Konami : 1Q FY2021 Financial Results Presentation Material

FY2021 1st Quarter Financial Results

Three months ended June 30, 2020

KONAMI HOLDINGS CORPORATION

August 6, 2020

Cautionary statement with respect to forward-looking statements

Statements made in this presentation with respect to KONAMI HOLDINGS' current plans, estimates, strategies and beliefs, including forecasts, are forward-looking statements about the future performance of the Company. These statements are based on management's assumptions and beliefs in light of information currently available to it and, therefore, you should not place undue reliance on them. A number of important factors could cause actual results to be materially different from and worse than those discussed in forward-looking statements. Such factors include, but are not limited to (1) Changes in economic conditions affecting our operations; (2) Fluctuations in foreign exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar and the Euro; (3) the Company's ability to continue to win acceptance of our products, which are offered in highly competitive markets characterized by the continuous introduction of new products, rapid developments in technology and subjective and changing consumer preferences; (4) the Company's ability to successfully expand internationally with a focus on our Digital Entertainment business, Amusement business and Gaming & Systems business; (5) the Company's ability to successfully expand the scope of our business and broaden our customer base through our Sports business; (6) Regulatory developments and changes and our ability to respond and adapt to those changes; (7) the Company's expectations with regard to further acquisitions and the integration of any companies we may acquire; and (8) the outcome of contingencies.

• Financial information included herein is not audited by independent public accountants
• 1. Numbers included in this presentation material are;
  2. 1. in accordance with IFRS
     2. rounded to the nearest one hundred million yen
  3. Revenues of each segment include inter-segment sales

2

Contents

 Consolidated Financial Results			4
 Revenue by Business Segment			5
 Profit by Business Segment			6
 Earnings and dividend guidance for FY2021		7
 Digital Entertainment			8
 Amusement		9
 Gaming & Systems			10
 Sports			11
 Titles Released in Apr - Jun 2020 / Pipeline		12
 Consolidated Business Performance				14
 Consolidated Financial Position			15
 Consolidated Cash Flows			16

3

Consolidated Financial Results

				(Yen in Billions)
	FY2020 Q1			FY2021 Q1
	3 months ended			3 months ended
	June 2019			June 2020
Revenue	56.5		52.9
Segment profit (loss)	9.8		12.4
Other expenses	0.3		5.6			※
Operating profit	10.0		6.8
Profit before income taxes	9.7		6.3
Profit for the period	7.3		4.2
(attributable to owners of the parent)
Earnings per share (JPY)	53.83		31.48

• COVID-19related loss etc. of ¥5.6 billion recognized in the line item "other expenses."

The loss, mainly booked under sports segment, contains fixed costs including personnel, depreciation and
rent expenses for sports clubs, which were incurred during the temporal closure period throughout Japan
in response to the state-of-emergency declaration from the government and business suspension request
from local governments to prevent the outbreak of COVID-19.	4

Revenue by Business Segment

(Yen in Billions)

Revenue

Digital Entertainment

Amusement Gaming & Systems

Sports

Eliminations

					YoY		YoY
FY2020 Q1			FY2021 Q1		Change		Change
					(Amount)		(%)
3 months ended			3 months ended
June 2019			June 2020
31.5		42.8	11.3	+36.0%
3.3		2.9		△ 0.4		△11.8%
6.8		3.0		△ 3.8		△56.4%
15.2		4.7		△ 10.5		△68.9%
△ 0.4			△ 0.5		△ 0.2	-

Total	56.5	52.9	△ 3.6	△6.3%

5

Profit by Business Segment

(Yen in Billions)

							YoY		YoY
		FY2020 Q1			FY2021 Q1		Change		Change
							(Amount)		(%)
Segment profit (loss)	3 months ended			3 months ended
June 2019			June 2020
	Digital Entertainment	9.7		15.3			5.6	+57.9%
	Amusement	0.5		0.2		△ 0.8	-
	Gaming & Systems	0.2		0.9		△ 1.1	-
	Sports	0.6		1.1		△ 1.7	-
	Corporate expenses and eliminations	△ 1.2		0.7			0.5	-
	Total Segment profit (loss)	9.8		12.4			2.6	+26.5%
	Other income and other expenses	0.3		5.6		△ 5.8	-
	COVID-19 related loss	0.0		5.7		△ 5.7	-
	Other	0.3		0.1		△ 0.1	-
		10.0		6.8		△			△
	Total Operating Profit							3.2	32.4%

6

Earnings and dividend guidance for FY2021 (TBD)

With respect to the outlook, under the current circumstances where visibility is low on when COVID-19 will be under control and consumer spending will recover, it is difficult to reasonably calculate its impact on our guidance. Hence, consolidated earnings outlook and dividend forecasts for the fiscal year ending March 31, 2021 have not been determined.

We will promptly disclose our guidance when a reasonable projection becomes possible.

7

Digital Entertainment

Revenue and segment profit

(Yen in Billions)

						YoY		YoY
	FY2020 Q1			FY2021 Q1		Change		Change
						(Amount)		(%)
	3 months ended			3 months ended
	June 2019			June 2020
Revenue	31.5		42.8	11.3	+36.0%
Segment profit	9.7		15.3	5.6	+57.9%
Operating profit	9.7		15.2	5.5	+56.8%
Margin	31%		35%

Note: Operating profit for FY2021 includes COVID-19 related loss (includes labor cost during furlough) of JPY 0.1 billion

FY2021 Q1 summary

• Mobile games marks quarterly record revenues and profit driven by PROFESSIONAL BASEBALL SPIRITS A, eFootball Winning Eleven 2020 (eFootball PES 2020), surpassing 300 million downloads, and Yu-Gi-Oh! DUEL LINKS etc.
• Released Yu-Gi-Oh! RUSH DUEL, a new lineup from the Yu-Gi-Oh! card game series
• myClub mode from eFootball Winning Eleven 2020 (eFootball PES 2020) records strong sales driven by the Iconic Moment events celebrating the 25th anniversary of the franchise
• eSports initiatives: Hosted Virtual Interleague Games for the "eBASEBALL Pro League" in cooperation with the Nippon Professional Baseball Organization; Qualifying round of the online tournament KC Grand Tournament

held for Yu-Gi-Oh! DUEL LINKS

8

Amusement

Revenue and segment profit

(Yen in Billions)

						YoY		YoY
	FY2020 Q1			FY2021 Q1		Change		Change
						(Amount)		(%)
	3 months ended			3 months ended
	June 2019			June 2020
Revenue	3.3		2.9		△ 0.4		△11.8%
Segment profit (loss)	0.5			△ 0.2		△ 0.8	-
Operating profit (loss)	0.5			△ 0.3		△ 0.9	-
Margin	17%			△12%

Note: Operating profit (loss) for FY2021 includes COVID-19 related loss (includes labor cost during furlough) of JPY 0.1 billion

FY2021 Q1 summary

• Released the latest title of the QUIZ MAGIC ACADEMY series, QUIZ MAGIC ACADEMY: Kibou no Toki, and shipped the pinball-themedcoin-pusher game SMASH STADIUM
• Affected sales of machines and e-amusement participation (revenue share business) due to temporal closure of amusement facilities in response to the coronavirus outbreak. Although the facilities have resumed operations post the lifting of state-of-emergency declaration from the government and business suspension request from local governments, the recovery in number of visitors remains slow

9

Gaming & Systems

Revenue and segment profit

(Yen in Billions)

						YoY		YoY
	FY2020 Q1			FY2021 Q1		Change		Change
						(Amount)		(%)
	3 months ended			3 months ended
	June 2019			June 2020
Revenue	6.8		3.0		△ 3.8		△56.4%
Segment profit (loss)	0.2			△ 0.9		△ 1.1	-
Operating profit (loss)	0.2			△ 1.2		△ 1.3	-
Margin	2%			△39%

Note: Operating profit (loss) for FY2021 includes COVID-19 related loss (includes impact from factory shut-down) of JPY 0.2 billion

FY2021 Q1 summary

• Launched the latest cabinet DIMENSION 27 in addition to shipping the flagship KX 43 and Concerto cabinets
• Announced agreements to install the SYNKROS casino management system to Native American casinos
• Measures were taken by governments of various nations in response to the coronavirus outbreak; with closures of casino facilities worldwide (with exceptions in some areas) since mid-March, gaming

business was forced to suspend most of its operations. Casinos have gradually resumed operations
from late May	10

Sports

Revenue and segment profit

(Yen in Billions)

						YoY		YoY
	FY2020 Q1			FY2021 Q1		Change		Change
						(Amount)		(%)
	3 months ended			3 months ended
	June 2019			June 2020
Revenue	15.2		4.7		△ 10.5		△68.9%
Segment profit (loss)	0.6			△ 1.1		△ 1.7	-
Operating profit (loss)	0.8			△ 6.4		△ 7.2	-
Margin	5%			△135%

Note: Operating profit (loss) for FY2021 includes COVID-19 related loss (includes fixed cost during temporary closure) of JPY 5.3 billion

FY2021 Q1 summary

 State-of-emergency declared by the national government and business suspension requested by local governments as measures against the outbreak of coronavirus; decrease in revenues from temporary closure and reduced business hours of both directly-managed and outsourced facilities from April to May. Fixed costs during its closure recognized as one-off loss under the line item "other expenses"

 Since the declaration and the request have been lifted, with the highest priority of ensuring safety and security of customers and employees, the facilities resumed operations in phase and made

efforts to provide improved services for health promotion and hygiene management

11

Titles Released in Apr - Jun 2020 / Pipeline(1)

			Release	Business
Title	Platform	Geography	Segment
Date
			（※1）
Yu-Gi-Oh! RUSH DUEL	Card Game	Japan	Apr '20	DE
	PS4 / Xbox One	Americas
Skelattack	Nintendo Switch™	Jun '20	DE
Europe
	PC
eBASEBALL	PS4	Japan
Korea	Jul '20	DE
PAWAFURU PUROYAKYU 2020	Nintendo Switch™
Taiwan
eFootball Winning Eleven 2021 SEASON UPDATE	PS4/Xbox One/PC	Global	Sep '20	DE
eFootball PES 2021 SEASON UPDATE	(※2)
Momotaro Dentetsu	Nintendo Switch™	Japan	Nov '20	DE
- Showa Heisei Reiwa mo teiban! -
		Americas
SUPER BOMBERMAN R ONLINE	Stadia™	Europe	Fall '20	DE
		(※3)
Yu-Gi-Oh! DUEL LINKS	App Store	China	TBD	DE
Chinese title: "游戏王：决斗链接"	Android

※1 DE: Digital Entertainment ※2 PS4 only in Japan

※3 Available in designated countries

eFootball Winning Eleven 2021 SEASON UPDATE	SUPER BOMBERMAN R ONLINE
eFootball PES 2021 SEASON UPDATE

Yu-Gi-Oh! RUSH DUEL

Skelattack

Momotaro Dentetsu	eBASEBALL
PAWAFURU PUROYAKYU 2020
- Showa Heisei Reiwa mo teiban! -

© 2020 Studio Dice/SHUEISHA, TV TOKYO, KONAMI (Yu-Gi-Oh! RUSH DUEL)
© AKIRA SAKUMA ©Konami Digital Entertainment (Momotaro Dentetsu - Showa Heisei Reiwa mo teiban! -)
All other copyrights or trademarks are the property of their respective owners and are used under license.	12
(eFootball Winning Eleven 2021 SEASON UPDATE / eFootball PES 2021 SEASON UPDATE)

Titles Released in Apr - Jun 2020 / Pipeline(2)

			Release	Business
Title	Platform	Geography	Segment
Date
			（ ※）
QUIZ MAGIC ACADEMY Kibou no Toki	Amusement	Japan	Jun '20	AM
machine
Sengoku Collection 4	Amusement	Japan	Aug '20	AM
machine
FEATURE PREMIUM	Amusement	Japan	TBD	AM
MAH-JONG FIGHT CLUB 3	machine
FEATURE PREMIUM	Amusement	Japan	TBD	AM
Magical Halloween 7	machine
DUEL DREAM	Amusement	Japan	TBD	AM
machine
BUSOU SHINKI ARMORED PRINCESS	Amusement	Japan	TBD	AM
BATTLE CONDUCTOR	machine
FORTUNE TRINITY Seirei no Shihousai	Amusement	Japan	TBD	AM
machine
DIMENSION 27	Gaming	North	Jun '20	GS
machine	America
DIMENSION 49J	Gaming	North	H2 FY21	GS
machine	America
SYNK Vision	Gaming	North	TBD	GS
system	America

※ AM: Amusement GS: Gaming & Systems

ⒸKonami Amusement

QUIZ MAGIC ACADEMY

Kibou no Toki

ⒸKonami Amusement

DUEL DREAM

DIMENSION 49J

ⒸKonami Amusement

FEATURE Premium

MAH-JONG FIGHT CLUB 3

ⒸKonami Digital Entertainment ⒸKonami Amusement

BUSOU SHINKI ARMORED

PRINCESS BATTLE CONDUCTOR

DIMENSION 27

13

Consolidated Business Performance

(Yen in Billions)

								YoY	YoY
		FY2020 Q1 percentile	FY2021 Q1	percentile	Change	Change
								(Amount)	(%)
	Revenue	56.5	100.0%	52.9	100.0%	△ 3.6	△6.3%
	Total cost of revenue	△ 33.7	59.7%	△ 30.1	56.8%	3.6
	SG&A	△ 13.0	23.0%	△ 10.5	19.8%	2.5
	Other income and other expenses		0.3	△0.4%	△	5.6	10.5%	△ 5.8
	Operating profit	10.0	17.7%		6.8	12.8%	△ 3.2	△32.4%
	Finance income		0.1			0.0		△ 0.0
	Finance costs	△	0.4		△	0.3		0.0
	Profit from investments accounted	△	0.0		△	0.2		△ 0.2
	for using the equity method
	Profit before income taxes		9.7	17.2%		6.3	11.9%	△ 3.4	△35.3%
	Income taxes	△	2.4	4.3%	△	2.1	4.0%	0.3
	Profit for the period		7.3	12.9%		4.2	7.9%	△ 3.1	△42.4%
	Profit attributable to:
	Owners of the parent		7.3	12.9%		4.2	7.9%	△ 3.1	△42.4%
	Non-controlling interests		0.0	0.0%		0.0	0.0%	0.0		14

Consolidated Financial Position

									(Yen in Billions)
			Mar 31,	Jun 30,				Mar 31,	Jun 30,
			2020	2020	change			2019	2020	change
		Current assets					Current liabilities
		Cash and cash equivalents	131.4	132.8	1.4		Bonds and borrowings	28.3	30.4	2.1
		Trade and other receivables	29.9	29.1	△ 0.8		Trade and other payables	31.3	25.7	△ 5.6
		Inventories	10.0	9.6	△ 0.4		Other current liabilities	37.2	41.0	3.8
		Other current assets	16.4	19.4	3.0		Total current liabilities	96.8	97.1	0.4
		Total current assets	187.7	190.9	3.1		Non-current liabilities
			(44.8%)	(45.2%)			Bonds and borrowings	9.9	9.9	0.0
		Non-current assets					Other non-current liabilities	43.6	43.1	△ 0.5
		Property, plant and equipment, net	116.6	115.8	△ 0.8		Total non-current liabilities	53.4	53.0	△ 0.5
		Goodwill and intangible assets	34.4	36.0	1.6	Total liabilities	150.2	150.1	△ 0.1
		Investment Property	32.5	32.5	△0.0		Total equity attributable to	268.1	271.5	3.4
			owners of the parent
		Deferred tax assets	23.7	23.8	0.1			(64.0%)	(64.3%)
		Other non-current assets	24.1	23.4	△ 0.7		（per share: JPY）	(2012.85)	(2038.15)	(25.30)
		Total non-current assets	231.4	231.5	0.1		Non-controlling interests	0.8	0.8	0.0
			(55.2%)	(54.8%)		Total equity	268.9	272.3	3.4
	Total assets	419.1	422.4	3.3	Total liabilities and equity	419.1	422.4	3.3

※Issued JPY60B unsecured bonds on July 16, 2020

15

Consolidated Cash Flows

FY2021				（JPY in billions ）
Q1
	Operating CF	Investing CF		FX
Apr 1, 2020		△３.６	Financing CF	Jun 30, 2020
	＋６.７		＋０.１
		△１.９
１３１.４				１３２.８
		１.４ billion increase
FY2020
Q1	Operating CF	Investing CF
Apr 1, 2019	＋７.５	△５.６	Financing CF	Jun 30, 2019
			△１２.４	FX
			△０.８
１５９.２				１４７.９
		１１.４ billion decrease

16

THANK YOU

©KONAMI