SEGA SAMMY : FLASH REPORT CONSOLIDATED FINANCIAL STATEMENTS Year Ended March 31, 2019

April 26, 2019

(Translation)

ＦＬＡＳＨ ＲＥＰＯＲＴ

CONSOLIDATED FINANCIAL STATEMENTS [Japanese GAAP]

		Year Ended March 31, 2019
Name of the Company :	SEGA SAMMY HOLDINGS INC.
Code number :	6460
	(URL	https://www.segasammy.co.jp/)
Representative :	Haruki Satomi
	President and Group COO (Representative Director)
Any inquiry to :	Yoichi Owaki
	Vice President, Senior Executive Officer
	Managing Director of the Finance & Accounting Division
	Sumitomo Fudosan Osaki Garden Tower,
	1-1-1Nishi-Shinagawa,Shinagawa-ward, Tokyo
	Tel [phone]
Annual Meeting of Shareholders		: June 21, 2019 (plan)
Filing of Financial Report		: June 24, 2019 (plan)
Start of cash dividend payments		: June 3, 2019 (plan)

(Amounts below one million yen are rounded down)

1.Consolidated Operating Results for the Year Ended March 31, 2019

(1)RESULTS OF CONSOLIDATED OPERATIONS

(Percentage represents changes from the prior year)

			Net sales				Operating income			Ordinary income			Profit attributable to
													owners of parent
			Millions of		%		Millions of	%		Millions of		%	Millions of		%
			yen				yen			yen				yen
For Year ended			331,648		2.5		13,079	(26.2)		7,495		(48.6)	2,642		(70.4)
March 31, 2019
For Year ended			323,664	(11.8)			17,720	(40.0)		14,578		(48.9)	8,930		(67.7)
March 31, 2018
(Note) Comprehensive income:
For Year ended March 31, 2019						: ¥3,746 million ((63.3)%)
For Year ended March 31, 2018						: ¥10,209 million ((56.8)%)
			Net income		Net income per			Return on				Return on		Operating income
			per share		share (Diluted)			equity				assets		to net sales
			Yen				Yen			%			%		%
For Year ended			11.27			11.24		0.9				0.6			3.9
March 31, 2019
For Year ended			38.10			38.04		2.9				1.8			5.5
March 31, 2018
(Reference) Equity in earnings of affiliates:
For Year ended March 31, 2019						: ¥(3,859) million
For Year ended March 31, 2018						: ¥(4,368) million

(Note) The Group considers return on assets and the ratio of operating income to net sales as key performance indicators.

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(2) CONSOLIDATED FINANCIAL POSITION

Total assets

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen

%

Yen

March 31, 2019

464,654

305,337

65.1

1,289.32

March 31, 2018

473,467

310,456

65.0

1,313.90

(Reference) Shareholders' equity

March 31, 2019

: ¥302,648 million

March 31, 2018

: ¥307,951 million

(3) CONSOLIDATED CASH FLOWS

Cash flows from

Cash flows from

Cash flows from

Cash and cash

equivalents at the

operating activities

investing activities

financing activities

year-end

Millions of yen

Millions of yen

Millions of yen

Millions of yen

For Year ended

14,876

(22,113)

(20,668)

148,064

March 31, 2019

For Year ended

26,487

(20,422)

(28,780)

176,566

March 31, 2018

2. Cash Dividends

Cash dividends per share

Total

Dividends

dividends

Payout ratio

paid to

First

Second

Third

Year-

For the

paid

(Consolidated)

net assets

quarter

quarter

quarter

end

year

(annual)

(Consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

Year ended

－

20.00

－

20.00

40.00

9,375

105.0

3.0

March 31, 2018

Year ended

－

20.00

－

20.00

40.00

9,384

355.0

3.1

March 31, 2019

Year ending

－

20.00

－

20.00

40.00

62.6

March 31, 2020 (plan)

(Note) The year-end dividend for the fiscal year ended March 31, 2019 is the amount that the Company plans to pay and will be finalized at the Board of Directors' meeting to be held in May 2019.

3. Forecast of Consolidated Operating Results for the Year ending March 31, 2020

(Percentage represents changes from the prior year)

							Profit attributable to		Net
	Net sales		Operating income		Ordinary income				income
							owners of parent
									per share
	Millions	%	Millions	%	Millions	%	Millions	%	Yen
	of yen		of yen		of yen		of yen
Entire - year	390,000	17.6	27,000	106.4	23,000	206.8	15,000	467.6	63.90

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4.Other

(1)Significant changes in subsidiaries (scope of consolidation) during the year ended March 31, 2019: Yes

(Excluded) Company name: SEGA SAMMY BUSAN INC.

(2)Changes in accounting principles, procedures, disclosure methods, etc., for preparing the consolidated financial statements:

1.Changes associated with revision in accounting standards: No

2.Other changes: No

(3)Number of shares outstanding (common stock)

1.	Number of shares outstanding at the end of the period (including treasury stock)
	March 31, 2019	:	266,229,476
	March 31, 2018	:	266,229,476
2.	Number of treasury stock at the end of the period
	March 31, 2019	:	31,493,927
	March 31, 2018	:	31,850,504

3. Average number of shares during the period

For Year ended March 31, 2019	:	234,541,743
For Year ended March 31, 2018	:	234,383,551

(Note)

-This report is not required the auditing procedures by certified public accountants or accounting auditors.

-The forward-looking statements, such as results forecasts, included in this document are based on information available to SEGA SAMMY HOLDINGS INC. (the Company) at the time of the announcement and assumptions considered reasonable. Actual results could differ materially, depending on a range of factors. For the assumptions prerequisite to the results forecasts and the points to be noted in the use of the forecasts, please see "Outlook for the fiscal year ending March 31, 2020" on page 6.

-The Company plans to hold a briefing on financial results for analysts on April 26, 2019. The contents of the meeting, such as explanations about financial results (video and audio), will be posted on the Company's website.

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1.Operating Results and Financial Position

(1)Operating results for the fiscal year ended March 31, 2019

With regard to the pachislot and pachinko industry, in the pachislot machine market, the introduction of pachislot machines (No. 6-type) that conform to the regulatory revision and new voluntary regulations has begun, and expectations are rising for market revitalization, as some titles that have new gameplay utilizing the characteristics of the No.6-type machine are receiving high appraisal from players. On the other hand, the number of titles supplied for the No. 6-type machine continued to be sluggish, because the rate of pachislot machines that have been verified to be compatible through prototype testing, which was conducted by the Security Communications Association (Hotsukyo), remained low. Meanwhile, in the pachinko machine market, in addition to machines which have already been licensed under regulations before the revision, the launch of pachinko machines that conform to the regulatory revision is progressing.

Regarding the environment of the Entertainment Contents Business, in the field of digital game software, the competitive environment is further intensifying, with titles that capitalize on powerful IPs (Intellectual Properties), in addition to being high-quality products, take up the top spots in sales rankings. With regard to the packaged game software market, in the market for hardware of home video game consoles, expectations are rising, mainly in North America and Europe, for the expansion of the game software sales market due to the growing penetration of current-generation video game console hardware. In addition, game distribution platforms such as Steam are expanding in the PC games market. As for the market for amusement centers and amusement machines, the rate of facilities utilization is stable mainly in prizes.

In the resort industry, in 2018, the annual estimate for the number of foreign visitors to Japan exceeded 30 million for the first time and the number is increasing constantly, and an upward trend in the hotel occupancy rate is still evident. With a view to establishing Japan as a popular tourist destination, enforcement orders, etc. pertaining to the "Act on the Establishment of Specified Integrated Resort Areas" have been coming into force one after another from April 2019.

In this business environment, net sales for the fiscal year ended March 31, 2019 amounted to ¥331,648 million, an increase of 2.5% from the previous fiscal year. The Group posted an operating income of ¥13,079 million (a decrease of 26.2% from the previous fiscal year), ordinary income of ¥7,495 million (a decrease of 48.6% from the previous fiscal year) and profit attributable to owners of parent of ¥2,642 million (a decrease of 70.4% from the previous fiscal year).

Result of each segment is as follows

Net sales in each segment here do not include Inter-segment sales between segments.

« Pachislot and Pachinko Machines »

In the pachislot machine business, in addition to the No. 5.9-type machine, the Group started launching the No. 6-type machine and housings manufactured by ZEEG Co., Ltd., leading to overall sales of 67 thousand units (Overall sales of pachislot machines were 85 thousand units for the previous fiscal year). In the pachinko machine business, the Group engaged in sales mainly of machines that meet former standards, leading to sales of 159 thousand units (Overall sales of pachislot machines were 140 thousand units for the previous fiscal year).

As a result, net sales in this segment were ¥101,425 million (a decrease of 4.0% from the previous fiscal year) and operating income was ¥13,490 million (an increase of 13.1% from the previous fiscal year).

« Entertainment Contents »

In the field of digital game software, although the Group launched services for multiple new titles, these did not receive expected appraisal while existing titles in operation continued to decline in popularity, resulting in operating results significantly lower than the original estimates.

In the packaged game software field, while delays occurred in the release of some new titles, sales amounted to 23,440 thousand copies (17,330 thousand copies for the previous fiscal year), thanks to robust repeat sales of previously launched titles (catalog titles).

In the amusement machine field, the Group implemented the sale with a focus continuously on video game machines and prize game machines.

In the amusement center operations field, amusement center operations were conducted with a focus on prizes, like-for- like sales at the existing game center operations were 104.0% compared with the previous fiscal year.

In the animated film and toy field, the Group recorded income from distributing the theater film "Detective Conan"

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series and earnings from video distribution. In addition, the Group implemented the sale of new and mainstay toy products.

As a result, net sales in this segment were ¥219,631 million (an increase of 5.6% from the previous fiscal year) and operating income was ¥9,857 million (a decrease of 33.6% from the previous fiscal year).

« Resort »

In the Resort Business, at "Phoenix Seagaia Resort," owing to a steady growth in the use of accommodation, the number of guests increased 33.8% compared with the previous fiscal year.

As a result, net sales in this segment were ¥10,589 million (an increase of 6.6% for the previous fiscal year) and operating loss was ¥2,412 million (operating loss of ¥2,502 million for the previous fiscal year).

Overseas, PARADISE SEGASAMMY Co., Ltd. (affiliate accounted for using the equity method) is operating South Korea's first integrated resort "PARADISE CITY" and it has continued to attract many guests, primarily Japanese VIPs, owing to the effects of the domestic promotional activities that began in October 2018, etc.

(2) Financial positions as of March 31, 2019

(Assets and liabilities)

Total assets as of the end of the current fiscal year decreased ¥8,813 million from the end of the previous fiscal year, to ¥464,654 million.

Current assets decreased ¥11,868 million from the end of the previous fiscal year. This was attributable to decreases in cash and deposits and short-term investment securities, etc., despite increases in notes and accounts receivable - trade and inventories.

Noncurrent assets increased ¥3,055 million from the end of the previous fiscal year. This was attributable to an increase in property, plant and equipment and an increase in investments and other assets resulting from mark-to-market valuation of investment securities held and an increase in investment in capital, etc., and other factors.

Total liabilities as of the end of the current fiscal year decreased ¥3,694 million from the end of the previous fiscal year, to ¥159,316 million. This was attributable to decreases in bonds payable and loans payable.

(Net assets)

Net assets as of the end of the current fiscal year decreased ¥5,119 million from the end of the previous fiscal year, to ¥305,337 million.

This was attributable to a decrease in shareholders' equity due to cash dividends paid, etc., despite the recording of profit attributable to owners of parent.

(Financial ratio)

The current ratio at the end of the current fiscal year decreased 25.0 percentage points from the end of the previous fiscal year to 297.5%, remaining at a high level.

The equity ratio at the end of the current fiscal year increased 0.1 percentage points from the end of the previous fiscal year to 65.1%.

(3) Cash flows for the fiscal year ended March 31, 2019

Cash and cash equivalents at the end of the current fiscal year decreased ¥28,501 million from the end of the previous fiscal year, to ¥148,064 million.

Cash flows in respect of each area of activities in the current fiscal year are as follows.

(Cash flows from operating activities)

Factors including recording ¥6,981 million of income before income taxes, ¥18,819 million of depreciation and amortization and ¥8,334 million of impairment loss, etc., despite ¥10,203 million increase in notes and accounts receivable

-trade and a ¥10,004 million increase in inventories, resulted in ¥14,876 million net cash provided by operating activities in the current fiscal year (¥26,487 million inflow in the previous fiscal year).

(Cash flows from investing activities)

Factors including investing of ¥18,235 million for purchase of property, plant and equipment related with the relocation of the headquarters of the Company, etc., ¥10,274 million for purchase of intangible assets, despite ¥10,342 million proceeds from sales of property, plant and equipment, resulted in ¥22,113 million net cash used in investing activities in

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