progress of those measures in the first Viewing participation in domestic integrated resorts as a half of the fiscal year ending March 2020. major pillar of its future business, the Group is implementing Meanwhile, present-day society expects companies to help multifaceted preparations. While conducting forward-looking address a variety of social issues, such as environmental investments, our basic policy is to continue providing problems and the aging of the population. In conducting shareholders with stable dividends. business management, the SEGA SAMMY Group focuses Going forward, we will hold fast to our conviction that on the sustainable creation of corporate value. With reference continued long-term provision of value that exceeds the to environmental, social, and governance (ESG) factors and expectations of society and players is essential for the the United Nations’ Sustainable Development Goals (SDGs), sustained heightening of corporate value. As we prepare for the SEGA SAMMY Group has identified important issues, the future, I would like to ask our shareholders and other which it is heightening awareness of and taking measures to stakeholders for their continued support. address Groupwide. For example, we are implementing 3 ｜ SEGA SAMMY HOLDINGS INC. Related SDGs Enhancement of Job Satisfaction and Diversity and Elimination of Inequality With the aim of enabling various employees to take maximum advantage of their capabilities, we will promote work-style reforms and enhance diversity. Addressing Important Issues Countermeasures to Addiction Related SDG and Contributing to the To ensure that the Group can continue to provide moving experiences, it will Achievement of the SDGs take measures to prevent and address gaming disorder, addiction to playing pachinko and pachislot machines, and With the aims of achieving growth as a group and contributing to gambling addiction. the sustainable growth of society, we have set out important issues that we will tackle intensively going forward. Through initiatives aimed at addressing these important issues, we will contribute to the achievement of the SDGs. Related SDGs Environmental Preservation and Reduction of Environmental Burden We will expand and enhance initiatives aimed at realizing environment-friendly product design, promoting reuse and recycling, environmental preservation, and the reduction of power consumption. Response to Japan’s Super Low Birth Rate and Aging Society Related SDGs We will cater to Japan’s super low birth rate and aging society by creating places where children can study enjoyably and What Are the SDGs? by creating places that promote the mental and physical well-being of senior Adopted by the United Nations in 2015, the citizens. SDGs are a set of common international goals established with a view to realizing a sustain- able society. Seventeen concrete goals are set with the aim of addressing issues from eco- Corporate Governance Related SDGs nomic, social, and environmental perspectives. By continuing to strengthen corporate governance and In response, initiatives aimed at realizing the ensure rigorous compliance, we will earn further trust SDGs are being implemented worldwide. from stakeholders. SEGA SAMMY HOLDINGS INC. ｜ 4 INTERIM REPORT FROM THE COO titles under development and in operation as well as progress in transferring resources—measures that were based on the strategic tasks identified in light of the non-achievement of targets for two consecutive fiscal years—and a decrease of expenses in the record of impairment loss. In the Packaged Games area, new titles and repeat sales were solid. The Amusement Machine Sales area recorded declines in sales and operating income as continued steady sales of prize game machines were outweighed by low utilization of video games and an increase in fixed expenses in associated with the relocation of the headquarter. The Amusement Center Operations area continued to perform steadily, with existing Haruki Satomi domestic amusement centers achieving year-on-year sales President and Group COO (Representative Director) growth. Also, the Animation and Toys area posted revenues SEGA SAMMY HOLDINGS INC. from Detective Conan: The Fist of Blue Sapphire, which achieved record box-office revenues. As a result, the Entertainment Contents Business realized year- In the first half of the fiscal year ending March 2020, sales on-year increases of 8% in sales and 108% in operating income. decreased year on year mainly due to a decline in pachislot With regard to the Resort Business, despite being affected by and pachinko machine unit sales in the Pachislot and Pachinko a series of natural disasters, Phoenix Seagaia Resort increased Machines Business. On the other hand, operating income guest numbers by focusing on the summer vacation period and rose, primarily thanks to a favorable performance by the taking various measures to attract customers. However, the Entertainment Contents Business, particularly in the Digital business segment saw a rise of losses as investment aimed at Games area. participation in domestic integrated resorts increased.