SEGA SAMMY HOLDINGS Discussion Points

Transcription

1 SEGA SAMMY HOLDINGS Discussion Points The SEGA SAMMY Group endeavors to reflect the viewpoints of diverse stakeholders in management strategy by providing the Group s management team with feedback on the various requests and opinions received from shareholders, investors, and other stakeholders. These Discussion Points comprise excerpts from Integrated Report 2018 that are designed to providing the starting points of discussions as well as summarized information on market conditions and environmental, social, and governance factors that are intended to supplement the main report.

2 SEGA SAMMY HOLDINGS Overview of the SEGA SAMMY Group s Businesses The SEGA SAMMY Group offers moving experiences across a wide range of fields. Our businesses include the Pachislot and Pachinko Machines Business; the Entertainment Contents Business, comprising digital games, packaged games, amusement machines, amusement center operations, animation, and toys; and the Resort Business, focused on realizing successful integrated resorts. Pachislot and Pachinko Machines Business Pachislot machines Pachinko machines Contents for smartphones and PCs Entertainment Contents Business Digital games area Packaged games area Amusement machines sales area Amusement centers operetions area Animation and toys area Resort Business Hotels and golf courses Integrated resorts Detective Conan: Zero the Enforcer 2018 GOSHO AOYAMA/DETEC- TIVE CONAN COMMITTEE All Rights Reserved. Phoenix Resort SONIC FORCES SEGA Pachinko CR Shin Hokuto Muso Chapter 2 Buronson & Tetsuo Hara/ NSP 1983, Approved No.KOK Koei Tecmo Games Co., Ltd. Sammy Pachislot Hokuto No Ken Shindensetsu souzou Buronson & Tetsuo Hara/ NSP 1983, NSP 2007 Approved No.YBJ-918 Sammy UFO CATCHER TRIPLE SEGA ANPANMAN D.I.Y. Moving ANPANMANGO-CAR Takashi Yanase/ Froebel-kan,TMS,NTV PARADISE SEGASAMMY Co. Ltd., All rights reserved. Medium-to-Long-Term Performance Trends (Fiscal 2015 Fiscal 2019) Cost Structure Reform Business structure reform Return to earnings growth trend Effect of regulatory revision Growth due to introduction of No. 6 pachislot machines Net sales Operating income margin 5.4% Operating income (Plan) 1

3 INTEGRATED REPORT 2018 Road to 2020 provides a medium-term road map aimed at the realization of our long-term vision and covers fiscal 2018 through fiscal We are advancing measures that are based on Road to 2020 and which we have embedded into a mission pyramid that comprises the unchanging components of our DNA: a value, a mission (raison d être), a vision (ideal self), and a goal (specific target). Value (Mindset / DNA) Creation is Life Always Proactive, Always Pioneering Mission (Raison d être) Continuing to create moving experiences Making life more colorful Be a Game Changer Vision (Ideal self) Pachislot and Pachinko Machines Entertainment Contents Resort Be a Game Changer Sammy the wellspring of new ideas as an innovator in the industry Be a Game Changer Be an Experiential Innovator Goal (Specific target) Operating income margin: At least 15% ROA *1 : At least 5% Operating income margin: At least 30%* 2 Net sales: At least Operating income: At least 30.0 Operating income margin: At least 10% Succeed in IR businesses Enhance brand value *1 ROA = Profit attributable to owners of parent Total assets *2 Operating income margin of the Pachislot and Pachinko Machines Business excluding other and eliminations Review of fiscal 2018 based on Road to 2020 Billions of yen / % Pachislot and Pachinko Machines Business Responded to regulatory revision Advanced reuse Improved development efficiency Entertainment Contents Business Reorganized intellectual property studios Enhanced global rollouts Billions of yen / % Billions of yen Resort Business Opened PARADISE CITY Completed largest renewal of Phoenix Seagaia Resort since its opening Acquired gaming machine licenses in the U.S. State of Nevada (Plan) Net sales Operating income Operating income margin Although regulatory revision impacted results in fiscal 2018, in fiscal 2019 we aim to expand the business through the introduction of No. 6 pachislot machines (Plan) Net sales Operating income Operating income margin Earnings have been trending upward since structural reform. We aim to expand the business by marketing new digital game titles in fiscal (Plan) Net sales Operating loss We continued advance investment with a view to entering the integrated resort business in Japan. 2

4 SEGA SAMMY HOLDINGS Road to 2020 Business Strategies Pachislot and Pachinko Machines Business Business Strategy that Turns Change into Opportunities The regulatory revisions in February 2018 have broadened opportunities to tap into demand from people during their free time. In light of this, from the second half of fiscal 2019 through fiscal 2020, we plan to release a series of new pachislot machines (No. 6 machine models) that appeal to a broad base of customers. In pachinko machines, a major strength is our lineup of several models based on older reguration that have already been approved. In fiscal 2019, our sales strategy will focus on older models, starting with Pachinko CR Shin Hokuto Muso Chapter 2. While keeping an eye on trends in new models at other companies, we will continue to develop new-format machines with our sights set on a strategy for fiscal ZEEG, a Key Driver of Road to 2020 Reuse is key to achieving our targets under Road to 2020, and our central player in reuse is ZEEG Co., Ltd., a joint venture established between Sammy and Universal Entertainment Corporation. ZEEG is advancing efforts to generate significant synergies by improving product capabilities that combine the technologies of both companies, and by creating an efficient earnings structure by reducing procurement costs. For example, Universal Entertainment Corporation uses cabinets recovered from Sammy, expanding the scale of reuse beyond reuse on an individual company level. This will also lead to a significant reduction in procurement costs. We expect profits to improve (through the use of general-purpose cabinets) as more companies participate in this platform. ZEEG has also started to develop software development kit (ZSDK) with an eye on the future of the pachinko and pachislot machine industry. Pachinko CR Shin Hokuto Muso Chapter 2 Buronson & Tetsuo Hara/NSP 1983, Approved No.KOK Koei Tecmo Games Co., Ltd. Sammy ZEEG Reuse Flow Development and production at manufacturers Trade in by each company ZEEG s Area of Responsibility Sammy Universal Entertainment Other manufacturers Pachinko hall Sammy Universal Entertainment Other manufacturers Distribution centers of each company Component companies (Suppliers) Direct delivery Components supplied on a unit and machine cabinet basis ZSDK Initiative The ZSDK initiative aims to enable the reuse of software components in addition to hardware components by unifying software development tools and selling it as a package in the future. Utilizing ZEEG cabinets increases the reused component ratio and the ratio of cabinets used, thereby cutting purchase costs on an individual component basis 3

5 INTEGRATED REPORT 2018 Entertainment Contents Business SEGA s Passion for World-Class Creativity SEGA Games Co., Ltd., has a passion for quality that is evident in all facets of its business. By leveraging this passion in overseas businesses being strengthened under Road to 2020, the company s earnings are gradually improving on a global scale. Persona5, released by ATLUS. CO., LTD., became a hit title, with more than 2.2 million copies sold around the world. Moreover, overseas sales of this title were more than double domestic sales. The PlayStation 4 version of Persona5 ranked No. 1 overall in a game review website in Yakuza 6: The Song of Life has sold as many copies overseas as it has in Japan. The title mostly represents a Japanese world view, but its quality has won over fans overseas as well. The steady repeat sales reflect our growing reputation for product quality. ATLUS. CO., LTD., has studios in the U.S. with excellent localization capabilities, which have been winning over strong support from fans of the game around the world and this also drives firm growth in sales. System for Designating Responsibility for Profit in Projects In the packaged game area, we aim for all developers to autonomously control development costs while creating games that thrive on the market. Therefore, we have clarified responsibilities for profits (operating income) in each development project, and this has led to significant improvement in the profitability of packaged games in recent years. Persona5 Unit Sales / Downloads Persona5 ATLUS SEGA All rights reserved. 2Q Release of Japanese version (Japan) 3Q 4Q Release of traditional Chinese version (Hong Kong, Taiwan) 1Q Fiscal 2017 Fiscal 2018 Persona5 cumulative unit sales Over 2.2 million Release of English version (North America, Europe) Release of Hangul version (Korea) Earn Profits Globally with Localization that Wins over Fans in Foreign Countries 2Q Global versions of Persona5 Japanese version of Persona5 ATLUS localization studio in California Japanese version of Ryu ga Gotoku 6: Inochi no Uta Global versions of Yakuza 6: The Song of Life Resort Business Acquiring Expertise to Ensure Success of the Integrated Resort Business With our sights set on participating in the integrated resort business in Japan, we will acquire know-how in the operation of resort complexes through PHOENIX RESORT while accumulating expertise in the development and operation of integrated resorts through our business partnership with the PARADISE GROUP of South Korea. Further, we are refining our strategies that are focused on participation by identifying and conducting value chain analysis based on more than 118 key components of casino operations. Coordination in the Integrated Resort Business PARADISE CITY SEGA SAMMY HOLDINGS Japan Integrated Resort Business Department Sharing know-how with a view to domestic integrated resorts Sharing Know-how with a view to domestic integrated resorts PHOENIX RESORT Japan Market Planning Management Section Incheon project members: 87 personnel in total (57 overseas, 30 in Japan) *As of October 1, 2018 Business management Marketing Casino planning Management support Hotels Surveillance Operational management Commercial facilities Entertainment 4

6 SEGA SAMMY HOLDINGS 遊技機事業を取り巻く経営環境 Market Conditions of the Pachislot and Pachinko Machine Business Long-Term Trends Approval Process Before launching a machine, manufacturers are required to navigate an approval process in accordance with the Enforcement Regulation of Entertainment Establishments Control Law. The law and the internal regulations of industry bodies have been revised frequently with a view to the sound development of the industry. Each revision has affected the pachinko and pachislot machine market. Continued Long-Term Downtrend in Pachislot and Pachinko Machine Market The number of players peaked in 1995 and began trending downward due to casual players leaving the market in response to an increasing number of machines featuring more complicated gameplay or strong gambling elements. As a result, the pachinko and pachislot machine market entered a period of long-term decline. Following the enactment of the revision of regulations pertaining to the Entertainment Establishments Control Law (hereinafter regulatory revision ) in July 2004, the market has faced a challenging operating environment owing to the following three factors. 1) Pachinko hall operators declining investment capacity due to a decline in the number of players 2) Control of excessive gambling elements through regulatory revision and increase in various types of costs 3) Decline in the number of players owing to the diversification of entertainment that accompanied the expansion of the market for game apps for smart devices The above conditions have created a vicious cycle, wherein the deterioration of pachinko hall operators financial positions has resulted in a delay in measures to invigorate the market which, in turn, has had a negative impact on the pachinko and pachislot machine market. While the number of pachinko halls is declining owing to the shutting down of small-scale operators, as reflected in the increase in the number of pachinko and pachislot machines per hall, large operators are opening large-scale halls, resulting in the emergence of an increasingly well-defined oligopoly in the market and this secures certain sales channels for pachinko and pachislot machine manufacturers. Approval Process for Pachinko and Pachislot Machines Machine manufacturers Market Size and Pachinko and Pachislot Player Numbers Trillions of yen / Millions of player Pachinko and pachislot market (trillions) leisure market (trillions) Number of pachinko and pachislot players (millions) Breakdown of Pachinko Players by Age Group Based on 9 million players 10 s 0.3% 20 s 1. Application for prototype testing 2. Issuance of certification of prototype testing 3. Application for testing 4. Issuance of certification of prototype testing 5. Contract / delivery 30 s 40 s 50 s 60 s 70 s Women 7.3% 15% 22% 13% 12% 6% 24% Men 6. Application for approval 11.1 Source: White Paper on Leisure Industry 2018, Japan Productivity Center Security Communications Association Public Safety Commission in each prefecture Pachinko halls District police station Approval 8. Commencement of operations 9.0 Pachinko Hall Numbers and Machine Installations per Hall Pachinko halls / Units 15,617 15,165 14,674 13,585 12,937 12,652 12,479 12,323 12,149 11,893 11,627 11,310 10,986 10, Machine Installations, Unit Sales, and Annual Turnover for Pachinko and Pachislot Machines Millions of units / Times Pachinko hall numbers Machine installations per hall Sources: National Police Agency (forecast) Pachinko and pachislot machines installed Unit sales Annual turnover (times) Sources: National Police Agency, Yano Research Institute (Figures for fiscal 2018 are the Company s estimates or forecasts.) 5

7 INTEGRATED REPORT 2018 Recent Trends Advancing Oligopoly and Increasing Interconnection in the Industry In the pachinko and pachislot machine manufacturing industry, machine sales are worth approximately * 1. In the pachinko machine market, pachinko machines are sold by 36* 2 companies. In the pachislot machine market, pachislot machines are sold by 67* 3 companies. In response to the challenging business environment faced by pachinko hall operators, a pronounced bias has emerged in market demand toward titles and manufacturers that promise reliable returns on investment. The joint venture between Universal Entertainment Corporation and Sammy Corporation has also provided momentum toward cooperation within the industry aimed at invigorating the market and improving efficiency. *1 Fisal 2017(settlement dates from July to June) Source: Yano Research Institute Ltd. *2 Source: Yano Research Institute Ltd. *3 The number of pachislot machine manufacturers is the Group s estimate. Annual Pachislot Machine Unit Sales and Market Share Position Manufacturers Unit sales Share Manufacturers Unit sales Share Manufacturers Unit sales Share 1 Universal Entertainment 165, % Sammy 215, % Company (K) 107, % 2 Sammy 142, % Universal Entertainment 203, % Company (D) 100, % 3 Heiwa / Olympia 113, % Kita Denshi 90, % Sammy 85, % 4 Kita Denshi 100, % Heiwa / Olympia 80, % Company (U) 43, % 5 SANKYO 80, % Enterrise 57, % Company (Y) 38, % Annual Pachinko Machine Unit Sales and Market Share Position Manufacturers Unit sales Share Manufacturers Unit sales Share Manufacturers Unit sales Share 1 Sansei R&D 300, % SANYO 306, % Company (S) 330, % 2 SANKYO 296, % Sansei R&D 209, % Company (S) 171, % 3 SANYO 275, % Heiwa / Olympia 192, % Sammy 140, % 4 Heiwa / Olympia 234, % SANKYO 172, % Company (K) 140, % 5 NEWGIN 220, % NEWGIN 160, % Company (S) 130, % 6 Sammy 199, % Sammy 138, % Changes in the Market Environment from No. 6 Model Machines and Promotion of Reuse of Machines Although it restricts gambling aspects, the regulatory revision enforced in February 2018 has not only introduced maximum payout rates but also minimum payout rates. This change will allow companies to develop pachinko and pachislot machines with gameplay geared more approachable fun casual players. With respect to pachislot machines, changes in voluntary regulations have enabled the development of pachislot machines that can be enjoyed in a shorter period of time. As for pachinko machines, it has become possible to use new settings, meaning that companies can offer players a wider range of gameplay. For pachislot machines in particular, shorter play times for players of new-format machines create the potential for unearthing new demand. In recent years, the time needed to play pachislot machines has been lengthening. These longer play times were causing casual players to leave the pachislot machine market and were preventing the participation of new players. Given that it creates opportunities to provide players with pachinko and pachislot machines that can be played casually for short periods of time, the recent regulatory revision could lead to a return of former players and attract new players, thereby putting a brake on the decline in the pachinko and pachislot machine player population and the contraction of the pachinko and pachislot machine market. Outline of February 2018 Regulatory Revisions (Enacted on February 1, 2018) Estimate for Reaching 300 Tokens Using Pachislot Machine with AT Function* 2 Manufacturer 1. Ball output regulations 2. Addition of specifications for machines to enable easy checking of ball output data* 1 3. Introduction of settings (multi-stage payout ratio) for pachinko machines Playable in a short time No. 6 model* 3 Number obtained: 300 No. 5.9 model* minutes Number obtained: minutes Limits on gambling elements Number obtained: 2,400 Number obtained: 3,000 *1 Enables play without touching balls or medallions (electromagnetic recording and payment) One game 75 games 150 games *2 One game assumes to be finished in five seconds *3 No. 6 model assumes medals increase per game is 4.0 1,500 games *4 No. 5.9 model assumes medals increase per game is 2.0 (Maximum increase under voluntary regulations) (AT: abbreviation for pachislot machines assist time) 6

8 SEGA SAMMY HOLDINGS Market Conditions of the Entertainment Contents Business and the Resort Business Game Contents Market Market Grew by Roughly 20% Sales in the global game contents market grew by roughly 20% year on year in 2017, to approximately 10.9 trillion, with packaged game software for home consoles and PC accounting for roughly 1.2 trillion and digitaly distributed games accounting for approximately 9.7 trillion (of which, mobile apps about 4.5 trillion). Year-on-year growth in the packaged games market was limited despite the release of a new game console that emerged as a global hit. PC games, on the other hand, global expansion of PC game distribution platforms drove market growth and sales in the digital games market grew by roughly 20% year on year, contributing to the growth of the game content market as a whole. By region, the game contents market was worth an estimated 4.92 trillion in Asia (of which, mobile apps 3.0 trillion), 2.8 trillion in the US (of which, mobile apps 1.0 trillion), and 2.3 trillion in Europe (of which, mobile apps 0.5 trillion). All of these regions saw year on year growth of 10% 20%. Asia, that recorded sales of mobile games topped 3 trillion became the langest market. Game Content Market by World Region Other 5% Europe 20% Asia 46% 1, Total 8,997.7 United States 28% 2, , , ,826.7 Europe 21% Other 8% 2017 Total 10,896.4 United States 26% Source: Famitsu Game White Paper 2018 * The countries and regions used for the calculation of other areas are different for 2016 and (Prepared based on information as of June 2018) 4,921.9 Asia 45% Record-High Game Sales in Japan The Japanese game market has shown continuous growth, with sales Domestic Game App (Smart Devices + SNS) Market Billions of yen reaching a record high of 1.56 trillion in In the home console game market, the release of a new console contributed greatly to growth and combined hardware and software (including downloaded contents) sales rose for the first time in five years, climbing 128% year on year, to roughly 440. The online platform game market topped annual sales of 1.12 trillion and accounted for roughly 70% of all Japanese game market sales. The Japanese game app market grew by 9% year on year, to Source: Famitsu Game White Paper roughly 1.06 trillion, in Combined sales in China and South Korea were roughly 1.96 trillion, sales in North America were just over 1.0 trillion, and sales in Europe were approximately 540. Therefore Asia has built the largest market for game apps, accounting Japan s Home Video Game and Online Game Content Markets Billions of yen for roughly 60% of global sales. The number of gamers worldwide rose by roughly 5 million year on year in 2017, to approximately 49 million, the highest level in the past five years. The number of PC gamers rose by 150% year on year, 1,127.3 partly owing to growth in the popularity of e-sports. Further growth in , the game content market is expected as devices and content making use of leading-edge technologies such as virtual reality (VR) continue to emerge , , , (estimate) (forecast) 1, , (estimate) (forecast) Online game platforms Home video game software (including online games) Home video game consoles Source: Famitsu Game White Paper

9 INTEGRATED REPORT 2018 Amusement Machine Sales and Amusement Center Operations Markets Clear Recovery Trend After shrinking for some time amid the trend of diversification of leisure activities, the amusement center operations market reached a bottom in fiscal While the number of game centers in operation continues to decline, the industry has benefited from demand from overseas tourists visiting Japan and measures to improve efficiency and broaden the user base have been successful. From fiscal 2015, game center sales rose for the second consecutive year, showing a clear recovery trend. In fiscal 2016, sales increased by 6% year on year, to 460 linking to liberalization of regulations pertaining to the Entertainment Establishments Control Law. Sales in the amusement machine sales market also turned upward for the first time in five years in fiscal 2016 linking to the uptrend in the amusement center operations market. Amusement machine manufacturers are taking measures to energize the market and attract new users, such as adopting new business models such as revenue-sharing models, and introducing the use of electronic money. Number of Amusement Centers and Amusement Machine Installations Centers / Machines installed Amusement centers Amusement machines installed Source: National Police Agency Amusement Machine Unit Sales / Revenues from Amusement Center Operations Billions of yen 6,648 6,181 5,772 5,439 4,856 4,542 4, , , , , , , , Amusement machine unit sales Revenues from amusement center operations Source: JAIA, Amusement Industry Survey 2016 Resort Complex and Integrated Resorts Moves toward Realization of Integrated Resorts in Japan Begin in Full-fledge Since the commencement of the Visit Japan Campaign in 2003, visitors to Japan have been increasing, and improving business conditions for resort hotels. Moreover, further increases in visitors are likely in the run up to the Tokyo 2020 Olympic and Paralympic Games. In recent years, conditions in Asia s casino market have been challenging due to such factors as the Chinese government s policies. Currently, however, the market is showing signs of a recovery trend. As for Japan, the Act on the Establishment of Specified Integrated Resort Areas (an IR Implementation Bill) was enacted in July Going forward, casino openings are expected upon completion of a series of stages. These include the establishment and announcement of implementation policies by the government and municipal authorities, the acceptance of applications and selection of IR operators by municipal authorities, the approval and public notification of plans for specified areas by the government, the determinations of municipal authorities and IR operators, and the granting of licenses. Summary of the IR Implementation Bill Number of locations Admission fee Restriction on number of admissions Casino tax 3 locations nationwide 6,000 (applicable to Japanese citizens and non-japanese citizens residing in Japan) Up to 3 times in 7-day period and up to 10 times in 28-day period (applicable to Japanese citizens and non-japanese citizens residing in Japan) 30% of casino revenues 8

10 SEGA SAMMY HOLDINGS ESG Data and External Evaluation Personnel and Labor Data Scope FY2016: 16 domestic companies; FY2017: 16 domestic companies, 2 overseas companies (composition of employees only) FY2018: 15 domestic companies and 2 overseas companies (composition of employees only) SSHD, SE, SGC SGN, DL, TMS, SAMMY, TOYS, SLS, SHD, SGC, JMS, PSR, SIC, Jnext, BTF and SNW * Data coverage for fiscal 2018: About 90% of the sales ratio and 70% of the regular employment ratio Composition of Employees 2018 (15 Domestic Companies) 2018 (2 Overseas Companies) Total Male Female Total Male Female Number of employees 6,028 4,912 1, Regular employees 5,489 4, Non-regular employees Foreign nationals Average age Average length of service (years) Composition of Management-Level Staff Number of female management-level staff Percentage of female management-level staff (%) Composition in Fiscal 2018 Total Managers Division Managers Executive Officers Directors Number of management-level staff by position 1, Male 1, Female Ratio of females (%) Recruiting Total Male Female Total Male Female Total Male Female Number of new graduates Turnover rate of new employees (%) (within 3 years from employment) Number of mid-career recruits Rehired employees after retirement Data on the System Supporting both Professional and Private Lives Total Male Female Total Male Female Total Male Female Number of employees who have taken maternity / childcare leave Number of employees who have taken childcare leave Number of employees who returned to work after childcare leave Percentage of employees who returned to work after childcare leave (%) Work Life Balance Average overtime hours per month (hours) Number of days of paid leave taken (days) Percentage of paid leave taken (%) Total number of employees who took volunteer leave Total number of days for volunteer leave taken (days) Occupational Health and Safety Number of industrial injuries Rate of lost-worktime injuries

11 INTEGRATED REPORT 2018 Environmental Data Scope of Aggregation Reporting organizations for the aggregation of data: 15 companies (for fiscal 2015 and 2016, 16 companies including SEGA LIVE CREATION.) SSHD/SHD/SAMMY/TOYS/TMS/SNW/PSR/SE/SIC/SGC/ELEC/SLS/DL/MARZA/JMS CO2 Emissions (Scope 1) t-co2 13,485 CO2 Emissions (Scope 2) t-co2 Total Energy Input GJ 10,658 8,613 8, , ,449 86,944 85,140 2,216,589 2,050,423 1,832,927 1,897, Electricity Usage MWh Industrial Waste Discharged t Water Usage m³ 198, , , ,879 2,466 1,860 1,075, , , ,771 1,242 1, * Aggregated data includes an estimate based on floor space. * Gross decrease in CO2 emissions is mainly attributable to reduced fuel and electricity consumption. * Adjusted CO2 emission factors for each power company in previous years are used for purchased electricity. Status of Eco-Friendly Initiatives at Sammy s Kawagoe Factory Pachinko and pachislot machine recycle rate Recycle rate 97.28% 97.21% 95.99% Use of environment-friendly raw materials Amount of wood used 1,077 t 1,494 t 566 t Of which, PEFC-certified wood* 45 t (4.2%) 84 t (5.6%) 38 t (6.8%) * PEFC-certified wood: This refers to wood certified by the Programme for the Endorsement of Forest Certification. This wood is appropriately procured from forests that have received third-party certification as sustainably managed forests. Our use of PEFC-certified wood has declined due to a decrease in the volume of products that we manufacture for which PEFC-certified wood is usable. All of the components we procure use water-based adhesives, which place less burden on the environment. External Evaluations Selected for Inclusion in SRI Indexes Adopted by the GPIF as ESG Indexes SEGA SAMMY HOLDINGS was selected as a constituent for socially responsible investment (SRI) indexes adopted by the Global Pension Investment Fund (GPIF) as ESG indexes: the MSCI Japan ESG Select Leaders Index and the MSCI Japan Empowering Women Index (WIN). The Company qualified for inclusion in the MSCI Japan ESG Select Leaders Index as a constituent of the MSCI Japan IMI Top 500 Index that particularly excels in ESG. Our selection for inclusion in the MSCI Japan Empowering Women Index was predicated upon the quality of our disclosure of information in accordance with the Act of Promotion of Women s Participation and Advancement in the Workplace compared to other constituents in the MSCI Japan IMI Top 500 Index. Abbreviations of Group Companies SSHD: SEGA SAMMY HOLDINGS INC., SHD: SEGA Holdings Co., Ltd., SAMMY: Sammy Corporation, TOYS: SEGA TOYS CO., LTD., TMS:TMS ENTERTAINMENT Co., Ltd., SNW: Sammy Networks Co., Ltd., PSR: PHOENIX RESORT CO., LTD., SE: SEGA ENTERTAINMENT CO., Ltd., SIC: SEGA Interactive Co., Ltd., SGC: SEGA Games Co., Ltd., ELEC: TAIYO ELEC Co., Ltd., SLS: SEGA LOGISTICS SERVICE CO., LTD., DL: DARTSLIVE Co., Ltd., MARZA: MARZA ANIMATION PLANET INC., JMS: Japan Multimedia Services Corporation, OP: OASIS PARK Co., Ltd., GINZA: GINZA Corporation, RODEO: RODEO Co., Ltd., SSC: SEGA SAMMY CREATION INC., BTF: Butterfly Corporation, PSS: PARADISE SEGA SAMMY Co. Ltd., SSGE: SEGA SAMMY GOLF ENTERTAINMENT INC., Jnext: J-NEXT Co.,Ltd. Some activities include Group companies other than those listed above. 10

12 SEGA SAMMY HOLDINGS INC. Sumitomo Fudosan Osaki Garden Tower, Nishi-Shinagawa, Shinagawa-ku, Tokyo , Japan Printed in Japan