NEWSLETTER

June 2020
BANDAI NAMCO Holdings Inc.

BANDAI NAMCO Mirai-Kenkyusho
5-37-8 Shiba, Minato-ku, Tokyo 108-0014

Interview with the President

We will continue working to implement measures to prevent the spread of the COVID-19
infection, and, as an entertainment company, wewill strive to meet the expectations of customers.
BANDAI NAMCO Holdings Inc. has announced its consolidated results for
FY2020.3. In this issue of the newsletter, BANDAI NAMCO Holdings’ President
Mitsuaki Taguchi discusses the FY2020.3 results, the Group’s future direction,and the influence of COVID-19.

COVID-19 has caused confusion
around the world.
Taguchi: We would like to express our condolences for those who have passed away
as a result of the COVID-19 infection, andwe are hoping for a rapid recovery for those
who have contracted the illness.
The BANDAI NAMCO Group gives thehighest priority to the safety of all of its
stakeholders, including customers, employees
and their families, and partner companies.
Accordingly, we continue to implement initiatives to prevent the spread of the COVID-19infection. Furthermore, as we move forward
as a member of society, we will continue
striving to do everything that we can and tomeet the expectations of our stakeholders.
Please discuss the FY2020.3 results
and dividend?
Taguchi: Looking at the full-year results for
FY2020.3, net sales were ¥723.9 billion
and operating profit was ¥78.7 billion. In
the fourth quarter, each of our businesses
was affected by the spread of the COVID-19
infection, but looking at our results for theyear, we were able to achieve the plan forboth net sales and operating profit.
We aim to achieve ongoing dividendpayments and increases in corporate value
while further bolstering the Group’s competitiveness and maintaining financial
soundness. Specifically, our basic dividend

policy is to provide a return to shareholders
that targets a total return ratio of 50% ormore based on stable dividend payments
of 2% of DOE (dividends on equity), while
maintaining a stable level of dividends overthe long term and focusing on the cost ofcapital. In accordance with this policy, theannual dividend for FY2020.3 is ¥132 pershare (total payout ratio of 50.3%), with abase dividend of ¥40 per share and a performance-based dividend of ¥92 per share.
Would you provide an overview
of the situation in each business inFY2020.3? First, what are
the circumstances in the Toys andHobby business?
Taguchi: In the Toys and Hobby business,
products for the mature fan base, such as
Gundam plastic models and figures, recorded
favorable results worldwide. In addition,
popular products in Japan included KAMENRIDER and other established IP* toys aswell as peripheral products. Furthermore,
popular items in the Asian region included
products for the mature fan base and Ultraman toys. In the Americas and Europe, westrengthened sales and marketing of products
for the mature fan base.
In the fourth quarter, due to the influenceof COVID-19, there were delays in overseas
production at our plants and at cooperating
plants. In addition, overseas operations were

Mitsuaki Taguchi
President & Representative Director,
BANDAI NAMCO Holdings Inc.

affected by the closure of toy retail storesand distribution restrictions. Nonetheless,the Toys and Hobby business registered
record high results for the full fiscal year.
What is the situation in theNetwork Entertainment business?
Taguchi: In network content, major titles
recorded stable results. In the fourth quarter,
we held a fifth-anniversary event for DRAGONBALL Z DOKKAN BATTLE in February, andas a result monthly sales reached a record
high level for Japan. I believe this demonstrates not only the popularity of the IP itself
but also the effectiveness of our ongoingapproach to dealing with customers.
In home video games, in a period witha small number of major title launches, unit
sales of new titles, such as DRAGON BALLZ KAKAROT, surpassed the planned level.
Furthermore, repeat sales were also favorable. This was potentially due, in part, todemand resulting from people staying at
home during the crisis.
In the fourth quarter, the influence of
COVID-19 was seen in the closure of
retail stores overseas as well as in the postponement or cancellation of large-scale
promotional events.

* IP: Characters and other intellectual property

June 20201

Interview with the President

We will continue to implement measures toroll out the IP axis strategy on a global basis.
What is the situation in the RealEntertainment business?
Taguchi: In the fourth quarter, the influenceof COVID-19 led to the closure of amusement facilities around the world. Also, inamusement machines, there were delays in
the launch of new products, and sales plans
were not achieved. As a result, sales did
not reach the previous year’s level.
Among our businesses, the Real Entertainment business was the most significantly
affected by COVID-19. Moving forward, webelieve it is possible that amusement facilities
will remain closed in many regions, and that
there is a risk of an effect on demand foramusement machines. In consideration ofthis market environment, in order to strengthen
our financial position we recorded a valuation
loss on amusement machine work-in-process
at the end of the fourth quarter. In addition,certain amusement facilities face difficult
conditions, and an impairment loss related
to facility fixed assets was recorded as anextraordinary loss. Going forward, in the RealEntertainment business we will aim to build
robust operations that can adapt to changes
in the business environment.
What is the situation in the Visualand Music Production business?
Taguchi: In the Visual and Music Production
business, we produced popular visual, music,and live events on an IP axis, including
THE IDOLM@STER series, the Love Live!
series, and IDOLiSH7. However, sales wereaffected by a change in the product mix
from the previous year, when multiple highvalue-added packaged products were sold.
In the fourth quarter, due to the influenceof COVID-19, events were postponed orcancelled. However, due to favorable results
at events that were held previously and otherfactors, the effect on results was limited.
Please discuss the IP Creation
business.
Taguchi: In the IP Creation business, weworked to create buzz about the 40th2BANDAI NAMCO NEWSanniversary of Mobile Suit Gundam androlled out new visual products, such as TV
animations and movies. Also, to strengthen
IP creation, we reinforced the production
system and advanced Groupwide projects.
Profits increased year on year due to changes
in the product mix, etc. SOTSU CO., LTD.,
which has become a member of the Group,
is affiliated with the IP Creation Unit fromFY2021.3, and will work to create further
buzz about Gundam IP.
Looking at the Group’s overall resultsin FY2020.3, it is very difficult to quantify
the effect of COVID-19. However, adding
up the obvious factors, such as the closureof facilities and the cancellation of events,
we believe that COVID-19 had an influenceof approximately ¥14.0 billion on sales and¥4.0 billion on operating profit.
Would you discuss the results
forecast for FY2021.3?
Taguchi: At this point, the results forecast
for FY2021.3 has not yet been determined.
The trends in the economy and society
overall, as well as personal spending, areunclear, and we expect these circumstances
to continue for the time being. We determined
that, in this setting, it would be difficult tocalculate an appropriate forecast for presentation to stakeholders. We will promptly
disclose the results forecast for FY2021.3
when it becomes possible to make a reasonable calculation.
Moving forward, if the COVID-19 infection continues to spread, the Groupwide▲ Advancing projects for the40th anniversary of Gundam
plastic models in 2020
©創通・サンライズ
effects could include the closure of retailstores, distribution restrictions, postponement
or cancellation of events, and related effects
on a variety of promotional activities. In addition, there could be an influence on production
schedules for toys and other products at in-houseplants and cooperating plants, an influence
on development schedules and operational
systems for home video games and network
content, an influence due to the closure ofamusement facilities, and an influence on visual
product production schedules and opening
schedules. To reduce as much as possible these
influences on our business operations, foreach business we will implement a variety ofinitiatives and will step up our efforts to collectinformation and make decisions rapidly.
In addition, in the Real Entertainment
business, following changes to the treatmentof part-time employees due to the continued
closure of amusement facilities, managers
feel a strong sense of urgency in regard
to the spread of the COVID 19 infection.
To overcome these circumstances, theGroup decided to reduce the monthly baseremuneration for nine full-time directors
from BANDAI NAMCO Holdings Inc. andBANDAI NAMCO Amusement Inc. fromMay to September 2020.
From the perspective of crisis management, we are holding regular meetings ofthe Crisis Management Committee, withthe participation of the full-time directorsof BANDAI NAMCO Holdings Inc. andthe presidents of the core companies of fiveUnits. The policies that have been determined
are being announced throughout the Group’s
operations around the world, and each company is implementing countermeasures inline with the policies.

▲ SCARLET NEXUS for next-generation home video
game machines

SCARLET NEXUS™ & ©BANDAI NAMCO Entertainment Inc.

Please discuss the Group’s activities
to prevent the spread of theCOVID-19 infection.
Taguchi: The BANDAI NAMCO Grouphas contributed ¥100 million to the COVID19 Solidarity Response Fund for WHO,
which was established by the United Nations
Foundation and the Swiss Philanthropy
Foundation. The donations from companies
to this fund are utilized in the activities ofWHO, the World Food Programme (WFP),UNICEF, and the Coalition for Epidemic
Preparedness Innovations (CEPI). In addition, the donations are used for medical
material support, vaccine and drug development support, etc.
In addition, we are implementing support
initiatives through our products and services,such as leveraging mold production technologies to make masks for protection fromdroplets, offering free distribution of indoor
exercise videos and game content, and, withthe cooperation of the Ministry of Health,Labour and Welfare, promoting hand-washing by the provision of free educational
posters that utilize IP.

Please discuss business development initiatives in FY2021.3
and thereafter.
Taguchi: Under the Mid-term Plan, we have
implemented a variety of initiatives andmeasures as we have aimed for growth overthe medium to long term. Working on aGroupwide basis, in markets around theworld we have highlighted the appeal of
Gundam and stepped up the roll out ofGundam products and services. We are also
expanding our operations in China, fostering
innovation with established IP, and advancing
new IP creation projects.
We are implementing a range of initiatives
in each business area. In the Toys and Hobby
business, to expand products and services forthe mature fan base, we are working to implement the Gundam plastic model 40th anniversaryplan and to strengthen our global e-commerce
system. In the Network Entertainment business,
we are developing new network services andmajor home video game titles for next-generation game machines. In addition, we areadvancing plans for the 40th anniversary ofPAC-MAN, centered on overseas markets. Inthe Real Entertainment business, we will bolster
our financial and operational foundations as
we target the next stage of growth. In the Visualand Music Production business and the IP
Creation business, we are planning to utilize
established IP to create new series and new
visual products, to hold live events, etc.
Due to the influence of COVID-19,
schedules, etc., have been revised. However,in accordance with the IP axis strategy, which
is BANDAI NAMCO’s strength, there will
be no change to our principal direction,
which entails global roll-outs of products,services, and IP marketing initiatives. Movingforward, we will continue to implement
these initiatives.

We will address changes in customer preferences and values
with the ALL BANDAI NAMCO concept.
How will the Group approach thefuture operating environment?
Taguchi: I think that, due to the influenceof COVID-19, there will be significant
changes in customer preferences and values
as well as in our working style. Looking
at customer values, it seems likely that
digitalization will accelerate further, whileon the other hand customers will increasingly
recognize the necessity of the atmosphereprovided by real venues. I expect to seequestions raised about what is truly
necessary, and consumers will select theproducts and services that address their needs
and expectations.
In addition, I believe that changes inworking styles and communications, suchas working at home, etc., will naturally leadto a process of selection and concentrationin business operations. We anticipate a varietyof changes as we move forward. Accordingly,
with the cooperation of each region andbusiness, we will focus our strength underthe ALL BANDAI NAMCO concept andcarefully adapt to the challenging environment. We will strive to further strengthen
our systems and financial foundation so thatthey are less susceptible to fluctuations in
the business environment.
Finally, do you have a message
for readers?
Taguchi: A variety of restrictions are being
placed on the lifestyles of people around theworld. In this setting, we have reaffirmed
our understanding of how entertainment iscalled on to support peoples’ feelings andlifestyles. We are hoping for an end to thespread of COVID-19 infections, and employees throughout the Group are focusing theirinsights on products, services, and marketing
ideas and making preparations to help people
around the world to restore brightness
to their lives as soon as possible. Moving
forward, we will strive to address the expectations and needs of consumers in order tofulfill our mission of providing dreams andfun to people around the world and helping
to enrich their lives.

June 20203