Konami : 2Q FY2021 Financial Results Presentation Material

FY2021 2nd Quarter Financial Results

Six months ended November 5, 2020

KONAMI HOLDINGS CORPORATION

November 5, 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 guidance for FY2021			7
 Dividend forecast for FY2021			8
 Digital Entertainment			9
 Amusement		10
 Gaming & Systems			11
 Sports			12
 Titles Released in Jul - Sep 2020 / Pipeline	13
 Consolidated Business Performance			15
 Consolidated Financial Position			16
 Consolidated Cash Flows	17

3

Consolidated Financial Results

				(Yen in Billions)
	FY2020 H1			FY2021 H1
	6 months ended			6 months ended
	September 2019			September 2020
Revenue	121.1		116.1
Segment profit (loss)	20.8		25.7			※
Other expenses	0.1		4.4
Operating profit	20.9		21.4
Profit before income taxes	20.4		20.2
Profit for the period	15.2		13.8
(attributable to owners of the parent)
Earnings per share (JPY)	112.41		103.52

• COVID-19related loss etc. of ¥4.4 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 H1			FY2021 H1		Change		Change
					(Amount)		(%)
6 months ended			6 months ended
September 2019			September 2020
67.0		88.3			21.3	+31.8%
9.0		6.6		△ 2.4		△26.9%
14.9		7.1		△			△
							7.7	51.9%
31.1		15.1		△				△
						15.9	51.3%
△ 0.8			△ 1.1		△ 0.2	-

Total	121.1	116.1	△ 5.0	△4.1%

5

Profit by Business Segment

(Yen in Billions)

							YoY		YoY
		FY2020 H1			FY2021 H1		Change		Change
							(Amount)		(%)
Segment profit (loss)	6 months ended			6 months ended
September 2019			September 2020
	Digital Entertainment	18.7		31.0	12.3	+65.8%
	Amusement	1.6		0.3		△ 1.3		△81.0%
	Gaming & Systems	1.7		1.2		△ 2.9	-
	Sports	1.5		3.0		△ 4.5	-
	Corporate expenses and eliminations	△ 2.6		1.4	1.2	-
	Total Segment profit (loss)	20.8		25.7	4.9	+23.6%
	Other income and other expenses	0.1		4.4		△ 4.5	-
	COVID-19 related loss	0.0		4.6		△ 4.6	-
	Other	0.1		0.3	0.2	-
	Total Operating Profit	20.9		21.4	0.4	+2.1%

6

Earnings 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 for the fiscal year ending March 31, 2021 has not been determined.

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

7

Dividend forecast for FY2021

	FY2020
	dividend
	12 months ended
	March 2020
Interim dividend	38.00

Year-end dividend

7.00

Annual dividend

45.00

(JPY)

FY2021	YoY
dividend	Change
forecast	(Amount)
12 months ending
March 2021

22.50 15.50

(declared)

22.50 15.50

(forecast)

45.00 0.00

(forecast)

No change to the forecast announced on September 23 - Although the earnings guidance for
the year ending March 2021 has not been determined, the payment of dividends is forecasted
to maintain the same level of dividends for the year ended March 2020.
We will recalculate the annual dividend to be at least 45.00 yen per share to achieve a payout
ratio of more than 30% as our basic policy, when the earnings guidance is determined for the
year ending March 2021.	8

Digital Entertainment

Revenue and segment profit							(Yen in Billions)
								YoY		YoY
		FY2020 H1			FY2021 H1		Change		Change
								(Amount)		(%)
		6 months ended			6 months ended
		September 2019			September 2020
	Revenue	67.0		88.3	21.3	+31.8%
	Segment profit	18.7		31.0	12.3	+65.8%
	Operating profit	18.7		30.9	12.2	+65.2%
	Margin	28%		35%

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

FY2021 Q2 summary

• Mobile games marks quarterly record revenues driven by PROFESSIONAL BASEBALL SPIRITS A through collaboration events with a professional baseball player, etc.
• Continued global sales of Yu-Gi-Oh! trading card games and promotion of Yu-Gi-Oh! RUSH DUEL, a new lineup targeting younger generation
• Released video game titles eBASEBALL PAWAFURU PUROYAKYU 2020 and eFootball Winning Eleven 2021 SEASON UPDATE (eFootball PES 2021 SEASON UPDATE), a latest iteration from the Winning Eleven series
• eSports initiatives: Hosted online events amid COVID-19 restrictions - eBASEBALL Pro League eAllstar 2020, official eSports tournaments for the Winning Eleven series and a large-scale online competition for Yu-Gi-Oh!

DUEL LINKS

9

Amusement

Revenue and segment profit

(Yen in Billions)

YoY

YoY

FY2020 H1

FY2021 H1

Change

Change

(Amount)

(%)

6 months ended

6 months ended

September 2019

September 2020

Revenue

9.0

6.6

△ 2.4

△26.9%

Segment profit

1.6

0.3

△ 1.3

△81.0%

Operating profit

1.4

0.3

△ 1.2

△81.3%

Margin

16%

4%

FY2021 Q2 summary

• Initiative to drive market recovery - hosted BEMANI PRO LEAGUE ZERO, a promotional event for the music game pro league BEMANI PRO LEAGUE taking place in 2021
• Launched Sengoku Collection 4, a latest iteration from the Sengoku Collection series
• Following 1st quarter loss from impact of COVID-19, 1st half earnings turn profitable

10

Gaming & Systems

Revenue and segment profit							(Yen in Billions)
								YoY		YoY
		FY2020 H1			FY2021 H1		Change		Change
								(Amount)		(%)
		6 months ended			6 months ended
		September 2019			September 2020
	Revenue	14.9		7.1		△ 7.7		△51.9%
	Segment profit (loss)	1.7			△ 1.2		△ 2.9	-
	Operating profit (loss)	1.7			△ 1.5		△ 3.1	-
	Margin	11%			△21%

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

FY2021 Q2 summary

• DIMENSION 49J demonstrates exceptional performance at initial test-launch locations
• Announced agreements to install SYNKROS casino management systems at numerous sites
• DIMENSION 49J and SYNK31 Anti-Money Laundering system awarded most innovative gaming technology of 2020 in Casino Journal's Top 20
• 2nd quarter loss shrinks QonQ despite continued capacity restraints on casinos and travel restrictions under COVID-19 outbreak

11

Sports

Revenue and segment profit

(Yen in Billions)

YoY

YoY

FY2020 H1

FY2021 H1

Change

Change

(Amount)

(%)

6 months ended

6 months ended

September 2019

September 2020

Revenue

31.1

15.1

△ 15.9

△51.3%

Segment profit (loss)

1.5

△ 3.0

△ 4.5

-

Operating profit (loss)

1.7

△ 7.3

△ 9.0

-

Margin

6%

△48%

Note: Operating profit (loss) for FY2021 includes COVID-19 related loss (fixed cost during temporary closure etc.) of JPY 4.3 billion

FY2021 Q2 summary

• Further strengthened safety measures on hygiene management of employees, sufficient cleaning and ventilation of facilities and health checks of customers
• Announced a partnership with Hulic Co., Ltd. and Riso Kyoiku Co., Ltd. to develop and offer one-stop service for children and utilize idle floor space to provide services that are tailored to a new-normal lifestyle
• Recognized employment adjustment subsidies from the government during the 2nd quarter

12

Titles Released in Jul - Sep 2020 / Pipeline(1)

			Release	Business
Title	Platform	Geography	Segment
Date
			（※1）
eBASEBALL	PS4	Japan
Korea	Jul '20	DE
PAWAFURU PUROYAKYU 2020	Nintendo Switch™
Taiwan
		Americas
SUPER BOMBERMAN R ONLINE	Stadia™	Europe	Sep '20	DE
		(※2)
eFootball Winning Eleven 2021 SEASON UPDATE	PS4/Xbox One/PC	Global	Sep '20	DE
eFootball PES 2021 SEASON UPDATE	(※3)
Contra Anniversary Collection	Luna	North	Oct '20	DE
America
Castlevania Anniversary Collection	Luna	North	Oct '20	DE
America
Momotaro Dentetsu	Nintendo Switch™	Japan	Nov '20	DE
- Showa Heisei Reiwa mo teiban! -
EDENS ZERO	TBD	TBD	TBD	DE
(3D action RPG console game)
EDENS ZERO	TBD	TBD	TBD	DE
(top-down view action RPG mobile game)
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 Available in designated countries

※3 PS4 only in Japan, PC release date TBD

eFootball Winning Eleven 2021 SEASON UPDATE	EDENS ZERO
eFootball PES 2021 SEASON UPDATE

Momotaro Dentetsu

- Showa Heisei Reiwa mo teiban! -

SUPER BOMBERMAN R ONLINE	eBASEBALL
	PAWAFURU PUROYAKYU 2020

© AKIRA SAKUMA ©Konami Digital Entertainment (Momotaro Dentetsu - Showa Heisei Reiwa mo teiban! -)	13
© Hiro Mashima / KODANSHA, NTV ©Konami Digital Entertainment (EDENS ZERO)
All other copyrights or trademarks are the property of their respective owners and are used under license. © Manchester United Football Club Limited 2020 All rights reserved ©Konami Digital Entertainment （eFootball Winning Eleven 2021 SEASON UPDATE）

Titles Released in Jul - Sep 2020 / Pipeline(2)

					Release	Business
		Title	Platform	Geography	Segment
		Date
					（ ※）
Sengoku Collection 4	Amusement	Japan	Aug '20	AM
machine
～	GIRL'S KEIRIN GI Fairy Grand Prix	Amusement	Japan	Nov '20	AM
	～	machine
FEATURE PREMIUM	Amusement	Japan	Nov '20	AM
MAH-JONG FIGHT CLUB 3	machine
FEATURE PREMIUM	Amusement	Japan	Nov '20	AM
Magical Halloween 7	machine
BUSOU SHINKI ARMORED PRINCESS	Amusement	Japan	Dec '20	AM
BATTLE CONDUCTOR	machine
SOUND VOLTEX -Valkyrie model-	Amusement	Japan	Jan '21	AM
machine
MAH-JONG FIGHT CLUB Shin	Amusement	Japan	Jan '21	AM
machine
FORTUNE TRINITY Seirei no Shihousai	Amusement	Japan	Feb '21	AM
machine
Anima Lotta		Amusement	Japan	Mar '21	AM
Anima to Hoshi no Monogatari	machine
DUEL DREAM		Amusement	Japan	TBD	AM
	machine
DIMENSION 49J		Gaming	North	H2 FY21	GS
	machine	America
SYNK31		Gaming	North	Feb '21	GS
	system	America

ⒸKonami Digital Entertainment ⒸKonami Amusement	ⒸKonami Amusement
BUSOU SHINKI ARMORED	SOUND VOLTEX -Valkyrie model-
PRINCESS BATTLE CONDUCTOR

ⒸKonami Amusement	ⒸKonami Amusement
DUEL DREAM	FORTUNE TRINITY
	Seirei no Shihousai

※ AM: Amusement GS: Gaming & Systems	DIMENSION 49J	14

Consolidated Business Performance

(Yen in Billions)

							YoY	YoY
		FY2020 H1 percentile	FY2021 H1	percentile	Change	Change
							(Amount)	(%)
	Revenue	121.1	100.0%	116.1	100.0%	△ 5.0	△4.1%
	Total cost of revenue	△ 73.6	60.8%	68.7	59.2%	4.9
	SG&A	△ 26.7	22.0%	21.7	18.7%	5.0
	Other income and other expenses		0.1	△0.1%	4.4	3.8%	△ 4.5
	Operating profit	20.9	17.3%	21.4	18.4%	0.4	+2.1%
	Finance income		0.2		0.1		△ 0.1
	Finance costs	△	0.6		0.8		△ 0.2
	Profit from investments accounted	△	0.1		0.4		△ 0.3
	for using the equity method
	Profit before income taxes	20.4	16.9%	20.2	17.4%	△ 0.2	△0.9%
	Income taxes	△	5.2	4.3%	6.4	5.5%	△ 1.2
	Profit for the period	15.2	12.6%	13.8	11.9%	△ 1.4	△9.3%
	Profit attributable to:
	Owners of the parent	15.2	12.6%	13.8	11.9%	△ 1.4	△9.3%
	Non-controlling interests	△	0.0	△0.0%	△0.0	0.0%	△0.0		15

Consolidated Financial Position

																				(Yen in Billions)
					Mar 31,				Sep 30,						Mar 31,					Sep 30,
			2020	2020	change			2020	2020			change
		Current assets										Current liabilities
		Cash and cash equivalents	131.4	175.2	43.8		Bonds and borrowings	28.3	5.3				△ 23.0
		Trade and other receivables	29.9	28.3	△ 1.6		Trade and other payables	31.3	27.6				△ 3.7
		Inventories	10.0	10.6	0.6		Other current liabilities	37.2	38.2	1.0
		Other current assets	16.4	17.5	1.1		Total current liabilities	96.8	71.1				△ 25.7
		Total current assets	187.7	231.6	43.8		Non-current liabilities
													9.9	69.6	59.7
					(44.8%)			(49.8%)			Bonds and borrowings
		Non-current assets										Other non-current liabilities	43.6	42.7				△ 0.8
		Property, plant and equipment, net	116.6	115.3	△ 1.3		Total non-current liabilities	53.4	112.3	58.9
		Goodwill and intangible assets	34.4	38.2	3.8	Total liabilities	150.2	183.4	33.2
		Investment Property	32.5	32.5	△0.0		Total equity attributable to	268.1	280.7	12.5
			owners of the parent
			23.7	24.5	0.7
		Deferred tax assets				(64.0%)				(60.4%)
			24.1	22.9	△ 1.2
		Other non-current assets		（per share: JPY）		(2012.85)				(2106.84)			(93.99)
		Total non-current assets	231.4	233.3	1.9		Non-controlling interests	0.8	0.8				△0.0
					(55.2%)			(50.2%)		Total equity	268.9	281.5	12.5
	Total assets	419.1	464.9	45.8	Total liabilities and equity	419.1	464.9	45.8

16

Consolidated Cash Flows

FY2021				FX	（ JPY in billions）
H1			Financing CF	△０.１	Sep 30, 2020
	Operating CF	Investing CF	＋２９.９
	＋２３.１	△９.１
Apr 1, 2020				１７５.２
１３１.４		４３.８ billion increase
FY2020
H1	Operating CF	Investing CF
Apr 1, 2019	＋１６.７	△１４.８	Financing CF
			△２０.７	FX
			△１.０	Sep 30, 2019
１５９.２		１９.９ billion decrease		１３９.４

17

THANK YOU

©KONAMI