Sega Sammy : Notice Regarding Full-Year Consolidated Operating Results Forecast

August 5, 2020

(Translation)

Dear Sirs or Madams,

Name of Company:	SEGA SAMMY HOLDINGS INC.
Name of Representative:	Haruki Satomi,
	President and Group COO
	Representative Director
(Code No. 6460, Tokyo Stock Exchange 1st Section)
Further Inquiry:	Yoichi Owaki,
	Senior Vice President,
	Executive Officer

Managing Director of

Finance & Accounting Division (TEL: [phone])

Notice Regarding Full-Year Consolidated Operating

Results Forecast

It is hereby notified the full-year consolidated operating results forecast for the fiscal year ending March 31, 2021 which was pended in "FLASH REPORTCONSOLIDATED FINANCIAL STATEMENTS [Japanese GAAP] Year Ended March 31, 2020" announced on May 13, 2020, as follows.

Description

1. Full-year consolidated operating results forecast for fiscal year ending March 2021 (From April 1, 2020 to March 31, 2021)

	Net Sales	Operating	Ordinary	Profit attributable	Net income
	to owners of	(loss) per
	income	income
		parent	share
Previously	Millions of	Millions of	Millions of	Millions of yen	Yen
announced forecast	yen	yen	yen
―	―
(A)	―	―	―
Revised forecast	277,000	(15,000)	(20,000)	(17,000)	(72.31)
this time (B)
Amount of increase	―	―	―	―	―
or decrease (B-A)
Rate of increase or	―	―	―	―	―
decrease (%)
(Reference)
Operating results for
the previous fiscal	366,594	27,643	25,296	13,775	58.65
year
(Fiscal year ended
March 31, 2020)

• Background of the announcement of full-year consolidated operating results forecast

The full-year consolidated operating results forecast for the fiscal year ending March 31, 2021 was pended because it was difficult to determine the impact of COVID-19 on the business of our company but we have calculated the full-year consolidated operating results forecast based on the currently available information and forecasts, including the status of business after the declaration of state of emergency lifted this time.

• Per business status

Per segments breakdown of full-year consolidated operating results forecast for fiscal year ending March 2021

(Unit: millions of yen)

			Previously	Revised	Amount of
		Segment	announced	forecast this	increase or
		forecast	time	decrease
			(A)	(B)	(B-A)
		Total	―	277,000	―
Sales		Pachislot and Pachinko	―	56,000	―
Breakdown	Machines Business
		Entertainment	―	214,000	―
		Contents Business
		Resort Business	―	6,500	―
		Others/Eliminations,	―	500	―
		etc.
	Breakdown	Total	―	(20,000)	―
Ordinary
Entertainment	―	11,000	―
		Pachislot and Pachinko	―	(10,000)	―
		Machines Business
income		Contents Business
		Resort Business	―	(12,500)	―
		Others/Eliminations,	―	(8,500)	―
		etc.

*The Company changed the method of measuring segment income to "ordinary income" from FY2021/3.

(Pachislot and Pachinko Machines Business)

Although utilization of pachinko halls is recovering gradually, full-fledged replacement to new regulation machine is expected to be occuring in fiscal year ending March 2022, following the extension of the deadline for removal of previous regulation machines. Based on this outlook, we are planning to sell 52,000 units (123,000 units in the previous fiscal year) for pachislot machines and 71,000 units (104,000 units in the previous fiscal year) for pachinko machines and forecasting ordinary losses in fiscal year ending March 2021.

(Entertainment Contents Business)

We expect Amusement Machine Sales and Amusement Center Operation areas to remain sluggish as those areas are heavily influenced by COVID-19. On the other hand, the Consumer area is expected to remain strong as demand for games and download sales continue to increase and expecting to record ordinary income in Entertainment Contents Business as a whole.

(Resort Business)

In addition to the continuous recording of expenses for participation in domestic IR, we expect to record an ordinary loss due to a decline in utilization of facilities, Phoenix Seagaia Resort in

Japan and PARADISE CITY in overseas, due to the strong impact of COVID-19.

(Assumption of the impact of COVID-19 in each business, etc.)

Segment	Sub-	Impact	Full-year forecast
segment
Pachislot and			・ Expecting that the recovery of purchasing
		motivation of pachinko halls take a while as the
Pachinko		Negative
‐	deadline for removal extended.
Machines
		・ The plan for unit sales is expected to fall below
Business
		the previous year.
	Consumer ※	Positive	・ Expecting that the spending from staying at home
			will continue but will settle down.
	Amusement	Negative	・ Expecting the decrease of revenue from revenue
	sharing model and sales of machines due to
	Machine Sales
Entertainment		decline of utilization of stores.
Amusement		・ Although expecting the gradual recovery towards
Contents
Center	Negative	the end of fiscal year, sales of existing stores is
Business
	Operations		expected to be 62.7% YoY.
	Animation /		・ Expecting the decline of allocated revenue this
	Negative	fiscal year due to the postponement of the
	Toys	release of theatrical version of "Detective Conan,"
			and etc.
	Phoenix	Negative	・ Although expecting the gradual recovery towards
	the end of this fiscal year, assuming the recovery
	Resort
Resort		of travel demand may take a while.
Business	PARADISE	Negative	・Temporary closure of some facilities from July 1
	・Expecting that the restriction of foreign visitors
	SEGASAMMY
		entering South Korea will not lift within 2020.

*As the breakdown of sub-segment, Digital Games area and Packaged Games area have been integrated into 1 sub-segment and changed the name to Consumer area from FY2021/3.

■ Future Initiatives

In light of the fact that many businesses of our company are greatly affected by COVID-19, we established the Structural Reform Committee in order to reform the organization structure that adapt to the external environment. The Structural Reform Committee will work for 1) reviewing the balance sheet for non business properties, 2) building an organizational structure that can adapt to changes in the market environment, and 3) reducing the cost centered on group-wide common fixed expenses (reduction target: 15 billion yen).

The outlook for fiscal year ending March 2021 is expected to remain uncertain accompanying with the uncertainty of spread of COVID-19. Therefore, there is a possibility that the actual operating results of this fiscal year changes significantly from the forecast announced this time. In addition, the impact of structural reforms are not included in this operating results forecast. We will promptly announce if there is a need to amend the operating results forecast in the future.

As it is necessary to assess the impact of structural reform on business performance, both interim dividends and year-end dividends remain undecided at this stage.

*The figures and operating results forecast contained in this document are made based on information available as of the date of publication of this document. Actual results may differ from the projected figures due to various factors going forward.

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