セガサミーホールディングス（6460） – Fiscal Year Ended March 2022 Results Presentation

Fiscal Year Ended March 2022Results Presentation2022/5/13DisclaimerMarket forecasts, operating results forecast, and other information contained in this material are based on judgements and projections of the Company‘s managements based on currently available information. Therefore, please understand that the contents herein involve risks and uncertainties and that actual results could differ materially depending on various factors.This is an English translation from the original Japanese-language version. The translation is provided for your reference and convenience only and without any warranty as to its accuracy or otherwise. The Company assumes no responsibility for this translation and for direct, indirect or any other forms of damages arising from the translations. Should there be any inconsistency between the translation and the original Japanese document, the Japanese language version shall prevail. If you quote all or part of this document, please clearly indicate the source of the citation or link to this page.© SEGA SAMMY HOLDINGS INC. All Rights Reserved.01FY2022/3 Results/FY2023/3 Forecast-2-TopicsFY2022/3 ResultsFY2023/3 ForecastConsolidated➢ Significant increases in sales and profits YoY due to recoveries in Pachislot & Pachinko and AM*➢ Implemented share buybacks➢ Decrease in income taxes, etc. due to decrease of taxable income from net loss carried forward, etc.➢ Forecast increase in sales and profits in all business areasEntertainmentContents➢ Strong performance of new titles, recorded royalty income (CS*)➢ Significant increase in new title lineups (CS)➢ Maintain strong performance in prize categories ➢ Strong performance in the prize category (AM)(AM)Pachislot &Pachinko➢ V-shaped recovery from deficit of the previous fiscal year and secured stable earnings➢ Fixed costs remained at low levels.➢ Increase unit sales while responding to therelaxation of regulation.➢ Component procurement status continuously needs to be monitored closely.Resort➢ Domestic: Individual customers are recovering despite the negative impact of COVID-19. Cancellation of Yokohama IR.➢ Continued to be affected by the restriction of foreign visitors.➢ Reduction in loss margin（Assume the relaxation of behavioral restrictionassociated with COVID-19）*CS = Consumer area, AM = Amusement Machine Sales area-3-FY2022/3 Results, FY2023/3 ForecastFY2022/3 Results➢ Significant increases in sales and profits YoY•Businesses affected by COVID-19 in the previous fiscal year recovered earnings (Pachislot & Pachinko, AM*)➢ Recorded gain on sales of noncurrent assets and gain on sales of investment securities as extraordinary income➢ Decrease in income taxes, etc. due to decrease of taxable income from net loss carried forward and tax credits related to research and development at U.K. subsidiariesFY2023/3 Forecast••➢ Forecast increase in sales and profits in all business areasContinuous growth of CS* (Entertainment Contents)Increase unit sales while responding to the relaxation of regulation (Pachislot & Pachinko)Reduction in loss margin assuming the relaxation of behavioral restriction (Resorts)•➢ Forecast 20% increase in ordinary income compared to the previous fiscal year*CS = Consumer area, AM = Amusement Machine Sales area-4-(Billion yen)2021/32022/32023/3Full YearResultsFull YearResultsFull YearForecastSales277.7320.9375.0Entertainment Contents217.8235.9277.0Pachislot and Pachinko Machines53.175.886.0Resort6.38.611.5Other / Elimination0.50.60.5Operating Income6.532.040.0Entertainment Contents27.933.939.0Pachislot and Pachinko Machines-10.69.311.5Resort-4.1-2.5-1.2Other / Elimination-6.7-8.7-9.3Non-operating income2.85.92.0Non-operating expenses7.64.62.0Ordinary Income1.733.340.0Entertainment Contents27.936.840.0Pachislot and Pachinko Machines-11.310.212.0Resort-8.9-6.7-3.0Other / Elimination-6.0-7.0-9.0Ordinary Income Margin 0.6%10.4%10.7%Extraordinary income28.85.2-Extraordinary losses40.30.6-Income before income taxes -9.837.940.0Income taxes-11.70.912.0Profit attributable to owners of parent1.237.028.0ROE0.4%12.7%-Dividends per share (JPY)30.0040.0041.00Breakdown of Income (FY2022/3 Results)(Unit: billion yen)Operating income32.0Non-operating incomeNon-operating expensesOrdinary income33.3Extraordinary incomeExtraordinary lossesIncome before income taxesTaxes/OthersProfit attributable to owners of parent37.937.05.94.65.20.60.9-5-Non-operating income5.9Gain on investments in partnership3.0Non-operating expenses4.6Equity in losses of affiliates2.7Extraordinary Income5.2Gain on sales of noncurrent assets1.9Gain on sales of investment securities2.5Extraordinary Iosses0.6Impairment loss0.4Taxes/Others0.9Breakdown of non-operating income/losses andextraordinary income/lossesCosts and Expenses, etc.-6-■Entertainment Contents(Billion yen)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Full YearResultsFull YearForecastR&D / Content productionexpenses12.811.917.616.39.29.811.814.79.913.512.718.354.466.6Advertising expenses3.03.43.83.91.72.83.33.72.23.93.74.414.219.0Depreciation2.12.12.22.52.22.30.71.50.80.90.91.13.73.5Cap-ex4.04.34.65.32.22.83.51.91.51.41.62.87.37.5■Pachislot & Pachinko(Billion yen)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Full YearResultsFull YearForecastR&D / Content productionexpenses4.34.65.43.85.43.93.33.73.43.23.44.414.414.3Advertising expenses0.20.60.40.30.10.60.30.20.20.60.50.31.63.3Depreciation1.00.90.90.80.80.90.90.80.50.70.70.82.72.1Cap-ex0.90.90.71.01.10.70.70.81.21.10.81.04.14.02020/32021/32020/32021/32023/32023/32022/32022/3Costs and Expenses, etc.-7-■Resort(Billion yen)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Full YearResultsFull YearForecastR&D / Content productionexpenses0.00.00.10.00.00.00.10.10.00.00.00.10.10.0Advertising expenses0.10.10.10.10.00.10.10.00.00.20.10.00.30.4Depreciation0.20.30.30.30.20.20.30.20.10.20.20.10.60.8Cap-ex0.00.10.00.10.00.00.10.00.10.10.10.10.41.3■Other / Elimination(Billion yen)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Full YearResultsFull YearForecastR&D / Content productionexpenses0.0-0.1-0.20.00.1-0.10.0-0.10.1-0.10.1-0.10.00.0Advertising expenses0.30.80.10.20.20.10.20.20.40.40.20.31.31.2Depreciation0.30.40.20.30.40.30.30.10.40.10.30.21.00.9Cap-ex0.20.10.30.30.30.1-0.10.40.30.00.30.61.20.52020/32021/32020/32021/32023/32023/32022/32022/3Consolidated Balance Sheet SummaryMain factors for increase / decrease(Current Assets)Increase in inventories such as work-in-progress contents and components(Liabilities)Increase in notes and accounts payable – trade, and accrued expenses(Net assets)Shareholders’ equity decreased due to payment of dividends, share buybacks, etc., despite an increase due to the recording of profit attributable to owners of parent.-8-AccountAs of end ofMarch 2021As of end ofMarch 2022Increase/DecreaseAccountAs of end ofMarch 2021As of end ofMarch 2022Increase/DecreaseCash and Deposits154.9152.4-2.5Accounts Payable16.924.4+7.5Accounts Receivable38.138.9+0.8Corporate Bonds—Short term investment securities0.7- -0.7Short Term Loans Payable-10.0+10.0Inventories52.967.5+14.6Other42.852.5+9.7Other29.628.9-0.7Total Current Liabilities59.786.9+27.2Total Current Assets276.2287.7+11.5Corporate Bonds10.010.0 -Tangible Fixed Assets61.660.3-1.3Long Term Loans Payable42.032.0-10.0Intangible Fixed Assets14.913.1-1.8Other18.513.8-4.7Investment Securities38.340.6+2.3Total Noncurrent Liabilities70.555.8-14.7Other30.533.7+3.2Total Liabilities130.3142.8+12.5Shareholders Equity294.9294.4-0.5Total accumulated other comprehensive income-4.2-2.0+2.2Subscription rights to shares-0.1+0.1Non-controlling intesrests0.40.0-0.4Total Noncurrent Assets145.3147.7+2.4Total Net Assets291.2292.6+1.4Total Assets421.5435.4+13.9Total Liabilities and Net Assets421.5435.4+13.9(Billion yen) 　　　 　 【Assets】【Liabilities and Net Assets】As of end ofMarch 2021As of end ofMarch 2022Increase/DecreaseCash, deposits and cashequivalents154.5152.4-2.1Interest bearing debt52.052.0-Net cash 102.5100.4-2.1Equity ratio 69.0%67.1%-1.9pConsolidated Cash FlowsCash andcash equivalents2019/3期末End of FY2021/3154.5(Unit: billion yen)Cash Flows from Operating Activities(Unit: billion yen)C/FfromOperatingActivities+39.6C/FfromInvestingActivities-8.7C/FfromFinancingActivities-35.9Income before income taxes Depreciation and amortization Increase in inventoriesIncrease in notes and accountspayable – tradeOthersPurchase of securitiesRedemption of securitiesPurchase of property, plant andequipmentPurchase of intangible assetsOthersCash Flows from Investing ActivitiesCash Flows from Financing ActivitiesAcquisition of treasury stocksPayment of dividendsOthers+37.9+11.4-15.3+6.4-0.8-20.0＋20.7-5.9-4.5+1.0-25.0-9.4-1.52020/3期末End of FY2022/3152.4-9-To Maximize the Corporate Value (~FY2026/3)Shift to the management focusing on capital efficiencyMaximizationof theCorporateValueExpansion ofequity spreadImprovement ofasset efficiencyOptimization ofCapital costShareholderreturnsIndicatorsROEFY2021/3Results0.4％FY2022/3Results12.7％FY2026/3TargetOver 10％（FY2024/3 Target)33.3 billion yenOver 50.0 billion yenGrowth of profitOrdinary Income1.7 billion yenConsolidated ROIC10.6％Over WACCD/E ratiox 0.2x 0.5 to 0.6Total return ratioDOE105.8％3.1％Basic Policy50％ or moreBasic Policy3％ or more0.5％x 0.2384％2.4％-10-Transition of EPSEPS* improved due to earnings growth anda decrease in the average No. of shares during the period due to share buybacks.Profit attributable to owners of parent (Billion yen)EPS (yen)38.18.911.22.658.613.75.41.2158.8+1.337.0126.8(-20％)+7.728.0(-24%)FY2018/3FY2019/3FY2020/3FY2021/3FY2022/3FY2023/3(Forecast)*EPS=Earnings per shareAmount affected by share buybacks*For FY2022/3, decrease in income taxes, etc. due to decrease of taxable income from net loss carried forward and tax credits related to research and development at U.K. subsidiaries also contributed-11-Shareholder Returns (Process of Determining Return Amount and Method)FY2023/3Q1Q2Q3Q4FY2022/3ResultsannouncementQ1 ResultsannouncementQ2 ResultsannouncementQ3 ResultsannouncementInterim dividend(Q2 Results announcement)In principle, decide interim dividend in accordance with the DOE 3% standard.Forecast at the beginning of fiscal year (announced on May)DOE3％ or more=41 yen in the year(interim: 20 yen / year end: 21 yen）⚫ Setting dividends forecast at the beginning of fiscal year using DOE 3% as base dividendFY2024/3Q1FY2023/3 Resultsannouncement Share buybacks (if implemented)Year-end dividendResolve return amount and method for year-end(Full-year results announcement)Determine return amount and method for year-end[Basic policy of shareholder return]DOE: 3％ or more, Total return ratio: 50% or more⚫ Calculate the amount of shareholder returns in accordance with the profit level based on the basic policy of shareholder returns when the full-year business results are fixed. ⚫ Apply DOE or total return ratio, whichever is higher⚫ Implement shareholder returns through dividends or share buybacks-12-(Reference) Transition of shareholder returns and stock information, etc.Total amount of dividends7.0 billion yen9.1 billion yen9.0 billion yenCalculation based on base dividend DOE 3%FY2021/3FY2022/3FY2023/3 (Forecast)ShareholderReturnsAmount of share buyback25.02 billion yen*4.97 billion yen*Total of shareholder returns7.0 billion yen39.1 billion yenNumber of sharesShare buybacksCancellation of treasury stockTotal No. of shares outstanding by the end of fiscal yearNo. of Treasury stocks by the end of fiscal year within above12,560,300 shares*4.7% of total No. of shares outstandingbefore cancellation-2,240,700 shares*0.9％ of total No. of shares outstandingbefore cancellation25,000,000 shares9.39％ of total No. of shares outstandingbefore cancellationPlan to implement on May 24, 2022266,229,476 shares266,229,476 shares241,229,476 shares31,142,581 shares43,307,930 shares20,548,630 shares(rough estimate)—Market capitalizationMarket capitalizationMarket capitalizationafter adjustment(excluding treasury stocks)459.7 billion yen562.5 billion yen405.9 billion yenCalculated based on 1,727 yen of the stock price on 2021/3/31471.0 billion yenCalculated based on 2,113 yen of the stock price on 2022/3/31*Out of share buybacks implemented in FY2022/3, acquired amount and No. of shares between 2022/4/1 -2022/4/19-13-02Per Segments Results / Forecast-14-Entertainment Contents BusinessFY2022/3 Results➢ Both sales and profit increased YoY• Strong performance of CS* continued• Recovery of earnings in AM* which was affected by COVID-19FY2023/3 Forecast➢ Higher sales and profits by increase in new titles (CS)•Increase in unit sales of new titlesFY2022/3 Results: 8,770 K unitsFY2023/3 Plan: 13,950 K units•Increase in operating expenses such as R&D and advertising expenses due to increase in new titles➢ Expect to maintain strong performance in the prize category (AM)*CS=Consumer area, AM= Amusement Machine Sales area*For Amusement Center Operations area, the company transferred shares of a group company engaged in amusement facilities operation at the end of December 2020 and removed it from the scope of consolidation from Q4 of the previous fiscal year-15-(Billion yen)2021/32022/32023/3Full YearResultsFull YearResultsFull YearForecastSales217.8235.9277.0Consumer135.7158.3192.0Amusement Machine Sales35.749.755.8Amusement Center Operations21.0–Animation / Toy23.225.628.7Other / Elimination2.22.30.5Operating Income27.933.939.0Consumer31.429.334.5Amusement Machine Sales-1.62.53.3Amusement Center Operations-1.4–Animation / Toy2.13.03.0Other / Elimination-2.6-0.9-1.8Non-operating income0.93.31.0Non-operating expenses1.00.50.0Ordinary Income27.936.840.0Ordinary Income Margin12.8%15.6%14.4%Entertainment Contents Business: Per subsegmentFY2022/3 ResultsFY2023/3 ForecastFull GameStrong performance of new titles•• Recorded royalty income from some titlesSignificant increase in new titles (+5,180 K units YoY)• Growth in repeat titles due to a large number of new titles in the previous fiscal yearConsumerF2PStrong performance of “HATSUNE MIKU: COLORFUL STAGE!”• Released new title “PHANTASY STAR ONLINE 2 NEW GENESIS”Enhance the operation of existing titlesSchedule to release new titlesAmusement Machine SalesStrong sales of UFO Catcher ® series, prizes for prize machines, etc.Launched new title “EIKETSU TAISEN”Strengthen sales of UFO Catcher® series, prizes for prize machines, etc.Schedule to release new title “HORI A TALE”Animation / Toys• Released the theatrical version of “Detective Conan: • Release the theatrical version of “Detective Conan: Animation• Recorded animation production revenue, allocated The Scarlet Bullet“revenue, etc.The Bride of Halloween”Scheduled to record revenue from animation production and distribution, etc.ToysLaunched new products, “With a front camera! Fun to change mouse covers! Sumikkogurashi Personal Computer Premium” and “Demon Slayer POD”Sales of new products and regular products•••••••••••-16-Consumer Area / Full Game: Sales Trend(Unit: billion yen)新作・リピートの数字の表はナシ-17-Consumer Area / F2P: Sales Trend “PHANTASY STAR ONLINE 2”(2012/7～)”Fist of the North Star LEGENDS ReVIVE””HATSUNE MIKU: COLORFUL STAGE!””PHANTASY STAR ONLINE 2 NEW GENESIS”(Unit: billion yen)Top 3 titles in sales from Jan. – Mar. 2022(No. 1)(No. 2)(No. 3)”HATSUNE MIKU: COLORFUL STAGE!”©SEGA© SEGA/© CP/© CFMRelease: Sep. 2020“PHANTASY STAR ONLINE 2 NEW GENESIS””Fist of the North Star LEGENDS ReVIVE”©Buronson & Tetsuo Hara／COAMIX 1983, Approved No.GC-218 ©SEGARelease: Jun. 2021Release: Sep. 2019-18-（Reference）Consumer Area: Sales Trend・Full Game = Mainly physical sales and download sales of full game for home video game consoles and PCs. (Additional download content sales are not included.)・F2P = Mainly sales of contents offering free basic play and microtransaction for smartphones and PCs.・Other = Sales of additional download contents, consignment sales of 3rd party titles, revenue from consignment development, transfer of titles, offering of titles in batches to 1st parties, sales of products other than game software, etc.-19-(Billion yen)2023/3Q1ThroughQ2ThroughQ3ThroughQ4Q1ThroughQ2ThroughQ3ThroughQ4Full YearForecastSales32.461.4102.4135.729.571.2119.6158.3192.0Domestic12.427.948.764.613.030.950.366.666.1Overseas19.633.454.372.416.740.369.492.0126.1Overseas sales ratio60.5%54.4%53.0%53.4%56.6%56.6%58.0%58.1%65.7%Other / Elimination0.20.1-0.6-1.3-0.20.0-0.1-0.3-0.2Full Game14.425.242.655.111.030.750.365.898.4New titles2.05.213.819.93.016.029.140.662.2Japan0.00.11.82.10.22.45.45.75.1Asia0.71.01.21.70.10.92.03.04.9North America / Europe1.24.110.616.02.712.721.731.952.3Repeat titles12.319.928.835.28.014.721.225.236.2Japan1.72.73.74.50.82.02.83.43.3Asia0.51.11.52.20.71.41.82.34.5North America / Europe9.916.123.528.56.411.316.619.528.3Download sales ratio66.5%67.7%62.8%63.8%61.6%65.3%60.7%57.5%69.4%F2P11.125.541.154.112.426.140.855.856.8Japan9.121.535.547.210.923.236.650.150.6Asia0.00.10.20.20.00.00.30.50.5North America / Europe1.93.95.36.61.42.93.95.25.7Other6.510.619.427.76.214.528.637.037.02022/32021/3（Reference）Consumer Area / Full Game: Unit Sales Trend*Unit sales don’t include the figure for free download*As for Numbers of Titles above, for the same title released in multiple regions, the title number is counted 1 per each sales region (Japan, Asia and NA/EU)[Unit sales of major IPs]*Yakuza series includes the JUDGMENT series. -20-2023/3Q1ThroughQ2ThroughQ3ThroughQ4Q1ThroughQ2ThroughQ3ThroughQ4Full YearForecastFull Game:　Number of TitlesJapan0 title0 title2 titles2 titles0 title3 titles5 titles6 titles15 titlesAsia1 title1 title4 titles6 titles1 title4 titles7 titles9 titles15 titlesNorth America / Europe3 titles5 titles9 titles10 titles3 titles6 titles11 titles13 titles16 titlesFull Game: Unit sales (Thousands)12,98019,08034,20041,7706,58014,04021,97027,20034,250Total New titles7901,1803,7706,0201,0603,5006,6308,77013,950Japan1020370430504107808501,040Asia150200260360502505007601,570North America / Europe6209603,1305,2209602,8405,3507,16011,330Total Repeat titles12,19017,90030,42035,7505,52010,54015,34018,43020,300Japan4606909901,2302906609501,1401,240Asia2405107001,0003406808801,1702,110North America / Europe11,48016,69028,73033,5104,8909,20013,50016,13016,9602021/32022/3（Thousands）Q1ThroughQ2ThroughQ3ThroughQ4Q1ThroughQ2ThroughQ3ThroughQ4Sonic series8002,3003,7004,4001,0002,9004,9005,800Total War series1,9002,5003,6004,0006001,0001,3002,600Persona series 1,2001,5001,9003,0004007001,0001,300Yakuza series3006001,6002,2007001,8002,5002,9002021/32022/3(Reference) Consumer Area / Full Game: New Major Titles[FY2022/3 New titles]“HUMANKIND™”© Amplitude Studios 2021. © SEGA.“Lost Judgment”©SEGA“Sonic Colors: Ultimate”©SEGA“Super Monkey Ball Banana Mania” “Shin Megami Tensei Ⅴ”“Football Manager 2022”“Total War: WARHAMMERⅢ”©SEGA©ATLUS.©SEGA. All rights reserved.© Sports Interactive Limited 2021.© Games Workshop Limited 2021. Published by SEGA Publishing Europe Limited.Published by SEGA. -21-(Reference) Consumer Area / Full Game: New Major Titles[FY2023/3 New titles (plan)]*Only announced titles are listed“13 Sentinels: Aegis Rim” (for Nintendo Switch™)©ATLUS.©SEGA. All rights reserved.Released on April 14, 2022“Sonic Origins”©SEGA“SONIC FRONTIERS”©SEGA“Soul Hackers 2”©ATLUS.©SEGA. All rights reserved.“Two Point Campus”©Two Point Studios 2022. Published by SEGA.-22-(Reference) Entertainment Contents Business: Sales Schedule~FY2022/3In or after FY2023/3 (plan)HUMANKIND™Shin Megami Tensei VLost JudgmentFootball Manager 2022Sonic Colors: UltimateTotal War: WARHAMMER IIISuper Monkey Ball Banana ManiaPersona 4 Arena Ultimax13 Sentinels: Aegis Rim (for Nintendo Switch™)Sonic OriginsSoul Hackers 2SONIC FRONTIERSTwo Point CampusSonic Series/Persona Series/Total War Series/Football Manager Series/YAKUZA Series, etc.PHANTASY STAR ONLINE 2 / Puyo Puyo!! Quest / CHAIN CHRONICLESHIN MEGAMI TENSEI Liberation D×2 / SEGA Pocket Club ManagerFIST OF THE NORTH STAR LEGENDS ReVIVERe:ZERO -Starting Life in Another World- Lost in Memories / Project SEKAI COLORFUL STAGE! feat. Hatsune MikuPHANTASY STAR ONLINE 2 NEW GENESIS / Sin ChronicleremusnoCseltit weNtaepeRemaG lluFP2FIn or before FY2018/3FY2019/3～FY2020/3～FY2021/3～FY2022/3～FY2023/3～*Only announced titles are listed for “In or after FY2023/3 (plan)”-23-(Reference) Entertainment Contents Business: Sales Schedule~FY2022/3In or after FY2023/3 (plan)KanColle Arcade / StarHorse4 / Fate Grand Order Arcade / SANGOKUSHI TAISEN Series/ maimai DX / O.N.G.E.K.I. / CHUNITHM / meityromantic / lalameeUFO Catcher® series / Prizes for prize machinesCHUNITHM NEWPokemon CorogarenaEIKETSU TAISENHORI A TALEDetective Conan: The Scarlet BulletAnpanman:Fluffy Flurry and the Land of CloudsLUPIN THE 3rd PART 6Detective Conan:The Bride of HalloweenDemon Slayer PODWith a front camera! Fun to change mouse covers! Sumikkogurashi Personal Computer PremiumDisney&Pixar CharactersDream Switch 2Battle with medals! Dinosaur PC Ω*Only announced titles are listed for “In or after FY2023/3 (plan)”-24-sel aSenhcaMi tnemesumAsyoT / noitamnAiPachislot and Pachinko Machines BusinessFY2022/3 Results➢ V-shaped recovery from deficit of the previous fiscal yearIncrease in unit sales••Fixed expenses remained at low level due to the effect of structural reform implemented in FY2021/3, etc.• Major titles sold：”P Hokuto No Ken 9 Toushin””Pachislot CODE GEASS Lelouch of the Rebellion 3″, etc.FY2023/3 Forecast➢ Expect increase in unit sales, increase in sales and profits•Launch machines responding to the relaxation of regulation・No. 6.5 model (medal machine): To be delivered in July (“Pachislot Kabaneri of the Iron Fortress”)・No. 6.5 model (Smart Pachislot): From Nov.・Smart Pachinko: From Jan.• Component procurement status continuously needs to be *New series is counted as one title (Machines delivered starting previous fiscal year / monitored closelyspecification changed titles, etc. aren’t included)-25-(Billion yen)2021/32022/32023/3Full YearResultsFull YearResultsFull YearForecastSales53.175.886.0Pachislot13.930.632.7Pachinko28.537.144.5Other / Elimination10.78.18.8Operating Income-10.69.311.5Non-operating income0.61.00.5Non-operating expenses1.20.10.0Ordinary Income-11.310.212.0Ordinary Income Margin-13.5%14.0%PachislotNumber of Titles5 titles10 titles9 titlesUnit Sales (units)35,27377,87084,000PachinkoNumber of Titles4 titles5 titles6 titlesUnit Sales (units)69,01397,027114,000Board + Frame53,64156,72846,900Board 15,37240,29967,100PachislotPachnkoi(Reference) Pachislot & Pachinko Machines Business: Sales Schedule～FY2022/3New series Specification changed titleIn or after FY2023/3 (plan)Pachislot CODE GEASSLelouch of the Rebellion 3Pachislot Aladdin A ClassicPachislot ANEMONEPsalms of PlanetsEureka Seven HI-EVOLUTIONPachislot DISC UP 2Pachislot Konosuba:God’s Blessing on This Wonderful World!Pachislot KEMONO FRIENDSPachislot Kabaneri of theIron FortressP Hokuto No Ken 8 KyuseishuP Shin Hokuto Muso Re:319ver.P Hokuto No Ken 9 ToushinP Shin Hokuto Muso Chapter 3Jagi no GyakushuuDejihane P SOUTEN-NO-KENSouryuP Initial DDejihane PA Kayou Suspense Gekijou Saigo no Suiri(Major titles sold in FY2022/3)DeliveryUnit Sales(Titles to be launched in or after FY2023/3)DeliveryPachislotPachislot CODE GEASS Lelouch of theRebellion 3 Aug. 13,434 unitsPachislotPachislot Konosuba: God’s Blessing onThis Wonderful World!Pachislot Aladdin A ClassicPachislot ANEMONE Psalms of PlanetsEureka Seven HI-EVOLUTIONPachislot DISC UP 2PachinkoP Hokuto No Ken 9 ToushinP Shin Hokuto Muso Re:319ver.P Hokuto No Ken 8 KyuseishuP Shin Hokuto Muso Chapter 3Jagi no GyakushuuJan.Nov.Jan.Dec.Jan.May.Mar.13,073 units11,708 units11,657 units31,865 units17,328 units10,226 units10,094 unitsPachislot KEMONO FRIENDSPachislot Kabaneri of the Iron FortressPachinkoDejihane P SOUTEN-NO-KEN SouryuP Initial DDejihane PA Kayou Suspense GekijouSaigo no SuiriApr.May.Jul.Apr.May.Jun.-26-Resort BusinessFY2022/3 Results➢ PHOENIX RESORT: Reduction in loss margin YoY• Demand from individual customers increased outside the period of the state of emergency and priority measures to prevent the spread of disease, etc.➢ PARADISE SEGASAMMY: Continued to be sluggish• Continued to be affected by the restriction of foreign visitorsFY2023/3 Forecast➢ PHOENIX RESORT: Return to profitability• Continue to work on measures for individual customers through strengthening CRM, etc., and expect a recovery of group customers.➢ PARADISE SEGASAMMY: Reduction in loss margin• Work to strengthen marketing towards the resumption of travel*Expect the recovery in revenue, assuming the relaxation of behavioral restriction associated with COVID-19.-27-(Billion yen)2021/32022/32023/3Full YearResultsFull YearResultsFull YearForecastSales6.38.611.5Operating Income-4.1-2.5-1.2Non-operating income0.00.00.0Non-operating expenses4.84.11.8Ordinary Income-8.9-6.7-3.0Ordinary Income Margin—＜PHOENIX RESORT＞No. of facility users (Thousands)5527608683 accommodation facilities2233083632 golf courses759498Other facilities254358407(Reference) Status of each facility(Unit: billion yen)PHOENIX RESORT(Unit: KRW Billion)PARADISE SEGASAMMY• Demand for individual customers remained strong even in COVID-19 pandemic• Expect the increase of revenue in FY2023/3 from the recovery of group customers, etc.• The number of casino users fell sharply due to the restriction of foreign visitors• Sales decreased YoY, but EBITDA in FY2022/3 turned to positive due to cost reduction-28-03Progress of the Medium-Term Plan(FY2022/3-FY2024/3)-29-Long-term visionValue (Mindset and DNA)“Creation is Life” דAlways Proactive,Always Pioneering”Mission (Raison d’être)“Constantly Creating, Forever Captivating”—Making life more colorful—Vision (Ideal self)Be a Game ChangerEntertainmentGlobal Leading Contents ProviderPachislot andPachinkoTriple crown of share inutilization, in installation,and in salesGaming& ResortRealize the investment in gaming areaSustainabilityEnvironmentEmpathyEdgeEconomics© SEGA SAMMY HOLDINGS INC. All Rights Reserved.-30-Review of the First Year of the Medium-Term PlanProgress exceeded expectations, driven by Entertainment Contents1st year (FY2022/3)2nd year (FY2023/3)Mid-termTarget20.0ResultsDifferencesPlanDifferences33.3+13.340.0+10.0Mid-termTarget30.05%12.7%+7.7p7%–10%25.09.0-5.0-9.036.810.2-6.7-7.0+11.8+1.2-1.7+2.030.09.00.0-9.040.012.0-3.0-9.0+10.0+3.0-3.0-OrdinaryIncomeROEEntertainment ContentsPachislot & PachinkoResortOthers/Eliminations(Unit: billion yen)Final year(FY2024/3)Mid-termTarget45.040.013.01.0-9.0-31-Entertainment Contents BusinessConsumer areaEntertainment Contents Business-32-Long-term TargetBecoming a Global Leading Contents ProviderFY2024/3FY2026/3Reinforcing the earnings base by strengthening the global branding of existing IPsInvestment promotion period toward becoming a global playerCreation of “Super Games”Proactive growth investment(additional investments of 100.0 billion yen over five years)-33-Mid-term plan: Strengthen the Global Branding of Existing IPsGrow “mainstay IPs” as global brand1Expandingtouchpoints2Prolonging product life cycles3Strengthening user engagement-34-Expanding Touchpoints1ExpandingtouchpointsStrengthen global simultaneous launchx multi-platform supportFY2022/3FY2023/3 Plan◼ Global simultaneous launch × Multi-platform support (new titles)7 titles(Approx. 6M unit sales)⚫ “HUMANKIND™”⚫ “Sonic Colors: Ultimate”⚫ “Lost Judgment”, etc.13 titles（Approx. 13M unit sales）⚫ “SONIC FRONTIERS”⚫ “Sonic Origins”⚫ “Soul Hackers 2”, etc.*Only announced titles are listed*Number of titles and units sold includes titles corresponding to “2. Lengthening of product lifecycles”.-35-Prolonging Product Life Cycles2Prolonging productlife cyclesRemake/Remaster, Spin-Off / Change of theme,Multichannel monetization (Additionally support subscription services, etc.)FY2022/3FY2023/3 Plan◼ Remake/Remaster, Spin-Off / Change of theme (new titles)Approx. 4M unit sales⚫ “Sonic Colors: Ultimate”⚫ “Super Monkey Ball Banana Mania”⚫ “Lost Judgment”, etc.⚫ “HUMANKIND™”⚫ “Football Manager 2022”⚫ “Total War: WARHAMMER III”, etc◼ Additionally support subscription services (new titles)Approx. 5M unit salesPlanning multiple titlesPlanning multiple titles*Number of titles and units sold includes titles corresponding to “1. Expanding touchpoints”.-36-Strengthening User Engagement3Strengtheninguser engagementStrengthening the mix of media, expanding SONIC’s brand awarenessCY2020CY2021CY2022CY2023～Future initiatives with PARAMOUNT PICTURES◼ Development of a third feature film◼ Development of original TV series to be distributed in Paramount+©2022 PARAMOUNT PICTURES AND SEGA OF AMERICA, INC. ALL RIGHTS RESERVED.©2022 PARAMOUNT PICTURES CORPORATION AND SEGA OF AMERICA, INC.©SEGA*Schedule to release new title“SONIC FRONTIERS”-37-Sonic Film“Sonic the Hedgehog 2”Release date (US): April 8, 2022Scheduled release date (Japan): August 19, 2022Box office results➢ US• Opening three days: $72 million (Announced on April 13, 2022)• $170 million (As of May 12, 2022)*Following the previous film, recorded best ever for a film based on a video game➢ Worldwide• $142 million (Announced on April 13, 2022)• $350 million (As of May 12, 2022)*Exceeded $319 million of previous film “Sonic the Hedgehog” (released in 2020)©2022 PARAMOUNT PICTURES CORPORATION AND SEGA OF AMERICA, INC.-38-Sales Growth of Main IPsContinue to grow by solidifying main IPs and utilizing large amount of IPs(Unit: billion yen)*Sales of the series in Consumer area. Ryu ga Gotoku (Yakuza in N.A. and Europe) includes “JUDGMENT” series-39-Pachislot and Pachinko Machines BusinessPachislot and Pachinko Machines Business-40-Long-term TargetsTriple crown of share inutilization, in installation,and in salesBuilding a stableearnings structureFY2024/3No. 1 in total utilization shareof Pachislot and PachinkoMaintain stable earningsCreation of hitsImprovement of business efficiency-41-Review of the First Year of the Medium-Term Plan*1Total Utilization ShareFY2021/3FY2022/3Pachislot: Both sales and utilization of titles sold in FY2022/3 were strong (+2p)Pachinko: Decreased due to removal of popular titles in previous regulation such as “Pachinko CR Shin Hokuto Muso” (-7p)Stable EarningsLevel of fixed cost:Approx. 15% reduction (Compared to pre-structural reform)*2*1: In-house estimation based on DK-SIS data (Data for 4 yen Pachinko and 20 yen Pachislot) of Daikoku Denki Co., Ltd*1: Calculated by average of the fiscal year (Exclude the week striding over fiscal years)*1: Utilization Share = Ratio of Sammy machine’s utilization out of total number of installed machine for each title × utilization of each title (Pachislot: Numbers of inserted medals, Pachinko: Numbers of shot balls)*2: Comparison of FY2022/3 result and average of FY2018/3-FY2020/3-42-1stK Company18%2ndS Company18%3rdSammy11%4thS Company9%1stS Company19%2ndK Company17%3rdSammy13%4thU Company13%Trend of Number of Pachinko Halls and Number of Installed UnitsTotal number of installed units after the deadline for removal are approx. 3,660K units* In-house estimation based on figures published by the National Police Agency and figures released by Zennichiyuren (a union for pachinko and pachislot halls)-43-Annual Unit Sales Forecast for Market(Unit: K units)➢ FY2022/3Unit sales of new regulation machines increased due to the arrival of removal deadline of previous regulation machines➢ FY2023/3Expect hesitation to purchase will occur until machines responding to the relaxation of regulation will be launched Variable factors (Not considered in forecast)••Positive impact of relaxation of regulationComponent procurement risk*In-house estimation-44-Relaxation of RegulationPachislot: Approx. over 70~80% of current players are dissatisfied about the upper limit of payout and advantageous section（Factors behind dissatisfaction）• There is an upper limit of payout at once even though there is no limit to the Upper limit of payoutnumber of medals to insertreaches the upper limit• Not able to digest the rest of the AT and ART games added, when payout • Cannot see clear picture of obtaining a large amount of medals, because it is not possible to obtain more than 2,400 medals at onceUpper limit of advantageous section(Upper limit of No. of games)• The game ends before obtaining enough amount of medals when reaching the upper limit of games• Mode and points are all reset by the end of the advantageous section• Can’t expect to win after the advantageous section lamp going out as it indicates the end of AT*Source: Excerpts from the Nichiyukyo “Survey on Pachislot Players 2020 Survey Report”-45-Pachislot: Relaxation of Upper Limit of Advantageous Section (Upper Limit of No. of Games)4,000G3,000G1,500Gtimil reppu fo tnemhsilobA✓ Relaxation regarding upper limit of advantageous section is continuing✓ Upper limit will be abolished in Smart PachislotNo. 6.0 modelNo. 6.2 modelNo. 6.5 model(medal machine)No. 6.5 model(Smart Pachislot)-46-Pachislot: Regarding Relaxation of Upper Limit of Payout0①②① Up until now, at most, only+2,400 medals can be obtained from the start of jackpot(Upper limit: MY*2,400 medals)② From No. 6.5 model, at most, +2,400 medals from ±0 medals can be obtained（Upper limit: In-out 2,400 medals）✓ There will always be a chance for players to “win”*MY = Refers to the increased number of medals from the point of when the number of medals, etc. decreased the most, in a section (such as in a day, or in an advantageous section)-47-Pachislot: New Title to be Launched”Pachislot Kabaneri of the Iron Fortress” No. 6.5 model (medal machine)Delivery: July 2022 (plan)©Kabaneri Committee ©Sammy-48-Investment StrategyInvestment StrategyConcept of Investment in Growth (～FY2026/3)Continue to consider investing in the following growth areasConsumer areaApprox. 100.0 billion yenStrengthen development resourcesArea of consideration for investment⚫ Expansion of organic development pipeline⚫ Strengthen global mobile and online gamesInvestment in new ecosystemArea of consideration for investment⚫ Strengthen CRM functions to revitalize user communities⚫ Investment in newly emerging business areasGaming areaApprox. 100.0 billion yenCareful assessment of investment opportunities in the gaming areaArea of consideration for investment⚫ Both domestic and overseas IR⚫ Online casino and sports betting overseas⚫ Land-based casinos overseasExpand CVC investment limit (Total limit: 15.0 billion yen)in start-up companies⚫ Strengthen open innovation activities, including investment OtherApprox. 50.0 billion yenTotal 250.0 billion yenCreation of new business, acquisition of IPs, etc.-50-SustainabilitySustainability-51-Constantly Creating, Forever Captivating- Making Life More Colorful -SEGA SAMMY Sustainability VisionWe at SEGA SAMMY believe our determination to enhance life with a rich and colorful stream of captivating experiences should be reflected in our approach to sustainability.It is our responsibility to put sustainability at the heart of everything we do, in tandem with our people, society, and the environment.SEGA SAMMY will continue to pursue this synergy as a company dedicated to the shared experiences of a colorful world. © SEGA SAMMY HOLDINGS INC. All Rights Reserved.52ESG Ratings and EvaluationsMSCI ESG RATINGSESG INDEXESCDP⚫ Climate Change：C⚫ Water：C-53-Material Issues to be AddressedFive Key Areas of Sustainability ManagementProducts/ServicesHuman ResourceEnvironmentAddictionGovernancePrevention of addictions and disordersInitiatives by industry organizationsSEGA SAMMY’s unique initiativesStrengthening corporate governanceEstablish Sustainability Governance structureQuality ImprovementCreating content and services that appeal to 3.0 billion gamers globally(Entertainment Contents)Becoming the winner of triple crown of share in utilization, in installation, and in sales(Pachislot & Pachinko)Safety and SecurityCreating rules that allow everyone in the world to enjoy without discrimination(Entertainment Contents)In order to continuously createcontent that users and operatorscan rely on(Pachislot & Pachinko)Multi-culturePromoting “Game Change” by increasing human resources with multi-cultural backgroundActive career opportunities for womenCreating a foundation where people can thrive regardless of genderDevelopment of core human resourcesStrategic development of human resources who can lead the next generationMaintenance of work environmentMaintaining and improving the engagement of human resourcesScope 1, 2Achieving carbon neutralityScope 3Reduce GHG emissions by 22.5% or moreDisclosure of information based on TCFD recommendationsIncluding response to the climate change into the strategyP55~P60~P65~P68~P69~-54-Products / 製品/サービスServicesQuality ImprovementTarget CompaniesDomesticOverseasCreating content and services that appeal to 3.0 billion gamers globallyMajor InitiativesCreation of innovation⚫ Strengthen global roll-out and expand roll-out platformsManifestation of scalability⚫ Creating Super GameExploration of a strategic alliance with Microsoft⚫ Launch of the CRM project toward expanding customer base-55-Products / 製品/サービスServicesQuality ImprovementTarget CompaniesDomesticOverseasCreating content and services thatappeal to 3.0 billion gamers globallyMajor InitiativesAccessibility⚫ Support for color universal in Puyo Puyo⚫ Compliance with CVAA guidelines⚫ Subtitle display functionSOJ*1SOA*2, SOE*3Creative Assembly, Relic, AmplitudeDiversityPrivacy⚫ Utilization of “Culturize Word Check”⚫ LGBT + GuidelinesSOJ⚫ Plan to add female football in “FOOTBALL MANAGER”SOJSports Interactive⚫ Compliance with the European Union General Data Protection regulation(GDPR)SOA, SOE, each studio⚫ Strict control of children’s data at mobile titles⚫ CCPA/CPRA compliance projectSOASOA*1 SEGA CORPORATION *2 Sega of America *3 SEGA Europe-56-Products / 製品/サービスServicesSafety and SecurityCreating rules that allow everyone in the world to enjoy without discriminationMajor InitiativesTarget CompaniesDomesticOverseasCompliance of relevant laws and regulationsInitiatives to ensure safety and securityStructure for global collaboration⚫ Compliance with laws and regulations◎Payment Services Act, Act against Unjustifiable Premiums and Misleading Representations ◎Moral risk⚫ Quality assurance and quality control◎Release Judgment Meeting ◎Collaboration with Customer Relations Office ◎Various verification works, etc.⚫ Youth protection◎Rating system (CERO Code of Ethics, etc.) ⚫ Establishment of global product operations divisionStart developing a global value chain toward global simultaneous launch x multi-platformsupport ⚫ Launch of Data Privacy ProjectCross-national and international projects to ensure efficient and reliable compliancewith the protection of personal information-57-Products / 製品/サービスServicesQuality ImprovementBecoming the winner of triple crown of share in utilization, in installation, and in salesManufacturing based on user preferencesTarget CompaniesDomesticPlanning with identified needsMajor InitiativesMarket Analysis,HypothesisverificationBrush-up with proprietarytest-shooting⚫ Development and planning based on market analysis dataSummaryknowledgePromotionsintroduction to the marketBuilding a proprietary development process⚫ Introduction of a proprietary test-shoot evaluation systemBrush up machines with reference to highly reliable reputation at a pseudo Pachinko hall (Parlor Sammy)Detailed attributesQuantitative evaluation-58-Products / 製品/サービスServicesSafety and SecurityIn order to continuously create content that users and operators can rely onManagement of quality that can be enjoyed without discomfortTarget CompaniesDomesticMajor InitiativesEthics Committee⚫ Established ethics committeeEthics Committee[Example of Guidelines]Thorough expression with respect for human rightsManagement of expressions to lead criminal activities and expression that overly encourage excessive gamblingHead of each divisionEthics practitioners⚫ Thorough quality assurance systemTarget of “zero serious defects” related to human safetyQuality audits of domestic and overseas partner plantsDevelopment staffs⚫ Industry-leading countermeasure system for improper modifications and cheating activitiesEvaluation and verification by an organization specialized for countermeasure to improper modifications, as well as collection and dissemination of information on cheating activities, etc.-59-Human Resources人 Multi-culturePromoting “Game Change” by increasing human resourceswith multi-cultural background*Approx. 900 personsTarget CompaniesDomesticMajor InitiativesRatio in total employees:Approx. 21%~with multi-cultural background(new graduates and mid-career)⚫ Expanded recruitment measures for human resources 554 personsRatio in total employees:Approx. 15%2021(as of December)2030(Target)⚫ Creation of opportunities for global experiences to existing *Either of foreign nationality, multicultural, English/Chinese (daily conversations), CEFR B2 level or higher⚫ Creating an environment in which foreign students and foreigners can easily join the company⚫ Accelerate development of human resources with multi-cultural background (Provide language training permanently)employees(Provide study abroad program, etc.)-60-Human 人ResourcesActive Career Opportunities for WomenIn order to respond to changes in the market environment and customer preferenceCreating a foundation where the peoplecan thrive regardless of genderMajor InitiativesTarget CompaniesDomesticApprox. 80 persons～Ratio in managers:Approx. 8%~42 personsRatio in managers:Approx. 5%2021(as of December)2030(Target)*Number of managers, including professionals⚫ Strengthen the recruitment of female managers (mid-career)⚫ Increase the recruitment ratio of female at the time of new hires ⚫ Support for career development after joining the company(improvement of environment, education, awareness building and career support)• Choice of work style according to circumstances such as childcare and nursing care• Encouraging employees and eliminating unconscious bias• Promotion to the specialist level by introducing a new personnel system• Provide educational opportunities for next generation leadership candidates• Promotion of male maternity leave-61-Human 人ResourcesDevelopment of Core Human ResourcesTarget CompaniesDomesticIn order to make all human resources can realize our mission “Constantly Creating, Forever Captivating”Strategic development of human resources who can lead the next generationCumulative total of at least 4.0 billion yen*Major Initiatives⚫ Maximize the utilization of in-house university “SS-College” Approx. 0.45 billion yen/yearand skills⚫ Developing human resources with diverse values, knowledge, Approx. 0.15 billion yen/yeareducationFY2022/3(as of December)FY2031/3(Target)*FY2023/3-FY2031/3⚫ Different education in phases to support the growth of humanresources who lead the future of the group⚫ Effective operation of the investment and measure for• Education for next-generation • Measures to develop global humanleadersresources• Recurrent education• Support for development of young employees• Education for division managers• Development of digital human resources• Support for career development• Introduction of new system to manage the attendance of trainings⚫ Implementation of individual company-specific training based on business strategy⚫ Visualization of development status-62-Human 人ResourcesMaintenance of Work EnvironmentToward the coexistence of diverse human resources and valuesMaintenance and improvement of the engagement of human resourcesMajor InitiativesTarget CompaniesMajor Group Companies61 or more ~ less than 67FY2030 (Target)1) Visualize organizational status and organizational issuesEngagement Score *1RatingDeviation value67 or moreAAAAAABBBBBBCCCCCC48 or more ~ less than 52As of December 202158 or more ~ less than 7055 or more ~ less than 5852 or more ~ less than 5545 or more ~ less than 4842 or more ~ less than 4539 or more ~ less than 42*1 Provided by Link and Motivation Inc.⚫ While conduct ES*2 at each major group company in Japan over the years;2) Identify issues for each company/organization and implement measures to address them3) Turn PDCA while monitoring results⚫ Reflect ES*2 results to mid-term incentive of executives at major group companies in Japan.*2 Engagement Survey-63-Human 人ResourcesIntroduction of Overseas InitiativesTarget CompaniesOverseasActive career opportunities for womenMaintenance of the work environment⚫ Establishment of in-house groups that carry out the activities ⚫ Establishment of Values Staff Groups, an internal DEI group to improve to promote active career opportunities for womenthe workplace environment.Each company and studioSOE⚫ Cooperation with Women in GamesEach company and studio⚫ Implementation of Culture Amp, an employee surveyDevelopment of core human resources⚫ Utilization of external online training platformEach company and studio⚫ Establishment of training and coaching programs for managersHARDlightSOESports Interactive⚫ Introduction of new engagement survey form and performance-management platforms (Lattice)SOEHARDlight⚫ HARDlight Engagement Survey andsurveys in accordance with Best Places to Work Awards standards-64-Environment環境Scope 1, 2Target CompaniesWhole GroupAchieve carbon neutralityAchieve carbon neutrality of GHGs emission in Scope1, 2 in all business segments by 2050Major Initiatives8,2974,54313,553Group-widereduction of approx. 50%～(t-CO2)Entertainment Contents(including SSHD)Pachislot & PachinkoResort BusinessGroup-wideCarbon neutralScope1Scope2Entertainment ContentsPachislot & Pachinko Machines614 t-CO2Emission amounts in 2021578 t-CO2Company veicles⚫ Switch to non-gasoline vehicles7,683 t-CO2Emission amounts in 20213,966 t-CO2Electricity at business sites, etc.⚫ Introduction of “raw green power”⚫ Purchases of the Renewable Energy Certificates⚫ Introduction of solar power generation equipment services2021(Fiscal Year Ending March)2030(Target)2050(Target)Resort Business⚫ Introduction of energy-saving equipment (transfer the lighting to LEDs, replacement of high-efficiency heat source equipment, etc.)⚫ Gradually switch to renewable energy by 2030⚫ Introducing new renewable energy technologies and decarbonization innovations by 2050-65-Environment環境Scope 3Reduce GHG emissions by 22.5% or moreStart initiatives in the supply chain with the aim of reducing which meets a level sufficiently below 2°C of SBT (Well Below2℃:WB2°C).Total of 22.5% or more(t-CO2)SEGA (SOJ)Sammy169,010200,9142021(Fiscal Year Ending March)2030(Target)Target CompaniesDomesticMajor InitiativesC1 (purchased goods and services)⚫ Factoring the reductions by platformers⚫ Expand reuse and standardize of components⚫ Implementation of supplier surveysScope3⚫ Reduce the volume of components procurement by minimizing the replacement parts⚫ Implementation of supplier surveysC11 (use of sold product)⚫ Factoring in projected ⚫ Factoring in projected reductions due to promotion of transition to renewable energy at the business sites of the sales destination(Amusement Machines Sales)reductions due to promotion of transition to renewable energy at the business sites of the sales destination ⚫ Development and introduction of power-saving pachinko and pachislot machines-66-Environment環境Disclosure of Information Based on TCFD RecommendationsTarget CompaniesWhole GroupIncluding response to the climate change into the strategyThe importance of non-financial information disclosure is increasing in order to engage in two-way dialogue with stakeholdersRecognizing climate change as an important management issue and disclosing information from this fiscal year⚫ Sustainability ReportEdition published on May 2022-67-Addiction依存症Prevention of Addictions and DisordersTarget CompaniesDomesticTo sincerely face the negative aspectsthat increasing as business expansionsMajor initiativesCompliance with laws, regulation,voluntary regulation, etc.Support for the initiatives by industry associationsImplementation of SEGA SAMMY’sunique initiatives[Common]Offering of appropriate products and services through compliance with laws, regulations, and voluntary regulationMajor Initiatives by industry organizationsMajor initiatives Major initiatives by industry by industry organizationsorganizationsContributing to the sound development of the Pachislot and Pachinko industryIn order to continue to provide a safe and secure amusement environment, promote measures to resolve the problem of gambling addictions and other issues, centered on industry associations.Contributing to the sound development of the game industry• Surveys and researches on gaming disorder which aimed at finding effective countermeasures based on scientific studies are underway at four game-related organizations*1 in Japan.• Educational activities such as establishment of rules between parents and children and promotion of the utilization of parental control functions*2*1 Comprised of following four organizations: Computer Entertainment Supplier’s Association (CESA), Japan Online Game Association (JOGA), Mobile Contents Forum (MCF), and Japan esports Union (JeSU). *2 Available to users overseas in PFMajor initiativesConducting joint industry-academia research on gambling addiction with Kyoto University-68-GovernanceガバナンスSustainability GovernanceBoard of Directors meetingBoard of Directors: 7 / Audit & Supervisory Committee Members: 4 *Excluding Chairman, Representative DirectorChairman… President and Group CEO, Representative DirectorGroup Management Strategy CommitteeGroup SustainabilitySubcommittee(hold twice a year)Chairman: President and Group CEO, Representative DirectorMembers: Senior Executive Vice President and Group CFO, Board of Directors and Audit and Supervisory Committee memberswhose the sustainability is listed in their skill matrix, and directors in charge of sustainability at major business companies in the GroupSecretariat: Sustainability Promotion Office⚫ Formulation and revision of the Group Sustainability Plan⚫ Formulation of Group targets⚫ Evaluation, recommendations, and advisory services for the initiatives of each Group companyDirectional expansion / MonitoringReportGroup SustainabilityPromotion Committee(hold twice a year)Chairman: General Manager of the Sustainability Promotion OfficeEach business company: Directors in charge of sustainability, and persons in charge⚫ Sharing group-wide policies⚫ Monitoring of each company’s initiatives, horizontal roll-out of successful examples, etc.Sammy GroupSEGA GroupOther business companies-69-(Reference) Schematic Diagram of Corporate Governance StructureGeneral Meeting of ShareholdersIndependent Advisory Committee(Appointment /Compensation）Inquiries / RepliesBoard of Directors meetingElection / DismissalBoard of Directors(Excluding Audit & Supervisory Committee MembersAudit / SuperviseElection / DismissalAudit & Supervisory CommitteeAudit & Supervisory Committee MembersElection /DismissalIndependent AuditorSupervision/ EvaluationCooperationInstructions / AssistanceInstructions / ReportsInstructions/ ReportsInstructions/ ReportsAudit and Supervisory Committee OfficeGroup Management Strategies CommitteeGroup Audit Liaison CommitteeCooperationThis CommitteeReportsHoldings Audit Liaison CommitteeAudit & Supervisory Board Members and Internal Auditing Office Liaison CommitteeCo-operationGroup Sustainability SubcommitteeGroup Risk & Compliance SubcommitteeInstructions/ ReportsInstructions/ ReportsInternal Audit DivisionGroup SustainabilityPromotion CommitteeGroup Risk & Compliance Promotion CommitteeInstructions/ ReportsInstructions/ ReportsInstructions/ ReportsAuditEach OrganizationEach Group Company*The Company will transfer to a company with an Audit and Supervisory Committee, subject to approval at the 18th Ordinary General Meeting of Shareholders to be held in June 2022.-70-(Reference) Skill Matrix of Board of Director’s membersNameGenderCorporate managementEntertainment business creationFinance and accountingRisk management / complianceICT・DXGLOBALSustainabilityExpertise and experienceHajime SatomiReappointmentHaruki SatomiReappointmentKoichi FukazawaReappointmentDirectorYukio SuginoNew AppointmentHideo YoshizawaReappointmentKohei KatsukawaReappointmentExternalMelanie BrockReappointmentExternalFemaleFujiyo IshiguroReappointmentExternalFemaleAudit & Supervisory Committee MembersYukito SakaueNew AppointmentKazutaka OkuboNew AppointmentExternalShione KinoshitaNew AppointmentExternalFemaleNaoko MurasakiNew AppointmentExternalFemaleMaleMaleMaleMaleMaleMaleMaleMale●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●*They are the members of Board of Director if approved at the 18th Annual General Meeting of Shareholders to be held on June 22, 2022, and their expertise and experiences*List up to four items that are particularly expected of each person. The above list does not represent all the knowledge and experience of each person-71-(Reference) Definition of Skill MatrixItems1. Corporate managementManager of a listed company or an equivalent organizationDefinitions2. Creation ofEntertainment Contents BusinessHaving an experience as a business development manager or experience in launching new business in the business segments of our Group3. Financial Accounting4. Risk Management/Compliance5. ICT・DX6. GLOBAL7. SustainabilityHaving an experience in specialized fields such as financial institutions, auditing firms, or an experience as a director in charge of the finance department of a large companyHaving an experience in specialized fields such as such as attorneys or an experience as a director in charge of legal affairs or compliance or auditing at a large companyHaving an experience in specialized fields such as IT companies, vendors, consulting, or an experience as a director in charge of IT at a large companyHaving experience of living abroad or an experience at overseas business companies, or similar experienceHaving knowledge in the following two areas, “environment” and “human resources (diversity)”, of our five materiality*, and are expected to help our group to promote sustainability in the future.*Products / Services, Human Resources, Addiction, Environment, Governance*Reasons for Item Selection:Selected experience and expertise required for a listed company and for achieving the Company’s long-term vision.-72-Future Milestones (1)MaterialityIssueMajor activities / MilestonesQuality ImprovementSafety and SecurityProducts / ServicesWhole GroupUpdate of existing initiatives, addition of new initiatives (annual)SEGAStrengthen the Global Branding of Existing IPsCreation of “Super Game”SammyPromotion of manufacturing based on user preferences,brush up by test-shoot evaluation systemMonitoring of quantitative targets (annual)Whole GroupUpdate of existing initiatives, addition of new initiatives (annual)Expansion of companies to be included in the disclosure 3 MajorcompaniesReexamination of target figures,re-review of the action plansHumanResourcesMulti-cultureActive career opportunities for womenDevelopment of core human resourcesMaintenance of work environmentSEGAConsideration of global human resources measuresSSHD,SEGA, SammyReexamination of target figures,re-review of the action plansSEGAEstablishment of a global structureConsideration of global human resources measuresImplementation of global human resources measuresEach GroupCompanyReview of disclosure policies and careful examination of action plansEach GroupCompanyReview of disclosure policies and careful examination of action plansImplementation ofaction plansTarget for 2030Becoming a Global Leading Contents Provider(Entertainment Contents)Becoming the winner of triple crown of share in utilization, in installation, and in sales(Pachislot & Pachinko)⚫Ratio of MC* human resources:21% or more (Approx. 900 persons)⚫Ratio of female managers:8％ or more (80 persons or more)⚫Investment amount for education:Total 4.0 billion yen or more⚫EMS scores:58 or more, Rank A or more*MC=Multi-culturePrevention of addictions and disordersAddictionSEGASammySSHDImplementation of surveys and researches on gaming disorderby four game-related organizationsCompliance with Laws, regulation, voluntary regulation, etc. relating to addictionPromotion of measures to resolve the problem of gambling addictions and other issues, centered on industry associationsContributing to the sound development of the industriesMonitoring of outcome from joint industry-academia research (per half year)Conducting joint industry-academia research on addiction -73-Future Milestones (2)MaterialityIssueMajor activities / MilestonesTargetScope1-3Scope1, 2Domestic/Whole GroupOverseas/SEGADomestic/Whole GroupCheck GHG emissions and status of reduction measures taken (annual)Update of existing initiatives, addition of new initiatives (annual)Overseas/SEGAConsideration of action plansEstablishment of a global structureConsideration and implementation of action plansImplementation of action plansOngoing review of goal setting and action plansEstablishment of a system, implementation of measures such as questionnaires (consideration of improvement and expansion of methods)PSRSetting quantitative targetsSEGA, SammyStrengthen supplier engagementSEGA, SammyConsideration of criteria for selecting supplierOverseas/SEGAEach Group CompanyConsideration of expansion of companies to set reduction targetsand timing of expansion3 Major companiesEach GroupCompanyConsider expansion of companies to be included in the disclosure andtiming of expansionEnvironmentScope3ConsiderationFormulation and applicationTCFDEstablish an annual update system at each companyEstablishment of a systemConsideration of expansion of companies to set reduction targets,and timing of expansionUpdate the details of disclosure (expanding further scope of information)Consider expansion of companies to be included in thedisclosure and timing of expansionAchieve carbon neutrality group-wide by 2050(Entertainment Contents and Pachislot & Pachinko set target to achieve carbon neutrality by 2030)Aim to reduce GHG emissions by 22.5% or more to meet SBT standard by 2030 in both SEGA (SOJ) and SammyReport progress from the following year ongoing after gradual expansion of the scope of disclosure-74-Human 人ResourcesReference: External evaluations, Awards, etc.DEI*Creative Assembly⚫ IGDA 2021 Awards for Diversity and Inclusion⚫ Best Place to Work AwardCreative Assembly⚫ 2021 Diversity in Tech Awards for Social Mobility programmeCreative Assembly⚫ TIGA UK Games Education Awards 2021Creative AssemblyDevelopment of core human resources⚫ 2021 G into Gaming Diversity AwardCreative Assembly⚫ 2021 Best Place to Work Award for CSRCreative AssemblyMaintenance of work environment⚫ British LGBT Award for ‘Best ERG or Network Group”SOE⚫ Women in Games AwardsCreative Assembly⚫ Gold award in PRIDE IndexSSHD, SOJ, Sammy*Diversity, Equity and Inclusion⚫ Best HR team for the year in careers index awardsSEGA BLACK SEA⚫ Best Place to Work AwardCreative Assembly⚫ Best Places to Work in Canada 2021Relic⚫ Best Place to WorkSports Interactive⚫ Platinum Kurumin CertificationSammy0504 Appendix-76-Trend of Balance of Content Production Expenses in B/S(Consumer area)(Unit: billion yen)*Balance of work in progress R&D expenses of titles before release + Balance of unamortized R&D expenses of released titles-77-Trend of No. of Employees by Segment(Unit: employees)*No. of employees are the No. of full-time employees and permanent contract employees. Excludes the No. of temporary employees.-78-Pachislot and Pachinko Machines Business (Utilization share)Trend of Utilization Share (Sammy)Pachislot utilization sharePachinko utilization share21.0%16.4%19.5%19.5%19.5%17.9%12.2%10.9%15.0%12.2%10.4%9.0%8.1%6.7%7.2%6.5%8.0%7.2%13.0%9.1%FY2013/3 FY2014/3 FY2015/3 FY2016/3 FY2017/3 FY2018/3 FY2019/3 FY2020/3 FY2021/3 FY2022/3*In-house estimation based on DK-SIS data (Data for 4 yen Pachinko and 20 yen Pachislot) of Daikoku Denki Co., Ltd.*Calculated by average of the fiscal year (Exclude the week striding over fiscal years)*Utilization Share = Ratio of Sammy machine’s utilization out of total number of installed machine for each title × utilization of each title (Pachislot: Numbers of inserted medals, Pachinko: Numbers of shot balls)Reference: Ranking of utilizationshare in FY2022/3-79-1stS Company33%2ndS Company16%3rdSammy13%4