FLASH REPORT CONSOLIDATED FINANCIAL STATEMENTS [Japanese GAAP] 6 Months Ended September 30, 2021

(2) CONSOLIDATED FINANCIAL POSITION

November 8, 2021

(Translation)

FLASH REPORT

CONSOLIDATED FINANCIAL STATEMENTS [Japanese GAAP]

		6 Months Ended September 30, 2021
Name of the Company	:	SEGA SAMMY HOLDINGS INC.
Code number	:	6460
		(URL https://www.segasammy.co.jp/)
Representative	:	Haruki Satomi
		President and Group CEO, Representative Director
Any inquiry to	:	Yoichi Owaki
		Senior Vice President, Executive Officer
		Managing Director of Finance & Accounting Division
		Sumitomo Fudosan Osaki Garden Tower,
		1-1-1Nishi-Shinagawa,Shinagawa-ku, Tokyo
		Tel [phone]

Filing of Quarterly Report	:	November 12, 2021 (plan)
Start of cash dividend payments	:	December 1, 2021 (plan)
		(Amounts below one million yen are rounded down)

1. Consolidated Operating Results for the 6 Months Ended September 30, 2021

1. RESULTS OF CONSOLIDATED OPERATIONS

(Percentage represents changes from the prior period)

	Net sales	Operating income		Ordinary income	Profit attributable
		to owners of parent
	Millions	%	Millions	%		Millions	%	Millions	%
	of yen	of yen		of yen	of yen
For 6 months ended	134,893	22.4	14,678	-		14,752	-		12,012	-
September 30, 2021
For 6 months ended	110,225	(33.4)	(3,076)	-		(3,583)	-		(21,716)	-
September 30, 2020
(Note) Comprehensive income
For 6 months ended September 30, 2021	: ¥13,391 million (-%)
For 6 months ended September 30, 2020	: ¥(18,614) million (-%)
		Net income	Net income per
		per share		share (diluted)
			Yen			Yen
For 6 months ended September 30, 2021		51.08		50.93
For 6 months ended September 30, 2020	(92.38)		-

		Total assets		Net assets	Equity ratio
	Millions of yen		Millions of yen	%
September 30, 2021		423,106		296,451	70.0
March 31, 2021		421,599		291,256	69.0
(Reference) Shareholders' equity
September 30, 2021 : ¥296,218 million
March 31, 2021	: ¥290,759 million

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2. Cash Dividends

Cash dividends per share

First quarter

Second quarter

Third quarter

Year-end

Total

Yen

Yen

Yen

Yen

Yen

Year ended

-

10.00

-

20.00

30.00

March 31, 2021

Year ending

-

20.00

March 31, 2022

Year ending

-

20.00

40.00

March 31, 2022 (plan)

(Note) Revision of the forecast from latest announcement: No

3. Forecast of Consolidated Operating Results for the Year ending March 31, 2022

(Percentage represents changes from the prior year)

Net sales

Operating income

Ordinary income

Profit attributable

Net income

to owners of parent

per share

Millions

%

Millions

%

Millions

%

Millions

%

Yen

of yen

of yen

of yen

of yen

Full-year

305,000

9.8

23,000

251.0

21,500

-

15,000

-

63.78

(Note) Revision of the forecast from latest announcement: Yes

4. Other

1. Changes in significant subsidiaries during the period: Yes
   (Changes in specified subsidiaries causing a change in the scope of consolidation) Excluded: 1 company (SEGA GROUP CORPORATION)
2. Adoption of special accounting treatment in preparation of quarterly consolidated financial statements: Yes
3. Changes in accounting policies, changes in accounting estimates, restatements
4. 1. Changes in accounting policies due to amendments of accounting standards, etc.: Yes
   2. Other changes in accounting policies: No
   3. Changes in accounting estimates: No
   4. Restatements: No
5. Number of shares outstanding (common stock)
6. 1. Number of shares outstanding at the end of the period (including treasury stock)

September 30, 2021 :	266,229,476
March 31, 2021	:	266,229,476

2. Number of treasury stock at the end of the period September 30, 2021 : 30,732,326

March 31, 2021

: 31,142,581

3. Average number of shares during the period (cumulative from the beginning of the fiscal year) For 6 months ended September 30, 2021 : 235,191,643

For 6 months ended September 30, 2020 : 235,091,565

(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 the 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 "Forecast of Consolidated Operating Results" on page 5.
• The Company plans to hold a briefing on financial results for institutional investors on November 8, 2021. 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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Operating Results and Financial Position

(1) Overview

Regarding the environment of the Entertainment Contents Business, in the consumer area, the advance of digitalization has brought major changes to the market environment, such as the expansion of download sales for PCs, home video game consoles, etc., the emergence of cloud gaming services, and the diversification of platforms. Furthermore, with diversified revenue opportunities expected from new business models and services, there has been a growing interest in the revitalization and growth of the game market on a global scale. As for amusement machines, although the market has entered a recovery trend with a focus on prize category, facility operations have not yet reached a full-fledged recovery due to the impact from the spread of COVID-19.

With regard to the pachislot and pachinko industry, the machines based on former regulations are being replaced with new regulation machines to meet the deadline for removing them, which is scheduled for the end of January 2022. For pachinko machines, the replacement is progressing well with multiple titles of new regulation machines gaining popularity. For pachislot machines, the introduction of Type 6.2 new regulation machines began in September 2021, and it is hoped that new titles expected to become popular among users will be introduced as a result of a wider range of game elements. Meanwhile, the supply has been unstable due to the global shortage of semiconductors, causing the parts procurement risk to become visible.

In the resort industry, travel demand has been sluggish due to the impact from the spread of COVID-19. Also, following the announcement of the application period for the certification of district development plans pertaining to the "Act on the Establishment of Specified Integrated Resort Areas", some local governments that wish to attract integrated resorts have the request for proposal (RFP). While these local governments are proceeding with the selection of operators, Yokohama City called off the process for selecting business operators for IR project.

In this business environment, net sales for the 6 months ended September 30, 2021 amounted to ¥134,893 million (an increase of 22.4% for the same period in the previous fiscal year). The Group posted an operating income of ¥14,678 million (operating loss of ¥3,076 million for the same period in the previous fiscal year), ordinary income of ¥14,752 million (ordinary loss of ¥3,583 million for the same period in the previous fiscal year), and profit attributable to owners of parent of ¥12,012 million (loss attributable to owners of parent of ¥21,716 million for the same period in the previous fiscal year).

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Result of each segment is as follows.

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

« Entertainment Contents »

In the consumer area, for Full Game, the Group released a remastered title "Sonic Colors: Ultimate" and the series latest title "LOST JUDGMENT" with simultaneous global release in addition to providing new IP "HUMANKIND™" to various platforms such as PC, Xbox Game Pass, Stadia™, etc., and catalog titles strongly performed, leading to sales of 14,040 thousand copies (19,080 thousand copies in the previous fiscal year). Also, royalty income has been recorded for certain titles. For free-to-play games (F2P), new titles and existing titles strongly performed.

In the amusement machine sales area, the sales of prizes, UFO CATCHER® series, etc. strongly performed.

In the animation and toy area, the Group recorded allocated revenue of "Detective Conan the Movie The Scarlet Bullet", etc. including sales of new products and regular products for toys.

As a result, net sales in this segment were ¥107,474 million (an increase of 10.8% for the same period in the previous fiscal year) and ordinary income was ¥22,709 million (an increase of 34.7% for the same period in the previous fiscal year).

« Pachislot and Pachinko Machines »

For pachislot machines, the Group leaded to overall sales of 31 thousand units (4 thousand units in the previous fiscal year). For pachinko machines, the Group leaded to overall sales of 23 thousand units (11 thousand units in the previous fiscal year) which were mostly in line with the projections. Due to factors including the effects of the structural reform undertaken in the previous fiscal year, fixed costs have remained at a low level.

As a result, net sales in this segment were ¥23,335 million (an increase of 116.9% for the same period in the previous fiscal year) and ordinary loss was ¥1,324 million (ordinary loss of ¥12,425 million for the same period in the previous fiscal year).

(Pachislot machines)

Pachislot CODE GEASS Lelouch of the Rebellion 3

Pachislot Rakuen Tsuiho -Expelled from Paradise-

(Pachinko machines)

P SOUTEN-NO-KEN Tengoku

P Kayou Suspense Gekijou Saigo no Suiri

Dejihane PA Shin Hokuto Muso Chapter 2 Rengeki Edition

« Resort »

In the resort business, at "Phoenix Seagaia Resort", the number of guests continued to fall due to the impact from the spread of COVID-19, leading to 72.0% compared with the same period from April to September 2019 before the impact of COVID-19 despite recovering to 155.0% compared with the same period in the previous fiscal year.

Overseas, "PARADISE CITY", operated by PARADISE SEGASAMMY Co., Ltd. (affiliate accounted for using the equity method) that the drop amounts (purchased amount of chips by customers at the table) was 40.3%, and the number of guests was 58.4% compared with the same period in the previous fiscal year, respectively, saw substantial decline from January to June 2021.

*PARADISE SEGASAMMY Co., Ltd. is posted 3 months delay due to the fiscal year ended in December.

As a result, net sales in this segment were ¥3,832 million (an increase of 70.6% for the same period in the previous fiscal year) and ordinary loss was ¥3,955 million (ordinary loss of ¥4,662 million for the same period in the previous fiscal year).

In addition, the Company has been forced to suspend the participation in IR Business in Yokohama due to cancel the public offering in September 2021 despite formed a consortium and applied for a request for proposal (RFP) for "the scheduled business operator of the installation and operation of Specified Integrated Resort" conducted by Yokohama City.

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(2) Forecast of Consolidated Operating Results

The Company has revised the forecast of consolidated operating results for the fiscal year ending March 31, 2022 which was announced on May 13, 2021. With regard to the details, refer to "Notice of Revision of Operating Results Forecast" announced on November 8, 2021.

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