Konami : FY2020 Financial Results Presentation Materia

FY2020 Financial Results

Fiscal year ended March 31, 2020

KONAMI HOLDINGS CORPORATION

May 14, 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 includeinter-segment sales

2

Contents

 Consolidated Financial Results			4
 Revenue by Business Segment			5
 Profit by Business Segment			6
 Dividend declared			7
 Earnings and dividend guidance for FY2021		8
 Digital Entertainment			9
 Amusement		10
 Gaming & Systems			11
 Sports			12
 Titles Released in Jan - Mar 2020 / Pipeline		13
 Consolidated Business Performance				15
 Consolidated Financial Position			16
 Consolidated Cash Flows			17

3

Consolidated Financial Results

	FY2019			FY2020
	Actual			Actual
	12 months ended			12 months ended
	March 2019			March 2020
Revenue	262.5		262.8
Operating profit	50.5		31.0
Profit before income taxes	50.3		30.4
Profit for the period	34.2		19.9
(attributable to owners of the parent)
Earnings per share (JPY)	252.86		147.26

(Yen in Billions)

FY2020

Revised

Guidance

12 months ended

March 2020

263.5

33.0

32.0

21.0

155.29

4

Revenue by Business Segment

(Yen in Billions)

Revenue

Digital Entertainment

Amusement

Gaming & Systems

Sports

Eliminations

FY2019		FY2020
Actual		Actual
12 months ended		12 months ended
March 2019		March 2020

1. 153.4
2. 23.7

31.2 28.4

63.5 59.0

△1.6

△1.7

YoY		YoY			FY2020
Change		Change			Revised
(Amount)		(%)			Guidance
					12 months ended
					March 2020
11.7	+8.3%		148.0
△4.1		△14.8%		24.0
△2.8		△8.9%		31.5
△4.5		△7.1%		61.5
△0.0	-			△1.5

Total	262.5	262.8	0.3	+0.1%	263.5

5

Profit by Business Segment

(Yen in Billions)

FY2019

FY2020

YoY

YoY

FY2020

Change

Change

Revised

Actual

Actual

(Amount)

(%)

Guidance

Segment profit (loss)

12 months ended

12 months ended

12 months ended

March 2019

March 2020

March 2020

Digital Entertainment

32.3

43.2

△0.6

△1.4%

41.5

Amusement

5.2

5.3

△3.1

△36.7%

5.0

Gaming & Systems

3.1

1.8

△2.9

△62.3%

3.5

Sports

2.5

0.0

△2.2

△98.5%

2.2

Corporate expenses and eliminations

2.8

△6.1

△1.4

-

△6.0

Total Segment profit (loss)

40.3

44.3

△10.3

△18.8%

46.2

Other income and other expenses

0.8

△13.3

△9.3

-

△13.2

One-off relocation expense

0.0

△4.8

△4.8

-

△5.0

Sports business impairment charge

0.0

△6.4

△6.4

-

△6.2

Other

0.8

△2.2

1.9

-

△2.0

Total Operating Profit

39.4

31.0

△19.5

△38.7%

33.0

6

Dividend declared

			FY2019
	Regular	Commemorative	dividend
			12 months ended
			March 2019
Interim dividend	35.50	25.00	60.50
Year-end dividend	40.50	25.00	65.50
Annual dividend	76.00	50.00	126.00
Reference:
Total cash dividends	10.3 billion	6.8 billion	17.0 billion

FY2020	FY2020
dividend	dividend
forecast	declared
12 months ended	12 months ended
March 2020	March 2020

38.00 38.00

38.00 7.00

(forecast) (declared)

76.00 45.00

(forecast) (declared)

10.2 billion

6.1 billion

(JPY)

YoY

Change

• 22.50
• 58.50
• 81.00

Year-end dividend revised to JPY 7 with an annual dividend of JPY 45 while maintaining payout ratio of over 30%.

Along with share buyback of JPY 6.5 billion, total shareholder return amounts to JPY 12.6

billion resulting in total return ratio of 63.2%.

7

Earnings and dividend guidance for FY2021 (TBD)

With respect to the outlook, there are concerns over a global recession triggered by measures taken to avoid the spread of the coronavirus outbreak.

The governments of various nations have implemented policies that result in voluntary temporal closures of stores and lockdowns. The Konami Group expects that business stagnations and slowdown of future demands caused by temporal closure of amusement facilities, casino facilities and sports clubs will affect our earnings performance.

Under the current circumstances where visibility is low on when the outbreak 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 disclose our guidance promptly when a reasonable projection becomes possible.

8

Digital Entertainment

Revenue and segment profit

(Yen in Billions)

FY2019

FY2020

YoY

YoY

FY2020

Change

Change

Revised

Actual

Actual

(Amount)

(%)

Guidance

12 months ended

12 months ended

12 months ended

March 2019

March 2020

March 2020

Revenue

141.7

153.4

11.7

+8.3%

148.0

Segment profit

43.8

43.2

△0.6

△1.4%

41.5

Operating profit

40.3

40.7

0.4

+1.1%

40.5

Margin

28%

27%

27%

Note: Operating profit includes other expenses of JPY 3.5 billion (FY2019) and JPY 2.5 billion (FY2020)

FY2020 Q4 summary

• Mobile games driven by continued strong performance from "PROFESSIONAL BASEBALL SPIRITS A," "eFootball Winning Eleven 2020 (eFootball PES 2020),""Yu-Gi-Oh! DUEL LINKS" etc.
• Conducted marketing activities for the release of"Yu-Gi-Oh! RUSH DUEL," a new lineup from the Yu-Gi-Oh! card game series
• Released "PC Engine mini" console and"Yu-Gi-Oh! Legacy of the Duelist: Link Evolution" for PS4, Xbox One and PC
• eSports initiatives: Hosted the eClimax Series and eNippon Series for the "eBASEBALL Pro League" in cooperation with the Nippon Professional Baseball Organization. Pro athletes from various European club

teams participated in the Winning Eleven franchise official eSports championship "eFootball League 2019-20	9
season"

Amusement

Revenue and segment profit

(Yen in Billions)

FY2019

FY2020

YoY

YoY

FY2020

Change

Change

Revised

Actual

Actual

(Amount)

(%)

Guidance

12 months ended

12 months ended

12 months ended

March 2019

March 2020

March 2020

Revenue

27.8

23.7

△4.1

△14.8%

24.0

Segment profit

8.4

5.3

△3.1

△36.7%

5.0

Operating profit

8.0

5.0

△3.1

△38.4%

5.0

Margin

29%

21%

21%

Note: Operating profit includes other expenses of JPY 0.4 billion (FY2019) and JPY 0.4 billion (FY2020)

FY2020 Q4 summary

• Released amulti-ballcolored-roulette medal game "Color CoLotta Mezase! Yumeno Takarajima," and a pinball-themedcoin-pusher game "SMASH STADIUM"
• Launched "SKYGIRLS-Zero no Tsubasa-," a latest iteration from the SKYGIRLS series
• Coronavirus impact slowing down supply chains

10

Gaming & Systems

Revenue and segment profit

(Yen in Billions)

FY2019

FY2020

YoY

YoY

FY2020

Change

Change

Revised

Actual

Actual

(Amount)

(%)

Guidance

12 months ended

12 months ended

12 months ended

March 2019

March 2020

March 2020

Revenue

31.2

28.4

△2.8

△8.9%

31.5

Segment profit

4.7

1.8

△2.9

△62.3%

3.5

Operating profit

4.7

1.8

△2.9

△62.2%

3.5

Margin

15%

6%

11%

* YoY impact from forex: revenue JPY △1.0 billion, operating profit JPY △0.2 billion

FY2020 Q4 summary

• "KX 43" and "Concerto" cabinets sold across North America, Oceania, Latin America and European markets
• "SYNKROS" awarded gold medal in the casino management system Data Quadrant Awards
• Coronavirus outbreak resulting in supply chain slowdown and product delivery delays as well as closures of casinos on a global scale impacting the business

11

Sports

Revenue and segment profit

(Yen in Billions)

FY2019

FY2020

YoY

YoY

FY2020

Change

Change

Revised

Actual

Actual

(Amount)

(%)

Guidance

12 months ended

12 months ended

12 months ended

March 2019

March 2020

March 2020

Revenue

63.5

59.0

△4.5

△7.1%

61.5

Segment profit

2.2

0.0

△2.2

△98.5%

2.2

Operating profit

2.1

△6.0

△8.2

-

△4.0

Margin

3%

△10%

△7%

Note: Operating profit includes other expenses of JPY 0.1 billion (FY2019) and JPY 6.1 billion (FY2020)

FY2020 Q4 summary

• Began daily updates of Konami Sports Club's original exercise video streaming "TODAY's Video" starting in April to resolve lack of exercise from avoiding nonessential outings, in addition to our existingat-home exercise video streaming service
• Temporary suspension of exercise school lessons and closures of gyms in some regions as measures to prevent the spreading of the coronavirus

12

Titles Released in Jan - Mar 2020 / Pipeline(1)

			Release	Business
Title	Platform	Geography	Segm ent
Date
			（ ※1）
PC Engine mini		Japan
N. America: TurboGrafx-16 mini	-	N. America	Mar '20	DE
Europe: PC Engine Core Grafx mini		Europe
Yu-Gi-Oh! Legacy of the Duelist:	PS4 / Xbox One	Global	Mar '20	DE
Link Evolution	PC
Yu-Gi-Oh! RUSH DUEL	Card Game	Japan	Apr '20	DE
eBASEBALL	PS4/Nintendo	Japan
Korea	Jul '20	DE
PAWAFURU PUROYAKYU 2020	Switch™
Taiwan
Momotaro Dentetsu	Nintendo	Japan	Winter	DE
- Showa Heisei Reiwa mo teiban! -	Switch™	2020
Yu-Gi-Oh! DUEL LINKS	App Store	China	TBD	DE
Chinese title: "游戏王：决斗链接"	Android

※1 DE: Digital Entertainment

©1996 KAZUKI TAKAHASHI ©2017 NAS・TV TOKYO

©2016 Konami Digital Entertainment ©NPB ©2019 SAMURAI JAPAN

© AKIRA SAKUMA

Yu-Gi-Oh! RUSH DUEL	eBASEBALL
PAWAFURU PUROYAKYU 2020

PC Engine mini	Momotaro Dentetsu
	- Showa Heisei Reiwa mo teiban! -

Yu-Gi-Oh! Legacy of the Duelist:

Link Evolution

13

Titles Released in Jan - Mar 2020 / Pipeline(2)

			Release	Business
Title	Platform	Geography	Segment
Date
			（ ※）
SKYGIRLS -Zero no Tsubasa-	Amusement	Japan	Jan '20	AM
machine
Color CoLotta	Amusement	Japan	Feb '20	AM
Mezase! Yumeno Takarajima	machine
SMASH STADIUM	Amusement	Japan	Mar '20	AM
machine
Pachinko GI Derby Club	Amusement	Japan	Mar '20	AM
machine
FEATURE PREMIUM	Amusement	Japan	TBD	AM
MAH-JONG FIGHT CLUB 3	machine
DUEL DREAM	Amusement	Japan	TBD	AM
machine
BUSOU SHINKI ARMORED PRINCESS	Amusement	Japan	TBD	AM
BATTLE CONDUCTOR	machine
Sengoku Collection 4	Amusement	Japan	TBD	AM
machine
DIMENSION 49J	Gaming	North	H1 FY21	GS
machine	America
SYNK Vision	Gaming	North	TBD	GS
system	America

※AM: Amusement GS: Gaming & Systems

SMASH STADIUM	Color CoLotta
Mezase! Yumeno Takarajima

DUEL DREAM	BUSOU SHINKI ARMORED
PRINCESS BATTLE CONDUCTOR

FEATURE Premium	DIMENSION 49J	14
MAH-JONG FIGHT CLUB 3

Consolidated Business Performance

(Yen in Billions)

					YoY	YoY
	FY2019	percentile	FY2020	percentile	Change	Change
					(Amount)	(%)
Revenue	262.5	100.0%	262.8	100.0%	0.3	0.1%
Total cost of revenue	△155.4	59.2%	△163.0	62.0%	△7.7
SG&A	△52.6	20.0%	△55.5	21.1%	△2.8
Other income and other expenses	△4.0	1.5%	△13.3	5.1%	△9.3
Operating profit	50.5	19.2%	31.0	11.8%	△19.6	△38.7%
Finance income	0.3		0.4		0.0
Finance costs	△0.8		△0.9		△0.1
Profit from investments accounted	0.3		△0.0		△0.3
for using the equity method
Profit before income taxes	50.3	19.2%	30.4	11.6%	△19.9	△39.6%
Income taxes	△16.1	6.1%	△10.5	4.0%	5.6
Profit for the period	34.2	13.0%	19.9	7.6%	△14.3	△41.9%
Profit attributable to:
Owners of the parent	34.2	13.0%	19.9	7.6%	△14.3	△41.8%
Non-controlling interests	0.0	0.0%	0.0	0.0%	△ 0

15

Consolidated Financial Position

									(Yen in Billions)
			Mar 31,	Mar 31,				Mar 31,	Mar 31,
			2019	2020	change			2019	2020	change
		Current assets					Current liabilities
		Cash and cash equivalents	159.2	131.4	△27.8		Bonds and borrowings	10.5	28.3	17.7
		Trade and other receivables	32.5	29.9	△2.6		Trade and other payables	31.5	31.3	△0.3
		Inventories	8.3	10.0	1.7		Other current liabilities	28.8	37.2	8.5
		Other current assets	7.7	16.4	8.7		Total current liabilities	70.8	96.8	25.9
		Total current assets	207.7	187.7	△20.0		Non-current liabilities
			54.9%	-44.8%			Bonds and borrowings	9.8	9.9	0.1
		Non-current assets					Other non-current liabilities	21.0	43.6	22.6
		Property, plant and equipment, net	82.2	116.6	34.4		Total non-current liabilities	30.8	53.4	22.6
		Goodwill and intangible assets	38.1	34.4	△3.7	Total liabilities	101.6	150.2	48.6
		Investment Property	0.0	32.5	32.5		Total equity attributable to	275.6	268.1	△7.5
			owners of the parent
		Deferred tax assets	21.1	23.7	2.6			72.9%	-64.0%
		Other non-current assets	25.6	24.1	△4.7		（per share: JPY）	2,038.16	2,012.85	△25.31
		Total non-current assets	170.3	231.4	61.1		Non-controlling interests	0.8	0.8	0.0
			45.1%	-55.2%		Total equity	276.4	268.9	△7.5
	Total assets	378.0	419.1	41.1	Total liabilities and equity	378.0	419.1	41.1

16

Consolidated Cash Flows

FY2020		（JPY in billions ）
Operating CF Investing CF

	＋５１.２	△６２.１
Apr 1, 2019
		Financing CF	FX
		△１５.９	△１.０Mar 31, 2020

１５９.２		１３１.４
	２７.８billion decrease

FY2019

Operating CF Investing CF

△２２.５	Financing CF	FX
＋４９.１	△２２.４	＋０.６	Mar 31, 2019
Apr 1, 2018
１５４.５			１５９.２
４.８billion increase
			17

THANK YOU

©KONAMI