BANDAI NAMCO GroupINTEGRATED REPORT 2021

www.bandainamco.co.jp

OUR MISSION STATEMENTOUR VISION“Dreams, Fun and Inspiration” are the Engine of Happiness.
Through our entertainment products and services, BANDAI NAMCO will continue to provide“Dreams, Fun and Inspiration” to people around the world, based on our boundless creativity and enthusiasm.
As an entertainment leader across the ages, BANDAI NAMCO is constantly exploring new areas andheights in entertainment. We aim to be loved by people who have fun and will earn their trust as“the Leading Innovator in Global Entertainment.”

CONTENTS
02

OUR GROWTH TRACK

04

THE BANDAI NAMCO GROUP—1 YEAR OF RESULTS

06

 HE BANDAI NAMCO GROUP—T
ORGANIZATIONAL STRUCTURE AND OVERVIEW

08

MAJOR IP IN GROUP PRODUCTS AND SERVICES

10 HE GROUP’S GREATEST STRENGTH—T
THE IP AXIS STRATEGY

12

 HE BANDAI NAMCO GROUP—TOUR VALUE CREATION PROCESS

14

 OARD OF DIRECTORS AND AUDIT & SUPERVISORY
B
BOARD MEMBERS

16

CHAIRMAN’S MESSAGE

18

PRESIDENT’S MESSAGE

22

 ISKS AND OPPORTUNITIESRFOR THE BANDAI NAMCO GROUP

24

 ESSAGE FROM THE DIRECTOR IN CHARGE OFM
FINANCE AND INFORMATIONThe strength of the BANDAI NAMCO Group is the IP axis strategy, under which we work to maximize the value

26

 ESSAGE FROM THE DIRECTOR IN CHARGEM
OF MANAGEMENT PLANNING AND ESG

28

 ESSAGES FROM THE PRESIDENTS OF
M
THE BUSINESS MANAGEMENT COMPANIES38 EVIEW OF THE PREVIOUS MID-TERM PLAN
R
(APRIL 2018 TO MARCH 2021)

40

 PECIAL FEATURESEMPOWER, GAIN MOMENTUM, AND ACCELERATEEVOLUTION IN A NEW ERA

56

ESG SECTION

of characters and other intellectual property (IP) to provide the optimal products and services at the optimal
time in the optimal region.
Based on the IP axis strategy, we will strive to forge connections with fans in global markets and contributeto the creation of a world that fosters happiness by providing “Dreams, Fun and Inspiration” through theGroup’s products and services.

About Integrated Report 2021

IR

CSR

 OUNDTABLE DISCUSSION AMONG OUTSIDER
DIRECTORS / CORPORATE GOVERNANCE /OFFICER SYSTEM / HUMAN RESOURCESINITIATIVES / CSR INITIATIVESIn editing this report, we made reference to the Value Reporting Foundation’s International Integrated Reporting
Framework and SASB disclosure standards for Toys & Sporting Goods and for Software and IT Services, as wellas the TCFD recommendations.
Forward-Looking Statements
The forward-looking statements in this report are based on the information available to management as ofAugust 2021 and include various risks and uncertainties. Accordingly, actual results may differ materially fromthese projections for a variety of reasons. Major factors that could influence actual results include changes in the
BANDAI NAMCO Group’s operating environment, market trends, and exchange rate fluctuations.

84

FINANCIAL SECTION

129

Our website provides a variety of information about the BANDAI
NAMCO Group, such as IR information and CSR initiatives.
Please utilize the website in conjunction with this report.

CORPORATE DATA

www.bandainamco.co.jp/en/index.html

130

OVERVIEW OF MAIN GROUP COMPANIES

Notes:
1. Figures in this report have been rounded down.
2. FY2021.3 represents the one-year period ended March 31, 2021.
3. Unless otherwise noted, figures in this report are as of August 2021.

1

Achieved record-highoperating profit
for threeconsecutive years.

The BANDAI NAMCO Group was created in September 2005 through the management integration of BANDAI CO., LTD.,
and NAMCO LIMITED. After the integration, the Group moved quickly to leverage synergy effects by implementing a
range of internal measures. However, we were not able to respond adequately to changes in our markets and customers.
Our operational speed declined, and we did not effectively utilize the strengths of each Group company. As a result,our performance was sluggish. In response, in April 2010 we launched the Restart Plan with the objective of transforming
ourselves into a speedy Group under the IP axis strategy. The Group worked together to maximize the shared value ofIP, and in this way we achieved a recovery in our results. In the fiscal year ended March 31, 2021, our businesses wereaffected by the spread of COVID-19, but the Group's wide-ranging business portfolio demonstrated its effectiveness,
and we achieved record-high levels of net sales and operating profit.

Registered
record-high
net sales for sevenconsecutive years.

740.9

Restart!

723.9

732.3
678.3

Launched the Restart Plan and announced the IP axis strategy totransform ourselves into a speedy Group, improve our profitability,
and strengthen our financial standing.

Management
Integration

Attained record-high
net sales andoperating profit.

OUR GROWTH TRACKOUR GROWTH TRACK

84.6

84.0

620.0
575.5

78.7

75.0

565.4

Net Sales(¥ billion)

507.6
450.8
459.1

63.2

487.2

460.4

56.3

454.2

426.3

378.5

394.1

48.6

49.6
Transitioned from a systemof three business segments
to a system of five Units,
including the newly
establishedReal Entertainment Unit and
IP Creation Unit.

44.6
42.2

Operating
Profit35.6

34.6

Reorganized our businesssegments. Establishedthe Network Entertainment
and Visual and Music
Production Units.

33.4(¥ billion)

22.3
16.3

Changed to a system of three Units.
The Toys and Hobby Unit and the
Network Entertainment Unit werecombined to form the Entertainment
Unit, while the Visual and Music
Production Unit and the IP Creation Unit
were combined to form the
IP Production Unit. The RealEntertainment Unit changed its name to
the Amusement Unit.

For the Fiscal Years
Ended March 31

1.8

2006

2007

2008

2009

Reduction in speed
Unresponsive to operating
environment and trends

2007.3–2009.3 Mid-term Plan

2

2010

2011
Introduction of
Restart Plan

2010.3–2012.3 Mid-term Plan

2012

2013

2014

2015

Transformation
into a speedy Group

Adoption of IP
axis strategy by
the Group

2013.3–2015.3

Mid-term Plan

2016

2017

2018

2019

2020

2021

IP axis strategy:
From adoption to acceleration
2016.3–2018.3 Mid-term Plan

2019.3–2021.3 Mid-term Plan

2021.4-2022.3 Enhancing
Business Foundations andSystems for the Next Mid-term Plan

3

1 YEAR OF RESULTS

FY2021.3

THE BANDAI NAMCO GROUP—

1 YEAR OF RESULTSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31

Overview of Results
Net Sales

Operating Profit¥¥

740.9billion

84.6 billion

+2.3%

YoY

620.0

678.3

732.3 723.9 740.9

Operating
Profit(¥ billion)(¥ billion)

Overseas
Sales
Proportion
(%)

84.0
75.0

Net Sales

20.6

2017

+7.5%

YoY

20.5
18.7

20.0

2019

2020

2018

22.3

78.7

84.6

63.2
11.5
10.2 11.1

10.9

11.4

Operating
ProfitMargin
(%)

2021

2017

2018

2019

2020

In the fiscal year ended March 31, 2021, thespread of COVID-19 had an effect on the RealEntertainment Unit, the Visual and Music
Production Unit, and other businesses.
However, we advanced a variety of initiatives
to adapt to the changes in customer lifestyles
and preferences, such as strengthening sales
and marketing through the use of digitaltechnologies. In the Toys and Hobby Unit,
multiple products enjoyed popularity withcustomers, such as products for the mature
fan base and products utilizing new IP. In
addition, in the Network Entertainment Unit,sales of network content and repeat sales ofhome video games were favorable. The
Group’s favorable overall results are attributable to the effectiveness of our wide-ranging
business portfolio.

Shareholders’ Equity Ratio

69.7%

394.1

429.3

453.0

Cash Dividends per Share

Basic Earnings per Share

¥

¥

112
YoY

472.8

¥

145

123*2

357.6

Total
72.5
71.3 71.5
70.0
Shareholders’EquityCashDividends
per Share

69.7(¥ billion)–39.81

YoY

132

¥

288.40(Yen)

262.39246.29112

222.58201.0382*1
40.8

49.9 50.3 50.3

50.3

(Yen)

Shareholders’Equity Ratio

Total Payout
Ratio

(%)
2017

2021

–20

222.58

2018

2019

2020

(%)

2021

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

*1 FY2017.3 includes a special dividend of ¥20.
*2 FY2018.3 includes a special dividend of ¥25.

Segment Sales Ratio
OthersIP Creation

3.6%

4.3%

Visual and Music
Production

Toys and Hobby

37.3%

3.5%

Real
Entertainment

Network
Entertainment

8.0%

43.3%

Note: P
 ercentage figures are calculated based on sales before eliminationof inter-segment transactions.

ESG (For detailed data, please refer to FACT BOOK 2021, a separate publication.)

Debt/Equity Ratio*2

Breakdown of Operating Profit (Loss) by Segment
Operating
Profit (Loss)

Operating
Profit Margin

Toys and Hobby¥38.2 billion

12.9%

Network Entertainment¥57.3 billion

16.7%

Real Entertainment¥–8.3 billion—

Visual and Music Production¥0.9 billion

3.5%

IP Creation¥2.7 billion

9.7%

Others¥1.4 billion

4.2%

0.05 times
27.3(¥ billion)(times)6.1
0.8 1.4 0.9
0.00 0.00 0.00

0.01

2017

2020

2018

157 people

Number of Consolidated Employees

Ratio of Female Managers to
Total Managers*

Industrial Waste

Number of Independent Directors or
Independent Audit & Supervisory
Board Members

CO2 Emissions

19.1%

Interest-Bearing Debt*1

Debt/Equity
Ratio*2

Number of Female Managers*

2019

7 people

0.05

9,550 people
2,099t52,256t-co

2* Figures are for the five Unit core companies in FY2021.3.

2021*1 From FY2020.3, certain overseas consolidated
subsidiaries applied IFRS 16 “Leases.”
Increase in long-term borrowings in FY2021.3*2 Debt/equity ratio = Interest-bearing debt /Total shareholders’ equity

Contributions to Net Sales byGeographic Region
Asia, excluding Japan
Europe7.4%

7.0%

Return on Equity (ROE)

10.2%

511.4
429.6

348.7
13.3

7.9%

Japan

77.7%

Note: P
 ercentage figures are calculated based on
external sales. Figures are estimates basedon management accounting.

4

KAMEN RIDER series

732.7

454.6

15.5

488.0

13.1

10.2

(¥ billion)

13.5

15.1

13.0

12.9

2018

2019

2020

2021

2021

31.2 billion¥¥

78.1 billion¥¥

28.9 billion

95.0 billion

81.5 80.4 82.0

134.9 billion¥

BORUTO/NARUTO
2021

127.4 billion

¥

2020

2021

13.0 billion¥¥

21.4 billion

59.0(¥ billion)

2017

2018

2019

2020

2021

22.0

19.5

2020

2021

34.9 billion

¥

¥

54.8

Game Content
R&D Investment

ONE PIECE

(%)
2017

2020

Total Assets

ROA

(%)

2021

2020

(¥ billion)

ROE

Mobile Suit Gundam series

2020

DRAGON BALL series

540.4
14.7

Game Content R&D Investment andCapital Investment

71.0

612.9 619.8

Total Net Assets
Americas

13.0%

387.3
14.7

Sales of IP* Products and Services (Group Total)

Return on Assets (ROA)

38.0 billion

27.3

22.7

CapitalInvestment(¥ billion)

2017

2018

2019

2020

2021

* IP: Characters and other intellectual property

5

The BANDAI NAMCO Group—

In advance of the next Mid-term Plan, which starts in April 2022, we implemented a reorganization fromthe previous five-Unit system to a three-Unit system.
Purpose of Reorganization

ENTERTAINMENT UNIT
Digital Business
Toys and Hobby Business

IP PRODUCTION UNIT
Visual and Music Business
Creation Business

Through the combination of the Digital business (formerly the Network Entertainment
Unit) and the Toys and Hobby business (formerly the Toys and Hobby Unit), theEntertainment Unit will promote closer coordination of business activities centered aroundthe IP axis and cooperation and expansion thatmutually utilize a wide range of outputs, while
enhancing the creation of entertainment andstrengthening the digitalization corresponding
to customers’ new sense of value.
With these changes, the Unit aims toincrease competitiveness in global markets.

The IP Production Unit will consolidate thestudio and production function that creates
IP, in order to strengthen the capabilities tocreate IP which enables it to produce
more-diverse synergy effects throughcollaboration not only within the Unit but
also with various businesses of the Groupand external partners.

Business Overview

Results in the Fiscal Year Ended March 31, 2021*

Digital Business

Digital BusinessBusiness Management Company:

BANDAI NAMCO Entertainment Inc.
Planning, development, and distribution of network content; planning,development, and sales of home video games

Business Management Company:

BANDAI CO., LTD.

Planning, development, production, and sales of toys, capsule toys, cards,
confectionery and foods, apparel, sundries, plastic models, prizes, stationery,and other products

Business Management Company:

BANDAI NAMCO Arts Inc.
Planning, production, and management of visual and music content;
artist discovery and development; and live entertainment operations

Creation BusinessBusiness Management Company:

BANDAI NAMCO Amusement Inc.
Planning, development, production, and sales of amusement machines;
planning and operation of amusement facilities, etc.

Supporting the Units in such areas as distribution, logistics,
and administrative services6

Net Sales¥300.8 billion

Operating Profit¥39.0 billion

Net Sales¥34.2 billion

Operating Profit¥1.5 billion

Creation Business

Planning and production of animations; management and administration of
copyrights and other rights; production of music related to animations andmanagement and administration of music and masters related to animations

AFFILIATED BUSINESSCOMPANIES¥56.7 billion

Visual and Music Business

Visual and Music Business

SUNRISE INC.

The Amusement Unit provides points ofcustomer contact in the IP axis strategy.
The Unit will select and focus on thestrengths unique to the BANDAI NAMCO
Group in such ways as utilizing IP and theGroup’s resources, and work to build astrong business foundation to generateearnings stably under a more unified
framework for collaborating with theGroup’s other businesses.

¥337.9 billion

Operating Profit

Toys and Hobby Business

Toys and Hobby BusinessBusiness Management Company:

AMUSEMENT UNIT

Net Sales

ORGANIZATIONAL STRUCTURE AND OVERVIEWORGANIZATIONAL STRUCTURE
AND OVERVIEWNet Sales

Operating Profit

Net Sales

Operating Loss

Net Sales

Operating Profit¥28.2 billion¥63.9 billion¥24.6 billion¥2.7 billion¥–8.3 billion¥0.6 billion* Due to the change in the Unit system, FY2021.3 results were reorganized to the business segment classifications after the change.

7

MAJOR IP IN GROUPPRODUCTS AND SERVICES
More than

8

The BANDAI NAMCO Group utilizes more than 300 IP per year toroll out products and services. This section introduces examples of
established IP.

PAC-MAN

Anpanman has been popularamong parents and children for
more than 30 years. The BANDAI
NAMCO Group provides Anpanman
products and services, centered
on toys for infants.

With a theme of “eating,” PAC-MAN
was created in 1980 as a game that
could be enjoyed by all, without
regard to age or gender. Since then,in addition to game development,
PAC-MAN has been used in character
merchandising and has appeared ina variety of company commercials.
Even today, it is popular around theworld. PAC-MAN is one of the inhouse IPs that is representative of
BANDAI NAMCO.

Units Developing IP Products and Services
Entertainment Unit

IP Production Unit

Amusement Unit

THE IDOLM@STER Series

IDOLiSH7

Tamagotchi Series

PRETTY CURE! SeriesThis IP was introduced in 2005.
Centered on idol production
game content for smartphones
and home video games, it has
earned popularity among a wide
range of fans, without regard togender. We are rolling out avariety of products and services,such as music CDs, live events,
animations, comics, Web radio,
and merchandise.

Since the launch of a gameapp for smartphones in 2015,
IDOLiSH7 has achieved a highlevel of popularity, especiallyamong women. The BANDAI
NAMCO Group is rolling out awide range of products andservices, including animations,
live events, music CDs, and goods.

This in-house IP was created asa portable nurturing toy in 1996
and today is supported by two
generations – parents and theirchildren. The lineup has been
expanded with the addition of
new Tamagotchi versions thatincorporate new trends, and the25th anniversary will be reachedin 2021.

The PRETTY CURE! series has
been popular for more than 15
years, centered on children ages
three to six. The BANDAI NAMCO
Group provides a wide range of
PRETTY CURE! products andservices, centered on toys.

Ultraman Series

Mobile Suit Gundam Series

DRAGON BALL Series

Love Live! Series

Since its launch in 1966,
Ultraman has earned the support of a wide range of age
groups, extending to two or eventhree generations. The BANDAI
NAMCO Group provides
Ultraman products and services,such as toys and visual packaged products.

Since its launch in 1979, Mobile
Suit Gundam products haveearned support among a wide
range of age groups. Centeredon visual products, theseinclude plastic models, home
video games, network content,
and amusement machines. In
addition to Japan, Mobile Suit
Gundam initiatives are beingrolled out around the world,
including appearances in
Hollywood films.

Launched in 1984, DRAGONBALL comics and animations
have earned the support ofcustomers around the world formany years. The BANDAI
NAMCO Group provides a wide
range of DRAGON BALL products
and services, such as home
video games, network content,
card products, and figures.

This IP, which was created froma project linking magazines,
visual products, and music, wasintroduced in 2010. In addition
to magazine pages and visualand music packaged products,
live events are highly popular.

MAJOR IP IN GROUP PRODUCTS AND SERVICES

300

Annual Number of IP Utilized

AnpanmanGUNDAM FACTORY YOKOHAMAKAMEN RIDER Series

Super Sentai Series

BORUTO / NARUTOONE PIECE

The KAMEN RIDER series has
been popular for more than 50
years and has earned the support of a wide range of age
groups around the world. The
BANDAI NAMCO Group provides
various KAMEN RIDER products
and services, centered on toys.

The Super Sentai series has
maintained its popularity withmore than 45 products and has
also earned support in Asia. The
BANDAI NAMCO Group provides
a wide range of Super Sentai
products and services, centered
on toys.

This IP was introduced in 1999,
and its comics and animations
have been popular around theworld for many years. The
BANDAI NAMCO Group is providing a wide range of products
and services, centered on home
video games and network content.

Launched in 1997, ONE PIECE
comics and animations havebeen popular around the world
for many years. The BANDAI
NAMCO Group provides a wide
range of ONE PIECE products
and services, such as home
video games, network content,
and figures.

9THE GROUP’S GREATEST STRENGTH —THE IP AXIS STRATEGYFY2019.3
Approximately

FY2020.3
Approximately

FY2021.3
Approximately

¥

¥

¥

6.0 billion

Affiliated Unit

outlet

9.0 billion

LIVE ENTERTAINMENTTOYS

The optimal

regionNETWORKCONTENTHOME VIDEOGAMESAMUSEMENTFACILITIES

CARDS

25.5 billion¥

Nature of business

BLUEfin (currently, BANDAI
NAMCO Collectibles LLC)

Sales, promotions, event sales, e-commerce,
Further growth in sales of products for the matureetc., for collectible figures and other products
fan base in North America
for the mature fan base

HEART CORPORATION

Planning, production, processing, andwholesale sales of seasonal special event
candy and candy toys

Reflector Entertainment Ltd.

By strengthening the development system necessary
for the creation and growth of home video game
Planning and production of entertainment
titles, we will build a home video game portfolio incontent, such as network content, home
Europe and North America with a balance between
video games, etc.
titles originating in Japan and titles originating inother markets.

NEW
DEVICES

PurposeFurther strengthening of toys and hobby categories
in which we do not have a presence

Planning and production of animation;
Xebec Corporation*
management and administration of(currently, SUNRISE BEYOND INC.)
copyrights

Strengthening production capabilities to drive new
IP creation and foster innovation with existing IP

Planning, production, and copyrightbusiness for TV animation programs;
production and agency operations in
sports entertainment

Unifying/streamlining decision making in the value
chain in the Gundam business

IP Production
SOTSU CO., LTD.

VIDEO ON
DEMAND(VOD)
CONTENT

10.5 billion

Company nameEntertainment

CONFECTIONERY
and FOODS

Cumulative three-year total
Approximately

For M&A, we implemented activities based on quantitative investment decision-making standards, such as internal rate on
return (IRR) and return on invested capital (ROIC) standards. Furthermore, we are not aiming simply to expand our scale.
Rather, we are taking a forward-looking approach to considering and implementing projects that enable both sides to profit andlead to gains in corporate value (projects in which we can leverage the Group’s strengths and supplement/expand our businesses).

The optimaltime

We mainly invested in new IP creation in each Unit, initiatives related to the IP Strategy Division (DREAM SUPPORT PROJECT,
innovation with existing IP, etc.), and challenge support project (investing in new businesses, new technologies, etc.)

Major M&A results (Period of previous Mid-term Plan: April 2018 to March 2021) Maximizing IP Value
The optimal

Amount of Strategic Investment for IP (Period of previous Mid-term Plan: April 2018 to March 2021) 

THE IP AXIS STRATEGYThe IP axis strategy is the greatest strength of the BANDAI NAMCO Group, which has a diverse rangeof businesses and extensive know-how in the field of entertainment.
It is through the IP axis strategy that the Group works to maximize IP value by leveraging IP worldviews
and providing the optimal products and services in the optimal regions at the optimal times.
By advancing, promoting, and expanding the IP axis strategy, the BANDAI NAMCO Group is aiming
to achieve further growth in global markets.

PLASTICMODELS* Took over only the visual product production department

Examples of IP Creation Initiatives (Period of previous Mid-term Plan: April 2018 to March 2021)
MOVIES

VISUALand MUSIC
PACKAGEAMUSEMENT
MACHINES

IP Strategy
Division

The IP Strategy Division was established within BANDAI NAMCO Holdings Inc. to strengthen the IP axis strategy,
which is aimed at driving the growth of the Group over the medium to long term. This division has advanced avariety of projects, including the worldwide rollouts of established IP, such as the Mobile Suit Gundam series andthe DRAGON BALL series; the creation of new IP; and the rollout of IP for women in the mature fan base.

BANDAI NAMCO
Content FundThis fund was established through investment by BANDAI NAMCO Holdings and its major business companies. It is
implementing aggressive investment and production of visual products and other content from a long-term, optimal
viewpoint, with the objective of sustained IP creation. In collaboration with partners inside and outside the Group, the fundis currently advancing Group-originated content, content developed jointly with partners outside the Group, etc.

Introducing products and services thatleverage the worldviews of IPs

Accu
mul
ated
kno
w-h
ow

t
men
vest
n
i
IP

• Employee-Participation Idea Submission Systems
Cultivation

Note: This illustration shows one example of IP axis development.

Creation

Co-creation

Internal andExternal Idea
Proposal
Systems

At the Unit and company levels, we have established employee-participation idea submission systems related to
products, services, business models, etc.

• BANDAI NAMCO Accelerator

The BANDAI NAMCO Accelerator supported the operations of start-up companies, integrated Group
resources, and rolled out innovative businesses and IP.

• DREAM SUPPORT PROJECTThe DREAM SUPPORT PROJECT supports the dreams of next-generation creators. In addition to funding, theproject provides educational support through workshops and a system for mentoring by Group employees.

1011THE BANDAI NAMCO GROUP —OUR VALUE CREATION PROCESSTHE BANDAI NAMCOGROUP’S OPERATINGENVIRONMENT AND
ISSUES FACING THE GROUP

Our Vision

The Leading Innovator in
Global Entertainment

Leveraging IP to Foster Communication among People around the WorldIn response to the issues that we face, the BANDAI NAMCO Group is combining original management
resources to implement the global rollout of the IP axis strategy, which is the Group's greatest strength andbusiness model, and to provide products and services that leverage the appeal of IP. Moreover, throughthose products and services, we are striving to fulfill our responsibility to contribute to a sustainable society
and aiming to realize sustained growth over the medium to long term. In these ways, the BANDAI NAMCO
Group is working to meet the expectations of its stakeholders. Through these initiatives, we will contributeto the creation of a world in which all IP fans around the globe can communicate and forge connections in amanner that transcends national borders and languages and will increase our corporate value.

INPUT(Key management resources)

Intensifying
competition in
global markets

Changes intechnology,
such as network
adoption

Platform
diversification

Diversehuman
resources

Corporate
culture oftaking on
challenges

Planning anddevelopment
capabilities

Technical
capabilities

Dependence on
specific IP,
businesses,
or regions(IP axis strategy)

9,550 people(As of March 31, 2021)

Maximizing IP Value

Strategic investment
for IP axis strategy:

25.5¥
billionover three years

Annual number ofIP utilized:

More than300

Game content
R&D investment:

82.0 billion¥

Introducing products
and services thatleverage theworldviews of IPs

Advertisingexpenses:

45.2 billion

12

Strengthening
the IP axis
strategy
Increasing the Corporate Value ofthe BANDAI NAMCO Group
Expandingbusiness on a
global basis¥

Shareholders’equity ratio

69.7%

Creating newentertainment

Customers

Creating a world in which
all IP fans around the globe cancommunicate in ways that transcend
the barriers of national borders
and languages, achieving asustainable societyOpen partnerships

Increasing
customersatisfaction

COMPLIANCE

CSR MANAGEMENT BASED ON THE SUSTAINABILITY POLICYCORPORATE GOVERNANCE

Threats, such as
disasters,
epidemics,
and terrorism

Shareholders

Local communities(FY2019.3 to FY2021.3)(FY2021.3)

Addressing
climate change
and environmental
changeVALUE CREATION

Sustained growthover the medium tolong term(FY2021.3)

Stable financial position

Securing humanresources

OUTCOME

Number of consolidated employees:(FY2021.3)

Sales andmarketingcapabilities

BUSINESS MODELOPERATING ENVIRONMENT AND ISSUES FACING THE GROUP

Changes incustomer lifestyles
and preferences

Employees

Partners
Utilizing
diverse humanresources

Our Mission Statement

Dreams, Fun and Inspiration

13

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS
As of June 21, 2021

President andRepresentative Director

Masaru Kawaguchi

Director

Shuji Ohtsu

Director (Part-time)Director

Director (Part-time)

Yuji Asako

Yasuo Miyakawa

Satoshi Kono

Director (Part-time)Director (Part-time)Director (Outside)

Makoto Asanuma

Hiroshi Kawasaki

Koichi Kawana

President and Representative
Director of BANDAI NAMCOEntertainment Inc.

President and Representative
Director of BANDAI NAMCO Arts Inc.

President and Representative
Director of SUNRISE INC.

President and Representative
Director of BANDAI NAMCO
Amusement Inc.

Director (Outside)Director (Outside)

Satoko Kuwabara

Mikiharu Noma

Director (Outside)

Toshio Shimada

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS

Chairman and Director

Mitsuaki Taguchi

AUDIT & SUPERVISORY BOARD MEMBERS

14

Audit & Supervisory Board
Member (Full-time)

Audit & Supervisory Board
Member (Full-time, Outside)

Audit & Supervisory Board
Member (Outside)

Audit & Supervisory Board
Member (Outside)

Masataka Nagaike

Toru Shinoda

Osamu Sudoh

Katsuhiko Kamijo

15

CHAIRMAN’S MESSAGE

Changing Our Management System
and Reorganizing Our Units in Advanceof the Next Mid-Term Plan“I will strive to contributeto the establishment of a solid
system, as we target a new
way to compete for
BANDAI NAMCO in a new era.”

Mitsuaki Taguchi
Chairman and Director
BANDAI NAMCO Holdings Inc.

In addition, the new representative directors of thebusiness management companies are highly capable ofleading BANDAI NAMCO in the new era. We are advancing
personnel exchanges among representative directors anddirectors—extending across business lines—and they are
accumulating a wide range of experience. Accordingly,
I expect to see even more dynamic combinations andcollaborative activities in the future.

Making a New Contribution fromMy Position as Chairman
Going forward, I will support Mr. Kawaguchi from theperspective of overall optimization for the entire Group.
Mr. Kawaguchi will handle overall Group management
and advance the formulation of the next Mid-term Plan.
In addition, I will oversee the IP Production Unit. This Unit
has been significantly influenced by the spread of COVID-19,
and it will need to address the changes in its environment
and further deepen the processes of integration andcollaboration for the two businesses that have beencombined. In addition, the Unit’s mission is the creationof IP, and I have considered this to be my duty since
I became president. Moving forward, with IP creation as
our starting point, we will work to further expand our IP
creation capability and strengthen collaboration with theGroup’s various businesses.
Even during the next Mid-term Plan, there will be nochange to the BANDAI NAMCO Group’s direction of using
the IP axis strategy as an asset to expand operations in
global markets. Nonetheless, with the operating environment undergoing significant change, we will not be able
to survive if we simply extend previous ways of doing
business. Under the new system, we will aim for sustained
growth and build a new way to compete for BANDAI NAMCO
in a new era.

Aiming for a World in Which IP Fansaround the Globe Can Communicate inWays That Transcend the Barriers of
National Borders and Languages

CHAIRMAN’S MESSAGE

From April 2021, I have become the Chairman and Director,
and Masaru Kawaguchi has become the President andRepresentative Director.
In an environment marked by the influence of COVID-19,
to address the changes of the times in formulating strategies and building a foundation, we changed the start dateof the next Mid-term Plan from April 2021 to April 2022,
and in April 2021 we changed our management system
and reorganized our Units in advance of the next
Mid-term Plan. We believe that these initiatives will
enable us to carefully formulate a plan while unifying our
purpose under the new organizational structure.
Masaru Kawaguchi, the new president, has experience
with Group business companies and is well-versed in the

IP axis strategy, the Group’s greatest strength. He has astrong track record as a manager. For example, as theleader of the Toys and Hobby Unit, he achieved recordhigh results in consecutive fiscal years. In addition, he has
accumulated a wide range of experience, including as vicepresident of BANDAI NAMCO Holdings Inc. and a director
at BANDAI NAMCO Entertainment Inc. More thananything, Mr. Kawaguchi excels in not only delegating
authority but also drawing out the frontline capabilities
of employees, encouraging them to work independently
as they tackle their jobs. In this way, employees on thefront lines can work in a free and open-minded manner.
With both human resources and organizations, he ishighly skilled at linking one successful initiative to thenext. In the selection process, the Personnel Committee
conducted deliberations in line with the successor planand made its recommendation. Outside directors make up
a majority of this committee, which is chaired by anoutside director.

the committed efforts of the people on the front lines, whoworked with pride so that the BANDAI NAMCO Group could
provide people with “Dreams, Fun and Inspiration.” I have a
deep appreciation for their hard work.
The BANDAI NAMCO Group is rolling out products andservices leveraging more than 300 diverse IPs withwonderful worldviews. IP not only inspires, it also fosters
identification and brings people together. I have often said
that if we fully draw out the power of IP, then we candefinitely achieve a “world in which IP fans around theglobe can communicate in ways that transcend thebarriers of national borders and languages.”
In the midst of the COVID-19 crisis, I believe entertainment that truly makes people happy is increasingly
important. Going forward, we will continue to maintaina sense of pride and responsibility for our mission ofproviding “Dreams, Fun and Inspiration.” On that basis,
we will strive to forge connections with fans in global
markets and contribute to the creation of a world thatis full of smiles and happiness. I am excited about the
future, and I would like to ask for your continued supportand encouragement of the BANDAI NAMCO Group in theyears ahead.


September 2021

In FY2021.3, the final year of the previous Mid-term Plan,
despite the influence of COVID-19, we were able to achieve
record-high net sales and operating profit. Looking backover the six years when I was president, the fact that wewere able to maintain favorable results was due to all of

16

17

PRESIDENT’S MESSAGE“To maximize the value ofIP and achieve growth inglobal markets, we willcontinue to take onchallenges under the
ALL BANDAI NAMCO concept.”

New Role as President

Results in FY2021.3

Record-High Results for Net Sales andOperating Profit
In FY2021.3, which was the final year of the previous
Mid-term Plan, our employees responded rapidly andflexibly to the changes in the environment resulting fromCOVID-19. As a result of their hard work, we achieved
record-high net sales and operating profit, with net salesof ¥740.9 billion and operating profit of ¥84.6 billion. In
particular, in the first quarter each business was significantly affected by COVID-19, but we were able to recoverfrom the summer onward. Our operating profit margin
was 11.4%, and ROE was 10.2%. The decline in ROE was
due to such factors as business structural reform
expenses in the Real Entertainment Unit, which wererecorded as extraordinary losses.

Evaluation of the Previous Mid-term Plan
and Future Issues

Wide-Ranging Development on Three
Axes — Business, Target, and Region

Wide-ranging strategic development on the three axes ofbusiness, target, and region will be essential for theGroup’s further growth. For example, we currently haveroom for further growth in terms of targets, such as withinitiatives for women in the mature fan base.
Looking at regions, we have been aiming for an
overseas sales ratio of 50%, but business in Japan isstrong, and currently this ratio remains at about 20%.
However, we did make steady progress over the three yearsof the previous Mid-term Plan. We recorded significant
growth in net sales in China, which has been positioned asa key region. Moreover, with sales of home video games in
Europe and the Americas and sales of products for themature fan base in North America, we have been able toachieve results that pave the way for the next Mid-term
Plan. Moving forward, to increase the extent to which wewill leverage our comprehensive strength under the ALL
BANDAI NAMCO concept, we plan to implement a variety
of measures, including reorganizational measures in eachregion, such as combining the Digital business company
and the Toys and Hobby business company in China.

Accelerate Evolution in IP Axis Strategy
Under the previous Mid-term Plan, we received a strong
response as we targeted progress with the IP axis strategy.
Established IP products and services maintained stable
popularity, and a contribution was made by multiple new IP.
We have entered a highly favorable cycle, under which we
rapidly introduce and commercialize IP that draws attention
while generating steady results with established IP.
Among established IP, Mobile Suit Gundam is in-house
IP that draws attention, and the best approach to the
Gundam outlet strategy will remain an important theme
under the next Mid-term Plan. Even now, when more than
40 years have passed since its launch, Mobile Suit Gundam
still has significant potential, and we will implement a
number of measures to further expand its growth. (Foradditional information, please see the special featuresection starting on page 40.)
The creation of new IP requires the use of a different
time frame. These initiatives will require a certain amount oftime, and their completion will require more than the periodof a single Mid-term Plan. Under the previous Mid-term
Plan, we implemented a total of ¥25.5 billion in strategic
investment, and moving ahead we will take an aggressive
approach to IP creation and acquisition. We have already
implemented a variety of preparations, such as rollingout new IP with initiatives that extend across multiple
businesses, and the results are starting to appear in rapid
succession, even before the next Mid-term Plan.

PRESIDENT’S MESSAGE

I have been appointed President and Representative Directorof BANDAI NAMCO Holdings Inc. I joined BANDAI CO., LTD.,in 1983, and after working in a variety of business departments, I became President and Representative Directorof BANDAI. In addition, I worked in Group management asa director at BANDAI NAMCO Holdings Inc. and BANDAI
NAMCO Entertainment Inc. This wide range of experience in
the Group has helped me to grow.
Over that period, I have always emphasized a spirit ofacting independently and stepping up to take on challenges.
As for my approach to work, I value an autonomous,
independent viewpoint, a commitment to results rather
than process, and a feeling of humble appreciation for
one’s surroundings.
In taking over the leadership of the BANDAI NAMCO
Group, I have a strong sense of the weight of my responsibilities. Entertainment companies tend to go into a
decline at the moment when they start to focus on themaintenance of the status quo. I believe the BANDAI
NAMCO Group holds significant potential that has not yet
been realized. In a management environment marked
by dramatic change, I will need to focus on more thanshort-term stability. Rather, my role will be to pursue amore aggressive course of growth and determine theGroup’s direction with a focus on the medium- to longterm future, thereby building a strong foundation.

COVID-19 had a number of negative impacts on theGroup. (Please read in conjunction with page 23.) In theReal Entertainment Unit, amusement facilities closed or
reduced their operating hours around the world. In the
Visual and Music Production Unit and the IP Creation Unit,
there were delays in production and release schedules aswell as the cancellation or postponement of live events.
On the other hand, in the Toys and Hobby Unit and the
Network Entertainment Unit, which captured demandassociated with people staying at home, we achieved
record-high results, and we were able to offset thenegative impacts on a Groupwide basis. This was a resultof the effectiveness of our wide-ranging businessportfolio. The prompt initiatives that were implemented ateach work-site produced significant results.
Looking at our results forecast for FY2022.3, we
expect the operating environment to remain uncertain,
including the circumstances regarding the spread of
COVID-19. When we launched the previous Mid-term
Plan, we announced targets for the plan’s final year of¥750.0 billion in net sales and ¥75.0 billion in operating
profit, and even in this operating environment, we will
strive to steadily achieve these targets.

“My role will be to determine theGroup’s direction with a focus on themedium- to long-term future,
thereby building a strong foundation.”

Masaru Kawaguchi
President and Representative Director
BANDAI NAMCO Holdings Inc.

18

19

PRESIDENT’S MESSAGE

Toward the Next Mid-term Plan

Transition to 3-Unit System

We have positioned FY2022.3, which is currently underway,
as a period for reinforcing our foundation for the next
Mid-term Plan, and we are advancing a variety of reforms.
As one part of those initiatives, in April 2021 we moved
ahead with the reorganization of the Units. We transitioned from the previous system of five Units to a systemof three Units so that each Unit can address the changes
in the environment and increase its potential as a resultof the combination.

the new system through this process, as we develop acommon understanding of the issues that we face, is having
positive knock-on effects in a variety of areas.
For example, in FY2022.3 we conducted multiple
Groupwide projects that extended throughout the organization, such as the Gundam Project. On the front lines, we
also launched a number of independent projects that
extend across organizational boundaries. These types ofactivities that transcend organizational boundaries arealso proving to be useful in the formulation of the next
Mid-term Plan.

IP Production Unit

Amusement Unit

Pursuing New Possibilities for
Amusement Facilities

The Entertainment Unit resulted from the combination of theformer Toys and Hobby Unit and the former Network
Entertainment Unit. With a focus on the future, we decided
that now, when both Units have favorable results, was thebest time for a reorganization to succeed in intense global
competition. The new system combines digital elements(content business) and physical elements (tangible products
business), and it can leverage a wide range of outlets. Thissystem is unique in markets around the world, and it will bea major point of differentiation versus other companies.
Furthermore, to promote the integration of the businesses
and encourage employees, we are implementing personnel
exchanges among the directors of the business companies.
The Entertainment Unit accounts for a large percentage
of Group sales, and from the outside our structure might
appear somewhat unbalanced. We took our time and held
repeated discussions from a variety of angles, and we
decided that the Unit combination was necessary to expand
business opportunities and achieve growth. The transition to

The IP Production Unit resulted from the combination of
the former Visual and Music Production Unit and theformer IP Creation Unit. The Unit will foster collaboration,
both inside the Unit itself and with external partners, andwill play a role in new IP creation and nurturing. The
recent combination has consolidated the Group’s internalstudio and production functions, and we now have morethan 20 production lines at in-house studios that we
supervise and more than 30 production lines that areshared with studios of other companies.
In regard to Gundam, we made SOTSU CO., LTD., whichhandles rights management, a wholly owned subsidiary. We
expect this to speed up decision making, with the effects
subsequently extending to a variety of areas. The circumstances are also challenging for live events, but we will pursue
a new approach to this business through the use of online
events and new technologies. Furthermore, we will continue
working to increase value and create new businesses
through the fusion of visual, music, and live elements.

The Amusement Unit (former Real Entertainment Unit) will
focus on rebuilding its business and strengthening its
earnings platform. Amusement facilities are one outlet in the
IP axis strategy, and they are a venue for rolling out Group
products, such as prizes and capsule toys. In addition, thesefacilities also have an important role as points of directcontact with customers. Under the next Mid-term Plan, theUnit will implement initiatives, such as developing a newamusement facility image that leverages BANDAI NAMCO’s
distinctive characteristics and devising measures for the
more effective utilization of Group resources.

BANDAI NAMCO Group Organization Chart (From April 2021)

Schedule for the Next Mid-term Plan
2019

2020

2021

2022

2023

Entertainment Unit
Digital Business
Toys and Hobby Business

IP Production Unit

Previous
Mid-term Plan

Next
Mid-term Plan

(FY2019.3 to FY2021.3)(From FY2023.3)

Visual and Music Business
Creation Business

Amusement Unit

Affiliated Business Companies

Strengthening Governance froman External Viewpoint
To increase the transparency and objectivity of management
decision making, it is essential to have highly effective
governance that introduces external, independent
perspectives. The Company’s outside directors are allindividuals with abundant experience in corporate
management, law, or academia. Based on their highlevels of expertise, they are providing a wide range ofsupervision and advice. In particular, in regard to the
management of the risks of overseas business and themonitoring of investments, they are offering detailed
opinions based on a legal perspective and examples fromother companies, and this is making a significant contribution to enhancing management decision making.
In addition, from June 2021 Toshio Shimada, who has
IT company management experience, became an outside
director. Moving forward, with our new lineup of directors,
we will strive to further deepen discussions about such issues
as the method of advancing digital transformation (DX).

Targeting Further Growthin the Global Market
My basic view is that entertainment companies should not
aim for stability. The entertainment business is a series ofdaily challenges, and an easygoing, stable approachadversely affects the potential for future growth. It is
important to have a dynamic approach marked by continually taking on challenges, even if you fail. I believe that theemployees of BANDAI NAMCO, who have overcome manydifficulties in the past, have this type of strong character.
As I mentioned above, the BANDAI NAMCO Group has
extremely high potential. By rolling out more than 300 IP
on the three axes of business, target, and region, andworking to further advance the IP axis strategy, we will beable to maximize the value of IP. This is BANDAI NAMCO’s
strength, and it is a unique feature of our operations thatis unparalleled.
My mission as the new President and Representative
Director will be to provide IP to fans around the world
through our products and services, to nurture that IP withfans, and to enhance BANDAI NAMCO’s global presence.
I would like to ask our shareholders and investors for their
ongoing support of the BANDAI NAMCO Group as we aim
for further growth in the global market.


PRESIDENT’S MESSAGE

Fusion of Digital and Physical Elements

Accelerating the Creation andNurturing of New IPEntertainment Unit

20

“The employees of BANDAI NAMCO have overcome
many difficulties in the past, and I believe that they
have strong character.”

September 2021

Formulation of the Next Mid-term Plan
Establishing a foundation for the implementationof strategies

21

RISKS AND OPPORTUNITIES FOR THE BANDAI NAMCO GROUP

For the BANDAI NAMCO Group to record sustained growth over the medium-to-long term, we will need to reducerisks and make the most of opportunities by responding rapidly to changes in the environment, identifying risks
and opportunities for the Group, and considering and implementing measures to address them. At top management
meetings and various committees, we are analyzing and sharing information about risks and opportunities andconsidering measures. In this way, we have established an appropriate risk management system.
Major Groupwide Risks and Opportunities
Risks and Opportunities
Items
accompanying the
spread of COVID-19

Please refer to page 23.
• Rapid changes in markets and customers;
technological progress• Dependence on specific IP• Increased investment related to IP creation/acquisition• Damage to IP value, such as IP infringement• Securing and developing human resources

Opportunities• Promoting collaboration among regions andbusinesses• Expanding potential for the creation of
new markets and businesses

Changes in thenaturalenvironment, suchas climate change

Please refer to page 79.

• Disasters, such as natural disasters and accidents• Changes in political situation• Exchange rate fluctuations• Revision of laws, regulations, etc.
• Cyberattacks on core systems, etc.

• Promoting activities and implementing continued
reevaluations based on business continuity plan (BCP)
and business continuity management (BCM)• Strengthening risk management system• Strengthening system for the collection and sharing of thelatest information about each business and region• Strengthening cybersecurity, such as collecting the latest
information and implementing regular verification

Major Risks and Opportunities in Each Business
Opportunities• Spreading/expanding network environment• Expanding customer touchpoints
through digitalization• Using online measures to strengthen initiatives toenhance IP recognition as well as global rollouts• Strengthening digital initiatives, such as e-commerce

Risks

All businesses• Platform diversification• Technological progress• Rising amount of development investment• Aggressively addressing new technologies and new platforms• Continued investment in technical research• Strengthening development system with focus on quality
and increasing efficiency• Continued communication with fans after release• Trend toward fewer children in Japan• Oil price increases; strengthened regulations
regarding the trend away from the use of plastic• Concentration of production regions; quality control• Expanding target customer groups and regions• Development and production value chain reform, initiatives to address the trend away from the use of plastic,
such as new material R&D• Strengthening quality control system (continued reevaluationof quality standards, implementation of Code of Conduct(COC) audits, etc.)

Entertainment Unit
Digital businessEntertainment Unit
Risks

Toys and Hobby
business

IP Production Unit

Creation business

22

Risks

Amusement Unit

Risks

Visual andMusic business

Systematic Measures Based on Business Continuity Planning (BCP) and Business Continuity Management (BCM)
In accordance with our BCP and BCM, we are holding regular meetings of the Crisis Management Committee, with a special
focus on preventing the spread of COVID-19. Participants include directors from the Company, directors and managers fromrelevant companies, and executives from overseas regional headquarters companies. We are sharing information and deliberating on policies at these meetings, and we are working to keep people throughout the Group informed. In FY2021.3, withconsideration for the COVID-19 circumstances, we revised our BCP. In the future, we will continue to improve and update
content to facilitate the full comprehension of various risks.

Introducing New Working Styles
With our priority on the health and safety of employees and their families, we are working to implement thorough hygiene
management in offices, and in FY2021.3, we established guidelines for new working styles. In accordance with theseguidelines, we have set a target of a work-from-home ratio of 70% (for Group companies in Japan). We have established anenvironment that promotes working at home, including the payment of allowances. In addition, we have introduced systems
and frameworks that facilitate more flexible working styles, such as off-peak commuting and a flex-time system with no coretime. (For information about measures for employees, please refer to page 75.)

Implementing Support for Society

Risks

Items
accompanying
other external
factors• Spreading corporate philosophy, enhancing brand value• Addressing new business models and platforms• Strengthening collaboration among Units and cooperation
with external partners• Establishing IP, business, and regional portfolios• Strengthening development system with focus on quality• IP protection activities, such as eliminating
counterfeit products• Introducing systems and frameworks that facilitate active
careers for diverse human resources• Bolstering sound financial position• Expanding global rollouts, implementing
organizational restructuring

In regard to COVID-19, the Group is giving the highest priority to the safety of its various stakeholders, including employees,
their families, and customers. To prevent the spread of COVID-19, we will continue to implement thorough hygiene management and a variety of initiatives in accordance with the requests of national and local governments in countries and regions.
In business operations, to minimize the influence on society, the economy, individual lifestyles, and consumption, and tominimize the impact of changes in market environments and consumer preferences, we will continue to collect information
and adapt to the circumstances. In addition, as a member of society, we will strive to meet the demands and expectations ofsociety and customers in accordance with our corporate philosophy of providing “Dreams, Fun and Inspiration” to people
around the world through our products and services.

• Intensification of competition in IP creation• Developing and securing human resourcesin production• Consolidation of studio and production functions• Enhancing production environment, strengthening humanresources development• Investing to enhance production technologies• Strengthening collaboration with all partners inside andoutside the Company• Diversification of entertainment utilizing real venues• Utilizing IP and Group resources• Strengthening stable business foundation

As a member of society, the BANDAI NAMCO Group is implementing social support activities to help prevent the spread of
COVID-19. In addition to making donations, we are implementing initiatives that utilize IP. For example, in cooperation with thegovernment, we are promoting handwashing by providing free educational posters, and we are offering free distribution ofindoor exercise videos. In these ways, we are implementing social support that leverages the distinctive characteristics
of our businesses.

RISKS AND OPPORTUNITIES FOR THE BANDAI NAMCO GROUP

Risks

Items
accompanying theadvancement of
the IP axis strategy

Measures

Influence of the Spread of COVID-19

Major Expected Effects if the Spread of COVID-19 Continues
Looking at the major effects that we expect if the spread of COVID-19 continues, there will be a negative influence onamusement facility operations, live events, etc. On the other hand, due to the growth of digitalization, we expect the arisingof new opportunities, such as through growth in digital demand and customer touchpoints, and digitalization of existing
businesses. We will continue to implement initiatives to minimize the negative effects, and in addition we will implement
flexible responses to changes in markets and customer lifestyles.

Groupwide influence• Influence on consumption due to retail store closures, etc.
• Event postponement/cancellation and accompanying influence on promotions, etc.
• Increase in digital demand, such as online events and use of e-commerce• Enhancement of work-life balance through the introduction of new working styles

Influence on Units/Businesses Entertainment Unit, Digital Business• Influence on title development/operational schedules

Entertainment Unit, Toys and Hobby Business• Influence on production and distribution schedules

at in-house plants and cooperating plants• Influence on product sales at amusement facilities

IP Production Unit

• Influence on visual and music product production, opening,and packaged product sale schedules

Amusement Unit

• Influence of amusement facility closure and reduced

operating hours• Influence on amusement machine demand

23

MESSAGE FROM THE DIRECTOR IN CHARGE OF FINANCE
AND INFORMATION“We will aim to establish a stable,
agile financial position that supports investment
for the Group’s growth.”
Influence of the Spread of COVID-19 and
the Acceleration of Reforms

DX as Creativity and Technology
In regard to the Group’s digital transformation initiatives,
I think that there are two dimensions—a creative side,
where specific added value is created, and a technology
side, which supports those activities. In contrast to thecreative side, which belongs to the business and management strategy fields, the corporate departments areadvancing three measures from the technology side.
These are “digitization,” which turns tacit knowledge into
universal, multipurpose data; “digitalization,” which links
that data to improvement of business processes, etc.; andstrong “information security,” which is a precondition foreverything that we do. I also work as the director in chargeof information, where I have responsibility for a series ofmeasures in the corporate departments.

In FY2021.3, we launched a project for the Groupwide
collection and utilization of business analysis data.
In addition, we continue to strengthen measures to address
security risks, such as cyber-attacks through ransomware.
We have already put into effect rigorous vulnerability
countermeasures for network equipment, such as throughVPNs*1. We have also completed the implementation ofcountermeasures such as the introduction of endpoint
detection and response (EDR)*2 measures, and the implementation of 24-hour monitoring through a security
operations center. Going forward, we will implement
additional measures to rigorously protect information assets.
*1 Virtual private network on the Internet.
*2 Detection and response when intrusion of malware, etc., has been permitted

Pursuing Financial Stability and Agility
To rapidly and steadily advance investment necessary for
the Group’s growth, and to sustain employee hiring andmaintain relationships with partner companies, it isnecessary to have a certain level of cash and to secure a
flexible fundraising system. In regard to capital efficiency,
we will continue to steadfastly maintain financial stability
and soundness while remaining aware of return on equity(ROE).
In fundraising, in FY2021.3, as one part of crisis
management measures, we maintained and renewed
financing frameworks with financial institutions, and we
also borrowed funds. Moving forward, to support a moreaggressive growth strategy from the finance side, I thinkthat it will be necessary to further increase financial agility

Cash Dividends per Share and Total Payout Ratio
145
132

123

Shuji Ohtsu
Director
Division General Manager of the Group
Administrative Headquarters
BANDAI NAMCO Holdings Inc.

112

82

Cash Dividends
per Share(Yen)
Total Payout Ratio
(%)

40.8

2017

49.9

50.3

50.3

2018

2019

2020

through the effective utilization of funds on hand within
the Group.

Fulfilling Our Duties as a
Member of Society
For shareholder return, from the previous Mid-term Plan
the Company introduced a basic policy of maintaining
stable dividends over the long term and focusing on thecost of capital. Based on a dividend on equity (DOE) ratio of
2%, we will target a total return ratio of 50% or more. In
accordance with this policy, for FY2021.3, we paid annual
dividends of ¥112 per share, which included the baseportion of ¥42 per share and a performance-linked portionof ¥70 per share. Moving forward, we will continue toconsider possible improvements to our capital policy.
I believe that the way to address the mandate of shareholders and investors is for the Group to fulfill its duties asa member of society through a variety of initiatives,maintain a sound financial position, and record growth.
I would like to ask for continued understanding and support
as we implement these initiatives.

MESSAGE FROM THE DIRECTOR IN CHARGE OF FINANCE AND INFORMATIONCOVID-19 had an influence on our results in FY2021.3.
Adding up the obvious factors, such as the closure ofamusement facilities and the cancellation of events, theimpact was approximately ¥75.0 billion on sales andapproximately ¥21.0 billion on operating profit. In the RealEntertainment business, on which COVID-19 had anespecially large effect, business structural reform expenses
were recorded as an extraordinary loss of ¥11.7 billion.
On the other hand, the Toys and Hobby business and the
Network Entertainment business, which captured demandassociated with people staying at home, exceeded plans
and achieved record-high levels of consolidated net sales
and operating profit.
Moving forward, we expect the influence of COVID-19 tocontinue, but we will work to minimize the negative impact

and approach the circumstances as an opportunity toaccelerate forward-looking reforms.

50.3

2021

For the Fiscal Years Ended March 31
FY2017.3 includes a special dividend of ¥20.
FY2018.3 includes a special dividend of ¥25.

24

25

MESSAGE FROM THE DIRECTOR IN CHARGE
OF MANAGEMENT PLANNING AND ESG“In accordance with the key phrase‘with fans,’ we will advance sustainable
activities that leverage our distinctive strengths.”
Influence of the Spread of COVID-19 and
the Acceleration of Reforms

The revision of the Japanese Corporate Governance Codewas announced in June 2021. We recognize the importanceof that approach, and we will work to address eachprinciple and to secure accountability. In addition, we will
aim to realize sustained growth for the Group andenhancement of corporate value over the medium to longterm by further strengthening the governance system.
In addition, consciousness of the position of outside
directors in companies is increasing. In this setting, wehave established a system in which outside directors makeup one-third (four directors) of all directors. Objective
comments and opinions from the outside directors, offeredfrom a variety of perspectives, are effectively enhancing theawareness of the executive directors. In the most recent
review of the effectiveness of the Board of Directors, a highevaluation was received for the Board culture, while on theother hand it was suggested that there is a need tostrengthen policy setting from a global perspective and risk
identification and monitoring. These opinions have been
received earnestly by the Board of Directors, which is
rapidly implementing improvement measures. Individuals
with experience and expertise that complement the skills of
the Board of Directors are selected as outside directors.
The Company’s new outside director, Toshio Shimada, waselected and assumed the position of outside director at theOrdinary General Meeting of Shareholders in June 2021.
Based on his experience and expertise related to digitaltechnologies, the Company expects that he will support theadvancement of digital technologies and management,
which is an area that the Group needs to strengthen.

Sustainable Activities Advanced“With Fans”
In April 2021, the BANDAI NAMCO Group formulated a newsustainability policy. We have implemented CSR initiatives
that leverage the distinctive strengths of the Group and its
businesses. With consideration for the growing expectations
and demands of society, such as environmental change andthe SDGs, we have announced that “Under the IP Axis
Strategy, we will work with fans to promote sustainability
activities corresponding to social issues that should be
addressed by the Group.” As one part of those initiatives, theGroup announced that it is promoting the identification ofmateriality issues (reselection of Important Themes) for the
next Mid-term Plan, and that we have established a goal of
net-zero energy-related emissions of carbon dioxide by 2050.
Targeting the achievement of our goals, we will implement
initiatives in line with the characteristics of each business.
The statement “with fans” in the sustainability policy
indicates our distinctive dedication. Our business is supported
by fans. We need to move forward with fans, who are important stakeholders, and work together with them to advancesustainability activities. For example, we have been implementing the Gundam Recycling Project since April 2021.
Under this project, at 190 Group amusement facilities inJapan we have installed boxes exclusively for the collection of

The BANDAI NAMCO Group Sustainability Policy
Under the IP Axis Strategy, we will work with fans to promote sustainability activities corresponding to social issues that should
be addressed by the Group.

Specific Initiatives
Identification of materiality issues (reselecting Important Themes)
Advancement of activities linked to the IP axis strategy
Medium- to long-term targets for decarbonization

Yuji Asako
Director
Division General Manager of the
Corporate Planning Division
BANDAI NAMCO Holdings Inc.

TargetBy 2050:
Reduce the amount of energy-related carbon dioxide emissions at Group business sites (offices, own plants,
directly operated amusement facilities, etc.) to net zero

Medium-termtargetBy 2030:
A 35% reduction compared with FY2020.3 (a 50% reduction compared with FY2014.3) in energy-related carbon
dioxide emissions at Group business sites

Main
initiatives

26

Gundam plastic model runners (plastic model frame
sections). In this way, the runners are collected from fansaround the country and recycled, and a large number of fansare cooperating. We have gotten a strong response, and thequantity collected has already exceeded our expectations. Thisis an activity that we have implemented together with fans.
To respond to the dramatically changing circumstancesin society and the demands that are placed on companies,
the BANDAI NAMCO Group will advance sustainable
activities that leverage our distinctive strengths. The
Sustainability Policy is an expression of that determination,and in accordance with the key phrase “with fans,” we will
advance original BANDAI NAMCO measures.

MESSAGE FROM THE DIRECTOR IN CHARGE OF MANAGEMENT PLANNING AND ESG

The spread of COVID-19 has significantly changed our daily
lives. We focused on reevaluating our business continuity
planning (BCP) and business continuity management(BCM) from the perspective of infection countermeasures,
which we had not considered prior to FY2020.3. On thatbasis, we corrected our BCP and BCM. COVID-19 has had asignificant influence on our operations, but at the sametime it has also provided an opportunity to substantiallyreevaluate our approach to business and our working
styles. (For information about working styles, please referto page 75.)

Leveraging Directions and Advice froman Outside Perspective, and Advancing
Effective Corporate GovernanceFurther promotion of energy-saving measures and introduction of renewable energy, etc.

27

MESSAGES FROM THE PRESIDENTS OF THE
BUSINESS MANAGEMENT COMPANIESENTERTAINMENT UNIT
 e will strive to create new value through the integration of digitalW
and physical elements.
Advancing Three Main
Strategies as We Work to Builda New Unit Organization

Yasuo Miyakawa
Director (Part-time)
In charge of Digital business, Entertainment Unit
BANDAI NAMCO Holdings Inc.
President and Representative Director
BANDAI NAMCO Entertainment Inc.

28

To further strengthen collaboration
around the world, we are implementing reorganizational measuresand consolidating offices in eachregion, such as combining the Digitalbusiness company and the Toys andHobby business company in China.
Through these initiatives, eachregion will foster enhanced unity
under the ALL BANDAI NAMCO
concept and build systems for theadvancement of strategies during
the next Mid-term Plan. Around theworld, the Digital business and theToys and Hobby business will step up

Initiatives by Business for
FY2022.3
In the Digital business, network
content and home video games areenjoyed over extended periods oftime, in units of several years.
Accordingly, we will continue

working to enhance title quality andto communicate with fans. Also, in
response to the speed of technological progress, we will strive tobuild an efficient, flexible development system. In global rollouts,
we will work together with overseas
bases, which are familiar with local
markets. Furthermore, we will
collaborate with local partners indevelopment and marketing. In thisway, we will promote rollouts thatleverage the special characteristics
of each region.
In the Toys and Hobby business,to grow the business in products forthe mature fan base, we havepositioned Japan, North America,and China as key markets. We will
expand the IP and product lineup,bolstering the distribution network,and advance digital initiatives, suchas strengthening e-commerce.
We will also focus on conducting

stable rollouts of established IP,
creating IP originating in products,
and implementing rapid initiatives
for new IP.

Aiming for an Original Business
Structure by Integrating theKnow-How from Two
Businesses
The Entertainment Unit has
know-how in the Digital business,
which focuses on quality in thedevelopment of titles that are
enjoyed for extended periods of time.
The Unit also has the speed androllout capabilities of the Toys andHobby business, which rapidlycommercializes IP in a wide range ofcategories. By integrating thesestrengths, I believe that the Unit will
be an original, appealing businessorganization. To that end, we willfurther deepen mutual understanding and integration between
the businesses and strive to becomea workforce of highly enthusiastic
employees. We consider the combination of the former Units to be thebeginning of the process of theintegration of digital and physicalelements. Going forward, we will
strive to multiply our strengths andcreate new value.

MESSAGES FROM THE PRESIDENTS OF THE BUSINESS MANAGEMENT COMPANIESThe Entertainment Unit was createdthrough the combination of theformer Toys and Hobby Unit and theformer Network Entertainment Unit.
The Unit comprises the Digitalbusiness and the Toys and Hobby
business. BANDAI NAMCOEntertainment Inc. and BANDAI CO.,LTD. are responsible for eachbusiness, and both companies work
together to oversee the entire Unit.
In FY2022.3, the first year since the
combination, in addition to advancing
our businesses we will work tobolster our foundation by implementing a variety of future-focusedinvestment and building a new
Unit organization.
Overall, the Entertainment Unit
will advance three main strategies.
First, we will maximize IP value
through the use of diverse content
outlets. Second, we will further
strengthen collaboration around theworld. And third, we will create newentertainment that integrates digitaland physical elements. In advancing
these strategies, we will launch avariety of Unit-wide projects andpursue future possibilities with asense of urgency.
To maximize IP value, welaunched multiple cross-sectional
projects for strategic IP, such as
Gundam. With the participation of theleadership of each company, we areworking to formulate businessstrategies and foster collaborationin products and services.

integration and cooperation. In
addition to IP originating in Japan,
we will focus on creating and rollingout IP originating overseas.
Targeting the creation of newentertainment, we are promoting avariety of projects that started on thefront lines. In addition, we haveoperated a proposal system with theparticipation of Unit employees.
Moreover, in addition to working
within the Group, as an open Group
we are aggressively advancing
partnerships with outside personnel,
companies, etc.

Kazuhiro Takenaka
Executive Officer, Division General Manager
of IP Strategy Division
In charge of Toys and Hobby business, Entertainment Unit
BANDAI NAMCO Entertainment Inc.
President and Representative Director
BANDAI CO., LTD.

29

Digital Business

Toys and Hobby Business

Example of Business Model in the Digital Business (when in-house IP is used)Example of Business Model in the Toys and Hobby Business (when another company’s IP is used)

Customers

Customers
Promotion androlling out media

Download content,
updates, holding events

Game content
Provision of products
and services
Promotion androlling out media

Platforms

Download content,
updates, holding events

Collaboration

IP usageapproval

Stores / e-commerceGame content

Promotion androlling out media

DigitalBusiness

TV
MoviesPublishing
Internet
Eventsetc.

Media

Provision of products
and services

Collaboration

Development /production partner

Program provision /investment

Toys and Hobby
Business

IP usageapproval

Merchandisingpermission

Rights holders

Other companies

RESULTS IN FY2021.3: KEY POINTS	Continued favorable results in network
content with major titles
	Large increase in unit sales of repeat titles inhome video games

FY2021.3 RESULTS AND RELATED DATA
Sales by Major Category
Network content

¥

207.7

Network Content
FY2022.3 NUMERICAL TARGETS*

Segment Sales

310.0

40.0

 ¥

Segment Profit¥* Results forecasts are as of May 2021

30

billionbillionOverseas sales ratio*

35%* Percentage of network content
sales contributed by transactions arising overseas

billionRESULTS IN FY2021.3: KEY POINTSFY2021.3 RESULTS AND RELATED DATA	Favorable performance of products for themature fan base around the world

Sales of IP Products and Services (Toys and Hobby Business in Japan)

Home video games	Favorable results in Japan with new IP
products and toy-related products¥	Improved results following reevaluation ofbusiness structure in Europe and the Americas

118.1

billionAnpanman¥¥

41,498thousandunits

Full package download sales ratio49%

FY2022.3 NUMERICAL TARGETS*

Segment Sales

300.0

35.0

 ¥

Segment Profit¥

billionbillionUltraman seriesHome Video Games
Unit sales of home video games

8.3
4.9

Mobile Suit Gundam series

PRETTY CURE! series

¥

¥

41.0

billionSuper Sentai series

billion¥

4.5

billion

6.6

¥

6.0

DRAGON BALL series

ONE PIECE¥¥¥

billion15.4

billionbillionPokémon

KAMEN RIDER series

24.3

MESSAGES FROM THE PRESIDENTS OF THE BUSINESS MANAGEMENT COMPANIESCreators
Development
partners

Media

TV
MoviesPublishing
Internet
Eventsetc.

billion

7.1

billionbillion* Results forecasts are as of May 2021

31

MESSAGES FROM THE PRESIDENTS OF THE
BUSINESS MANAGEMENT COMPANIESIP PRODUCTION UNIT
 e will create diverse, highly distinctive IP as the starting point of the IP
Waxis strategy.
Strengthening the Foundation
for IP Creation by Consolidating
Studio Functions

Satoshi Kono
Director (Part-time)
In charge of Visual and Music business,
IP Production Unit
BANDAI NAMCO Holdings Inc.
President and Representative Director
BANDAI NAMCO Arts Inc.

32

Initiatives in FY2022.3
Targeting the creation of new IP,
we are already advancing multiple
Unit-wide projects. In FY2022.3, we
will roll out a diverse lineup oflaunches, including establishedIP series as well as new IP, withproducts for casual users and coreusers. This will include products that
had their production or launches
delayed in FY2021.3 due to the
spread of COVID-19.

the content of virtual streaming
characters that we have cultivated
up to this point. We will work to
implement new digital entertainment initiatives, such as the entertainment business in virtual spaces
and the development of virtual
streaming characters.

Human Resources Development:
An Important Theme for
Supporting Sustained Growth
The cycle of the Unit’s businessmodel involves the creation andproduction of IP; the maximizationof the value of that IP, not only within
the Group but also with external
partners; and the investment of theearnings generated into new IP.
By concentrating the production
know-how of each studio, we will beable to create and leverage highquality IP with a sense of urgency.
In FY2022.3, the first year since the

combination, we will work to deepen
integration within the Unit and build
a strong foundation and robust
business models. In this way, we will
strive to further strengthen our IP
creation capabilities and our production capabilities.
An important theme in supporting
sustained growth will be the development of our human resources, suchas the producers and creators who
support IP creation and production. If
we can advance Unit integration andfoster smooth collaboration amongstudios, then we should be able toestablish an environment in whichyoung creators have increased opportunities to experience more products
and exciting initiatives. At the sametime, we will be able to provide anenvironment that is appealing toexternal partner creators.
In addition to visual products
such as animations, the IP
Production Unit handles such initiatives as artist production, operationof live events, and online distributionof visual products. In this way, we
have a wide range of original
capabilities for the creation andproduction of IP in variety of forms.
To maximize the capabilities of theentire Unit, each business will
collaborate closely and work hard
together so that we can provide
dreams and inspiration through thecreation and production of IP.

MESSAGES FROM THE PRESIDENTS OF THE BUSINESS MANAGEMENT COMPANIESThe IP Production Unit was createdthrough the combination of the former
Visual and Music Production Unit
and the former IP Creation Unit.
The Unit comprises the Visual andMusic business and the Creation
business. BANDAI NAMCO Arts Inc.
and SUNRISE INC. are responsible
for each business, and both companies
work together to oversee theentire Unit.
The most important mission of
the IP Production Unit is the creationand production of IP. The IP that wecreate is the starting point for the
IP axis strategy, under which thestrengths of the BANDAI NAMCO
Group are concentrated andextended across the world. Studiofunctions have been consolidated
through the Unit combination. In
addition to in-house studios withmore than 20 lines, we have acollaboration system with outsidestudios with more than 30 lines. In
this way, we have strengthened thefoundation for IP creation. Byleveraging and combining studios
with a variety of features andstrengths, we can make possible awide range of expression, and we
can now create diverse, highly
distinctive IP.

We are aiming to make Gundam intoa worldwide IP, and we will continue
working to create buzz around theworld through such initiatives as thelife-size moving Gundam at GUNDAM
FACTORY YOKOHAMA, the life-size
Gundam statue in Shanghai, newanimations, and the live-action
film that is currently being madewith LEGENDARY.
We will continue to hold live
events in strict compliance with thegovernment and industry guidelines
for the prevention of COVID-19. To
this point, we have accumulated
know-how while gaining experiencein such areas as online distribution
and events that are hybrids of realand online elements. In April 2021,
we established a department specifically to handle the xR business, and
we also commenced operation of astudio that is addressing xRtechnology. We will integrate the
live-event operational know-how and

Makoto Asanuma
Director (Part-time)
In charge of Creation business, IP Production Unit
BANDAI NAMCO Holdings Inc.
President and Representative Director
SUNRISE INC.

33

Visual and Music Production Business

Creation BusinessExample of Business Model in the Visual and Music Production BusinessExample of Business Model in the Creation Business

Customers

Customers

Provision of products and services
Provision of
products

Management

Coordination

Artist development
Operation of fan clubs
OthersPackaged productsVideo on demand (VOD)
Goods
Music publishing
OthersContent (IP, etc.)

Coordination

Artists
Visual
Products

Creators

Planning and operation
Ticket sales
Goods
Others	Packaged product lineup influenced bydelays in visual and music productproduction and opening schedules	Large decline in live events

Collaboration

TV
MoviesPublishing
Internet
Events
etc.

Sales of products

Visual and Music Production Business
Number of Copyrighted Products(As of March 2021)

Number of copyrighted products /Total number of hours
BANDAI NAMCO Arts Inc.

1,157
4,341

Number of performances*

308

times

products

Coordination

Other UnitsBANDAI NAMCOGroup

RESULTS IN FY2021.3: KEY POINTS

Number ofLive Events Held

Provision of
products
and services

Promotion androlling out media

Creation
Business

Creators / Production partners

FY2021.3 RESULTS AND RELATED DATA

Promotion androlling out media

FY2021.3 RESULTS AND RELATED DATA
Number of Copyrighted Products

Influence of COVID-19
	Delays in production of visual products formainstay IP
	Decline in number of live events held

(As of March 2021)

MESSAGES FROM THE PRESIDENTS OF THE BUSINESS MANAGEMENT COMPANIES

Influence of COVID-19

companies

Visual andMusic
Production
Business

RESULTS IN FY2021.3: KEY POINTSIP usage approval

Other

Live Events

Coordination

Other companies

Media

Coordination

Packaged productsVideo on demand (VOD)
Goods
OthersCollaboration

Provision of products
and services

Music

Promotion androlling out media

Number of copyrighted products /Total number of hours

SUNRISE INC. and BANDAI NAMCO Pictures INC.

	Creation of buzz, centered on
online initiatives

342

products /

2,765

hours

hours

FY2022.3 NUMERICAL TARGETS*

FY2022.3 NUMERICAL TARGETS*

Number of musical works
BANDAI NAMCO Arts Inc.

Segment Sales

Segment Profit



¥

45.0
4.0
¥

* Results forecasts are as of May 2021

34

Number of works with masterlicense recordings

billionApprox.

43,000

Number of works publishedbillionApprox.

23,000

Segment Sales* Number of performances held by
BANDAI NAMCO Live Creative Inc.

Segment Profit



¥

30.0
4.0
¥

billionbillion* Results forecasts are as of May 2021

35

MESSAGES FROM THE PRESIDENTS OF THE
BUSINESS MANAGEMENT COMPANIESAMUSEMENT UNIT

Example of Business Model in the Amusement Unit
Provision of products
and services

 e will bolster the use of the Group’s IP and resources and provide value thatW
is only available from BANDAI NAMCO.
Our Strength — Shared
Inspiration That Can Only Be
Experienced at Physical Venues

The Amusement Unit is the new nameof the former Real Entertainment Unit.
BANDAI NAMCO Amusement Inc. is
responsible for the Unit.
In FY2021.3, COVID-19 had asignificant influence on operations,and it was a challenging year in termsof results. Business structural reform
expenses were recorded as extraordinary losses, and in addition we
withdrew from the amusement
facility business in North America.
In FY2022.3, we will take steps toimprove efficiency, such as carefully
utilizing more rigorous standards for
opening and closing facilities, andwe will strengthen our provision ofvenues at which customers canexperience BANDAI NAMCO’s
distinctive value.
The Amusement Unit’s facilities
are customer touchpoints, which area part of the IP axis strategy, and arevenues for the rollout of the Group’s
products and services. Moving forward,
to address changes in markets andcustomers, the Unit will increase its
use of Group IP and resources andwork to build a strong businessfoundation for the next Mid-term Plan.

In developing amusement facilities,
I believe that it is important to create
spaces that enable people to experience something outside of theireveryday lives. We will bolster therollout of initiatives that leverage
BANDAI NAMCO’s distinctive strengths.
These will include venues that utilize
Group products, such as Capsule Toy
Stores and ichinbankuji shops forlottery-related products; venues forthe provision of information about IP,
such as Hugood!; and venues for theprovision of new types of fun, suchas VS PARK. In amusement machines,
we will introduce strategic products,
such as Mobile Suit Gundam: Senjo no

Kizuna II, and address the trend
toward digitalization. In addition, we
will take steps to support flexible
payment methods, such as usagebased rates and leasing.
The spread of COVID-19 is having
an effect, and the market environment remains uncertain. However,
our strength is shared inspirationthat can only be experienced at
physical venues. The Amusement
Unit will continue to provide facilities,
products, and services that bringsmiles to the faces of customers,
and we will take on the challengeof creating new value without
limiting ourselves to previous waysof doing things.

Provision of
products andservices

Revenue-sharing
facilities*

Sales / New versions

Facilities operated
by other companies

IP usage approval

Production partners

Rights holders* Revenue-sharing facilities:
Revenues from the operation ofamusement machines are shared.

RESULTS IN FY2021.3: KEY POINTSFY2021.3 RESULTS AND RELATED DATA
Sales by Major Category

Influence of COVID-19
	Amusement facility closure and reduced
operating hours

Amusement machines	No new major launches of amusement
machines¥

FY2022.3 NUMERICAL TARGETS*

Director (Part-time) in charge of Amusement Unit
BANDAI NAMCO Holdings Inc.
President and Representative Director
BANDAI NAMCO Amusement Inc.

Amusement
Unit
Collaboration

	Business structural reform expenses
recorded as extraordinary losses

Hiroshi Kawasaki

Amusement machine development

Segment Sales

Segment Profit



¥

84.0
2.0
¥

16.7

Number of Amusement Facilities(Global total)

Directly managed facilities

266

billion47.1

billion

Other Total billionbillionfacilities

Revenue-sharing facilities*

Amusement facilities¥

MESSAGES FROM THE PRESIDENTS OF THE BUSINESS MANAGEMENT COMPANIESBuilding a Strong Business
Foundation for the Next
Mid-term Plan

Directly operated facilities

Customers

534

facilities

3

facilities

803

facilities* Revenue-sharing facilities: Revenues from theoperation of amusement machines are shared.

* Results forecasts are as of May 2021

36

37

REVIEW OF THE PREVIOUS MID-TERM PLAN
(APRIL 2018 TO MARCH 2021)

From April 2018 to March 2021, the BANDAI NAMCO Group implemented a three-year Mid-term Plan, with a Mid-term
Vision of CHANGE for the NEXT: Empower, Gain Momentum, Accelerate Evolution. Under the previous Mid-term Plan,
we aimed to be a Group that was changing in all aspects in order to progress to the next stage rather than being bound by
previous business models and established ideas. On that basis, we advanced four main strategies. In this way, we aimed to
evolve the IP axis strategy further and achieve penetration and expansion in global markets. At the same time, we also
worked to strengthen business development in regions and businesses with high growth potential.
The next Mid-term Plan was previously scheduled to start in April 2021, but the Company decided to start it in April
2022. Anticipating significant change in customer lifestyles and values, we considered changes in the environment andresults and issues under the previous Mid-term Plan, and we decided that it would be necessary to formulate the next
Mid-term Plan as a new way of competing for BANDAI NAMCO in a new era. In FY2022.3, we will formulate the next
Mid-term Plan and establish a business foundation and organizational structure to advance our strategies.

Numerical targets for the final year of the Mid-term Plan
(FY2021.3)
Netsales: ¥Operatingprofit margin:

10.0% or more

ROE:

¥740.9 billion

75.0 billionNetsales:

10% or more

Operatingprofit margin:

Operating¥profit:750.0 billion

Numerical results in FY2021.3

11.4%

84.6 billion

Operatingprofit:

¥

ROE:

10.2%

Review of Main Strategies

IP AXISSTRATEGY

Strengthened
new IP creation/investment,
implemented initiatives to nurture/strengthen established IP
Strategic investment for IP: ¥25.5 billion

Outline of the Previous Mid-term PlanWe established the BANDAI NAMCO Content Fund andimplemented investment in new IP creation.

Please refer to page 11.

CORPORATEPHILOSOPHY

We aggressively implemented M&A with production studios, etc.,
in order to strengthen IP creation capabilities.

Mission:Dreams, Fun and Inspiration

Vision:

The Leading Innovator in Global Entertainment

The IP Strategy Division implemented Groupwide initiatives for established IP, such as the DRAGON BALL series
For information about the Mobile Suit Gundam series,
please refer to pages 41 to 49.
and Mobile Suit Gundam series.
We rapidly created products/services for new IP from other companies, such as Demon Slayer: Kimetsu no Yaiba
and Disney: Twisted-Wonderland.

Withconsideration for the changes in the market environment and customer preferences, theappearance of new competitors, and other factors, we advanced measures without being
limited by previous business models and established ideas.
In the digital business, we strengthened operations-type businesses
and advanced measures to support long lives for each title.

Please refer to pages 50 to 51.

In each business, we rolled out products using digital elements and strengthened marketing.
We advanced Groupwide operations using the venues of BANDAI NAMCO Amusement Inc.

IP AXISSTRATEGYACCELERATE EVOLUTION IN IP AXIS STRATEGY
Invest aggressively in IP creation

Boost capability to create IP (structural changes)

BUSINESSSTRATEGYEMPOWER PUSH INTO NEW ENTERTAINMENT

MAIN STRATEGIES

Establish and enhancebusiness infrastructure

REGIONSTRATEGYREGIONSTRATEGY

Expand and strengthenbusiness fields

We advanced regionally oriented measures by unifying the efforts in each region underthe ALL BANDAI NAMCO concept.
We expanded sales in China, which is positioned as a key market.
FY2019.3: ¥18.0 billion → FY2021.3: ¥28.2 billion

Please refer to pages 52 to 53.

We strengthened roll-outs of home video games in Europe and the Americas.

Please refer to pages 50 to 51.

REVIEW OF THE PREVIOUS MID-TERM PLAN

MID-TERM VISION

BUSINESSSTRATEGYWe established a company to strengthen sales of products for the mature fan base in North America, and we
Please refer to page 47.
developed the market by introducing products at large-scale retailers.

Promote incubation

In FY2022.3 and thereafter, we plan to implement base consolidation and company combinations to leverage theGroup’s comprehensive strength.

GAIN MOMENTUM WITH ALL BANDAI NAMCO
Make full-blown entry into Chinese market

Establish system for ALL BANDAI NAMCOPERSONNEL
STRATEGYWe established environments for active careers by diverse human resources, and weadvanced measures to cultivate a sense of unity under the ALL BANDAI NAMCO concept.
In response to the spread of COVID-19, we advanced new working
styles that leverage BANDAI NAMCO’s distinctive strengths.

PERSONNEL
STRATEGY

MAKE PERSONNEL THE CORE OF THE GROUP
Establish environment to optimize employees’ performance bytapping their individual strengths and to empower new ventures38

We supported employees in taking on challenges through an 
in-house system for encouraging submissions of ideas.

Please refer to pages 54 to 55 and pages 74 to 76.

We implemented initiatives to promote diversity.
At SUNRISE INC., we changed the employment status of staff members, who had been working under business
Please refer to page 45.
consignment contracts, etc., to full-time, permanent status.

39

SPECIAL FEATUREEMPOWER, GAIN MOMENTUM,
AND ACCELERATE EVOLUTION
IN A NEW ERA

With the global business environment undergoing dramatic changes,
the entertainment industry is entering a new era. To address these changes,
the BANDAI NAMCO Group is advancing a variety of initiatives todrive sustained growth under the ALL BANDAI NAMCO concept.
Drawing on the IP axis strategy, the Group’s greatest strength,
BANDAI NAMCO is working to build a new way of competing in the new era.
This section introduces the initiatives that BANDAI NAMCO is implementing
on the front lines as the Group continues to Empower,
Gain Momentum, and Accelerate Evolution.

Mobile Suit Gundam:Continued Growth in ValueSPECIAL FEATURE

The Mobile Suit Gundam series has surpassed 40 years
since its first TV broadcast. Gundam is in-house IP fromthe BANDAI NAMCO Group, and we have worked toincrease its value through nurturing initiatives implemented over many years. Mobile Suit Gundam is an IP
that represents the BANDAI NAMCO Group, and from its
starting point as a visual product, we have implemented
an integrated series of initiatives, from IP creation to
product and service rollouts, through close collaboration
within the Group.
As we enter a new era, we will take on the challengeof implementing a variety of initiatives in order to growGundam into a worldwide IP. We will strive to accelerate
global rollouts by creating buzz on a global scale andworking to increase recognition. In addition, throughopen partnerships with external partners, we will takeon the challenge of creating new value.
Groupwide Gundam initiatives increase not only thevalue of the IP but also the value of the Group. Moving
forward, we will work to maximize the value of the IP
so that Gundam continues to be a fan favorite for 50
years or even 100 years into the future.

FY2025.3 plan¥

FY2021.3 sales

CONTENTS
41

40

Mobile Suit Gundam: Continued Growth in Value

150.0 billion

Group sales in Mobile Suit Gundam series¥(¥ billion)
For the Fiscal Years Ended March 31

42

Message from the Chief Gundam Officer

 rowth Strategies in the Digital Business
G
Promoting Longer Product Lives and Implementing
Global Rollouts for Game Content

44

 Visual Product Strategy That is the Starting PointAof the IP Axis Strategy

52

 rogress with Regional Strategies
P
Accelerating Full-Blown Entry into the Chinese Market

46

Column: GUNDAM FACTORY YOKOHAMA

54

47

 olumn: Marketing Strategy in the
C
North American Market

 ersonnel Strategy: Making Personnel the Core of theP
GroupAiming to Create Environments That Facilitate
Active Careers for Diverse Human Resources

48

Manufacturing Strategy at the BANDAI Hobby Center

50

80.2

76.7

78.6

2015

2016

74.3

65.2

34.6

2010

38.2

2011

95.0 billion

79.3

78.1

2019

2020

68.3

44.7

2012

2013

2014

2017

2018

2021

2025

41

SPECIAL FEATUREEMPOWER, GAIN MOMENTUM, AND ACCELERATE EVOLUTION IN A NEW ERA

Koji Fujiwara
Chief Gundam Officer (CGO)Managing Director
BANDAI NAMCO Entertainment Inc.
Joined BANDAI CO., LTD., in 1998. After working as a generalmanager of the Hobby Products Department and a director at
BANDAI SPIRITS CO., LTD., moved to current position in April 2021.

Mobile Suit Gundam: Continued Growth in Value

Pursuing New Possibilities through Business CombinationsThe Mobile Suit Gundam series reached its 40th anniversary in
2019, and Gundam plastic models marked their 40th anniversary
in 2020. Gundam is a representative IP that embodies the success of the IP axis strategy. As strategic Group IP, Gundam has
continued to create new value over many years, and as theGroup takes on the challenge of a new way of competing in a
new era, I believe that Gundam is the IP that should take the leadin opening up the way forward.
The BANDAI NAMCO Group has established the position ofChief Gundam Officer (CGO), who leads the way in setting out thebroad direction of the measures that are implemented to maximize the value of the Gundam IP. In this way, BANDAI NAMCO
has fostered collaboration and advanced strategies within theGroup. Traditionally, CGOs have worked as directors in the Toysand Hobby business company, which accounts for a majority ofthe sales of related products. As a director in the Toys and Hobby
business company, I have worked as CGO since 2019. In April 2021,

I moved to BANDAI NAMCO Entertainment Inc., where I havecontinued in my role as CGO. Following the Unit combination,
there is a need for integration of digital and physical elements,
and I believe that the transfer of the CGO position to a different
business is certainly one initiative supporting that integration.
Actually working in the digital business has clarified thecharacteristics of this business that are different from those of
the Toys and Hobby business. In the Digital business, the operational speed is faster than in the Toys and Hobby business. If we
can integrate that speed and the appeal of physical products,
then I think that we will be able to broaden the possibilities of
the IP axis strategy to a remarkable extent. Bringing people
together, multiplying ideas, and further advancing collaboration
should lead to the creation of new content, products, and services. Integration is also an important theme for Gundam, andwe will further increase our speed and pursue new possibilities
as we move forward.

On its own, the Group would not have been able to open the
exhibit of the 18-meter, life-size moving Gundam project that
opened at GUNDAM FACTORY YOKOHAMA in 2020. The achievement of this project is attributable to the manner in which webrought together many external partners, including those inother industries. This demonstrated that the value of Gundam
can be further increased by adding open partnerships to theGroup’s strengths.
As a project that further advances collaboration with external partners, we recently launched Gundam Open Innovation.
This project recruits a wide range of new ideas and technologies
for forward-looking social development from outside the Group.
These ideas and technologies address social issues that are
portrayed in Gundam visual products, such as population andenvironmental problems and advances into space. The recruiting
period will last until October 2021, and we have already received
a large number of strong proposals. By concentrating people’s
insight and enthusiasm on the axis of the Gundam IP, we will beable to create entirely new value. I hope you look forward to the
future development of this project.

 ealizing Growth Toward Becoming a Global IP byR
Accelerating Overseas Rollouts
At this point, overseas business accounts for about 30% ofGroupwide Gundam-related sales. First, our current goal for thisratio is to increase it to 50%. SOTSU, which handles rights management, joined the Group in 2020, making it possible for theGroup to advance its global strategy with a greater sense of
speed. For the time being, our key regions are China and North
America. In China, in April 2021 we opened an exhibit of a lifesize Gundam statue at a large-scale commercial facility. In North
America, during the previous Mid-term Plan, demand increased
as we implemented a full-scale rollout of an in-house e-commerce site and expanded our sales network to large-scale

MOBILE SUIT GUNDAM SERIES: REGIONAL SALES RATIOS

Europe andthe Americas

Europe andthe Americas

20%

10%

Asia

22%

Japan

50%

Japan

68%

Asia

30%

Current Sales Ratios(FY2021.3)

42

retailers. The live-action film is currently being made in
Hollywood, and we anticipate further growth when it opens. As
we create these types of opportunities in various regions, we willmeet with enthusiastic fans around the world and work together
with them to create buzz. The most important strategy for increasing the value of the Gundam IP will be listening to feedback fromfans, directly addressing their enthusiasm, and working together
with them. Highly enthusiastic fans create new fans, leading tofurther gains in recognition and growth in groups of fans. Goingforward, the Group will continue striving to fulfill the mission ofworking together with fans to grow Gundam into a global IP.

SPECIAL FEATURE

Message fromthe Chief Gundam Officer

Advancing Active Collaboration with External Partners

Vision43

SPECIAL FEATUREEMPOWER, GAIN MOMENTUM, AND ACCELERATE EVOLUTION IN A NEW ERA

Sharing Product Worldviews through Close Communications

Shin Sasaki
Managing Director
SUNRISE INC.
Joined SUNRISE INC. in 1997. Worked as generalmanager of the Gundam Business Department, withresponsibility for Gundam products, including promotion.
Subsequently became a director of SUNRISE in 2012.
Moved to current position in 2018.

 upporting the Creation of High-Quality ProductsS
through the Development of Human Resources

Mobile Suit Gundam: Continued Growth in Value

Making Gundam a Global IP, Creating Products with a Global Focus
In addition, as a Groupwide project, we launched Mobile Suit
Gundam SEED PROJECT ignited in May 2021. Mobile Suit Gundam
SEED is a product thatstarted with a TV broadcast in
2002, and currently SUNRISE
is advancing production of atheatrical version. The Mobile
Suit Gundam SEED series is
supported by many fans, andin particular it is highly popular in the Chinese market,
where we are aiming to
expand our business. Goingforward, we will work tocreate a theatrical version
that meets the expectationsof fans.

As technology advances, there is growing demand for highspecification, high-quality visual products. Against a backgroundof these needs, in the creation of Gundam products, we are
pursuing leading-edge visual expression leveraging the latest
digital technologies. On the other hand, Japan’s hand-drawn
animations are highly regarded around the world, and we alsoemphasize the expressivity of hand drawing. By adding thewarmth and distinctive texture that can only be achieved with handdrawing to character portrayals and coloring, we are able to add
an original interpretation. With a balanced combination of thelatest technologies and hand drawing, we will strive to achieve
expression that leverages our distinct strengths.
Human resources development is another important elementin the creation of high-quality products. SUNRISE has establishedthe SUNRISE Drawing Academy and SUNRISE Art Academy withthe aim of developing the human resources who will support
next-generation animation products. In this way, SUNRISE is
working to develop creators. In addition, we changed theemployment status of a large number of staff members, who had
been working under business consignment contracts, to fulltime, permanent status. We are working to bolster the humanresources systems within the company. Furthermore, in fall 2021
we plan to relocate the head office and consolidate studio basesthat had been in multiple locations. In these ways, we will work toincrease efficiency as well as to provide a better production
environment for employees, thereby enhancing motivation.
All of the Gundam visual products have expressed insight
into the future of the world. I believe that this future orientationfascinates people of all generations. To communicate to people
around the world the appeal of the Gundam worldview, we willcontinue working to create future-oriented, exciting products.

Digital drawing

SPECIAL FEATURE

A Visual Product Strategy That is theStarting Point of the IP Axis Strategy
For more than 40 years, the Mobile Suit Gundam series has
maintained a consistently original worldview while continuing toprovide visual products that have themes reflecting the times. In
Japan, Gundam already has solid recognition and popularity, but
to communicate to the world the appeal of Gundam and grow it
into a global IP, we will roll out development initiatives with astrong emphasis on global elements, including for visual products. One of those initiatives is the live-action film that iscurrently being made in Hollywood. This is a joint production
with LEGENDARY, which has created multiple worldwide hits.
Netflix will handle distribution around the world. (In China, planscall for a theatrical opening.) This is a visual product that is
expected to act as a major trigger for increasing recognition of
the IP on a global basis. We are aiming to attract new fans who
have not yet experienced Gundam.

For Gundam, from the start of planning for a visual product wealso simultaneously advance planning of other products andservices. In this way, we have completed the framework for
immediately rolling out activities. What is important is close
communications with others in the Group.
In advancing a project, from the planning formulation stage
SUNRISE continually shares the product concept and details
within the Group. The Gundam Project, which is held monthly,is an important venue for sharing. This meeting is attended byprincipal members from Group companies, centered on the
Chief Gundam Officer (CGO). Information is exchanged anddiscussions are held about strategy formulation for the rollout ofvisual products and other products and services. In addition, we
are working to share information closely and to foster rapid Group
collaboration in frontline meetings held at the product level.

SUNRISE Drawing Academy

Image from the live-action film, a joint
production with LEGENDARY

4445

SPECIAL FEATUREEMPOWER, GAIN MOMENTUM, AND ACCELERATE EVOLUTION IN A NEW ERA

Kazuichi Kojima
Director of Hobby Department
BANDAI NAMCO Collectibles LLC
Joined BANDAI CO., LTD., in 2002. After working in the toy
and plastic model departments, as well as in Hong Kong,
moved to current position in 2019. In charge of marketing andsales of Gundam plastic models and other hobby products

Kaori Shida
Producer in charge of
GUNDAM FACTORY YOKOHAMA
IP Strategic Business Division
SUNRISE INC.

Karen Margolis

Joined SUNRISE INC. in 2001. After working in the
production of visual products, such as Mobile Suit
Gundam SEED DESTINY, was placed in charge of sales
planning. Has produced multiple statue projects in
Daiba, Shizuoka, and Yokohama.

National Account Manager,
Field Sales Department
BANDAI AMERICA INCORPORATED
Joined BANDAI AMERICA INCORPORATED in 2018. In chargeof sales of toys and collectible items to large-scale retailers.

Mobile Suit Gundam: Continued Growth in Value
ColumnGUNDAM FACTORY YOKOHAMAGUNDAM FACTORY YOKOHAMA opened in Yokohama in
December 2020. The showpiece of this facility is an 18-meterlife-size moving Gundam. This was the third Gundam statue that
I had been in charge of, starting with the installation of the firstlife-size statue in 2009. Of these, this moving statue was atremendous challenge.
The life-size statue installed in 2009 moved its head a little
bit, and even that received a great response. We received many

comments from the people that viewed the statue saying“I want to see a moving Gundam.” In 2014, we launched a project
aimed realizing a life-size moving Gundam, and to take on thechallenge of advanced technologies, we assembled about 10
external partner companies with a variety of specialized skills
and worked to achieve a moving Gundam.

Building Cooperative Relationships with a Sense of Unity through Gundam
The external partners all had different fields of specialty, and toensure a consistent direction, my role was to ask what needed to
be done to express “Gundam,” and to spell out a clear vision.
I believe that this project was achieved because of theenthusiastic support that Gundam had received for 40 years. The
external partners were all excited about Gundam. They strongly
wanted to “make Gundam move,” and on that basis they worked
together in a unified manner. I was strongly reminded of theappeal of the Gundam IP.
Even in the midst of advancing digitalization, there has beena very strong reaction to the power of the completed life-size
moving Gundam and to the fact that it moved. This challenge has
become the starting point for our next endeavor and will lead toa new challenge. Going forward, we will continue working on
initiatives that will inspire customers.

46

ColumnMarketing Strategy
in the North American Market

Driving Growth in Gundam Plastic Model Sales with Rollouts to Large-Scale Retailers
BANDAI NAMCO Collectibles LLC (known as BLUEfin), andBANDAI AMERICA INCORPORATED (BAI), are working together
to increase sales of Gundam plastic models in the North
American market. BLUEfin principally handles promotions oftoys and hobby products for the mature fan base and overallsales strategy for specialty retailers, while BAI is in charge ofsales to large-scale retailers. Recognition of Gundam has beensteadily increasing through the continued implementation ofpromotional activities, such as exhibitions at large events andmodel-making events. As of May 2020, Gundam plastic models
were available in about 3,000 stores operated by large-scaleretailers, such as Target. This has significantly expanded oursales channels and become a new turning point for our operations in the North American market.
Prior to the spread of COVID-19, we had already started afull-scale rollout of e-commerce operations, and during the

COVID-19 crisis we have seen results from our efforts to further
strengthen e-commerce and to actively hold online events. We
believe that hybrid activities
combining off-line and online
elements will become themainstream approach infuture marketing initiatives.
Moving forward, we will continue to strengthen online
sales and promotional
activities and to implement
effective off-line initiatives.

SPECIAL FEATURE

Moving Gundam Showcases a Wide Range of Capabilities

Mobile Suit Gundam: Continued Growth in Value

Online events held in 2020

Building a Foundation in Preparation for the Opening of the Live-Action Film
Currently, our largest target in the North American market isfostering further growth in the Gundam business in preparation forthe opening of the live-action film that is currently being made in
Hollywood. To further broaden our sales channels, we will work to
expand shelf space at large-scale retailers. This initiative will
involve close cooperation between two companies, BAI andBLUEfin, which are scheduled to be combined in April 2022, as wellas collaboration with local partners and other Group companies.

Sales are strong. However, the full-scale rollout of Gundam
business in North America has only just begun. North America ismore than just a large market; it has substantial economic andcultural influence around the world, especially in Europe and inCentral and South America. Our performance in the North
American market will have a significant influence on other regions,and accordingly we will strive to set an example in marketing, andwe will continue to take on new challenges as we move ahead.

47

SPECIAL FEATUREEMPOWER, GAIN MOMENTUM, AND ACCELERATE EVOLUTION IN A NEW ERA

ideas about manufacturing. The local production facilities are
relatively new, and accordingly there are limits to what we can do in
the short term, but we would like to help develop these employees
over the medium to long term. Furthermore, looking at productionin Japan, in addition to our production system centered on
Shizuoka, we are establishing and expanding production systems

in other regions. Overseas sales are increasing, and together withproduction volume, distribution is another important factor. In
addition to the Port of Shimizu, we have also started exports fromthe Port of Osaka and the Port of Tokyo. Going forward, we willrefine our strategies with consideration for the maintenance of
manufacturing quality and the delivery to the end user.

Creating New Value, Contributing to the Enhancement of IP Value
Yukio Matsuhashi
Deputy General Manager
Creation Department, Hobby Division
BANDAI SPIRITS CO., LTD.
Joined BANDAI CO., LTD., in 2003. After working in thedevelopment of character toys, moved to BANDAI(SHENZHEN) CO., LTD., in China. After returning toJapan in 2015, has worked in development andproduction of Gundam plastic models.

Mobile Suit Gundam: Continued Growth in ValueI ncreasing Production Capacity through the Use of the
New Building at the BANDAI HOBBY CENTER
The establishment of a production system that will be stable
over the medium to long term is an important theme in the
production strategy for Gundam plastic models. At the end of
March 2021, cumulative total shipments of Gundam plastic
models had surpassed 700 million units, with high popularity
around the world. Overseas sales account for about 50% of
annual shipments, of which Asia contributes approximately 80%.
The Chinese market is recording especially strong growth. In
addition, in North America, the expansion of the distribution
network and the implementation of promotion measures haveproduced results, and demand is increasing.
To address this demand, the BANDAI HOBBY CENTER(BHC) New Building was placed into operation in December
2020 on the site of the BHC, which manufactures Gundam plastic
models. In this way, we increased our production capacity. In the
new building, we installed six multicolor molding machines, andwe increased efficiency by installing two small automatic48

conveyance machines for fully automated parts conveyance. We
also enhanced efficiency and the ability to track the situation inreal time with a production molding management system thatpredicts and corrects errors. Through these types of initiatives,
production capacity has increased to about 1.4 times the level in
FY2019.3. However, I think that to meet growth in demandaround the world, it will be necessary to continue to strengthen
the production system.
In preparation for the next Mid-term Plan, we are exploring avariety of possibilities in that area, but we do not believe that thesolution is to simply increase production capacity by expanding
production bases. I think that an important point will be to realize
continued customer satisfaction by firmly maintaining the BHC
quality that we have established over 40 years. For products sold in
the Chinese market, we are working with local production facilities
in China. The production employees are learning about plastic
model production while developing an understanding of BHC’s

Cumulative Total Shipments of Gundam Plastic Models

700 million units*More than

Cumulative Total Number of Varieties of Gundam Plastic Models Sold

More than

4,500 varieties* Total for Gundam plastic model Real series: 538.24 million units, and SD series:
176.60 million units (as of March 2021)

SPECIAL FEATURE

Manufacturing Strategy at the
BANDAI HOBBY CENTER

At BHC, we will accelerate initiatives for the human resources
who support manufacturing. A major factor supporting our
high-quality manufacturing is the establishment of a framework
for carefully transmitting technology. The Meister System issymbolic of this framework. This system recognizes employees
who have outstanding knowledge and skills as Meisters, andaccordingly Meisters work to develop successors and to enhance
BHC technologies. In addition to skills and knowledge in theirown fields of expertise, in the future, I would like to see the
Meisters also acquire knowledge about the entire value chain,including their understanding of not only production but alsoplanning and sales. In this way, I would like to see the Meisters
support the further strong growth of BHC.
Our aim is not simply expansion in production volume. It is thecreation of new value by continually taking on the challenge of
new knowledge and technologies. That will lead to increased
value not only for the Gundam plastic model products but also for
BHC and for the IP itself. The reason why Gundam plastic models
have remained popular for more than 40 years is that we havecontinued to sustain a high level of quality that is one step aheadof the expectations of the customers who purchase them. By
controlling quality, BHC will not compromise in the areas of technology, quality, cost, or production capacity and will do its utmost
to see that customers can enjoy the products with peace of mind.

ColumnBANDAI HOBBY CENTER (BHC)
BHC, which produces Gundam plastic models, uses its world-class production capacity andtechnical capabilities to conduct integrated activities in planning and development, productdesign, mold making, and manufacturing. To increase production efficiency and product quality,
BHC continually introduces leading-edge technologies and strives to make further progress.
In addition, BHC conducts high-quality monozukuri (manufacturing) with a commitment to
overwhelming quality. In addition, solar panels have been installed on the walls, and solar power
generation is providing 56,000 kWh a year. Furthermore, BHC reuses 2,000 tons of water a year through a rainwater and groundwaterreuse system. In these ways, we are aggressively implementing initiatives that reflect consideration for the natural environment.

Multicolored Molding Machines
Multicolor molding is an original Group technology that enables simultaneous molding of fourcolors and four different materials with one mold. Through the use of special four-color injection
molding machines, we are able to reduce the four runners used with single color molding to asingle runner. At BHC, we are aggressively utilizing these types of technologies and striving to
make it easier to produce plastic models and to pursue coloring reproduction after assembly.

49

SPECIAL FEATUREEMPOWER, GAIN MOMENTUM, AND ACCELERATE EVOLUTION IN A NEW ERA

 orking Together with Customers to Nurture andW
Provide Services That Can Be Enjoyed for Long Periods of Time

Naoki Katashima
Senior Managing Representative Director
BANDAI NAMCO Entertainment Inc.
Joined NAMCO BANDAI Games Europe S.A.S. (currently,
BANDAI NAMCO Entertainment Europe S.A.S.) in 2008. Served
as president and officer of business companies in Europe andthe Americas, and worked to expand the Digital businessoverseas, centered on games. Moved to current position in
April 2021.

In network content and home video games, due to changes inthe environment and to diversification of consumer behavior,
there is a shift in the main business model, from a model whererevenues end with the sale to a model based on providing content over the Internet, etc. (long-lived products).
In this setting, the DRAGON BALL Z DOKKAN BATTLE smartphone game app continues to maintain its popularity even today,
more than six years after the launch of online distribution in 2015.
This has become a model of successful initiatives in the realizationof long-lived products.
Operational factors play a
key role in the development oflong-lived products. With focus
on customers having fun, we
implement ongoing initiatives
that lead to long-term sustainability. For example, we

analyze customer activity within a game and other factors, andwe add new elements, implement updates, and hold in-gameevents. This style, in which we listen to feedback from customers
and work together with them to nurture games, is behind thesuccess of DRAGON BALL Z DOKKAN BATTLE. This type of experience is also reflected in long-selling titles based on other IP,
such as the Tales of ... series.
Furthermore, in home video games, sales of TEKKEN7,
which was launched in 2017, continue to be favorable.
Cumulative total shipments have surpassed 7.5 million units (asof May 2021), and more than 90% of those were sales in Europe
and the Americas. Sales of download content and digital items
and the implementation of in-game events have contributed tothis performance, and in addition I think that this is a result ofcareful community management with close ties to local regions,such as the implementation of esports in countries in Europe
and the Americas.

Growth Strategies in the Digital Business

Cultivating a Mindset Based on a Global Perspective
I worked in the Digital business for more than 10 years, centeredon Europe. In the Digital business, global competition is intensifying, due in part to a succession of companies entering themarket from different industries, in addition to the traditional
game companies. Moreover, the business environment is undergoing dramatic change due to the acceleration of digitalization
on a global scale as a result of the influence of COVID-19. In thissetting, my mission is to leverage the overseas experience that
I accumulated over many years, and to accelerate global development initiatives under the ALL BANDAI NAMCO concept.

50

In the Company’s Digital business, which is represented by
network content and home video games, the overseas sales ratio
is more than 50%. However, in consideration of the fact that thescale of the overseas market is overwhelmingly large in comparison with the market in Japan, there is room for further
growth in our overseas sales ratio. To that end, in accordancewith the premise that Japan is a single region of the world, it isimportant that we think from a more global perspective. I believethat my role also includes working to cultivate this mindset
throughout the Group.

DRAGON BALL Z DOKKAN BATTLETEKKEN7

SPECIAL FEATURE

Promoting Longer Product Livesand Implementing Global Rollouts
for Game Content

Listening to Customers through Bases around the World
Opportunities to conveniently experience digital content are
increasing, such as through the F2P (free-to-play) style. In thissetting, intensifying competition is expected to lead to advances
in a process of selection and sorting. That is exactly why it isimportant to listen to customers; increase the quality of development, operations, and marketing; and roll out measures that will
enable customers to enjoy products for long periods of time.
In addition, in marketing strategy, it is extremely importantto create direct communication with customers. With basesaround the world, we are leveraging our strengths, and local
employees who are well acquainted with local languages andcultures are collecting valuable information through direct
feedback from customers. Even as we work to advance online
communication through the Internet, there is no change to theimportance of direct communication.
Going forward, I will strive to personally confirm the circumstances on the front lines in countries around the world andcommunicate directly with local employees, while at the sametime endeavoring to quickly identify customer needs andchanges and working together with customers to create buzz
about our business.

51

SPECIAL FEATUREEMPOWER, GAIN MOMENTUM, AND ACCELERATE EVOLUTION IN A NEW ERA

Increasing Recognition and Accelerating Rollouts of IP Originating in Japan
Chinese consumers have an affinity for IP, and the Chinese
market has high potential. However, awareness of IP originatingin Japan is still low. To grow our businesses under the ALL
BANDAI NAMCO concept, our major strategic axes going forward
will be enhancing awareness of IP originating in Japan andexpanding products and services.
Among Japan-originated IP, popular products include
Mobile Suit Gundam, KAMEN RIDER, and Ultraman. In order toaccelerate business development for Mobile Suit Gundam, weare advancing the Gundam China Project, which is the generalname for a variety of plans under which the BANDAI NAMCO
Group is working together to develop the Gundam business in
China. For example, since April 2021 a life-size Freedom
Gundam statue has been installed in Shanghai. When the statue
was opened to the public, we simultaneously rolled out figuresand plastic models, and we opened the second THE GUNDAM
BASE, our Gundam flagship shop, in Shanghai. In addition, we

Wang Kai
Deputy General Manager
Corporate Planning Headquarters
BANDAI NAMCO Holdings CHINA CO., LTD.
Worked at an investment company in China, with responsibility forinvestments in venture companies. Subsequently joined BANDAI
NAMCO (SHANGHAI) CO., LTD. (currently BANDAI NAMCOEntertainment (SHANGHAI) CO., LTD.), in 2017. Began current
position after transferring to BANDAI NAMCO Holdings CHINA CO.,LTD., when it was established in 2018.

are implementing product promotions on a leading e-commercesite in China. Furthermore, we are aggressively forming
partnerships with other companies and rolling out a variety oflicensed products for in-house IP, including not only Mobile Suit
Gundam but also PAC-MAN and others. Through these initiatives, a wide range of customers are able to directly experience
the IP, and in this way we are aiming to enhance awareness ofeach IP in China. Despite the fact that we had not previously
implemented official launches of games in China, PAC-MAN’ssimple form is known to a large number of people. We offered
free distribution of PAC-MAN Championship Edition 2 from
April 24 to May 10, 2020, and as a result the number of downloads reached No. 1 in China.* In particular, retro games haverecently become a boom, and young customers are accepting
designs with a retro atmosphere. I think that PAC-MAN has
extremely high potential in China.
* Ranking for Steam version

Progress with Regional Strategies

Accelerating Full-Blown Entry
into the Chinese Market
The second THE GUNDAM BASE in ShanghaiOut-licensed PAC-MAN product

SPECIAL FEATURE

Life-size Freedom Gundam statue

Advancing Full-Scale Rollout on Strong Foundation
Over the past three years, significant progress has been made with
the Group’s goal of making a full-blown entry into the Chinese
market, which was announced in the previous Mid-term Plan. Under
BANDAI NAMCO Holdings CHINA CO., LTD. (BNHC), a holding
company, full-scale business rollouts have been commenced by
BANDAI NAMCO Entertainment (SHANGHAI) CO., LTD., whichhandles Digital business; BANDAI NAMCO Toys & Hobby(SHANGHAI) CO., LTD., which is in charge of the Toys and Hobby
business; SUNRISE (SHANGHAI) CO., LTD., which handles theCreation business, and BANDAI NAMCO Amusement (SHANGHAI)
CO., LTD., which is in charge of the Amusement business. In addition,plans call for the integration of BANDAI NAMCO Entertainment(SHANGHAI) CO., LTD., and BANDAI NAMCO Toys & Hobby(SHANGHAI) CO., LTD., in January 2022. Through this integration,
the Group will work to further advance the IP axis strategy in
the Chinese market by strengthening collaboration between the
Digital business and the Toys and Hobby business.

BNHC is the regional headquarters company, and its role in
the Chinese market is to handle business support and proposals
for Group companies and to implement the investment strategy
from the perspective of overall optimization. The Chinese market
is expanding rapidly, and consumer preferences are changing
quickly. In this setting, there is a need for fast decision making andbusiness execution. Moving forward, in order to fully leverage thepotential of the organizational foundation that we have established,
we will do our utmost to further strengthen collaboration among
business units and work with a sense of urgency. In addition,competition in the entertainment market is intensifying, and BNHC
will also have the important role of hiring and developing humanresources. As one part of those activities, in the fiscal year ended
March 31, 2021, we aggressively hired human resources. Moving
forward, we will continue working to build the optimal organizational structure and environment.

BANDAI NAMCO Holdings CHINA CO., LTD. (BNHC)

Digital Business

Toys and Hobby Business

Creation Business

Amusement Unit

BANDAI NAMCOEntertainment(SHANGHAI) CO., LTD.

BANDAI NAMCO Toys &Hobby (SHANGHAI)
CO., LTD.

SUNRISE (SHANGHAI)
CO., LTD.

BANDAI NAMCO
Amusement(SHANGHAI) CO., LTD.

Accelerating Initiatives for IP Originating in China
Aiming for growth in the Chinese market, we are implementing
initiatives for IP originating in China as well as in Japan. The
domestic Chinese animation market has posted rapid growth inrecent years, and the enthusiasm of fans for domestic IP has
increased significantly. The BANDAI NAMCO Group is investingin domestic Chinese animations and also developing products
through the acquisition of commercialization rights. In 2017,
we launched Agents in Otherworld as the Group’s first original
Chinese IP. In addition to the launches of online novels andbroadcasts of radio dramas that we had previously offered,from the end of 2020 we havealso started distribution of
locally produced 3DCG animations, and the number of views isrecording steady growth.
Working from a long-term perspective, we handle not only IP
originating in Japan but also IP
originating in China, and we are
striving to link this approach tothe future expansion of
our business.

Agents in Otherworld

We believe that advancing the IP axis strategy, which is theGroup’s greatest strength, will lead to significant results in the
Chinese market. With all businesses working together, we will
aim to “grow into China’s number one entertainment company”
under the ALL BANDAI NAMCO concept through the establishment of a “local production for local consumption” model.

Sales in China

For the Fiscal Years Ended March 31

28.2 billion¥¥24.8 billion¥18.0 billion

2019

2020

2021

Note: Figures are estimates based on management accounting.

Planned Integrationin January 2022

52

53

SPECIAL FEATUREEMPOWER, GAIN MOMENTUM, AND ACCELERATE EVOLUTION IN A NEW ERA

 stablishing an Environment That Cultivates the Spirit ofE
ALL BANDAI NAMCO

Naomi Tobita

Koji Hamano

Executive Officer, Deputy Division General
Manager of Administrative Headquarters
BANDAI NAMCO Holdings Inc.

General Manager of Human Resources
Administrative Headquarters
BANDAI NAMCO Holdings Inc.

Joined BANDAI CO., LTD., in 1986. Engaged in planning anddevelopment in the girls toy department and the digitaldepartment, etc. Moved to current position after working
as director of BANDAI CO., LTD.

Joined NAMCO LIMITED (currently, BANDAI NAMCOEntertainment Inc.) in 1996. Moved to current position
after working in amusement facility operations and inpersonnel at various companies.

Personnel Strategy: Making Personnel the Core of the Group

Addressing the Spread of COVID-19
Accompanying the spread of COVID-19, the BANDAI NAMCO
Group implemented countermeasures aligned with the business
configuration of each company, with its highest priority on thehealth and safety of Group employees and their families. Major
Groupwide initiatives included strengthening the network environment, enhancing the system for online meetings, and providing
special allowances for working from home and for improving thework-from-home environment. From the perspective of enhancing
work-life balance and labor productivity, we had previously
advanced measures to achieve flexible working styles. In thesecircumstances, in accordance with the key phrase “new working
styles,” we need to respond with a greater sense of urgency.
The experience of different types of working styles has madeemployees aware of many issues regarding work efficiency and54

communication. Moving forward, we will rapidly consider new
communication styles, enhancement of productivity, etc., while
integrating face-to-face and online elements. Also, other issues
will include the setting of goals, management of results, andestablishment of evaluation systems that take into account diverse
working styles. Currently, face-to-face communications havedeclined, and accordingly frontline managers are focusing on
innovative solutions, such as more precise schedule management.
However, I believe that appropriate Groupwide measures arenecessary. Going forward, as we address an environment that
continues to change, we will strive to create working styles thatleverage the Group’s distinctive strengths and to establish frameworks that enable employees to continue to work energetically.

the ratio of female managers from the current level of 10% to20%, to approximately 40%, which is the percentage of female
employees for the Group as a whole.

 nhancing the Group’s Driving Force in AccordanceEwith the Concept of “Same Spirit, Different Talents”

SPECIAL FEATURE

Aiming to Create Environments That
Facilitate Active Careers for Diverse
Human Resources

The ALL BANDAI NAMCO spirit is indispensable for the growthof the BANDAI NAMCO Group. Under ALL BANDAI NAMCO, we
work to transcend the barriers between regions and Units andwork together as a unified Group. To cultivate this type of
attitude, we have held Global Training, a worldwide training
program. In FY2021.3, we halted this program due to the influence of COVID-19, but we are considering holding it online in
FY2022.3. We think that holding it online will resolve the issueof travel and that accordingly there will be an increase in thenumber of participants.
In addition, under the name J Project, in the past we implemented training for women who were expected to have active
careers as managers. From the previous fiscal year, we havechanged direction toward training in which both men and womencan participate and implemented a training program based on
exchange with people in other industries. We formulated thistraining program to provide a new external impetus for employees and to enable them to acquire wide-ranging outside
viewpoints, without regard to gender.
Further, from this fiscal year we increased child-rearing
support money for Group companies in Japan, from ¥2 million to¥3 million, when a family’s third child is born. Moreover, we offer
various systems to support the realization of work-life balance.
By building an environment in which employees with childrearing responsibilities can work easily, we will strive to increase

As an entertainment group, we need to continually provide theworld with new value. Our mission is to respond rapidly tochange and continue to take on challenges without fearing failure. It will be important to enhance the Group’s driving force
while respecting diversity at each business and drawing on
everyone’s characteristics.
Currently, the importance of diversity is being widely
declared. As an approach that gives form to diversity and inclusion,
the concept of “Same Spirit, Different Talents” is deeply ingrainedin the BANDAI NAMCO Group. “Same Spirit, Different Talents” isa coined phrase that indicates a group of people who have thesame spirit but different talents. The potential for growth isincreased when diverse people are accepted and motivate eachother. The mission of the Human Resource Department is tointroduce systems that make it easy for everyone to work
comfortably, to pursue enhancement of working environments,
and to build foundations that highlight the individuality of each
employee. Moving forward, we will endeavor to build environments that enable diverse human resources to leverage the
BANDAI NAMCO Group as a place for active careers.

55

ROUNDTABLE DISCUSSION AMONG OUTSIDE DIRECTORSESGSECTION

This section introduces environmental (E), social (S),and governance (G) initiatives targeting the realizationof sustained growth.

57

R OUNDTABLE DISCUSSION AMONGOUTSIDE DIRECTORS61

CORPORATE GOVERNANCE

70

OFFICER SYSTEM

74

HUMAN RESOURCES INITIATIVES

77

CSR INITIATIVES

KoichiKawanaToshioShimadaThrough the implementation of highly transparent
monitoring, we will contribute to sound management
and the growth of the BANDAI NAMCO Group.
In FY2021.3, COVID-19 had a significant influence on operations, and the ability of companies to address the
rapidly changing world was continually called into question.
Four directors — lead outside director Koichi Kawana, outside director Satoko Kuwabara, outside director
Mikiharu Noma, and outside director Toshio Shimada, who was newly appointed after the Ordinary General
Meeting of Shareholders in June 2021 — met in a roundtable format to freely discuss a variety of topics, such as
the response to the spread of COVID-19, changes in management and organizational systems, and diversity.

The Role of Outside Directors:
Drawing on Diverse Expertise to Make aContribution from an External Viewpoint
I have experience in corporate management, and I
have worked in organizational administration and thecreation of new businesses. In addition, based on my 15 years ofexperience working overseas, I am familiar with global businessissues. In my duties as an outside director, I would like to makeuse of the knowledge and networks that I have cultivatedthrough my past work in order to contribute to the growth of
the Group.
KawanaI draw on my experience in corporate legal affairs toparticipate in discussions at meetings of the Board of
Directors from the perspective of corporate governance andKuwabara

56

SatokoKuwabara

ESG SECTIONCONTENTS

Mikiharu
Nomacompliance. In addition, I have been involved in many M&A
transactions. For acquisitions and investments, I participate indiscussions at meetings of the Board of Directors from theperspective of appropriate measures to address risk as well assuitability with regard to the objectives of IP strategy, etc.
I teach corporate value assessment and financial
accounting at a business school, and at the sametime I am supporting corporate value management and executive development at various companies. Leveraging this experience and practical knowledge, I am participating in meetings ofthe Board of Directors from the perspective of sustained growthand increases in corporate value. I have recently participated in
discussions regarding corporate governance and engagement,
and I am working to provide the Board of Directors with theinformation that I obtained in those endeavors.
Noma

57

ROUNDTABLE DISCUSSION AMONG OUTSIDE DIRECTORS

I became an outside director after the Ordinary
General Meeting of Shareholders in June 2021. Up tothis point, I have acquired experience in corporate management,
and I have also experienced situations in which business operations did not progress as expected, situations in which there was aneed to listen carefully to the opinions of people on the front lines
and change management policies, and situations in which considerable energy had to be utilized in the area of governance. In
consideration of that experience, I would like to provide support
that helps everyone to work in a forward-looking, natural manner.
Furthermore, in discussions of how the Group should achieve its
goals, I think that a digital perspective will also be necessary, andbased on my experience in the field of digital technology, I would
like to provide opinions that help to increase the speed ofdecision making. While deepening my understanding of theentertainment industry, I would like to leverage my experience andspecialist knowledge so that my selection as an outside director
helps to activate the Board of Directors.

measures have also been implemented, such as promptly commencing structural reforms in the amusement business, which
is facing challenging circumstances. From before, the Group hasemphasized a flexible response to changes in society. Even in anenvironment marked by the spread of COVID-19, the Group hasaddressed changes in a forward-looking manner and treatedthem as an opportunity for self-reform, and I think this has
produced results.

Addressing the Spread of COVID-19:
Results and Issues

Since the emergence of COVID-19, in line with thecharacteristics of each business, the Group has
considered its approach to remote work and aggressively introduced remote work initiatives. In addition, for customers, theGroup has aggressively advanced online initiatives and devisedcountermeasures. I evaluate these achievements highly. On theother hand, considering the changes occurring in the entertainment industry as a whole, there is room for further progresswith digitalization. To increase the speed of responses, it will benecessary to also consider such matters as collaboration withstart-up companies and the promotion of open innovation.

ShimadaI think that the Group’s ability to achieve record-highlevels of net sales and operating profit in the midst of
the spread of COVID-19 is a result of the effectiveness of theCompany’s portfolio management, which aims for overall
Groupwide optimization through the development of a diverse
range of businesses. The Board of Directors has responded
rapidly to changes in the market, such as demand associatedwith people staying at home, and devised measures to expand
businesses with favorable results. On the other hand, necessary
KawanaNomination of the Representative Director:
Selection Based on Clear-Cut Requirements
People who reach positions of leadership in the
Company need to have a wide range of capabilities
and experience. In addition to personifying the mission andvision, they need the ability to realize the business strategy,
enthusiasm for and ideas about that task, values, experience asa director in multiple businesses, and experience in such areas
as management and supervisory departments. Moreover, theyneed to have experience in overseas business, new businesscreation, and business revitalization, and they must be able tolead the Company’s growth as markets undergo dramatic change.
After deliberations, the Personnel Committee unanimously
reached the conclusion that President Kawaguchi was an
excellent fit for the position.
KawanaIt has been six years since I became an outside
director, and the Personnel Committee has periodically implemented discussions about how to develop the next
generation of executives. We have also held repeated discussions about the requirements of suitable individuals, and wehave considered such matters as education and training
programs for human resources development and personnel
rotations to facilitate the acquisition of experience in multiple
businesses. As a result, President Kawaguchi was considered tomeet the requirements. Major factors in his selection were theachievement of rapid growth in the results in the Toys and Hobby
Kuwabara

extending their respective strong points and providing mutual
support when facing issues. I look forward to their future growth
as they advance integration for the purpose of mutual understanding. For example, in the human resources area, representative personnel exchanges are already being implemented at
the executive level at major subsidiaries.

ESG SECTION

I have high expectations for the integration of theDigital business and the Toys and Hobby businessfollowing the Unit combination. These two businesses are
extremely similar in the context of entertainment, but there aredifferences in their organizational structures and in the capabilities required of their leaders. Integration does not necessarily
involve consolidating structures and capabilities. Rather, I would
like to see them contribute to the Group’s long-term growth by
Noma

58

activate challenge and innovation.

Noma

Unit Combination:
Anticipating Further Integration among Businesses

for self-reform has produced results.

are forward-looking actions that

With the influence of COVID-19 lengthening, in the
Amusement business the Group decided to implement structural reforms and withdraw from the North American
amusement facility market in a timely manner. I think that thisreflects appropriate management judgment. In the amusementbusiness, I believe it will be necessary to continue to implement
structural reforms, consider the best approach to new businesses, and advance preparations for a future recovery in suchareas as real experiences and events.

The Group has long handled a large amount of digitalcontent, centered on the game business. Accordingly,
there is a high degree of compatibility between digitalization anddigital transformation (DX) initiatives. In advancing digitalization
and DX initiatives, it will be necessary to emphasize the sensibilities of employees who actually work on the front lines. I think
it would be a good idea to carefully consider what types offrameworks should be introduced in which front-line work environments. More than executives might think, it seems thatfront-line workers are considering the use of digital technologies. The role of executives is to consider this type of front-line
thinking and build frameworks to facilitate reform from a
broad perspective.

change and treating it as an opportunity

implementing organizational changes

Kuwabara

ShimadaTaking a forward-looking approach toI think that combining Units and

The boundaries between digital elements andphysical elements are becoming less clear, and in thissetting, I think that combining Units and implementing organizational changes are forward-looking actions that activate challenge
and innovation. The organizational structure was changed inadvance of the next Mid-term Plan, which will start in April 2022.
This will facilitate the formulation of a Mid-term Plan that is
adapted more closely to current circumstances. With a sense of
anticipation, I look forward to providing support in the future.
Kuwabara

I believe that the recent Unit reorganization, including the integration of the Visual and Music businessand the Creation business, was a necessary measure for thegrowth of the Group from a long-term perspective. Once anorganization is established, there is a tendency to maintain thatsystem. I agreed with the idea of aiming to create dynamicchanges by boldly implementing a significant reorganization.
Reorganization will increase human resources mobility, andexpand the possibilities for the creation of new value. Under the
new organization, I would like the Group to make solid progresswith the discussion and formulation of the next Mid-term Plan,
including the future vision, and to work to realize its potential.
KawanaThe Personnel Committee conducted
deliberations, and the nomination wasmade in accordance with a clear plan fordeveloping next-generation managers.
The process was highly transparent.

59

ROUNDTABLE DISCUSSION AMONG OUTSIDE DIRECTORS

business and his experience in important positions as thepresident of BANDAI CO., LTD., and the vice-president of
BANDAI NAMCO Holdings.
Transparency is indispensable in the selection ofhuman resources, and it is our role is to ensure thetransparency of the selection process. In regard to this point, theGroup has established an appropriate governance framework.
The Personnel Committee, which functions as an advisory committee to the Board of Directors, is composed of four outside
directors and one executive director, with an outside director
chairing the committee. With this personnel composition, we
conduct deliberations with an extremely high degree of transparency. In the nomination of President Kawaguchi, thePersonnel Committee conducted deliberations, and the nomination was made in accordance with a clear plan for developing
next-generation executives. The process was highly transparent.
Noma

Diversity and Inclusion:
The Importance of Diversity in Values
It is very important that the promotion of diversity
and inclusion leads to the presentation of diverse
values and the creation of value. In particular, in regard to global
values, I would like to see managers naturally acquire global
sensibilities by working with a variety of overseas businesses,
while staying close to the front-line work-sites overseas. I would
like to see overseas employees aim to be active throughout theGroup, not just in their own regions. In this way, I think thatdiverse values will likely extend throughout the Group.
KawanaAt the companies where I worked in management,
there were many non-Japanese employees, and theBoard of Directors also included multiple officers who were not
Japanese. From these employees and officers, we were able toreceive opinions that reflected a perspective that was completely
different from a Japan-based perspective. Based on this experience, I also recognize the importance of diversity and inclusion.
In the promotion of diversity and inclusion, it is important to beopen to a wide range of opinions and to have mutual trust. In any
case, the people involved should listen to opinions, and then holdrepeated discussions based on those opinions. Of course, there
are situations in which, following discussions, the opinions are
not acted on, but nonetheless it is important to address diverse
opinions directly without excluding them.

The Company and the Group sufficiently understand the importance of various stakeholders related to the Company
and have a basic management policy of maximizing the corporate value of the Company and its shareholders’common interests over the medium to long term. In addition, the Company believes that construction of a solidmanagement foundation (corporate governance) is absolutely essential in order to emerge victoriously in the global
competition of the fast-changing world of entertainment. In accordance with this philosophy, the Company has
established a Basic Philosophy on Corporate Governance. Furthermore, we truly embrace the intent and spirit ofJapan’s Corporate Governance Code, and our initiatives on each principle of the Code are disclosed in “Initiatives
Related to Japan’s Corporate Governance Code.”*Monitoring of management is an important role foroutside directors. In regard to business strategies,
I believe that we are called upon to conduct objective verification
with our various specialized knowledge and diverse values, suchas international, digital, corporate legal affairs, management
experience, and academia. I would like to see external viewpoints become a source of strength for the Group and to see
further activation of internal discussions.

Corporate Governance System 

ShimadaKawanahttps://www.bandainamco.co.jp/en/social/governance/index.html

Strengthen the Management Oversight Function

Clarify the Responsibilities of Directors

Number of Outside Directors

4/12

Term of Directors
Number of Independent
Directors or Independent Audit &Supervisory Board Members

Number of Outside Audit &Supervisory Board Members

7

without excluding them.

Appointment /Dismissal

Appointment /Dismissal

Audit & Supervisory
Board Members
Audit & Supervisory Board

Auditing

Board of Directors

12 directors(of whom 4 are outside directors)

address diverse opinions directly

Independent Auditors

Dismissal

4 Audit & Supervisory Board members(of whom 3 are outside Audit &Supervisory Board members)

Appointment /Dismissal /Supervision

Appointment /Dismissal

Account Auditing /Reports on
Results

Independent Directors andAudit & Supervisory Board
Members Committee

7 independent directors (everyone)

Auditing

Representative Director
Directions
Directions

Reports

Reports

Personnel Committee

Reports

Reports

Reports

ESG SECTION

Looking at the appointment of female directors,
I am still the only one at BANDAI NAMCO Holdings.
However, we are seeing steady growth in female directors at
business companies, including the position of president andrepresentative director. For the next generation, the Company isstarting to develop female executive candidates, and I expect tosee further progress in active careers for women in management positions in the near future. On the other hand, in regard to
the employment of non-Japanese people, I think there is a needto discuss the medium- to long-term direction and to advancethe formulation of targets.

mutual trust. It is important to

The Company believes that the auditing system based on the Audit & Supervisory
Board, including outside Audit & Supervisory Board members, is an effectivemeans of implementing the management oversight function.

General Meeting of Shareholders

inclusion, it is important to be open toa wide range of opinions and to have

1Year or Less

Company with Company Auditors

Organization

All outside directors and outside Audit & Supervisory Board members meet the“Standards for the Independence of Outside Directors and Outside Audit &Supervisory Board Members” established by the Company.

In the promotion of diversity andKuwabara* For more information, please visit the Company’s website.

3/4

With diverse values in the Group, it will be easierto foster innovation. To that end, it is important tosecure human resources with a wide range of values, without
regard to their status as managers or employees, their gender,or their nationality. There is also a need for further progress inthe employment of diverse people, without regard to whether
they are new hires right out of school or mid-career hires.
Noma

CORPORATE GOVERNANCE

Cooperation

5 directors (of whom 4 areoutside directors)

Committees

Internal Auditing Division

Group CSR Committee
Group Risk Compliance Committee

Group Business Report MeetingGroup Management Meeting
Content Business Strategy Meeting

Support

Auditing

Group Information Security Committee
Internal Control Committee

IP Strategy Division Meeting
Policy Directions

Reports

Policy Directions

BANDAI NAMCO Group Companies
As of June 21, 2021

60

61

CORPORATE GOVERNANCE

Board of Directors 

The Company is a pure holding company, and the representative directors of the business management companies
concurrently serve as directors, etc., of the Company.
Therefore, directors, etc., are able to deliberate on measures
to address issues which overlap among the multiple
business domains of Group companies and quickly ascertain
specific problems and address them.
The Company’s Board of Directors decides importantmatters related to the Company and the Group, such as
matters stipulated in laws and regulations or in the Articles
of Incorporation, M&As, organizational restructuring, theelection of major subsidiaries’ directors and Audit &Supervisory Board members, and the acquisition and

Audit & Supervisory Board In regard to audits by the Audit & Supervisory Board, the four
Audit & Supervisory Board members (of whom two are
full-time Audit & Supervisory Board members and three areoutside Audit & Supervisory Board members) attend important meetings, such as meetings of the Board of Directors. In
addition, in conformance with the Audit & Supervisory Board
regulations determined by the Audit & Supervisory Board,
the audit standards for the Audit & Supervisory Board, andthe implementation standards and auditing plans related tointernal control systems, and in accordance with audit plans
determined by the Audit & Supervisory Board, the Audit &Supervisory Board members conduct audits regarding thedisposal of assets with large monetary value. Concerning
matters resolved by the Company’s Board of Directors andmatters delegated the authority as the business execution ofsubsidiaries, rules for criteria for matters on the Board of
Directors’ meeting agenda, etc., have been prepared andclarified. The Chairman of the Board of Directors is
President and Representative Director Masaru Kawaguchi.
In addition, with the objectives of heightening the effectiveness of the Board of Directors and increasing corporate value,evaluations of the effectiveness of the Board of Directors are
conducted periodically by the Independent Directors and Audit& Supervisory Board Members Committee.

status of business execution by the directors. In addition,
Audit & Supervisory Board members work together with
Audit & Supervisory Board members of Group companies,
and in this way the effectiveness of audits for the Group asa whole is heightened.
The Audit & Supervisory Board members, the independent auditors, and the Internal Auditing Division continually
exchange opinions and maintain close ties. The status of theGroup’s business operations is monitored, issues are identified and understood, and recommendations for resolving
those issues are provided.

Independent Directors and Audit & Supervisory Board Members Committee 

independent outside Audit & Supervisory Board members,
and its secretariat function has been established within athird-party specialist organization. This arrangement
facilitates the maintenance of a more effective oversightfunction in the Board of Directors.

Main Top Management Meetings As shown in the table below, the Company holds a variety of top management meetings and has established a system thatfacilitates rapidly tracking and responding to Group management information.
Meeting name

Board of Directors

Group Business
Report MeetingGroup Management
Meeting

Content Business
Strategy Meeting

IP Strategy Division
Meeting

Group CSR
Committee

Waigaya Meeting


62

Chair

Schedule

Agenda / Purpose

Participants

President andRepresentative Director
Masaru Kawaguchi
Director
Division General
Manager of the
Corporate Planning
Division
Yuji Asako
President andRepresentative Director
Masaru Kawaguchi
Executive Officer
Division General
Manager of IP Strategy
Division
Kazuhiro Takenaka
Executive Officer
Division General
Manager of IP Strategy
Division
Kazuhiro Takenaka
President andRepresentative Director
Masaru Kawaguchi

Monthly andotherwise asneededDecisions / reports on matters stipulated by law, items to be resolved inaccordance with authority standards, reports on the status of businessexecution, reports regarding CSR, crisis management, and complianceDirectors, Audit & Supervisory Board
members, other designatedemployees

QuarterlyGroup numerical reports, Unit reports, other items to be reported

Directors, Audit & Supervisory Board
members, other designatedemployees

Approx. 10
times a year

Deliberations regarding issues extending across Units, other Groupmanagement issues, strategic deliberations

Directors (excluding outside directors),
other designated employees

Quarterly

Sharing of information about each Unit’s initiatives related to theGroup’s important IP

Directors with related
responsibilities, directors from major
subsidiaries with related responsibilities, other designated employees

Quarterly

Discussions for the purpose of formulating / advancing the Group’s
IP axis strategy over the medium to long term

Semiannually Deliberations and information sharing regarding the Group’s importantand otherwise CSR strategies, consideration of resolutions, items to be reported, anddeliberations at meetings of the Board of Directors, overall supervision
as neededof Group CSR subcommittees, overall supervision of progress ofimportant items for each Unit and affiliated business company
President andWeeklyWeekly reports regarding the departments for which directors are
Representative Director
responsible
Masaru Kawaguchi

Directors with related
responsibilities, other designatedemployees

Directors (excluding outside directors),
other designated officers/employees

Directors (excluding outside directors),
other designated employees
Note: Planned to be held in FY2022.3

Policies and Processes for Appointing Directors
The appointment of directors is based on candidates possessing broad knowledge and experience required for decision making
on company management, as well as possessing the track record and insight in the fields and businesses they haveexperience in which are required in order to provide management oversight. In addition, the Company's basic policy is toappoint at least two outside directors.
When appointing candidates for director, the Company considers the necessary abilities, experience, personality, andothers according to the role. Inquiries are made to the Personnel Committee and recommendations are received, andoutside directors hold interviews with new director candidates. Decisions are then made by the Board of Directors.
Appointing Outside Directors
The appointment of outside directors is made withconsideration for an appropriate balance of individuals who
possess a wealth of experience as corporate managers,
attorneys-at-law who have thorough knowledge regarding
compliance and other aspects of internal control, andindividuals who possess deep academic knowledge on
corporate strategy.

Policies and Processes for Appointing
Candidates for Audit & Supervisory Board Members
When appointing candidates for Audit & Supervisory Board
members, the necessary abilities, experience, personality,
and others are considered according to the role. Inquiries
are made to the Personnel Committee, and decisions are
made by the Board of Directors after receiving consent
from the Audit & Supervisory Board.

Outside Directors and Outside Audit & Supervisory Board Members Of the Company’s 12 directors, four meet the conditions foroutside directors. The Company is working to strengthen the
management oversight function. In addition, of the four Audit& Supervisory Board members (including two full-time Audit& Supervisory Board members), three meet the conditions
for outside Audit & Supervisory Board members. They work
together and monitor the Company’s internal control situation
on a daily basis.
The Company has established “Standards for the
Independence of Outside Directors and Outside Audit &Supervisory Board Members,” and outside directors andoutside Audit & Supervisory Board members are appointed
in accordance with those standards. In the Company’s
judgment, the outside directors and outside Audit &Supervisory Board members meet those standards, there isno concern that they will have a conflict of interest withgeneral shareholders, and they possess high levels of
independence. Accordingly, the Company has notified theTokyo Stock Exchange (TSE) that they are all independent
directors or independent Audit & Supervisory Board
members in accordance with TSE regulations.
The status of audits by internal auditors, audits by the Audit& Supervisory Board members, and audits by the independent
auditors are reported to the Board of Directors. By attending
meetings of the Board of Directors, the outside directors track
the status of these audits and work to maintain close ties.

In addition to tracking the status of internal audits reported
at meetings of the Board of Directors, outside Audit &Supervisory Board members track the status of audits by the
Audit & Supervisory Board members at meetings of the Audit& Supervisory Board and maintain cooperative relationships
with the internal auditors and the other Audit & Supervisory
Board members. In addition, all members of the Audit &Supervisory Board, including outside Audit & Supervisory
Board members, receive explanations from the accounting
auditors of the status of account audits on a quarterly basis. In
this way, they track the status of these audits and maintaincooperative relationships with the accounting audit.
Furthermore, through matters brought to the Board of
Directors, outside directors and outside Audit & Supervisory
Board members track the status of internal control departments within the Company. In addition, they attend the Group
Business Report Meeting, where reports on the status of theGroup’s operations are made; confirm the status of businessexecution; and provide advice as needed.
Moreover, as an information access support system, theCorporate Planning Division supports outside directors andoutside Audit & Supervisory Board members. In regard to
the communication of information from the Corporate
Planning Division, principally, materials are sent prior tomeetings of the Board of Directors and explanations areprovided as needed.

ESG SECTION

To evaluate from an objective standpoint whether the Boardof Directors is functioning appropriately, the Company has
formed the Independent Directors and Audit & Supervisory
Board Members Committee. This committee is comprised ofjust four independent outside directors and three

Policies and Processes for Appointing Directors and Audit & Supervisory Board Members Roles and Duties of the Personnel Committee Related to Officer Remuneration, Etc. 
The Company’s Personnel Committee, which is chaired by anoutside director, holds appropriate deliberations about thevalidity of systems for officer remuneration, including thebasic policy for the Group’s officer remuneration system, theremuneration framework, the variable remuneration framework, etc. These deliberations are based on objective information related to officer remuneration (most recent systemstatus, trends at other companies, etc.). The committee thensubmits a report to the Board of Directors. The Company’s
Board of Directors accepts the report and makes the final
decision on the details of the officer remuneration system.
In addition, in the same way, the board of directors for eachof the business management companies, etc., accepts thedecision of the Company’s Board of Directors and makes
the final decision on the details of the officer remuneration
system for the business management company, etc.
In some cases, as necessary in the conduct ofdeliberations, external remuneration consultants, etc.,
attend meetings of the Personnel Committee or provide
information to the committee. This is intended to provide
support for effective deliberations and consensus formation.
Opinions, etc., as to appropriateness regarding the details of
the report to the Board of Directors are not received.

63

CORPORATE GOVERNANCE

Matters Related to the Policy Regarding Decisions about the Amount and Calculation Method for
Remuneration, Etc., for Directors and Audit & Supervisory Board Members 
Basic policy

Base remuneration

The base remuneration for directors of the Company is fixed,
monthly monetary remuneration. It is paid within a specifictime period every month. The limit is ¥400 million per year
pursuant to a resolution at the 10th Ordinary General
Meeting of Shareholders held on June 22, 2015. In addition,
Company directors, excluding outside directors, contribute a
fixed proportion of the base remuneration to the shareholding association for directors and officers to purchase theCompany’s shares. During his or her term of office, eachdirector continues to hold such shares, as well as sharesacquired through performance-based stock compensation.
Performance-based remuneration

As for variable remuneration of the Company, theconsolidated operating profit of the Group is used as anindicator for both performance-based bonuses andperformance-based stock compensation, with the aim of
directly reflecting the evaluation of the management effortsof the Group’s management team in the amount of
remuneration to be paid.

64

KPI targets / results for performance-based remuneration•T he standard results for performance-based bonuses (results for which thestandard amount will be paid)• The decision standard for determining whether or not performance-based
stock compensation will be paid

Consolidated operating profit of ¥60,000 million or higher
Performance-based bonuses
In regard to the Company’s performance-based bonuses, thepayment amount is decided based on the Group’s consolidated
operating profit each fiscal year, within the range of 0% to200% of the predetermined standard amount. The payment
amount is limited to the smaller of the ¥450 million limit for
cash bonuses based on a resolution of the Company’s 10th
Ordinary General Meeting of Shareholders held on June 22,2015, or 1.5% of profit attributable to owners of parent. For
executive directors other than the President and Representative
Director, in addition to the evaluation portion of the Group’s
consolidated operating profit, an individual evaluation portion(qualitative evaluation portion) is included. The remuneration
shall be paid within a specific time period every year, after theend of the relevant fiscal year.
Performance-based stock compensation
Performance-based stock remuneration is provided only
when the Group’s consolidated operating profit is ¥60,000
million or higher. In accordance with a resolution of the
Sixteenth Ordinary General Meeting of Shareholders held on
June 21, 2021, the upper limit is the amount obtained bymultiplying 45,000 shares by the Delivery Share Price* per
year. Whether or not performance-based stock compensation will be paid and the level of payment are decided eachfiscal year. The framework is as follows. In accordance withposition, the reference number of share units is determinedin advance. The common stock of the Company and cash aredelivered or provided in accordance with the number ofprovided share units, as decided according to the degree ofattainment of the performance target for consolidated
operating profit. Furthermore, the performance-based stockcompensation shall be paid within two months from the day
following the day on which the figure of the performancebased indicator (consolidated operating profit of the Group)
is finalized.
* Delivery Share Price is the closing price of common stock of the Company on theTokyo Stock Exchange on the business day immediately preceding the date of theresolution at the Board of Directors meeting to deliver the Company’s common
stock related to the performance-based stock compensation system held within
two months from the date of the Ordinary General Meeting of Shareholders
pertaining to each Evaluation Fiscal Year (if the Company’s shares were not tradedon that day, the closing price on the last day the shares were traded prior to that).

Performance-based remuneration results
Consolidated operating profit in FY2021.3¥84,654 million

Achievement rate
in regard to standard
results

141%

Payment ratio for
performance-based
bonuses

200%

Payment ratio for
performance-based
stock compensation

100%

Remuneration criteria and ratios are determined by utilizing amanagement remuneration database with which data on
remuneration are aggregated and analyzed by an external
specialist organization, setting objective benchmarks in lightof the scales of the Company’s business operations and otherfactors, and comprehensively taking into consideration the
proportion of fixed remuneration and variable remuneration in
annual total remuneration and the proportion of medium- tolong-term remuneration in variable remuneration. If thepredetermined base business performance has beenachieved, the ratio of fixed remuneration to variable
remuneration in annual total remuneration shall be about
50:50, and the proportion in annual total remuneration ofstock-based remuneration. Also, the sum of the contributionof a fixed proportion of the base remuneration to theshareholding association for directors and officers andperformance-based stock compensation shall be slightly
more than 20%.

Activities of the Personnel Committee
Composition of the Personnel Committee / Committee Chair

The Company’s Personnel Committee has a maximum of seven members in addition to the chair, with outside directors
making up a majority of the members. The chair of the committee is an outside director elected by the outside directors.
Status of Activities of the Personnel Committee

Since the Ordinary General Meeting of Shareholders held in June 2021, the composition of the Personnel Committee isas follows.
People5 people (1 executive director and 4 outside directors)

Chair

Director (Outside) Koichi Kawana

Members

President and Representative Director Masaru Kawaguchi, Director (Outside) Satoko Kuwabara, Director (Outside) Mikiharu
Noma, Director (Outside) Toshio Shimada

In FY2021.3, deliberations by the Personnel Committee were held a total of seven times. The chair and themembers all attended on each of these occasions, and the attendance rate was 100%. The major agenda items wereas follows.
Meeting dates

Major agenda items

May 1, 2020
(held on a document basis)

Consideration of the amount of reduction in the remuneration of certain directors due to the influence of the
spread of COVID-19

May 26, 2020

Amount of payment of performance-based bonuses and performance-based stock compensation at theCompany and Unit core companies, etc., for FY2020.3.
Evaluation indicators for performance-based bonuses and method of calculating performance-based stockcompensation for FY2020.3

July 28, 2020

Discussion points and measures for the system for compensation of directors and Audit & Supervisory
Board members

September 15, 2020
(held on a document basis)

Partial change to personnel matters for directors and Audit & Supervisory Board members accompanying
a director or Audit & Supervisory Board member concurrently holding a position at another group

November 19, 2020

Consideration of officer-related personnel matters in FY2022.3 (the Company, business managementcompanies, etc.)

January 29, 2021

Progress with next-generation managers development planInterviews with new director candidates
Approval of officer-related personnel matters and remuneration for directors and Audit & Supervisory
Board members in FY2022.3 (the Company, business management companies, etc.)
Evaluation indicators for remuneration for directors and Audit & Supervisory Board members in FY2022.3(the Company, business management companies, etc.)

March 22, 2021
(held on a document basis)

Approval of changes to remuneration for directors and Audit & Supervisory Board members in FY2022.3(the Company, business management companies, etc.)

ESG SECTION

The basic policy of the remuneration system for theCompany’s directors, excluding outside directors, is to createa remuneration framework that promotes the Company’s
continuous growth and improves the Company’s corporate
value over the medium to long term by promoting thesharing of values with shareholders, ensuring objectivity andtransparency so that the Company can adequately fulfill its
accountability obligations, and fostering a healthy sense ofentrepreneurship in the directors while taking into accountthe level of remuneration that will enable the Company tosecure and retain top-grade personnel.
Specifically, the remuneration framework comprises thebase remuneration as fixed remuneration and performancebased bonuses and performance-based stock compensationas variable remuneration. In addition, for the directors of theGroup’s five business management companies (BANDAI
NAMCO Entertainment Inc., BANDAI CO., LTD., BANDAI
NAMCO Arts Inc., SUNRISE INC., and BANDAI NAMCO
Amusement Inc.) and of BANDAI SPIRITS CO., LTD., thebasic policy is the same as that of the Company.
Remuneration for outside directors of the Company
comprises base remuneration only, to ensure their independence from the Company, and the amount of remunerationfor each outside director is determined at the Board of
Directors meetings.
FY2022.3 is a period for preparation for the next Mid-term
Plan. Accordingly, based on advice from the Personnel
Committee, in FY2022.3, for the remuneration system for
Company directors, excluding outside directors, the Company
continues to adopt the details of the remuneration system
under the previous Mid-term Plan (FY2019.3 to FY2021.3).
Remuneration for Audit & Supervisory Board membersof the Company comprises base remuneration only, with theamount set in accordance with their job positions, considering that they bear the duty to audit the execution of all
businesses across the Group. The amount of remunerationfor each Audit & Supervisory Board member is determinedat the Audit & Supervisory Board meetings.

Remuneration structure

Message from the Chair of the Personnel Committee
I became chair of the Personnel Committee in June 2021. The chair of the Personnel Committee
is an outside director elected by the outside directors. In addition, four of the five members of
the committee are outside directors. In the recent nomination of the new directors, including
the President and Representative Director, the Personnel Committee acted as an advisorycommittee to the Board of Directors. While receiving appropriate support from the committee
secretariat, the committee monitored the selection process from an objective viewpoint andworked to ensure fairness and transparency. From the perspective of the enhancement ofcorporate governance, the importance of various committees is increasing. In this setting,against a backdrop of the diverse knowledge of outside directors, the committee will continue
striving to implement appropriate monitoring and aiming to act in a highly effective manner.
The Personnel Committee will strive to fulfill its role in a manner that enables it to make asignificant contribution to the growth of the BANDAI NAMCO Group.

Koichi Kawana
Outside Director

65

CORPORATE GOVERNANCE

FY2021.3

In regard to the method of calculating performance-based
stock compensation, the matter is submitted to the Personnel
Committee. A precondition is that among committee
members, executive directors do not participate in deliberations regarding decisions on performance-based stockcompensation. When all outside directors have agreed andmade a decision on performance-based compensation, thedecision is finalized through a resolution of the Board of
Directors. In addition, at the business management companies, etc., in accordance with decisions based on the resolutionof the Company’s Board of Directors, decisions are madethrough resolution of each company’s board of directors.

Total amount of compensation, etc.,
by type (¥ million)

Total amount of compensation, etc.,
by type (¥ million)

Total amount of compensation, etc.
(¥ million)

Fixed
remuneration

Number of eligible officers(People)Performance-based stockcompensation

Of the amount on the left,
non-monetary compensation, etc.

Number of eligible officers(People)Directors

495

169

4

326

101

3

Audit & Supervisory Board
members

24

24

1

—

—

—

Officer category(excluding outside directors)(excluding outside Audit & Supervisory
Board members)

Outside officers

94

94

7

—

—

—

Notes 1. Non-monetary compensation, etc., for directors (excluding outside directors) is performance-based stock compensation.
2. The amount of performance-based stock compensation is calculated based on the closing price of the common stock of the Company on the Tokyo Stock Exchange on
March 31, 2021, and when making actual payment, the Delivery Share Price is applied.

Shareholdings Standards for and approach to the classification of investment shares

I.	The necessity for the enhancement of the Company’s
corporate value going forward, such as the further
strengthening of the IP axis strategy through thecreation of IP or the expansion of businesses fields.
II.	The level of contribution to the enhancement of theCompany’s corporate value, such as the current statusof transactions or business alliances with the company
in question.

66

Number of issues and carrying amount on balance sheet
Number of issues

Total carrying amount onbalance sheet (¥ million)

Unlisted shares

7

1,452

Shares other than unlisted
shares35

99,963

Flow of the Group’s Risk Compliance System

Number of issues

Unlisted shares
Shares other than unlisted
shares

1

132

1

5,993

Issues for which the number of shares decreased in FY2021.3

Number of issues

Total selling price related
to the decrease in thenumber of shares(¥ million)

Unlisted shares——

Shares other than unlisted
shares2

467

President and Representative
Director (chair)

Full-time
director

Nominator

Full-time Audit & Supervisory Board Member

Executive OfficeCompliance response: Corporate Communications Department (CC Department)
Responses to natural disasters and other crises: General Affairs Department

President and Representative Director

Full-time Director

Reports

Outside Director
Full-time Audit &Supervisory Board
MemberInformation
sharing

Information gathering:
CC Department

General Manager of the Corporate Planning Division

Outside Audit &Supervisory Board
MemberReports

PR Function
Person incharge of PR

Information
sharing

Directions

CC Department General Manager
Compliance matters

Reports

General Manager of the General Affairs
Department
Natural disasters and other crisis matters

Reports

Person incharge of PR

Issues for which the number of shares increased in FY2021.3
Total acquisition cost
related to the increasein the number of shares(¥ million)

Group Risk Compliance Committee

Conveningof meetingGroup companies

The Company has a basic policy of implementing crossshareholdings on a strategic, limited basis, provided thatholding such shares can be recognized to contribute toincreasing the Company’s corporate value by further bolsteringbusiness partnerships and by maintaining and/or strengthening the stable business relationship with such companies.
Such a determination is based on factors including thecompanies’ business developments, the status of businesswith the companies, and the market price of the shares.
Also, each year, the Company shall implement a sufficient review, including whether or not to continue to holdcross-shareholdings, by the Board of Directors of all crossshareholdings from a medium- to long-term perspective,
taking into consideration the importance of the crossshareholdings and economic rationale, such as the associated risks and returns, business relationships, the cost ofcapital, etc. The Company shall also reflect the results ofthese reviews in explanations regarding the objectives of thecross-shareholdings, etc. Specifically, reviews are conductedin light of the following perspectives.

As a result of the review in FY2021.3, the Company
confirmed the appropriateness of holding all of the shares held.
In exercising the voting rights of cross-shareholdings, theCompany does not unconditionally agree with the proposals of
the companies whose shares it owns. Rather, voting rights are
exercised based on whether or not the proposals willcontribute to increasing the Company’s corporate value
through the maintenance and/or bolstering of the business
partnership and business relationship with such companies.

Each month, the Group Risk Compliance Committee
Secretariat reports to the Board of Directors any informationon compliance and risk and how they have been managed in
the Company and its subsidiaries.

ESG SECTION

Investment shares held for purposes other than pure investment

III.	The relationship between the benefit of ownership andthe Company’s cost of capital with respect to theacquisition price of each cross-shareholding

Should violations of compliance occur or risk arise, ameeting of the Group Risk Compliance Committee, chairedby the President and Representative Director, is convened
immediately to ensure a quick and appropriate response.

From receipt of report to meeting of the Compliance Committee

The Company holds as investment shares only crossshareholdings that can be recognized to contribute toincreasing the corporate value. The Company does not holdinvestment shares for pure investment purposes (investment
shares held exclusively with the objective of obtaining profits
through stock price fluctuations or stock-related dividends).

Compliance and Risk Management 

Response evaluation/judgment/decision making

Procedure for determining compensation
The policy for remuneration, the remuneration framework,and the structure for performance-based remuneration for
directors, excluding outside directors, shall be decided at
Board of Directors’ meetings after receiving opinions from the
Personnel Committee, in order to elicit outside directors’
adequate participation and appropriate advice. In the courseof deliberations by this committee, sufficient information isprovided to the outside directors so that they are able toperform their analysis, including for instance by asking foradvice from external specialist organizations where necessary.

Information
sharing

Office for reception of risk complianceinformation
Business Strategy
Department

Reports

Reports

Person in charge of reporting information regarding crises or compliance violations forbusiness management companies and affiliated business companies

Person in charge of reporting information regarding crises or compliance violations for
Reports
unit-affiliated companies other thanbusiness management companies

67

CORPORATE GOVERNANCE

In order to ensure abidance of laws, respect of ethical behavior,and compliance with internal regulations, the Company has set
in place the BANDAI NAMCO Group Compliance Charter todefine behavioral guidelines for directors, etc., and employeesof the Company and its subsidiaries, and is working to ensurethat they are familiar with the Charter through putting up
posters and distributing the Compliance Book. In addition, thedirector in charge of compliance of the Company strives tostrengthen the compliance systems by carrying out management of the overall compliance of the Group and periodical
training using e-learning tools and other programs. The
Company also investigates the degree of actual awarenessthrough distributing surveys on compliance awareness to all
employees of the Company and major subsidiaries and strives
to strengthen the compliance systems by sharing the results ofthe survey with each subsidiary director in charge of compliance.
Furthermore, the Company has established and operates awhistleblowing system to provide a point of contact for internaland external consultations and an Audit & Supervisory Board
Members Hotline to allow direct reporting to Audit &Supervisory Board members. The Company and its major
subsidiaries have also included provisions in their internal
regulations to ensure the protection of whistleblowers.
For risk management, the Company and its subsidiaries
have established guidelines on risk management and have

Takeover Defenses 

BANDAI NAMCO Group Compliance Charter
The Charter brings together matters that need to be strictly observedin business execution by all Group officers and employees. It clarifies
principles related to the following.
• Appropriate products andservices / fair dealings• Respect for all employees• Information disclosure• Respect for and usage ofintellectual property• Protection of information andresources• Rejection of anti-society groups• Harmony with the environment• Harmony with society

In concrete terms, in the event an inappropriate bidder
emerges, the management team will not take steps to guard
its own interests against the takeover offer by the bidder, butwill sufficiently deliberate the matter at the Board of Directors’
meetings after referring the matter to the Independent
Directors and Audit & Supervisory Board Members Committee
for their review from objective viewpoints, to enable theCompany to make a judgment from the perspective ofimproving corporate value first. The Company will also work tocollect sufficient information and secure necessary time, so as
to be conducive to appropriate judgment by the shareholders.

IR Activities 

Aiming to enhance corporate value, BANDAI NAMCO
Holdings is implementing a variety of investor relations (IR)activities in accordance with information disclosure standards
and the IR policy related to IR opportunity enhancement, etc.
In addition, the status of IR activities and the reactions ofinvestors and analysts are shared with directors and continuallycommunicated as feedback to the business managementcompanies and throughout the Group.
As well, BANDAI NAMCO aims to be a highly transparent
company that clearly communicates management strategies
and business policies to shareholders and investors.
Accordingly, the Company works to enhance opportunities for
executives to speak directly to investors and securities analysts,
such as results presentations and telephone conferences.

Results of Major IR Activities in FY2021.3
Results presentations for investors and analysts—*

Results telephone conferences for investors
and analysts

4 times (538 people)

Overseas IR—*

Separate meetings for investors and analysts

458 people

Presentations for individual investors in Japan—** In FY2021.3, due to the influence of the spread of COVID-19, there was no
implementation due to self-restraint in regard to overseas travel and events.

Internal Control System 
The BANDAI NAMCO Group’s basic policy regarding its internal control system
is as below:(1) Systems to Ensure that the Execution of the Duties by Directors, etc., andEmployees of the Company and Its Subsidiaries Is in Compliance with theLaws and Regulations and the Articles of Incorporation• The Company shall set in place the Group’s Corporate Philosophy and the
BANDAI NAMCO Group Compliance Charter, ensure that Directors andemployees of the Company and its subsidiaries are familiar with them, andalways pay due attention to ensure they carry out their duties lawfully and fairly.
• Directors of the Company shall report periodically to the Board of Directors on
the structure and operating status of internal control systems.
• The Company shall install a Director in charge of compliance who is responsible
for supervision of compliance overall based on its compliance regulations, andestablish a structure ensuring that the Company and the entire Group abides by
the law, behaves ethically, and complies with internal regulations.
• Should violations of compliance or suspicions thereof occur within the Group,
the Company shall immediately convene the Group Risk Compliance
Committee with the Company’s President and Representative Director as its
chair to discuss and decide how the issue should be handled.
• Overseas, an overseas regional headquarters shall be determined for eachregion to manage risk and support compliance.
• Internal reporting systems including an internal consultation point, an
external consultation point comprising external legal advisors, and the Audit& Supervisory Board Members hotline, which enables reporting directly
delivered to the Audit & Supervisory Board Members, shall be put in place in
the Company and its major subsidiaries.
• The Internal Auditing Division shall be established independently of theexecutive sections in the Company and its major subsidiaries to work towards
maintaining the properness of execution of operations through internal audits.
(2) Systems for Preserving and Managing Information Related to Directors’
Execution of Their Duties• The Company shall establish regulations concerning document management
and ensure (i) the centralized collection and management of minutes ofseveral kinds of meetings, contracts, and other documents, and (ii) appropriate
safe-keeping and management of important documents, including documents
circulated for approval in each department. The Company shall have a system
to ensure that Directors and Audit & Supervisory Board Members may peruse
those documents at any time.
• The Company shall establish regulations concerning information security as apart of Group management. These regulations will provide for a system toensure appropriate safekeeping and preservation of information.
(3) Regulations Concerning Management for Risk of Loss of the Company
and Its Subsidiaries and Other Systems• The Company shall establish regulations concerning risk management andcompliance as a part of Group management. Throughout the Group, we will
work to prevent risk and to discover risk factors as rapidly as possible.
• When risk arises, the Company shall convene the Group Risk Compliance
Committee without delay to minimize the impact of risk on our business by
responding to risk quickly and in an appropriate manner.
• Anticipating the occurrence of situations that could cause drastic damage tothe management of the Group through a major disaster or the like, the Groupshall define the basic policy for a Business Continuity Plan (BCP) for theGroup, and formulate a BCP for the Group and organize a Business Continuity
Management (BCM) system to achieve rapid recovery and restart of operations.
Directors and employees of the Company and its subsidiaries shall be madeaware of this.
(4) Systems to Ensure that Directors, etc., of the Company and Its
Subsidiaries Execute Their Duties Efficiently• The Company shall assign each subsidiary into Units categorized by businesssegment, and appoint a Director and business management company incharge of each Unit in order to improve efficiency of business operations
based on the division of duties, chain of command structure, authorities andcompetencies, decision-making frameworks, and other regulations regarding
structure within the Group.
• The Company shall formulate a Mid-term Plan with a period of three businessyears for the entire Group and each Unit, and determine the budget for eachbusiness year based on those Mid-term plans.
(5) Systems Concerning Reporting Matters Regarding Execution of Duties of
Directors, etc., of Subsidiaries to the Company• The Company shall establish meetings such as the Group Business Report
Meeting and the Group Management Meeting, and put in place a system forreporting inside the Group and decision making.

68(6) Other Systems to Ensure Proper Business Behavior by the Company and
Its Subsidiaries• The Company shall revise the BANDAI NAMCO Group Compliance Charter as
appropriate in response to revisions to laws and regulations and changes inthe social context surrounding the Group, and shall ensure that the contentsof the Charter are made thoroughly known to Directors, etc., and employeesof the Company and its subsidiaries through distributing the BANDAI NAMCO
Group Compliance Handbook and through training.
• The Company and its subsidiaries shall endeavor to improve and standardize
business processes considering the importance of effectiveness andefficiency in business operations, and shall evaluate and operate internal
controls on financial reporting based on related laws and regulations, etc.
(7) Matters Regarding Employees Required by Audit & Supervisory Board
Members to Assist Their Duties, and Matters Regarding theIndependence of Such Employees from the Board of Directors• The Company shall provide a speedy response when Audit & Supervisory
Board Members ask the President and Representative Director to provide
employees to assist their duties. Where that employee simultaneously works
for any other section, his or her business duties pertaining to the Audit &Supervisory Board Members shall take priority.
• The Company shall provide an opportunity for Directors and Audit &Supervisory Board Members to consult in advance regarding personnel
matters relating to such employees, so as to ensure independence from theBoard of Directors.
(8) Matters Concerning Ensuring the Effectiveness of Instructions to
Employees Who Assist the Audit & Supervisory Board Members• The Company shall keep Directors and employees thoroughly informed that
employees who assist the Audit & Supervisory Board Members in their duties
are under the command of the Audit & Supervisory Board Members.
(9) System for Directors, etc., and Employees of the Company and Its
Subsidiaries to Report to the Company’s Audit & Supervisory Board
Members• Directors, etc., and employees of the Company and its subsidiaries shallreport to the Audit & Supervisory Board promptly with regard to mattersprescribed by laws and regulations, other matters likely to have a major
impact on the Company and the Group, and matters related to the current
status of internal audits and compliance.
• Directors, etc., and employees of the Company and its subsidiaries shallreport promptly and appropriately when requested to do so by an Audit &Supervisory Board Member of the Company regarding the performanceof their duties.
• The Company shall put in place an Audit & Supervisory Board Members
Hotline to allow reports to be made directly to the Company’s Audit &Supervisory Board Members as an internal reporting system.

ESG SECTION

At present, the Company has taken no specific measures as
takeover defenses. The Group regards implementing its
management and business strategies in accordance with themeasures to increase the corporate value of the Group andaiming to increase the corporate value of the Group as a whole
as a substantial defense against inappropriate takeovers.
That said, since the Group is entrusted by shareholders as
the management of the Group, we will work on studying anddeveloping a system of takeover defenses, with a close eye on
legal and social trends, in anticipation of situations in which
an inappropriate entity or person might emerge to havedecision-making power over the Company’s financial andbusiness policies.

formulated and operate a business continuity plan (BCP) and abusiness continuity management (BCM) system for the Group.
The Company is working to ensure that directors, etc., andemployees of the Company and its subsidiaries are well awareof these guidelines and systems. Also, in working to preventthe spread of COVID-19, we are holding regular meetings of
the Crisis Management Committee, with a special focus on
preventing the spread of COVID-19. Participants include theCompany’s directors and other people in charge from related
departments. At these meetings, we are sharing informationand deliberating on policies. The results are made known
within the Group, and initiatives are advanced in accordancewith the policies of each company.

(10) System for Ensuring that Persons Making Reports to Audit &Supervisory Board Members Shall Not Be Treated Disadvantageously• The Company shall prohibit the disadvantageous treatment of persons who
have reported or consulted with Audit & Supervisory Board Members, andshall state that clearly in the Group Risk Compliance Regulations and make itthoroughly known to Directors, etc., and employees of the Company andits subsidiaries.
(11) Matters Regarding Policies Pertaining to Procedures for Advance
Payments or Reimbursement of Expenses Arising in the Performanceof Duties by Audit & Supervisory Board Members and Other Paymentsof Expenses and Liabilities Arising in the Performance of Said Duties• The Company shall immediately pay expenses or liabilities where an Audit &Supervisory Board Member has requested advance payments or reimbursementof expenses arising in the performance of his or her duties, excluding cases
where they were not considered necessary for the performance of said duties.
(12) Other Systems to Ensure the Effectiveness of Audits Conducted by the
Audit & Supervisory Board Members• Directors of the Company shall formulate a system whereby Audit &Supervisory Board Members can attend important meetings, and ensure thata system exists whereby they can meet periodically or on an ad hoc basis with
Directors and employees, and cooperate with the Internal Auditing Division
and Accounting Auditors.
• Subsidiaries of the Company shall install an appropriate number of Audit &Supervisory Board Members according to their scale, business category, etc.,
and ensure that there are systems in place wherein Audit & Supervisory
Board Members of subsidiaries report periodically to the Audit & Supervisory
Board Members of the Company.

69

OFFICER SYSTEM
As of June 21, 2021

The Company works to see that the Board of Directors has a good overall balance between Executive
Directors, who execute agile business operations and have thorough knowledge of the Company’sbusinesses or company operations, etc., and Outside Directors, who possess advanced expertise andare capable of providing management advice and oversight with a wide range of viewpoints. In addition, the Company strives to see that the Directors have the knowledge, experience, and capabilities tofulfill their duties and that the composition of the Board achieves both diversity and an appropriate scale.

Executive Directors

Position
Name
Areas of responsibility

Number ofCompany
shares owned

Director in charge of Visual and Music
Business of IP Production Unit

Director in charge of Creation Business of
IP Production Unit

Director in charge of Amusement Unit

International

Number ofmeetings
attended

44,100

Mr. Asako possesses extensive experience, achievements, and knowledge
relating to management and administration, including business planning andaccounting, and also has experience in roles where he was responsible forinternal and external communications, such as IR, PR, and SR, as well assustainable activities. He was appointed Director as the Company considers
him capable of implementing the Group’s management strategies andseeking a sustained increase in corporate value.

18

21,750Mr. Miyakawa possesses extensive experience, achievements, and knowledge
from his wide-ranging involvement in multiple businesses in the Group. He
has driven the business forward as the president and representative directorof BANDAI NAMCO Entertainment Inc., which is the current business
management company of the Digital Business of the Entertainment Unit of
the Group, since 2019. He was appointed Director as the Company considers
him capable of building closer ties between the Digital Business and Groupmanagement.

18

12,400

Mr. Kono possesses extensive experience, achievements, and knowledge inthe Visual and Music Business. He has driven the business forward as thepresident and representative director of BANDAI NAMCO Arts Inc., which isthe business management company of the Visual and Music Business of the
IP Production Unit of the Group, since 2021. He was appointed Director as theCompany considers him capable of building closer ties between the Visualand Music Business and Group management.

—

17,000

Mr. Asanuma possesses extensive experience, achievements, and knowledge
from his wide-ranging involvement in multiple businesses in the Group. He
has driven the business forward as the president and representative directorof SUNRISE INC., which is the current business management company of theCreation Business of the IP Production Unit of the Group, since 2019. He wasappointed Director as the Company considers him capable of building closer
ties between the Creation Business and Group management.

18

22,250

Mr. Kawasaki possesses extensive experience, achievements, and knowledge
from his wide-ranging involvement in multiple businesses in the Group. He
has driven the business forward as the president and representative directorof BANDAI NAMCO Amusement Inc., which is the business managementcompany of the Amusement Unit of the Group, since 2021. He was appointed
Director as the Company considers him capable of building closer ties
between the Amusement Business and Group management.

—

Director (Part-time)
Hiroshi Kawasaki

Environmentand society

18

Director (Part-time)
Makoto Asanuma

Finance andaccounting

41,900

Director (Part-time)
Satoshi Kono

New businesscreation

Number ofmeetings
held

18
ESG SECTION

Director in charge of Digital Business ofEntertainment Unit

Facilities/
machines

Mr. Ohtsu possesses specialist expertise as a CPA, as well as extensive
experience and achievements as Division General Manager of the Group
Administrative Headquarters of the Company. He was appointed Director as
the Company considers him capable of strengthening Group management
structures and ensuring highly transparent management.

Director (Part-time)
Yasuo Miyakawa

IP creation/
nurturing18

Director
Division General Manager of Corporate
Planning Division
Supervising Amusement Unit

Visual/music

53,300

Director

Yuji Asako

DigitalMr. Kawaguchi demonstrated his leadership skills based on extensive experience and broad knowledge at BANDAI CO., LTD., which is the current business
management company of the Toys and Hobby Business of the Entertainment
Unit of the Group, and he has also been supervising the management of theCompany appropriately since being appointed as Executive Vice President andDirector of the Company in 2020 and as President and Representative Directorof the Company in 2021. He was appointed Director as the Company considers
him capable of ensuring that the Group continues to grow.

Responsible for Entertainment Unit

Division General Manager of the Group
Administrative Headquarters

Operational experience
Toys andhobby

18

President and Representative Director

Shuji Ohtsu

Corporate
management

85,100Supervising IP Production Unit

Masaru Kawaguchi

Reasons for appointment

Mr. Taguchi served as President and Representative Director of the Company
from 2015 to March 2021, supervised its management appropriately by, forexample, achieving the previous Mid-term Plan, and possesses extensive
business experience, achievements, and knowledge. He was appointed
Director as the Company considers him capable of ensuring that the Group
continues to grow.

Chairman and Director
Mitsuaki Taguchi

Attendance at meetings ofthe Board of Directors(FY2021.3)

Major experience and expertise

Note: Number of shares held is as of the end of March 2021. Attendance rates at meetings of the Board of Directors are for FY2021.3.
	In addition to the number of meetings of the Board of Directors in the above table, there was one meeting held on a document basis that is regarded as a meeting of theBoard of Directors in accordance with Article 370 of the Companies Act. Satoshi Kono and Hiroshi Kawasaki were elected at the 16th Ordinary General Meeting of
Shareholders held on June 21, 2021, and accordingly did not attend meetings of the Board of Directors in FY2021.3.
Member of the Personnel Committee

70

71

OFFICER SYSTEM
As of June 21, 2021

Outside Directors
Position
Name

Director (Outside)
Koichi Kawana

Major concurrent positions

Outside Director (Audit & Supervisory
Committee Member) of COMSYS Holdings
Corporation
Outside Director of TOKYO ELECTRONDEVICE LIMITED

Reasons for appointment—

Given Mr. Kawana’s extensive knowledge and experience incorporate management, the Company anticipates that hewill be able to further strengthen management oversightand checking functions, and introduce a global managerial
perspective based on his extensive experience working
overseas, and thus believes that he will be able to performthe duties of an Outside Director appropriately.

18—

Although Ms. Kuwabara has not been involved in corporate
management other than through serving as an outside
officer, the Company anticipates, given her many years ofexperience as an attorney-at-law, that she will be able tofurther strengthen management oversight and checking
functions, mainly from a legal risk perspective, and thus
believes that she will be able to perform the duties of an
Outside Director appropriately.

18—

Although Mr. Noma has not been involved in corporate
management other than through serving as an outside
officer, given his profound scholarly knowledge accumulated throughout his study and teaching activities in thefield of corporate strategy, especially accounting andfinancial affairs, the Company anticipates that he will beable to further strengthen management oversight andchecking functions, and thus believes that he will be able toperform the duties of an Outside Director appropriately.

18—

Given Mr. Shimada’s extensive knowledge and experiencein corporate management, the Company anticipates that hewill be able to further strengthen management oversightand checking functions, and introduce his extensive
knowledge concerning fusion of corporate managementand digital technology into the Company’s managerial
perspective, and thus believes that he will be able toperform the duties of an Outside Director appropriately.

—

External Director of RENOVA, Inc.

Attorney-at-Law Partner of GAIEN PARTNERS

Director (Outside)
Satoko Kuwabara

Director (Outside)
Mikiharu Noma

Director (Outside)
Toshio Shimada

Outside Auditor of Unicafe Inc.
Outside Audit & Supervisory Board Memberof Nippon Yusen Kabushiki Kaisha

Professor, Graduate School of Business
Administration, Hitotsubashi University
Business School
Outside Auditor of Nice Corporation

Special Advisor of CAC Holdings Corporation

Major experience and expertise
Corporate
management

Finance/accounting

Law

Digital technology

Major concurrent positions

Number ofCompany
shares owned

Reasons for appointment

3,100

Given his many years of experience in engaging in work in
the administration divisions, and mastering corporate legal
affairs, the Company expects Mr. Nagaike to utilize hisknowledge and experience for the audit and supervisorysystem of the Company.

XXXX

Audit & Supervisory
Board Member(Full-time, Outside)
Toru Shinoda

200

Given his many years of experience in audit practices, andgiven he is a certified public accountant, the Company
expects Mr. Shinoda to utilize his wealth of knowledge andexperience in accounting and auditing for the audit andsupervisory system of the Company.

Major experienceand expertise

Businessknowledge

Independence

Attendance at meetings of the Boardof Directors (FY2021)
Number of
Number ofmeetings attended
meetings held

18

14

18

14

Law

Knowledgeof othercompanies
Finance/accounting

Attorney-at-Law Partner in Sudoh& Partners
Outside Audit & Supervisory Board Memberof MITSUI-SOKO HOLDINGS Co., Ltd.

10,600Outside Corporate Auditor of PRONEXUS INC.

Given his many years of experience as an attorney-at-law,
the Company expects Mr. Sudoh to utilize his wealth ofknowledge and experience in legal affairs for the audit andsupervisory system of the Company.

Law

Given his many years mastering tax affairs, and given that
he is a certified public tax accountant, the Company expects
Mr. Kamijo to utilize his wealth of knowledge and experience in tax affairs for the audit and supervisory system of
the Company.

Taxes

17

14

14

Statutory Auditor of Keikyu Corporation
Certified Public Tax Accountant

Audit & Supervisory
Board Member(Outside)
Katsuhiko Kamijo

72—

Attendance at meetings of the Audit &Supervisory Board (FY2021.3)
Number of
Number ofmeetings attended
meetings held

18

Audit & Supervisory
Board Member(Outside)
Osamu Sudoh

18

Outside Audit & Supervisory Board Memberof The Resolution and Collection
Corporation
Visiting Professor, Graduate School,
Chiba University of Commerce—

ESG SECTION

Audit & Supervisory
Board Member(Full-time)
Masataka NagaikeInternational

Independence

Note: Toshio Shimada was elected at the 16th Ordinary General Meeting of Shareholders held on June 21, 2021,
and accordingly did not attend meetings of the Board of Directors in FY2021.3.

Audit & Supervisory Board Members
Position
Name

Attendance at meetings of the Boardof Directors (FY2021.3)
Number of
Number ofmeetings attended
meetings held

Number ofCompany
shares owned

18

14

Note: Number of Company shares owned is as of theend of March 2021. Attendance at meetingsof the Board of Directors is for FY2021.3.
In addition to the number of meetings of theBoard of Directors in the above table, there was
one meeting held on a document basis that isregarded as a meeting of the Board of Directors
in accordance with Article 370 of the Companies
Act.
Member of the Personnel Committee
 ember of the Independent Directors and Audit &M
Supervisory Board Members Committee

73

HUMAN RESOURCES INITIATIVESThe BANDAI NAMCO Group believes that human resources are its most important asset. Accordingly, we are striving toestablish an environment in which employees can work energetically and with peace of mind while enjoying theirwork. We are also aiming to foster respect for the diverse individuality of our employees and to ensure that wehave a diverse workforce. We are appropriately addressing various laws and regulations, and we are focusing on
the development of human resources who can adapt to dramatic change and actively advance the IP axis strategy.

Initiatives to Support Employees Who Take On Challenges
Principal companies in the BANDAI NAMCO Group have introduced
performance-linked remuneration frameworks that correlate acompany’s operating profit with employee profit sharing. In addition, we have established systems for the proposal of ideas regarding IP, products, and services for Units and companies and othersystems. In these ways, we have established frameworks thattranscend boundaries between companies and departments andenable employees to make their own proposals. Furthermore, byintroducing systems that give recognition to teams and employees
for taking on challenges, we are working to establish foundations
and a corporate culture that make it easier to address challenges
with a positive attitude.

Groupwide recognition system: BANDAI NAMCO Awards

Initiatives to Cultivate Global Human Resources

We are implementing a variety of initiatives so that employees canwork while remaining healthy in body and mind. As countermeasures to long work hours, we have taken such steps as establishinga limit for overtime hours and implementing working hourintervals. Moreover, as a mental health measure, we have implemented stress checks and established a system for personal consultations with industrial physicians.

Initiatives to Prevent the Spread of the COVID-19 Infection
From the perspective of preventing the spread of COVID-19, theBANDAI NAMCO Group continues to conduct its business activities
while implementing necessary safety measures in accordance withthe guidelines of national governments and local governments.
We are strengthening the communications environment; taking
steps to establish a work environment that facilitates remote participation, such as for meetings and training; and promoting teleworking. In addition, we are implementing a variety of initiatives toprevent the spread of COVID-19. Moreover, we are approaching the
Examples of measures that BANDAI NAMCO has
introduced to prevent the spread of COVID-19(for Group companies in Japan)
Setting a target for the work-from-home ratio of 70%
Introducing flextime system with no core timePromoting off-peak commuting
Installation of acrylic panels in meeting rooms, work areas, etc.

changes resulting from the ongoing influence of COVID-19 on
society as opportunities to transition to new working styles, andestablished the BANDAI NAMCO Group New Working Style
Guidelines. These guidelines recommend such measures asadvancing work classification and efficiency; enhancing work-lifebalance; creating new forms of communication that integrate
online and real elements; introducing flexible working styles, suchas working from home and rotation work; effectively using satellite
offices; and moving away from the use of paper.

Granting additional paid leave in the following cases:• People who are feeling ill or have likely been in contact with someone who is infected by COVID-19 (implemented from February 2020)• Employees who cannot work because they are parents of children
whose school, day care center, etc., has been closed (implemented
from February 2020)• Employees who had a side effect when receiving the COVID-19
vaccine or after receiving the vaccine (implemented from April 2021)

Addressing Diverse Working Styles
GLOBAL TRAINING PROGRAM (photograph from FY2020.3)

The Group is operating a variety of systems to achieve work-lifebalance, such as systems to support child-rearing with peace ofmind. Other initiatives include the introduction of a system toprovide congratulatory money for childbirth, the provision of facilities to nursery schools certified by Tokyo Prefecture, and theintroduction of satellite offices. Furthermore, we have introduced
systems that address family circumstances, including not only

child-rearing but also family nursing and caregiving, etc.
In accordance with the Act on Advancement of Measures to
Support Raising Next-Generation Children, BANDAI NAMCOEntertainment Inc., BANDAI CO., LTD., and BANDAI NAMCO
Amusement Inc. have received certification from the Minister of
Health, Labour and Welfare (Kurumin certification) in recognition of
their support of child-rearing.

Examples of Systems to Promote Achievement of Work-Life Balance (Programs that surpass legal requirements)

Initiatives That Use Stock
We introduced an employee stock ownership plan with the objectives of encouraging employees to aim to raise the corporate valueof the entire Group from the perspective of shareholders, as well as
cultivating a sense of unity within the Group. In addition, to further
increase employee participation in management, in FY2022.3 andduring the next Mid-term Plan (FY2023.3 to FY2025.3), Group

Initiatives for Working While Remaining Healthy in Body and Mind

ESG SECTION

The cultivation of global human resources is essential for the Groupto achieve sustained growth over the medium to long term. In
addition to actively implementing personnel rotations that transcend the boundaries between regions, in FY2020.3 we operated
the GLOBAL TRAINING PROGRAM for employees worldwide. With
the objectives of deepening an understanding of the Group and the
IP axis strategy, cultivating an awareness of the ALL BANDAI
NAMCO concept, and fostering a spirit of taking on challenges, weoffered the Cross-Unit Lecture, which is for young employees, andthe Cross-Unit Discussion, which is for managers. Other initiatives
included observation of development bases and discussions. Fromthe perspective of preventing the spread of COVID-19, we did not
hold the GLOBAL TRAINING PROGRAM in FY2021.3. However, weplan to implement the training in FY2022.3 after revising the program with the use of online measures.

Initiatives for New Working Styles That Draw On BANDAI NAMCO’s
Distinctive Characteristics

employees in Japan who contribute a set amount or more eachmonth will receive special incentive shares in accordance with eachyear’s operating profit. Moreover, proposal briefings are provided to
employee shareholders to explain the importance of the shareholders’meetings and the details of proposals. (For FY2021.3, there is an
explanatory video.)

SystemOverview

Childcare leave

Can be taken until the day the child turns two years old.

Childcare support

Available until March 31 of the year in which the child completes sixth grade. In addition to shorter working
hours, includes exemption from overtime and late-night work.

Childbirth leave for male
employees

Male employees can take up to five days of paid leave when their wife gives birth.

Flextime system

Normal working hours are determined not on a daily basis but on a monthly basis.

Child-rearing flextime system

Up to March 31 of the year in which the child completes sixth grade, core time can be adjusted in line with childrearing circumstances.

Provision of support funds forchildbirth and childcare

Provision of ¥200,000 at the birth of each of the first and second children.
Provision of ¥3,000,000 at the birth of each of the third and subsequent children.
(Acquisition of childcare leave for one continuous week or more is a requirement for the receipt of this support.)

Lifestyle-support system

Introducing a lifestyle-support system with the objective of establishing supportive environments for employees ina variety of household circumstances.
Offering 30-day leave as well as shorter working hours / flextime, in accordance with the reason.
Examples of reasons: (1) truant children, (2) infertility treatment, (3) family nursing or caregiving for spouses and1st and 2nd degree relatives of employees, and (4) receiving outpatient care at medical facilities due to disease

Note: Systems used by Group companies are different.

74

75

HUMAN RESOURCES INITIATIVESCSR INITIATIVES

Initiatives to Facilitate Active Participation by Diverse Human Resources

To realize the provision of “Dreams, Fun and Inspiration,”the BANDAI NAMCO Group conducts CSR activities in accordance with theconcept of “Fun For the Future!”

The BANDAI NAMCO Group is working to create environments inwhich diverse human resources with abundant individuality canwork energetically. In regard to securing human resources, we haveannounced a policy of striving to “secure excellent human resources,
without regard to their status as new graduates or mid-career hires
or to their gender, age, and nationality.” In addition, we systematically
implement training programs in line with a variety of ranks andcharacteristics, from newly hired employees to managers.

BANDAI NAMCO Group CSR Management 

In accordance with the Group CSR Rules, which stipulate the basic policies for the Group's CSR, we have established the
BANDAI NAMCO Group's Important CSR Themes, which require special initiatives. Furthermore, each business segment andaffiliated business company formulates its own CSR Major Initiative Themes and leverages the special characteristics of its
operations to implement activities in accordance with those themes.

Examples of Groupwide Development Programs• Providing New Officer Training, with the objective of developing the next
generation of leaders• Training by years with the company and by position(1st year, 3rd year, 5th year, new manager training)

Establishment of special subsidiary for promoting theemployment of people with disabilities

BANDAI NAMCO Group’s CSR Policy • Training based on exchanges with personnel in other industries, which
encourages employees to think about their own company’s values and future
through lectures and discussions with people from other industries

Initiatives to Promote Active Careers for Diverse Human Resources• GLOBAL TRAINING PROGRAM for employees from around the world• Employment of seniors (hiring people who are past the retirement age but
want to continue working as senior employees; introducing a retirement ageof 65 in certain companies; framework for the active employment of seniors /experienced employees)• Exchange initiatives for young employees, which aim to build an understandingof operations and personal contacts within the Group through humanresources rotations for young employees at Group companies

Mission“Dreams, Fun and Inspiration”• Establishment of special subsidiary for promoting the employment of people
with disabilities

CSR Action Concept

Fun For the Future!

Data on Diversity at the BANDAI NAMCO Group (FY2021.3)
Gender ratio for full-time, permanent
employees*
Women:

Gender ratio for managers*

Men:

2,254

(32.6%)(67.4%)

peoplepeople

Women:

Gender ratio for new hires*

Men:

Women:

666

peoplepeoplepeople(19.1%)(80.9%)(42.0%)(58.0%)

people68

Environmental Consideration

Policies Regarding Influence on Society of the Group’s Content and Products

Supply Chain Management

Each business segment and affiliated business company sets up priority initiatives and works through its businesses toimplement activities in line with the BANDAI NAMCO Group’s Important CSR Themes.

Men:

157

Safety and Cleanliness of Products and Services

94

ESG SECTION

1,092

BANDAI NAMCO Group’s Important CSR Themes

BANDAI NAMCO Group’s CSR Promotion System * Total for five business management companies* Total for five business management companies* Total for five business management companies

Job separation rate (men and women)*

Number of mid-career hires*

Number of non-Japanese employees*

104 people

125 people

Age structure of workforce*

Inclusion in indexes

Men:

Women

4.0% 2.3%* Total for five business management companies* Total for five business management companies* Total for five business management companies. Number ofvoluntarily retiring employees in FY2021.3 (excluding permanenttransfers to another company and those retiring at retirement age)
divided by the number of full-time, permanent employees asof April 1, 2020

The BANDAI NAMCO Group has established the Group CSR Committee, which comprises the directors (excluding outside directors) of BANDAI NAMCO Holdings and others. The committee is chaired by the President and Representative Director of BANDAI
NAMCO Holdings. In this way, the Group is advancing CSR activities rapidly and in a manner that is integrated with operations.
In addition, in accordance with the idea that the promotion of CSR activities is an important initiative from the perspectiveof management strategy, the status of activities is periodically reported to the Company’s Board of Directors.
Moreover, to advance the Important CSR Themes, we have established the Group CSR Subcommittee, which is a subordinate organization under the Group CSR Committee. The manager of the Group CSR Subcommittee is a director of BANDAI
NAMCO Holdings with related responsibilities (Chief ecology Officer), and the participants include the people in charge of
CSR at each Unit’s business management company and at affiliated business companies. The subcommittee’s activities
include sharing the status of progress with the important initiative themes in each business, exchanging information, anddiscussing various issues. The specific measures formulated by the Group CSR Subcommittee are implemented after being
discussed by the Group CSR Committee.
CSR Promotion System

Employment rate for people withdisabilities*

2.21%* For consolidated subsidiaries that entrust work to special
subsidiary BANDAI NAMCO Will Inc.

60 and over

1.3%

50 to 59

7.9%

Board of Directors (CSR matters reported as needed)

Under 3049.6%
30 to 3923.2%

40 to 49

18.0%

Included as a constituent stock in the
MSCI Japan Empowering Women
Index (WIN), which is composed ofshares of companies with superior
gender diversity.

Supervision

Reports

Group CSR Committee
Chair

President and Representative Director Masaru Kawaguchi

Participants 	Directors of BANDAI NAMCO Holdings Inc.
(excluding outside directors), other designated officers/employees
Schedule

Semiannually and otherwise as needed

Agenda/Purpose 	Discussions and sharing of information related to the Group's
important CSR strategies, discussions/deliberations regarding
proposals or reports to the Board of Directors, supervision of theGroup CSR Subcommittee, supervision of progress of important
items by each business segment and affiliated business company* Total for five business management companies

Group CSR Subcommittee

76

Unit CSR Projects

77CSR INITIATIVES

Formulation of Important CSR Themes 

Aiming to further enhance the effectiveness of CSR activities, we formulated the BANDAI NAMCO Group’s Important
CSR Themes through the Group CSR Committee. These
themes have been in use since 2010 and are periodicallyreviewed. With consideration for the influence that companies have on society in addressing the various social issues
that surround the Group, we implemented multifaceted

initiatives to identify and evaluate themes that require
special initiatives. In this way, we formulated the BANDAI
NAMCO Group’s Important CSR Themes. As a company thatprovides “Dreams, Fun and Inspiration” to customers
around the world, we will work toward the resolution ofsocial issues.

Important CSR Theme Formulation Process Important CSR Themes — Establishment and Process Steps

Perspectives that are emphasized during
establishment/verification
BANDAI NAMCO Group’s Approach and Policies

The BANDAI NAMCO Group believes that measures to address climate change are necessary for the realization of a sustainable
society and for business continuity. Accordingly, in April 2021 we formulated the BANDAI NAMCO Group Sustainability Policy
and established medium- to long-term targets for the transition to a decarbonized society. As we aim for the realization of asustainable society, we will link these initiatives to sustained growth for the Group.

GovernanceRisk Management

Under our CSR promotion system, following deliberation andconsideration by the Group CSR Committee, which is led by thepresident and representative director, reports are made to theBoard of Directors, which handles supervision.

In regard to risks and opportunities, following deliberation andconsideration by the Group CSR Committee, the Group formulates
and implements various measures. Furthermore, in regard toenergy-related emissions of carbon dioxide, we have formulated
numerical reduction targets for each business segment and are
advancing measures in line with business characteristics. Each fiscal
year, we calculate* and analyze emissions volumes for the Group asa whole and for each business segment, and we use this information
to improve measures in subsequent years. The status of reductions
and the results of analyses are discussed by the Group CSR
Committee, and then reports are made to the Board of Directors,
which handles supervision.

Strategy

BANDAI NAMCO Group Corporate Philosophy
BANDAI NAMCO Group Sustainability Policy
BANDAI NAMCO Group Compliance Charter
BANDAI NAMCO Group Mid-term Plan
Related Group policies/guidelines (Group CSR Rules)
Trends and Demands of Society around the World
Various policies and guidelines from international institutions,research institutions, and governments
	Example: Sustainable Development Goals (SDGs), Japan Ministry of theEnvironment’s Environmental Report Guidelines, GRI Guidelines, TCFD
recommendations, SASB standards, ESG evaluation institution guidelines
and reports (CDP, MSCI, Sustainalytics, FTSE), etc.

In accordance with the BANDAI NAMCO Group Sustainability Policy(page 27), we established targets regarding decarbonization.
In setting targets, at meetings of the Group CSR Committee and theBoard of Directors, discussions were held regarding the demandsof society, including the TCFD recommendations, and the impact
of climate change on the Group. In conjunction with the formulationof the next Mid-term Plan, which will start from April 2022, wewill formulate and implement more specific measures to achieve
our targets.
Based on the transition risks under the 2°C scenario and thephysical risks under the 4°C scenario, we are conducting thefollowing analyses regarding the Group’s risks and opportunities.

Interviews with outside experts
Consumer surveys (implemented at irregular intervals)

Gain understandingof society’s
expectations throughinterviews withoutside experts, etc.
(Selection of specificitems related to CSR
activities)

STEP

2

Evaluate theimportance of thespecific items related
to CSR activities

STEP

52,256t-CO2

Risks and opportunities that could affect the Group’s businesses

Risks

73,996• Higher raw materials costs as well as production andprocurement costs due to carbon regulations and plastic
use regulations

59,04359,55059,551• Higher costs due to the introduction of new technologies,
investment in R&D, or capital investment

58,16952,256• Property damage, supply chain interruption, or resource
depletion due to natural disasters

STEP

Establishmentof the Group’s
Important
CSR Themes

4

Individual Units decidemajor initiative
themes based on theimportant themes2014• Lower electricity costs due to energy-saving

Implementation of measures

3

Organize andclassify specifichigh-importanceitems related to
CSR activities andconsolidate themwithin the four
important themes

BANDAI NAMCO Group CO2 emissions

Initiatives of companies that are advanced in regard to CSR

STEP

5

Promote initiatives
based on major
initiative themes inaccordance with the
CSR concept• Lower costs due to the introduction of efficient production/transportation processes• Creation of new markets due to changes in consumer
preferences due to natural disasters

Implemented every mid-term plan1*E
 ach year, the calculated environmental data is verified and reviewed by Bureau
Veritas Japan Co., Ltd., a third-party institution. The results are made available on
our website as an independent assurance report.

Vs. FY2020.3: reduction of 10.2% (vs. FY2014.3: reduction of 29.4%)

Opportunities

STEP

Climate Change Initiatives: Addressing TCFD Recommendations

In addition, we will implement the following measures to addressthese risks and opportunities.

2018

2019

2020

2021

Indicators and Targets
In April 2021, we established medium- to long-term targets for
decarbonization. For information about the Group’s carbon dioxide
emission reduction initiatives, please refer to page 81.
Medium- to long-term targets for decarbonization

The Group's measures to address risks and opportunities• Advancing energy-saving measures; increased efficiency
measures

Measures

TargetBy 2050:
Reduce the amount of energy-related carbon dioxide
emissions at Group business sites (offices, own plants,
directly operated amusement facilities, etc.) to net zeroMid-term
targetBy 2030:
A 35% reduction compared with FY2020.3 (a 50%
reduction compared with FY2014.3) in energy-related
carbon dioxide emissions at Group business sites

Main
initiatives

Further promotion of energy-saving measures andintroduction of renewable energy, etc.

• Using low-carbon energy, such as renewable energy• Advancing recycling

Periodic verification of important themes

2017

ESG SECTION

The BANDAI NAMCO Group’s Important CSR Themes were
established through a process of reconfirming which CSR
themes are the most important from the perspective of the
BANDAI NAMCO Group and its stakeholders. First, weinterviewed four outside experts to identify the needs ofsociety surrounding the Group. Next, based on a variety of
information, such as reports on investigations conducted byexternal organizations, we then compiled 68 specific items
related to CSR activities. We evaluated these items fromthe perspectives of the Mid-term Plan, guidelines, and theother sources listed below, and subsequently organized andclassified them. Through this process, we established thefour Important CSR Themes.
The appropriateness of the Important CSR Themes isevaluated for each Mid-term Plan, and related measures are
implemented after we confirm that there are no inconsistencies
between the themes and the demands of society. In FY2022.3,
in accordance with the BANDAI NAMCO Group Sustainability
Policy (please refer to page 27), we are promoting the identification of materiality issues (reselection of important
themes). Based on the identified materiality issues, from
April 2022 we will work to establish targets for the next
Mid-term Plan and implement initiatives.

Column• Introducing new technologies and materials; implementing
capital investment

Recommendations by TCFD: The Task Force on Climate-Related Financial Disclosures recommends efficient information disclosure that is consistent, comparable, reliable, and clear
in order to support appropriate investment judgments in regard to the main causes of climate change.

78

79

EXAMPLES OF INITIATIVES ADDRESSING IMPORTANT CSR THEMESSAFETY AND CLEANLINESS OF PRODUCTS AND SERVICESENVIRONMENTAL CONSIDERATIONThe BANDAI NAMCO Group strives to further enhance the safety and cleanliness of its products and services, which are
the foundation of the provision of “Dreams, Fun and Inspiration,” so that customers can enjoy them with peace of mind.

To ensure ongoing “Dreams, Fun and Inspiration” for the next generation, the BANDAI NAMCO Group is working toshow consideration for the environment, reduce energy consumption in its operating activities, and reduce the useof resources in its products and services.

Pursuing Product Designs and Materials with Consideration for Safety Awards for Best Contributors to Product Safety, which aresponsored by the Ministry of Economy, Trade and Industry(METI). We have received the award three times — in 2008,2012, and 2015 — and accordingly we have been certified as a
Product Safety Contributor Gold Company. In FY2021.3, after
five years had passed, we were certified under a renewal
examination, and we became the first company in the Large
Manufacturer and Importer Category to have a star symbol
added to the Product Safety Contributor Gold Company logo.
In addition, at BANDAI NAMCO Entertainment Inc.,
we have formulated internal regulations and guidelines forgame production. These are periodically reevaluated andcontinually applied. In this way, we are working to see that
customers can enjoy games with peace of mind.

Award Results Related to Product Safety
Best Contributors to Product Safety
Awards program, sponsored by METI

Certified as a Product
Safety Contributor
Gold Company
BANDAI CO., LTD.

Pursuing Security and Safety in Facilities 
To enable a wide range of age groups to enjoy facilities
safely and with peace of mind, the BANDAI NAMCO Groupis conducting facility design, safety reviews, checks, andemployee education. For example, at all facilities BANDAI
NAMCO Amusement Inc. implements safety checks forbuilding structure, electricity, fire prevention, cabinets,
installed play equipment, etc. In addition, with the objectiveof cultivating places for wholesome fun, we are promoting
the acquisition of certification for AOU Youth Advisor,
who have specialized knowledge and experience in youth
development activities.

Initiatives to Reduce CO2 Emissions and Conserve Energy 
The BANDAI NAMCO Group is working to reduce CO2
emissions and has set objectives for the reduction of CO2
emissions each year in each Unit. Consequently, Groupwide
emissions in FY2021.3 were down 10.2% from the previous
fiscal year, to 52,256 tons of CO2. In addition to total
emissions management, we are working to control CO2
emissions through the introduction of management basedon emissions intensity for each Unit. Furthermore, as one

Packaging and Containers — Reducing Material Usage and Promoting Recycling 
The BANDAI NAMCO Group is working to reduce the use ofmaterials in packaging materials and containers related tosales of products and services and to promote the recyclingof these items. For example, BANDAI CO., LTD., has worked
to move toward the use of a single material and reduce theamount of plastic used in the capsule containers for capsuletoys. In these ways, from 2013 we began to introduce lighter
containers that are only about 60% of the weight of previous
containers. Currently, we have shifted to lighter models fornearly all capsule containers. In addition, we are working
to collect empty capsules from stores and promote theirrecycling. In FY2021.3, we collected approximately six tons of
capsules. The empty capsules that are collected are recycled
and used for such applications as plastic flower pots andoffice stationery trays. Since 2015, we have been selling

ColumnInspection of electrical equipment at directly operated amusement facility

Results in FY2021.3
Number of checks/reviews related to facility safety*
Facility safety checks

239

locations

Play equipment checks

39

locationspart of our initiatives to conserve energy, in amusement
machines and store lighting at amusement facilities we areconverting from halogen lamps and fluorescent lighting to
LED lamps. The Group is also implementing a range ofother initiatives, such as increasing operational efficiency
at plants, aggressively utilizing LEDs at live events,
recycling materials, and promoting eco-driving.

capsule-less products. These products do not use capsulecontainers and are dispensed without a capsule. They havedrawn attention because they combine new product value
with consideration for the environment, and a cumulative
total of more than 50 million units have been shipped. In
addition, BANDAI SPIRITS CO., LTD., is
actively switching from plastic blister
packaging to cardboard packaging forTransform!
its lottery-related products. As of theend of March 2021, the transition had
been completed for about 55% of thetotal number of products, and BANDAISPIRITS estimates that it has reduced
the use of plastic by approximately 107
Capsule-less products
tons per year.

ESG SECTION

For each product, the BANDAI NAMCO Group anticipates
misuse by children and a wide range of customer needs and is
working to further enhance safety management systems.
As one part of those initiatives, BANDAI CO., LTD., conducts
necessary tests in accordance with such factors as productcharacteristics, selecting from among testing standards(approximately 370 items) to confirm product safety, strength,
durability, etc. In addition, standards related to the safety ofmaterials include more than 20 items. In addition to acquiringcertification from third-party inspection institutions, we conduct
internal analysis and inspections to confirm that the products
do not include poisonous heavy metals or regulated chemical
substances that have the potential to harm the human body.
For all products, we implement new product inspections to
implement this safety verification. In addition, when manufactured products are shipped from the plant, we implement
sampling inspections andconfirm product specifications, and finally we verify
that they do not containharmful substances.
BANDAI has received
the METI Minister’s Award,
Using gas chromatography–mass spectrometry equipment, inspections are conducted
the highest award, in theto determine the presence or absence of
Large Manufacturer andregulated chemical substances that have thepotential to harm the human body.
Importer Category of theEnvironment-Friendly Initiatives with Gundam

The Group started the Gundam Recycling Project in April 2021. Under this project, at 190 directly
operated amusement facilities run by BANDAI NAMCO Amusement, Gundam plastic model runners(plastic model frame sections) are collected from fans around Japan. The collected runners are
combined with the plastic left over from the production process at the BANDAI HOBBY CENTER,
a manufacturing plant for Gundam plastic models. A portion is used as a material for verification
testing targeting the realization of chemical recycling, and the rest is reused through material
recycling or thermal recycling. In FY2022.3, the first year, we are aiming to collect 10 tons, and in
the future we intend to further increase the amount collected. The electricity generated throughthis project’s thermal recycling is supplied to the BANDAI HOBBY CENTER, where it is linked tothe production of Gundam plastic models. In addition, GUNDAM FACTORY YOKOHAMA, the facility
that is displaying the moving Gundam, is switching to renewable energy for the power used to
exhibit the moving Gundam. In this way, we are actively working to reflect consideration for theenvironment through the Gundam IP overall.

Collection box

Gundam plastic model runner* Results for BANDAI NAMCO Amusement Inc.

80

81

EXAMPLES OF INITIATIVES ADDRESSING IMPORTANT CSR THEMESPOLICIES REGARDING INFLUENCE ON SOCIETY OF THE
GROUP’S CONTENT AND PRODUCTS

SUPPLY CHAIN MANAGEMENT

To provide “Dreams, Fun and Inspiration” to people around the world, the BANDAI NAMCO Group values freedomof expression, and we are working to appropriately provide customers with a wide range of content and products.

To achieve qualitative improvements in the “Dreams, Fun and Inspiration” that we provide, the BANDAI NAMCO
Group is working to enhance supply chain management in each of its business areas.

I mplementing Timely Training and Collecting andSharing Information regarding Ethical Expression 
Each Unit implements a variety of employee training
related to ethical expression in order to facilitate theprovision of products and services in accordance withappropriate expression. In addition, the Group is taking
steps to advance the sharing of information related to
ethical expression. For example, based on the latest
information and past examples, we are distributing mailmagazines to employees and holding study sessions.

Implementing a Variety of Audits 

Study session related to ethical expression(Photograph from July 2019. Currently being held online.)

IP Protection Initiatives Columnsuch as working jointly with the Shanghai Library to hold an
online course aiming to increase IP awareness.
In addition, as one facet of measures to address counterfeit
products, BANDAI SPIRITS CO., LTD., began to utilize special
specification hologram seals with forgery prevention
processing. These seals, which are now being applied to all
TAMASHII NATIONS brand products for the mature fan base,are used to verify that a product is genuine.

Hologram seals are applied to
TAMASHII NATIONS products.

Receipt of the Commissioner of the Japan Patent Office Award at theIntellectual Property Achievement Awards

At the 2021 Intellectual Property Achievement Awards held by the Ministry of Economy, Trade and Industry and the Japan
Patent Office, BANDAI CO., LTD., received the Commissioner of the Japan Patent Office Award for its initiatives to achieveboth IP protection and IP advancement.
Reason for Receipt of Award (Summary)In joint plans with outside companies, by acquiring, managing, andenvironment, emergency response, etc.); the environment(management of chemical substances in products,
waste management, etc.); fair trade and ethics; quality
and safety; and information security. BANDAI NAMCO
Amusement only conducts business with suppliers thatare not engaged in illegal activity. Furthermore, audits ofplant line production management systems, etc., areconducted at amusement machine assembly plants thatare starting a new transaction relationship with BANDAI
NAMCO Amusement. (No new transactions in FY2021.3.)

Results in FY2021.3
 umber of BANDAI Factory
N
Audits implemented

166

companies(Implemented at all suppliers
subject to audits) umber of secondaryNsupplier audits
implemented*

139

companies* Results at BANDAI CO., LTD.

ESG SECTION

The BANDAI NAMCO Group is working closely with partners
inside and outside the Group and with governments to protect
the image of its IP and to ensure that its customers canenjoy worry-free use of safe products. We are implementing
measures targeting counterfeit goods. We monitor Japaneseand overseas markets, including the online market, andask customs authorities to prohibit the import of counterfeit
products. In these ways, we are working to promptly detect
counterfeit products, prevent their appearance on the market,
and secure their prompt removal, if found. In addition, as amember of the International Intellectual Property Protection
Forum, we are working in collaboration with government
institutions and related organizations in each country to
implement effective countermeasures.
Furthermore, in China BANDAI NAMCO Holdings CHINA
CO., LTD., is taking steps to promote education in this area,

The BANDAI NAMCO Group strictly observes the laws andregulations of each country. We also establish our own
standards. In this way, the Group is working to strengthen
supply chain management.
One example is the implementation of BANDAI Factory
Audits (BFAs), which combine new plant audits and Code of
Conduct (COC) audits, at overseas final packaging plantsthat make products for BANDAI CO., LTD. or BANDAISPIRITS CO., LTD. The basic policy for BFAs is the BANDAI
Code of Conduct, which calls for strict observance of eight
COC standards (forced labor, child labor, working hours,
wages and allowances, punitive action, discrimination,
environmental protection, and origin of products). Audits
are conducted in accordance with our original BFA manual.
Furthermore, BANDAI is advancing audits ofsecondary suppliers. BANDAI (SHENZHEN) CO., LTD.,
which handles production management for core products
for Europe and North America, is conducting transactions
with plants that have received certification under the ICTI
Code of Business Practices, which are unified standards
for toy manufacturers from the International Council of Toy
Industries (ICTI). (In FY2021.3, all primary factories hadreceived ICTI certification.)
In addition, when it starts to do business with asupplier, BANDAI NAMCO Amusement Inc. implements a
CSR Procurement Questionnaire related to seven major
items — overall CSR; human rights (prevention of forcedlabor, discrimination, harassment, etc.); safety (work

Audit at plant in China

Initiatives in Cooperation with Suppliers 
BANDAI CO., LTD., which conducts business with a large
number of suppliers, holds supplier conferences every
year.* Information is shared with suppliers at these
conferences, including information about safety standards
accompanying revisions of toy-related laws in Japan andoverseas, as well as original quality standards. Furthermore,
BANDAI CO., LTD., has established the BANDAI SupplierAwards, which recognize suppliers that maintain highlevels of performance in regard to evaluation indicators.
We are working together with suppliers to improve working
environments and quality. In addition, suppliers that receive
awards share their know-how by giving lectures to othersuppliers about their initiatives on the front lines.
* In FY2021.3, to prevent the spread of COVID-19, we shared information with
suppliers on a document basis, and we did not hold the BANDAI Supplier Awards.

using copyrights in accordance with individual contracts stipulating
the handling of the IP in detail, BANDAI both protected andpromoted its own business model.

BANDAI conducts prompt IP checks in regard to the diverse rangeof products that it sells, and in addition BANDAI has establishedan IP acquisition and management system aligned with businessneeds and speed.

CSR

For further information about CSR initiatives, please see the following:https://www.bandainamco.co.jp/en/social/index.html

BANDAI is actively implementing countermeasures for counterfeit
products around the world. It is cooperating with police andcustoms authorities and is working to achieve the smoothelimination of counterfeit products.

82

Awards ceremony

83

CONSOLIDATED SIX-YEAR FINANCIAL SUMMARYBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31

Millions of yen, except per share data and main financial indicators

2016

2017

2018

2019

2020

2021

Net sales¥575,504¥620,061¥678,312¥732,347¥723,989¥740,903

Gross profit

202,600

223,759

241,581262,555

260,948

282,006

Selling, general and administrative expenses

152,959

160,520

166,557

178,510

182,172

197,352

Operating profit

49,641

63,23875,024

84,04578,77584,654

Recurring profit

50,77463,29075,38086,86379,797

87,612

Profit attributable to owners of parent

34,58344,15954,10963,383

57,66548,894Comprehensive income

27,377

43,10456,02469,95253,312

90,527

Capital expenditures

26,98625,01660,50129,01633,40631,507

Depreciation and amortization

21,626

21,85423,545

21,37023,23924,684

Cash flows from operating activities

58,04964,13655,13879,811

43,13160,483

Total assets¥448,336¥488,032¥540,490¥612,955¥619,819¥732,782

Total current assets

322,176

357,782

350,618

397,951

383,662455,210

Total current liabilities

114,333

126,110

136,202

163,893

142,506

175,920

Total net assets

317,304

348,784

387,354429,644454,684

511,433¥157.43¥201.03¥246.29¥288.40¥262.39¥222.58

52.00

82.00

123.00145.00132.00112.00Return on equity (ROE)*2 (%)

11.2

13.3

14.7

15.5

13.1

10.2

Return on assets (ROA)*3 (%)

11.4

13.5

14.7

15.1

12.9

13.0

For the Year:*1

FINANCIAL				 SECTIONCONTENTSAt Year-End:85

C ONSOLIDATED SIX-YEAR FINANCIAL SUMMARY86

F INANCIAL REVIEW90

C ONSOLIDATED BALANCE SHEETS

92
		
		

CONSOLIDATED STATEMENTS OF
INCOME AND CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME

93
		

CONSOLIDATED STATEMENTS OF
CHANGES IN NET ASSETS

94

C ONSOLIDATED STATEMENTS OF CASH FLOWS95

N OTES TO CONSOLIDATED FINANCIAL STATEMENTS

Selling, general and admini­strative expenses to
net sales (%)

26.6

25.9

24.6

24.4

25.2

26.6

125

I NDEPENDENT AUDITOR’S REPORT

Operating profit margin (%)

8.6

10.2

11.1

11.5

10.9

11.4

Profit attributable to owners of parent margin (%)

6.0

7.1

8.0

8.7

8.0

6.6

Shareholders’ equity ratio (%)

70.6

71.3

71.5

70.0

72.5

69.7

Debt/equity ratio (Times)

0.01

0.00

0.00

0.00

0.01

0.05

Per Share Data (Yen):
Basic earnings per share

Main Financial Indicators:

FINANCIAL SECTION

Cash dividends

Notes:*1 Recurring profit is a Japanese accounting term denoting income before extraordinary items.
*2 ROE = Profit attributable to owners of parent / Average total shareholders’ equity (= Total net assets – Stock acquisition rights – Non-controlling interests)*3 ROA = Recurring profit / Average total assets

84

85

FINANCIAL REVIEW

Toys and Hobby BusinessAs a result, net sales in the Visual and Music Production

Overview of Performance in the
Fiscal Year Ended March 31, 2021

Cost of Sales

The spread of the novel coronavirus disease (COVID-19) continued

and the ratio of cost of sales to net sales was 61.9%. As a result,to have a significant impact on the overall economy and consumer

gross profit was ¥282,006 million (year-on-year increase of 8.1%),

activity in Japan and overseas. As part of our response against theand the gross profit margin was 38.1%.

successful outcomes produced by sales, marketing, etc. that utilize
digital strategies. There was a gain in popularity for long-established

IP Creation Businessbeen giving the highest priority to the safety of our various stake-

SG&A Expenses

IP products such as the KAMEN RIDER series, as well as for new IP

As for the IP Creation Business, we stirred up public attention byholders, including employees and their families and our customers,

Selling, general and administrative (SG&A) expenses were

toys and peripheral products such as confectionery. Overseas, while

producing video works such as the Mobile Suit Gundam series andwhile implementing measures to prevent the spread of infection.

¥197,352 million (year-on-year increase of 8.3%), and the ratio of

business was affected by the temporary closures of retail stores,

the LoveLive! series, and disseminating information on IP fromWe also promoted various measures to adapt to changes in

SG&A expenses to net sales increased to 26.6%, from 25.2% in the

products such as those for the mature fan base performed stably,

GUNDAM FACTORY YOKOHAMA, leading to those series gaining

lifestyles and preferences of customers such as by strengthening

previous fiscal year. Principal items included advertising expenses

primarily in the Asian region.

popularity. In addition, because SOTSU CO., LTD., which became athe sales and marketing that utilize digital strategies. In accordanceof ¥45,203 million, directors’ remuneration and employees’ wages ofwith our three-year Mid-term Plan started in April 2018, in which we¥52,904 million, employees’ retirement and severance benefits ofset forth the Mid-term Vision of “CHANGE for the NEXT: Empower,¥3,114 million, provision for directors’ bonuses of ¥1,640 million,

Gain Momentum, and Accelerate Evolution,” we have also beenand research and development expenses of ¥26,446 million.

Cost of sales was ¥458,897 million (year-on-year decrease of 0.9%),

spread of COVID-19, the BANDAI NAMCO Group (“the Group”) has

As for the Toys and Hobby Business, in Japan, products for theBusiness were ¥28,089 million (year-on-year decrease of 40.2%),

mature fan base such as plastic models of the Mobile Suit Gundam

and segment profit was ¥969 million (year-on-year decrease

series and collectible figures performed favorably due to theof 87.9%).

As a result, net sales in the Toys and Hobby Business wereconsolidated subsidiary of the Company in the previous fiscal year,¥296,016 million (year-on-year increase of 16.7%), and segment

belonged to this business unit in the first quarter of the fiscal year

profit was ¥38,220 million (year-on-year increase of 43.0%).

ended March 31, 2021, goodwill was amortized despite recording
the revenue of said company.

Network Entertainment Businesstaking advantage of the worldview and unique characteristics of IP

As a result, net sales in the IP Creation Business were ¥28,213

As for the Network Entertainment Business, in network content, key

million (year-on-year increase of 20.1%), and segment profit was

titles being distributed worldwide such as the DRAGON BALL series¥2,740 million (year-on-year decrease of 56.3%).

(Intellectual Property: meaning characters and other intellectual

Operating Profit

property) to further evolve the “IP axis strategy” that aims to

Operating profit was ¥84,654 million (year-on-year increase of

maximize IP value through the provision of the optimal products and7.5%), and the operating profit margin increased to 11.4%, fromservices at the optimal possible times. The measures also include

10.9% in the previous fiscal year.

series, continued to perform favorably due to ongoing measures

Other Businesses

targeting users. In home video games, in addition to the new titles

Other Businesses consist of companies that conduct businesses

Other Income (Loss)such as Little Nightmares II, repeat sales of existing titles such as

such as logistics support, printing, and other kinds of administration

the DRAGON BALL series, TEKKEN 7, and the DARK SOULS series

and operational support for each of the Group companies. We haveenjoyed popularity, primarily overseas, due to ongoing measuresbeen making efforts to manage such operations related to grouptargeting users and increased demand for digital sales.

support in an efficient manner.

and ONE PIECE, and key titles in Japan such as The iDOLM@STER

an initiative to strengthen development in regions and businesses
with high growth potential and an initiative to realize the total
capabilities of the Group in regions around the world under the

In other income (loss), loss on impairment of fixed assets was

ALL BANDAI NAMCO concept.

¥11,284 million, loss on temporary store closures and other related

During the fiscal year ended March 31, 2021, although eachto COVID-19 was ¥3,059 million, and loss on liquidation of businessbusiness was impacted by the spread of COVID-19, the Toys andwas ¥1,754 million. Due to these and other factors, there was a net

Hobby Business saw increased popularity for products for theother loss of ¥12,714 million. Accompanying NAMCO USA INC.’smature fan base in Japan and overseas and products utilizing new

withdrawal from the amusement facility business in North America,

IP while the Network Entertainment Business enjoyed favorable

loss on sale of amusement facilities/equipment, etc., was recorded

performance of key titles in network content and strong repeat salesof home video game titles. The wide-ranging business portfolio has
produced successful outcomes across the Group.

Net sales in the Other Businesses were ¥34,088 million (year-

were ¥344,150 million (year-on-year increase of 4.9%), and segment

on-year increase of 9.8%), and segment profit was ¥1,445 million

profit was ¥57,356 million (year-on-year increase of 30.7%).

(year-on-year increase of 7.4%).

as loss on liquidation of business under other income (loss).

Real Entertainment Business

Financial Position

As for the Real Entertainment Business, the temporary closures ofAt the end of the fiscal year ended March 31, 2021, total assets

Profit Attributable to Owners of Parent

amusement facilities, etc. in Japan and overseas in response to thestood at ¥732,782 million, an increase of ¥112,962 million from the

spread of COVID-19 had a significant impact on facilities operations

end of the previous fiscal year. The main factors were increases ofand the sale of amusement machines. On the other hand, in response¥54,755 million in investment securities, ¥30,095 million in inventories,

to these changes in the business environment, we promoted initiatives

and ¥14,470 million yen in cash and time deposits.

The Group recorded profit attributable to owners of parent of

Net Sales¥48,894 million (year-on-year decrease of 15.2%). The profit attrib-

On a consolidated basis, the Group’s net sales were ¥740,903 million

utable to owners of parent margin was 6.6%, and basic earnings per(year-on-year increase of 2.3%).

share declined to ¥222.58, from ¥262.39 in the previous fiscal year.

Results by Segment

Toys and Hobby
Network Entertainment

Millions of yen

Millions of yen

Net sales

Segment profit (loss)

that only BANDAI NAMCO can offer, such as offering claw crane

Total liabilities amounted to ¥221,348 million, an increase ofgames that can be played online and strengthening the use of Group¥56,213 million from the end of the previous fiscal year. The main

products and services. In addition to recording the fixed costs

factors were increases of ¥20,062 million in long-term borrowings

incurred during the temporary closures of facilities, etc. in responseand ¥12,305 million in trade payables.

to the official requests from the national and local governments as

Total net assets stood at ¥511,433 million, an increase of ¥56,749

loss on temporary store closures and other related to COVID-19, themillion from the end of the previous fiscal year. The main factors were

2021

2020

Year on year

2021

2020

Year on year

Company recorded expenses associated with the business structure

increases of ¥19,787 million in retained earnings mainly due to the¥ 296,016¥253,714¥ 42,301¥ 38,220¥26,733¥11,487

reform of ¥11.7 billion as loss on impairment of fixed assets, etc.

recording of ¥48,894 million in profit attributable to owners of parent

344,150

328,079

16,07057,35643,87913,477

under other loss.

despite cash dividends paid of ¥29,220 million, and ¥34,749 million

As a result, net sales in the Real Entertainment Business wereReal Entertainment

63,92391,753(27,829)(8,379)(1,502)(6,877)Visual and Music Production

28,08946,951(18,862)

969

8,032

(7,063)

IP Creation

28,21323,497

4,716

2,740

6,269

(3,529)Other

34,08831,054

3,033

1,445

1,346

99

FINANCIAL SECTION

As a result, net sales in the Network Entertainment Businessin valuation difference on available-for-sale securities, net of tax.

¥63,923 million (year-on-year decrease of 30.3%), and segment loss

As a result, the equity ratio became 69.7% (compared with 72.5%

was ¥8,379 million (segment loss for the previous fiscal year wasat the end of the previous fiscal year). The current ratio*1 was 258.8%¥1,502 million).

(compared with 269.2% at the end of the previous fiscal year); thequick ratio*2 was 168.3% (compared with 192.0%); and the interest

Visual and Music Production Businesscoverage ratio*3 was 296.0 times (compared with 345.8 times).

As for the Visual and Music Production Business, although IP

Notes:*1 Current ratio = Total current assets / Total current liabilities*2 Quick ratio = (Cash and time deposits + Trade receivables) / Total current liabilities*3 Interest coverage ratio = Cash flows from operating activities / Interest paid

related visual and music package software, among others, including
the LoveLive! series and The iDOLM@STER series, continued to be
sold, live events were canceled due to the spread of COVID-19, andreleases of visual and music products and the launch of theirpackage software titles were postponed due to delays in production
schedules, among other reasons, which impacted business performance. On the other hand, in response to these changes in thebusiness environment, we streamed live events without spectatorsand carried out other new initiatives for live events suited to theseenvironmental changes.

8687Cash Flows

Outlook for the Fiscal Year Ending March 31, 2022

As of the end of the fiscal year, cash and cash equivalents (“funds”)

Looking ahead, the Group expects uncertainty to continue in countries

remaining on hand increased by ¥15,031 million from the end of thearound the world due to the impact of the spread of COVID-19 on

previous fiscal year to ¥203,698 million. Below is the breakdown ofsociety, the overall economy, people’s daily lives and consumption.

cash flows by activities.

Furthermore, we expect the changes occurring in the market
environment and in user preferences to become more extreme.

Cash Flows from Operating Activities

Under these circumstances, the Group will continue carrying out

The amount of funds provided by operating activities totaled ¥60,483

initiatives to prevent the spread of COVID-19, giving the highest

million (year-on-year increase of 40.2%). As a breakdown of funds

priority to the safety of our stakeholders, including employees andused, income taxes paid was ¥34,714 million (compared with ¥36,079

their families, and customers. Moreover, as a member of society,million in the previous fiscal year). However, overall, there was a net

we wish to respond to the requests and expectation from society andincrease in funds due to profit before income taxes of ¥71,940 million

our customers under our Group’s mission to offer “Dreams, Fun and(compared with ¥78,753 million in the previous fiscal year) andInspiration” to people around the world through products anddepreciation and amortization of ¥24,684 million (compared withservices. On the business front, the Group is working to minimize the¥23,239 million in the previous fiscal year).

impact that the spread of COVID-19 is having on society, the overall
economy, people’s daily lives and consumption, and the impact from

Cash Flows from Investing Activities
The amount of funds used in investing activities totaled ¥29,771
million (year-on-year increase of 29.1%). The main breakdown of

the change in the market environment and user preferences, bycontinuing to collect information and take flexible countermeasures.

funds used was purchases of property, plant and equipment

1. Change in the time for starting the next Mid-term Planand intangible assets totaling ¥23,849 million (compared with	The Company has changed its plan to start the next three-year¥22,629 million in the previous fiscal year).

Mid-term Plan in the fiscal year ending March 2022 (April 2021),
instead deciding to start the next Mid-term Plan in the fiscal year

Cash Flows from Financing Activities
The amount of funds used in financing activities totaled ¥19,037
million (year-on-year decrease of 46.0%). The main breakdown offunds used was cash dividends paid of ¥29,220 million (comparedending March 2023 (April 2022). This was because the Company
determined that it was necessary to formulate the next Mid-term
Plan that will serve as BANDAI NAMCO’s new strategy to compete
in this new era in light of the changes in the environment and thewith ¥32,328 million in the previous fiscal year).

results and challenges of the current Mid-term Plan as customers’

Basic Policy on the Distribution of Profits

Company has positioned the fiscal year ending March 31, 2022

The Company ranks the return of profits to shareholders as one ofits highest priorities in its management. The Company aims tofurther strengthen the Group’s competitiveness and, while
maintaining a sound financial status, to achieve regular distributions
Specifically, the Company follows a basic policy of providing a returnto shareholders that targets a total return ratio of 50% or more
based on stable dividend payments of 2% of DOE (dividends onequity). Under this policy, the Company strives to maintain longterm and stable dividends and be more aware of capital cost.
For the year-end dividend for the fiscal year ended March 31,
2021, based on this basic policy and the performance in the fiscal
year, a performance-based dividend of ¥70 was added to a basedividend of ¥21, for a total of ¥91 per share. Since the Company paid
an interim dividend of ¥21 per share on December 7, 2020, theannual cash dividend was ¥112 per share (total return ratio of
50.3%). The Company’s annual dividend forecast for the fiscal year
ending March 31, 2022 is ¥48 per share, which is the base dividend
set in accordance with the Company’s basic policy on the distribution of profits. The year-end cash dividend for the fiscal year ending
March 31, 2022 will be considered by the Company based on thebasic policy on the distribution of profits.

as a period for formulating the next Mid-term Plan and developing
the business foundation and organizational structure to pursue
its strategies.

•	Through the combination of the Digital Business and the Toys andHobby Business, the Entertainment Unit will promote closer
coordination of business activities centered around the IP axis andcooperation and expansion that mutually utilize a wide range of
outputs, while enhancing the creation of entertainment and

Forward-Looking Statements
Forecasts for the next fiscal year and other future projections in thisreport are based on information available to the Group at the time they
were made and are therefore subject to various risks and uncertainties.
Actual results therefore may differ materially from projections due to avariety of factors. Major factors that could influence results include

strengthening the digital transformation corresponding tocustomers’ new sense of value. With these changes, the Company
aims to increase competitiveness in global markets.

changes in the Company and the Group’s operating environment,
market trends, and exchange rate fluctuations.

•	The IP Production Unit will consolidate the studio and production
function that creates IP, in order to strengthen the more diverse
capabilities to create IP which enables it to produce a synergy effectthrough collaboration not only within the Unit but also with various
businesses of the Group and external partners.
•	The Amusement Unit will select and focus on the strengths uniqueto BANDAI NAMCO in such ways as utilizing IP and the Group’s
resources, and work to build a strong business foundation to
generate earnings stably under a more unified framework forcollaborating with the Group’s other businesses.
For the fiscal year ending March 31, 2022, the Group will accelerate
the integration and cooperation more than before for all businesses
worldwide under the ALL BANDAI NAMCO concept to prepare thebusiness foundation and organizational structure for the next
Mid-term Plan and sustainable growth in the medium to long term.
In addition, the Group will strengthen the creation of new IP anddevelopment of existing IP, further expand the IP axis strategy
utilizing the Group’s wide range of businesses and promote businessdevelopment in global markets.

Consolidated Plan for the Fiscal Year Ending March 31, 2022
Millions of yen
Net sales Segment profit (loss)
Segments
Entertainment Unit

2. Reorganization of the Group structure	The Group reorganized its structure in April 2021 from its previous
five Unit structure to a three Unit structure ahead of the start of thenext Mid-term Plan from April 2022.
Details of the reorganization• Digital Business¥310,000¥ 40,000• Toys and Hobby Business

300,000

35,000• Visual and Music Business

45,0004,000• Creation Business

30,000

4,000
2,000

IP Production Unit

Amusement Unit

84,000been combined to form the Entertainment Unit. BANDAI NAMCO

Other

25,000500

Entertainment Inc. has become responsible for the Digital Business

Adjustments(44,000)(10,500)

Consolidated¥750,000¥ 75,000•	The Toys and Hobby Unit and Network Entertainment Unit have(network content, home video games, etc.) and BANDAI CO., LTD.
has become responsible for the Toys and Hobby Business (toys,

FINANCIAL SECTION

of dividends and improvement in the Company’s corporate value.

lifestyles and values are expected to change significantly. The

Purposes of the reorganization

plastic models, etc.) as the respective business managementcompanies, and both companies are now responsible for the overall
Entertainment Unit in coordination with each other.
•	The Visual and Music Production Unit and the IP Creation Unit havebeen combined to form the IP Production Unit. BANDAI NAMCO
Arts Inc. has become responsible for the Visual and Music Business(visual and music content, live entertainment, etc.) and SUNRISE
INC. has become responsible for the Creation Business (animation
production, etc.) as the respective business management companies,
and both companies are now responsible for the overall IP
Production Unit in coordination with each other.
•	The Real Entertainment Unit has changed its name to theAmusement Unit. BANDAI NAMCO Amusement Inc. has become
responsible for the Amusement Unit as a business managementcompany.

88

89

CONSOLIDATED BALANCE SHEETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
As of March 31, 2020 and 2021

2020

Millions of yen

Thousands of
U.S. dollars (note 3)

2021

2021

AssetsLiabilities and net assets

Current assets:

Current liabilities:

Millions of yen

Thousands of
U.S. dollars (note 3)

2020

2021

2021

¥ 189,856¥ 204,326$ 1,845,598

Trade payables (notes 10 and 12)¥ 70,169¥82,474$ 744,958

Trade receivables (notes 6 and 12)

83,754

91,765

828,880

Accrued income taxes (note 12)

5,571

6,820

61,603

Allowance for doubtful receivables(1,398)(1,639)(14,806)

Provisions

3,892

3,547

32,042Inventories (note 7)

76,790106,886

965,459

Other current liabilities (note 9)62,873

83,078750,414

Other current assets (notes 4 and 5)

34,65853,872486,606

142,506

175,920

1,589,019

383,662455,210

4,111,739

Long-term borrowings (notes 9 and 12)

171

20,234

182,767

Provisions

238

301

2,727

Net defined benefit liability (note 11)

9,840

7,212

65,149Cash and time deposits (notes 4, 12 and 21)

		 Total current assets

		 Total current liabilities

Long-term liabilities:

Property, plant and equipment:
Buildings and structures (note 8)

33,076

38,643

349,053

Deferred tax liabilities (note 13)

1,878

4,639

41,906

Amusement facilities and machines (note 8)

72,03060,675548,060

Other long-term liabilities (note 9)

10,49913,040117,785

Land (note 8)

43,15643,047

388,831

		 Total long-term liabilities

22,62845,428410,336

Other property, plant and equipment (note 8)

133,875

139,5091,260,130

		Total liabilities

165,135

221,348

1,999,356

282,139

281,875

2,546,074

Less accumulated depreciation(185,232)(193,534)(1,748,120)

		 Net property, plant and equipment

96,906

88,341

797,954

10,00010,00090,326

Capital surplus

52,00452,232471,794

394,699

414,487

3,743,899(3,634)(3,905)(35,272)

453,069

472,8144,270,746

16,83751,587465,966

Deferred gains or losses on hedges, net of tax

250

988

8,932

Revaluation reserve for land, net of tax (note 17)(3,902)(4,016)(36,282)

Foreign currency translation adjustments(12,321)(7,438)(67,186)

Remeasurements of defined benefit plans, net of tax (note 11)(4,639)(3,419)(30,886)

		Subtotal(3,776)37,701

340,543

Non-controlling interests

5,392

917

8,288

		 Total net assets

454,684

511,433

4,619,578

		 Total liabilities and net assets¥619,819¥732,782$6,618,934

		Total

Net assets:
Shareholders’ equity:
Common stock (note 18)
		 Authorized: 1,000,000,000 shares

Intangible assets:
Goodwill

15,704

17,069154,184

Retained earnings (note 16)

Other intangible assets (note 8)

11,71815,944

144,019

Treasury stock, at cost; 2,324,320 shares in 2020 and 2,326,752 shares in 2021 (note 18)

27,42333,014298,203

		 Total intangible assets

		Subtotal

FINANCIAL SECTION

		 Issued: 222,000,000 shares

Accumulated other comprehensive income (note 15):
Valuation difference on available-for-sale securities, net of tax (note 5)

Investments and other assets:
Investment securities (notes 5 and 12)

66,453

121,208

1,094,831

Deferred tax assets (note 13)

27,313

16,310147,323

223

407

3,680

18,27018,707

168,979

(432)

(418)

(3,776)

111,827

156,215

1,411,037¥ 619,819¥ 732,782$ 6,618,934

Net defined benefit asset (note 11)
Other investments and assets (notes 8 and 21)
Allowance for doubtful receivables
		 Total investments and other assets
		Total assets
See accompanying Notes to Consolidated Financial Statements.

90

91

CONSOLIDATED STATEMENTS OF INCOME ANDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMECONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2020 and 2021

BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2020 and 2021

Consolidated Statements of Income

Year ended March 31, 2020
Millions of yen

Net sales
Cost of sales (note 7)
		Gross profit
Selling, general and administrative expenses (note 14)
		Operating profit
Other income (loss):
Interest and dividend income
Interest expense
Foreign exchange gains (losses)
Gain on investments in deferred compensation plan
Gain (loss) on sales of investment securities, net
Gain (loss) on sales and disposal of fixed assets, net
Loss on impairment of fixed assets (note 8)
Gain on step acquisitions
Subsidies for employment adjustment and other related to COVID-19
Loss on temporary store closures and other related to COVID-19
Loss on liquidation of business
Other

2020

2021

2021

¥723,989
463,041
260,948
182,172
78,775¥740,903
458,897
282,006
197,352
84,654$6,692,295
4,145,038
2,547,256
1,782,603
764,653

1,514
(124)
(1,008)—20
1,635(3,596)
1,722
—
—
—
(184)
(22)

1,546
(229)
480
384
307
(174)
(11,284)—
1,373(3,059)(1,754)(304)(12,714)

13,964(2,071)
4,344
3,476
2,774
(1,574)(101,928)—
12,401(27,631)(15,851)(2,749)(114,843)

Profit before income taxes

78,753

71,940649,809

Income taxes (note 13)

20,84523,074208,422

Profit57,90848,865441,386

Profit (loss) attributable to non-controlling interests

242

Millions of yen

Thousands of
U.S. dollars (note 3)(28)

Shareholders’ equity

Balance at beginning of year

¥ 57,665

Restated balance$ 441,646

Yen

U.S. dollars (note 3)

2021

2021

2020

Average number of shares during the period for calculating earnings per share
See accompanying Notes to Consolidated Financial Statements.

Year ended March 31, 2020

¥2,045.25¥2,323.98$20.99262.39—132.00222.58—112.00

2.01
—
1.01

219,770,515 shares, Year ended March 31, 2021¥(2,298)948
10,00052,308370,264

219,670,097 shares

ProfitOther comprehensive income (note 15):
Valuation difference on available-for-sale securities, net of tax (note 5)
Deferred gains or losses on hedges, net of tax
Revaluation reserve for land, net of tax (note 17)
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax (note 11)
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

Deferred
gains orlosses onhedges,net of tax¥429,326¥20,190¥(2,298)430,275(32,328)(32,328)

57,66557,665433

Capital increase of consolidated
subsidiaries(1,370)1Change in scope of consolidation- foreign currency translation
adjustment

(715)
409

¥ (8,864)¥(5,705)¥ (294)¥ 612¥429,644

5(5,920)(8,864)(5,705)

(294)

612

430,593948
20,190(32,328)
57,665

(937)

4,032

3,095

1

28

30

¥52,004

15

15

274

¥394,699

(441)
(8)

42

451

451

0

0

0

(1,335)¥10,000

15

(8)

1,335

(1,335)

Net changes of items other thanshareholders’ equity
Balance at end of year¥(5,920)(8)Change in treasury stock
accompanying changes to holdings
in companies to which the equity
method is applied
Reversal of revaluation reserve
for land

Total net
assets atend of year

(715)

Purchase of treasury stock
Disposal of treasury stock

Noncontrollinginterests

5—

Change in ownership interest ofparent due to transactions with
non-controlling interests

Total
Remeasurements accumulated
Foreigncurrency of defined benefit
othertranslation plans, net of tax comprehen(note 11)
adjustments
sive income

948

Profit attributable to owners of parent
Change in scope of consolidation

Revaluation
reserve forland,
net of tax(note 17)¥(3,634)¥453,069

1,335—(3,353)244

682(3,472)

1,065(4,832)444(4,388)¥16,837¥250¥(3,902)¥(12,321)¥(4,639)¥(3,776)¥5,392¥454,684

Year ended March 31, 2021
Millions of yen
Shareholders’ equity

Commonstock(note 18)

Accumulated other comprehensive income (note 15)

CapitalsurplusRetainedearnings(note 16)

Treasurystock(note 18)

¥10,000 ¥52,004¥394,699¥(3,634)

Total
shareholders’equityValuationdifference on
availablefor-salesecurities,
net of tax(note 5)

Deferred
gains orlosses onhedges,net of tax

Revaluation
reserve forland,
net of tax(note 17)¥453,069¥16,837¥250¥(3,902)

Total
Remeasurements accumulated
Foreigncurrency of defined benefit
othertranslation plans, net of tax comprehen(note 11)
adjustments
sive income¥(12,321)¥(4,639)¥ (3,776)

Noncontrollinginterests

Total net
assets atend of year

¥ 5,392¥454,684

Cash dividends(29,220)(29,220)(29,220)

Profit attributable to owners of parent

48,894

48,894

48,894

Change in ownership interest ofparent due to transactions with
non-controlling interests

5222

Disposal of treasury stock
Change in treasury stock
accompanying changes to holdings
in companies to which the equity
method is applied
Reversal of revaluation reserve
for land

(309)

(303)

(9)

(9)

(9)

48

270

270

0

0

0

113

113

Net changes of items other thanshareholders’ equity
Balance at end of year

¥10,000 ¥52,232¥414,487(4,823)¥(3,905)¥472,814

(113)

—

(113)

34,749

738

—

4,883

1,220

41,592¥51,587¥988¥(4,016)¥ (7,438)¥(3,419)¥37,701(5,127)¥349

41,941

917¥511,433

Year ended March 31, 2021
Thousands of U.S. dollars (note 3)

2020

92

¥369,315

Purchase of treasury stock

Consolidated Statements of Comprehensive Income

See accompanying Notes to Consolidated Financial Statements.

¥52,308

Total
shareholders’equityFINANCIAL SECTION

Per share data:
Net assets at March 31
Earnings per share:
Basic
DilutedCash dividends applicable to period (note 16)¥10,000

Treasurystock(note 18)

Cash dividends(260)¥ 48,894

CapitalsurplusRetainedearnings(note 16)

Cumulative effects of changes inaccounting policies

Balance at beginning of year		 Profit attributable to owners of parent

Commonstock(note 18)

Accumulated other comprehensive income (note 15)
Valuationdifference on
availablefor-salesecurities,
net of tax(note 5)

Millions of yen

Thousands of
U.S. dollars (note 3)

2021

2021

¥57,908¥48,865$441,386(3,101)244
682(3,468)
1,065

34,636
736
—
4,892
1,220

312,860
6,652—
44,18811,024

(17)

175

1,583

(4,595)¥53,31241,661¥90,527

376,310$817,696¥52,847465¥90,48640$817,333
363

Shareholders’ equity

Commonstock(note 18)Balance at beginning of year

CapitalsurplusRetainedearnings(note 16)

$90,326 $469,732 $3,565,163

Accumulated other comprehensive income (note 15)

Treasurystock(note 18)

Total
shareholders’equityValuationdifference on
availablefor-salesecurities,
net of tax(note 5)$(32,826)$4,092,395$152,086

Deferred
gains orlosses onhedges,net of tax$2,261

Revaluation
reserve forland,
net of tax(note 17)

Total
Remeasurements accumulated
Foreigncurrency of defined benefit
othertranslation plans, net of tax comprehen(note 11)
adjustments
sive income$(35,253) $(111,297)$(41,911)

Noncontrollinginterests

Total net
assets atend of year

$ (34,115) $ 48,704$4,106,984

Cash dividends(263,939)(263,939)(263,939)

Profit attributable to owners of parent

441,646

441,646

441,646

Change in ownership interest ofparent due to transactions with
non-controlling interests

53

Purchase of treasury stock
Disposal of treasury stock

2,007

Change in treasury stock
accompanying changes to holdings
in companies to which the equity
method is applied
Reversal of revaluation reserve
for land(2,798)(2,744)

(87)

(87)

(87)

439

2,447

2,447

0

0

0

1,028

1,028

Net changes of items other thanshareholders’ equity
Balance at end of year

$90,326 $471,794 $3,743,899(43,570)$(35,272)$4,270,746(1,028)313,880

6,671$465,966$8,932—(46,314)—(1,028)44,111

11,024

375,686

3,154

378,840$(36,282) $ (67,186)$(30,886)$340,543$ 8,288$4,619,578

See accompanying Notes to Consolidated Financial Statements.

93

CONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2020 and 2021

BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries

2020

Thousands of
U.S. dollars (note 3)

2021

2021

¥ 78,753
23,239
3,596
667
199
532
610
(1,514)124
232
182(1,635)337(5)(1,722)
12,813(2,812)(10,864)(7,335)(7,349)(6,612)(3,648)77,7891,545(124)(36,079)
43,131¥ 71,940
24,684
11,284
2,309
163
(307)
(126)
(1,546)
229
(128)
31
174
1,607
(307)
—
(6,653)(2,478)(29,053)(4,252)
11,30820,352(5,390)93,842
1,560(204)(34,714)60,483$ 649,809
222,967
101,928
20,8581,480(2,776)(1,146)(13,964)
2,071(1,159)286
1,574
14,524(2,774)—(60,101)(22,386)(262,431)(38,406)
102,141
183,831(48,687)
847,639
14,093(1,845)(313,566)
546,321

6,967(16,900)
2,873(5,728)
(901)
108
(560)

593
(16,032)863(7,816)(7,053)
522
(135)

5,362
(144,818)
7,800(70,601)(63,713)
4,717(1,221)(7,531)(137)(1,245)(237)
24(1,698)746(229)(23,067)

(800)
132
(436)
627
(98)
(29,771)(7,231)
1,199(3,944)
5,669(888)(268,915)(1,500)
200
(249)
(931)
(8)
(32,328)(500)
20,400
(397)
(815)
(9)
(29,220)(4,516)
184,265(3,593)(7,364)(87)(263,939)(441)(8,494)(76,723)(35,258)(2,531)(17,726)
206,270
123¥188,667(19,037)
3,357
15,031
188,667—¥203,698(171,959)
30,324
135,771
1,704,155—$1,839,926

1 Basis of Presentation
BANDAI NAMCO Holdings Inc. (“the Company”) and its consolidated

GAAP and filed with the appropriate Local Finance Bureau of thesubsidiaries have prepared their financial statements in accordance

Ministry of Finance as required by the Financial Instruments andwith the provisions set forth in the Japanese Financial Instruments

Exchange Act.

and Exchange Act and its related accounting regulations, and inSome supplementary information included in the statutory

conformity with accounting principles generally accepted in Japan

Japanese-language consolidated financial statements that is not(Japanese GAAP), which are different in certain respects as to applica-

required for fair presentation is not presented in the accompanying

tion and disclo­sure requirements of International Financial Reporting

consolidated financial statements.

Standards (IFRSs).

In preparing the accompanying consolidated financial state­ments,

The accounts of foreign subsidiaries are based on their accounting

certain reclassifications have been made to the con­solidated financial

records maintained principally in conformity with IFRSs or account­ing

statements issued in Japan in order to present them in a form that isprinciples generally accepted in the United States (U.S. GAAP).

more useful to readers outside Japan.

The accompanying consolidated financial statements have been

Certain reclassifications have been made to the prior year’s

prepared and translated into English from the consolidated financial

con­solidated financial statements to conform to the presen­tation

statements of the Company prepared in accordance with Japanese

used for the fiscal year ended March 31, 2021.

2 Summary of Significant Accounting Policies(a) Principles of Consolidation(d) Accounting Standards for Income and Expenses

The accompanying consolidated financial statements include

Video Game Software Revenue Recognition:

the accounts of the Company and its significant subsidiaries. Consolida­

Some overseas consolidated subsidiaries recognized revenue in accor-

tion of the remaining subsidiaries would have had no material effect on

dance with IFRS 15 “Revenue from Contracts with Customers” and US

the accompanying consolidated financial statements. Investments in

GAAP Accounting Standards Update (ASU) No. 2014-09 “Revenue fromsignificant affiliates are accounted for using the equity method.

Contracts with Customers.” In particular, for video game software with

Investments in unconsolidated subsidiaries and certain affiliates

online functions, estimated sales value is calculated for undelivered

other than those accounted for using the equity method are statedelements and an amount equivalent to that value is recognized as theat cost. If the equity method had been applied to the investments inrevenue over the reasonably estimated period for which performancethese companies, there would have been no material effect on the

obligations are expected to be satisfied.

accompanying consolidated financial statements.
All significant inter-company accounts and transactions have been
eliminated in consolidation.

Accounting for Video Game Software Production Expenses:
A distinctive characteristic of video game software is the process
through which the software is highly integrated with content that(b) Cash and Cash Equivalents

cannot be separated into identifiable components.

In reporting cash flows, the Company considers cash on hand,

The content is considered to be an important component of eachdemand deposits, and all highly liquid investments with originalvideo game title, which includes the game content and visual/music

maturities of three months or less to be cash and cash equivalents.

data. Once management makes a decision to go forward in distributing a title, the Company records the software and content develop-(c) Foreign Currency Translation
Foreign currency transactions are translated into yen at rates in effectat the dates they are transacted, and the gains or losses arising fromment costs as work in process.

FINANCIAL SECTION

Cash flows from operating activities:
Profit before income taxes
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in other provision
Increase (decrease) in retirement benefit liability
Interest and dividend income
Interest expense
Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using equity method
Loss (gain) on sales and disposal of fixed assets, net
Loss on disposal of amusement facilities and machines
Loss (gain) on sales of investment securities, net
Loss (gain) on step acquisitions
Decrease (increase) in trade receivables
Decrease (increase) in advance payments to suppliers
Decrease (increase) in inventories
Acquisition of amusement facilities and machines
Increase (decrease) in trade payables
Increase (decrease) in other current liabilities
Other
		Subtotal
Interest and dividends received
Interest paid
Income taxes paid
		 Net cash provided by operating activities
Cash flows from investing activities:
Decrease (increase) in time deposits, net
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries and associates
Purchase of shares of subsidiaries resulting in change in scopeof consolidation (note 4)
Payments of loans receivableCollection of loans receivable
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Other
		 Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of lease obligations
Purchase of treasury stock
Cash dividends paid	Payments from changes in ownership interests in subsidiaries that do not result inchange in scope of consolidation
		 Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at end of year (note 4)

Millions of yen

The capitalized production costs are amortized to cost of sales
based on projected sales revenue.

the settlement of the related receivables or payables are included
in “Foreign exchange gains (losses)” in the consolidated statements(e) Marketable Securities and Investment Securities

of income.

Available-for-sale securities with market quotations are principally

Receivables and payables denominated in foreign currencies at

carried at fair value. The difference, net of tax, between the acquisition

the balance sheet date are translated at the rates in effect as of thecost and the carrying amount of available-for-sale securities withbalance sheet date and the unrealized gains or losses are included

market quotations is recognized in “Valuation difference on available-

in “Foreign exchange gains (losses)” in the consolidated statements

for-sale securities, net of tax” in “Net assets” in the consolidatedof income.

balance sheets until realized. Available-for-sale securities without

The assets and liabilities of foreign consolidated subsidiaries andmarket quotations are principally carried at cost. The cost of available-

affiliates are translated into yen at the rates of exchange in effect atfor-sale securities sold is principally computed based on the moving-

the balance sheet date. Revenue and expenses of foreign consoli-

average method. Investments in investment limited partnerships or

dated subsidiaries and affiliates are translated into yen at the averagesimilar associations (investments that are deemed to be securities

rates of exchange during the fiscal year. Gains and losses resulting

under the Financial Instruments and Exchange Act, Article 2, Clausefrom the translation of foreign currency financial statements are2) are carried at the net amount proportionate to the Company’s

generally excluded from the consolidated statements of income andownership interests, based on the most recent financial statements

are included in “Foreign currency translation adjustments” in “Netavailable in accordance with the financial reporting date specified

assets” in the consolidated balance sheets.

in the partnership agreement.

See accompanying Notes to Consolidated Financial Statements.

94

95

(f) Allowance for Doubtful Receivables

fixtures) acquired since April 1, 1998 and for part of the amusement

In the event that a hedge becomes ineffective, hedge accounting

The allowance for doubtful receivables is provided for possible losses

facilities and machines, etc. The estimated useful lives for Buildings

is no longer applied and the recognition of the gains or losses on theon unrecoverable receivables. For ordinary receivables, the amount ofand structures and Amusement facilities and machines are 2–50

hedge transaction is no longer deferred.

the allowance is based on the historical rate of loss. For receivables

years and 3–15 years, respectively.

Network Entertainment Business stated on the consolidated

bankruptcy or under reorganiza­tion, the amount of the allowance is

Foreign Consolidated Subsidiaries:

The Company and certain domestic consolidated subsidiaries havebased on individually estimated unrecoverable amounts.

Depreciation of property, plant and equipment is principally computed

established a defined benefit corporate pension plan, a definedbalance sheet was calculated by writing down the book value
based on declining profitability.
	  With respect to the method of writing down the book value

by the straight-line method based on estimated useful lives. The

benefit retirement lump-sum benefit system plan, and a defined

based on declining profitability, the Company compares the net(g) Inventories

estimated useful lives for Buildings and structures and Amusement

contribution pension plan. Retirement benefits trusts have beenrealizable value (projected sales volume x unit sales price –Domestic Consolidated Subsidiaries:

facilities and machines are 5–50 years and 4–25 years, respectively.

established for certain defined benefit corporate pension plans.

estimated additional production costs – estimated direct selling

Other domestic consolidated subsidiaries (excluding domestic

expenses) and the book value of work in process, and if the bookconsolidated subsidiaries with no retirement benefit system) havevalue of work in process exceeds the net realizable value, theGenerally, inventories are stated using the cost method based on the
average method. The value stated in the consolidated balance sheetsis calculated by writing down the carrying amount based on
declining profitability.
Foreign Consolidated Subsidiaries:
Generally, inventories are stated using the lower cost or market
method based on the average method.

(j) Intangible Assets(Exclusive of leased assets and right-of-use assets)

established a defined benefit corporate pension plan and a definedCompany recognizes a write-down of the excess amount.

Amortization of intangible assets is computed by the straight-line

benefit retirement lump-sum benefit system. Certain consolidated	  In calculating the net realizable value, projected sales volumes,

method based on estimated useful lives. Software for internal use issubsidiaries have established a defined contribution pension planetc. are estimated using benchmarks such as similar game titles

amortized over 1–5 years.

and a defined contribution smaller corporate retirement allowance

released in the past.

Goodwill is amortized using the straight-line method over themutual aid system. Certain foreign consolidated subsidiaries haveperiod within 10 years. The Company reasonably estimates the period

established defined benefit pension plans, retirement lump-sum

significantly affected by how users respond after the release of thefor which the effects of goodwill are expected to emerge.

benefit systems, and defined contribution pension plans. Moreover,home video games and how they are evaluated by the market. In

additional benefits may be paid at retirement.

the case where the date of release of the game is delayed due to,

Both domestic and foreign consolidated subsidiaries state game	  Of these estimates, estimates on projected sales volumes aresoftware as work in process by the specific-cost method. The value(k) Leased Assets and Right-of-Use Assets

stated in the consolidated balance sheets is calculated by writing

Depreciation of leased assets is computed by the straight-line

formula basis is principally used to attribute expected benefit

on additional production costs increase as compared with thedown the carrying amount based on declining profitability.

method over the period of the lease with a residual value of zero.

payments to the period extending up to the end of the current fiscal

initial budget and the production period will be prolonged. The

Depreciation of right-of-use assets is computed by the straight-line

year. Prior service costs are amortized from the time they are incurred

estimated additional production costs are likely to be more uncer-

method over the shorter of the useful life or the lease period of assets.

by the straight-line method for a certain number of years (10 years)

tain and may possibly have a significant effect on the consolidated

within employees’ average remaining years of service. Actuarial gains

financial statements in the following fiscal year and onwards.

(h) Income Taxes
Current income taxes are accounted for based on income. Deferred

In calculating the retirement benefit obligations, the benefit(l) Derivatives and Hedging Activities

or losses are amortized from the consolidated fiscal year following

Deferred tax assets and liabilities are recog­nized for future tax conse-

The Company and its consolidated subsidiaries use derivative

the year in which the gain or loss is incurred by the straight-line

quences attributable to dif­ferences between the financial statement

instruments, such as forward foreign exchange contracts, to reduce

method for a certain number of years (7–15 years) not longer thancarrying amounts of existing assets and liabilities and their respective

market risks arising from fluctua­tions in foreign exchange rates andemployees’ average remaining years of service. The Company andtax bases and operat­ing loss and tax credit carryforwards. Deferred tax

interest rates. The Company and its consolidated subsidiaries use

certain consolidated subsidiaries use a simplified method in calcu-

assets and liabilities are measured using enacted tax rates expected tothese deriva­tive instru­ments solely for the purpose of reducing thelating net defined benefit asset, net defined benefit liability, andapply to taxable income in the years in which those temporary differ-risks resulting from such fluctua­tions to which they are exposed inperiodic pension cost under which retirement benefit obligations

ences are expected to be recovered or settled. The effect on deferred

the course of their ordinary business activi­ties. Accordingly, theare principally based on accrued benefits at the end of the year.

tax assets and liabilities of a change in the tax rate is recog­nized inCompany and its consolidated subsidiaries do not use derivative

income in the period that includes the enactment date.

instru­ments or other financial instruments for speculative purposes.

for example, taking measures for quality improvement, estimates

2. Valuation of property, plant and equipment and intangible assets
related to BANDAI NAMCO Amusement Inc.
(1) Amount recorded in the consolidated financial statements for thisfiscal year:
This fiscal year
Property, plant and equipment ¥1,758 million $15,882 thousand
Intangible assets¥130 million$1,182 thousand(2) Information concerning the contents of significant accounting(n) Appropriation of Retained Earnings

estimates for the identified items

The Company and its consolidated subsidiaries’ counterparties for

Retained earnings with respect to a given financial period are appro-

derivative instruments are all highly creditworthy financial institutions

priated by resolution of the shareholders at a general meeting to be	Property, plant and equipment and intangible assets of BANDAI

and, therefore, the Company believes that it is exposed to almost

held subsequent to the close of such financial period. The accounts

NAMCO Amusement Inc. are depreciated and amortized in a

Application of Tax Effect Accounting for the Transition from theno counterparty risk. Derivative transactions are conducted infor that period do not, therefore, reflect such appropriations.

regular manner, and if any indications of impairment are identified,

Consolidated Tax Payment System to the Group Taxation System

accordance with internal rules that specify transaction authority

With regard to paragraph 3 of “Practical Solution on the Treatment

and transaction amount limits.

apply a consolidated taxation system.

of Tax Effect Accounting for the Transition from the Consolidated

As a general rule, derivative instruments are stated at fair value.

the necessity of recognizing a loss on impairment is determined by(o) Per Share Data

comparing the total future cash flows before discount which may

In computing basic earnings per share, the average number of shares

be obtained from the asset group and the book value, and if theTaxation System to the Group Tax Sharing System” (Practical Issues

For derivative instruments that meet the criteria for hedge

outstanding during each year has been used. Diluted earnings perrecognition of a loss is determined to be necessary, the book value

Task Force (PITF) No. 39, March 31, 2020), the Company and its

accounting, recognition of unrealized gains or losses is deferred.

share assumes the dilution that could occur if securities or otheris reduced to the recoverable amount and the amount of reduction

domestic consolidated subsidiaries did not follow paragraph 44 of

In cases where forward foreign exchange contracts meet certain

contracts to issue common stock were exercised or converted into

“Implementation Guidance on Tax Effect Accounting” (Accounting

hedging criteria, the hedged receivables and payables are translatedcommon stock, or resulted in issuance of common stock.

Standards Board of Japan (ASBJ) Guidance No. 28, February 16, 2018),

at the corresponding forward foreign exchange contract rate (thebut applied provisions of pre-amended tax laws when calculating the“Allocation Method”).

amounts of deferred tax assets and liabilities that relate to transi-in the book value is recognized as a loss on impairment.
	  Future cash flows used to determine the necessity of recognizing

Cash dividends per common share are computed based ona loss on impairment are estimated on the basis of business plans

dividends declared with respect to income for the fiscal year.

which reflected the improvement of net sales related to the operations of facilities and the sales of amusement machines based on

The Company and its consolidated subsidiaries assess the effec-

tioning to the group taxation system and related amendments of tax

tiveness of hedging transactions from the start of the transaction(p) Notes Significant Accounting Estimatesthe outlook for when COVID-19 infections will abate, as well as thelaws for transitioning to the single tax payment system.

to the point at which effectiveness is assessed by comparing the

1. Valuation of work in process concerning home video games atcost reductions through the closure of facilities and the negotia-

cumulative changes in the fair value or the cumulative changes in(i) Property, Plant and Equipment(Exclusive of leased assets and right-of-use assets)

the cash flows of the hedged item with the cumulative changes in thefair value or the cumulative changes in the cash flows of the hedging

The Company and Its Domestic Consolidated Subsidiaries:

instrument. In the event that critical terms are the same for the

Depreciation of property, plant and equipment is principally computed

hedging instrument and the hedged assets, liabilities, or scheduledby the declining-balance method based on estimated useful lives.

transaction, it is assumed that the hedge is 100% effective, so the

The straight-line method is used for buildings (except for building

assessment of effectiveness is not performed.

FINANCIAL SECTION

income taxes are accounted for under the asset and liability method.

The Company and some of its domestic consolidated subsidiaries

96

estimates for the identified items
	The value of work in process concerning home video games in the(m) Retirement and Severance Benefits

from debtors at risk of bankruptcy and receivables from debtors in(2) Information concerning the contents of significant accounting

tions on their rents. In addition, net realizable value is estimatedmajor domestic development bases(1) Amount recorded in the consolidated financial statements for thisThis fiscal year
Work in process

on the basis of the policy for determining selling prices and actual
sales prices in the past.

fiscal year:¥43,082 million $389,144 thousand	  These estimates are exposed to high uncertainty as they are
dependent upon subjective management decisions and may
possibly have a significant impact on the consolidated financial
statements in the following fiscal year and onwards.

97

(q) New Accounting Standards Not Yet Applied

However, there are many uncertainties regarding the impact of the		

spread of COVID-19, which could affect the financial position and(i) Overview of transaction• “Accounting Standard for Revenue Recognition” (ASBJ Statement

financial performance of the Group in the next fiscal year.

a.	Name and description of business of the company involved in

Recognition” (ASBJ Guidance No. 30, March 26, 2021)(Reorganization of subsidiaries)

		Merging company (surviving company)

At the Board of Directors Meeting held on March 16, 2021, the			 Name:	BANDAI NAMCO Holdings(1) Overview

Company passed a resolution to reorganize its subsidiaries.

	The International Accounting Standards Board (IASB) and the U.S.

1. Absorption-type merger between subsidiaries and change in trade

Financial Accounting Standards Board (FASB) jointly developed

			 Description of business:	Regional holding company in(1) Purpose

		Merged company (disappearing company)tion. In May 2014, “Revenue from Contracts with Customers”

	With the aim of improving efficiency of business operations and			 Name:	BANDAI NAMCO Entertainment

expanding the IP axis strategy of the Toys and Hobby Business in

be applied from fiscal years starting on or after January 1, 2018,

North America, the Company will conduct a merger whereby

and Topic 606 is to be applied from fiscal years starting after

BANDAI AMERICA INC., which focuses mainly on toys for mass

e-commerce, etc., for products for

December 15, 2017. Accordingly, the ASBJ has developed compre-

distribution, will be the surviving company and BANDAI NAMCO

the mature fan basehensive accounting standards related to revenue recognition, which

Collectibles LLC, which focuses on collectible items for the mature

have been published in conjunction with implementation guidance.

fan base, will be the disappearing company. On the effective date	  From the viewpoint of comparability among financial statements,of the merger, the trade name of BANDAI AMERICA INC. will bechanged to BANDAI NAMCO Toys & Hobby America Inc.
(2) Transactions conducted by commonly controlled entities

accounting standards related to revenue recognition is to deter-(i) Overview of transactionmine the accounting standards by starting with the incorporationa.	Name and description of business of the company involved in
combinationof the basic principles of IFRS 15. Furthermore, if there are items
that should be taken into account regarding practices, etc., that		Merging company (surviving company)

have been implemented to date in Japan, then alternative

			 Name:accounting treatments are added, given that this addition will not			 Description of business: Sales of toy-related productscause a loss of comparability.

		Merged company (disappearing company)

BANDAI AMERICA INC.

(2) Planned date of application

			 Name:

BANDAI NAMCO Collectibles LLC

	Application will start from the fiscal year ending March 31, 2022.

			 Description of business:	Sales, promotion, event sales, and(3) Impact of the application of the standard and guidance

e-commerce business for products

	The impact on the consolidated financial statements resulting from thefor the mature fan baseapplication of the Implementation Guidance on “Accounting Standard
for Revenue Recognition,” etc., it is increase ¥179 million in retained
earnings at the beginning of the fiscal year ending March 31, 2022.

b. Date of business combination
		

April 1, 2022 (scheduled date)c. Legal form of business combination
surviving company and BANDAI NAMCO Collectibles LLC as theOverseas Consolidated Subsidiaries:	Under this accounting standard, in principle, lessees are required
to record assets and liabilities for all leases in the balance sheet.
There are no significant changes in lessor accounting.

d. Company name after combination		

BANDAI NAMCO Toys & Hobby America Inc.

(ii) Overview of accounting process		The accounting process will be carried out as transactions(2) Planned date of application

conducted by commonly controlled entities, in accordance with	Application will start from the fiscal year ending March 31, 2023.

the “Accounting Standard for Business Combinations” and the(3) Impact of the application of the standard“Guidance on Accounting Standard for Business Combinations

	The impact on the consolidated financial statements resulting

and Accounting Standard for Business Divestitures.”from the application of the standard is currently under evaluation.
2. Absorption-type merger between subsidiaries and change in trade(r) Additional Information

name of subsidiary in Continental Europe(Accounting estimates associated with the spread of COVID-19)(1) Purpose

With the spread of COVID-19, as for the Group, it may cause an impact

	With the aim of improving efficiency of business operations in theon consumption due to factors including the closure of sales outlets,

administration division, etc. and strengthening governance of theas well as the postponement or cancellation of events and an associatedsubsidiaries in Continental Europe by concentrating resources ofimpact on promotion both in Japan and overseas, an impact on thethat area, the Company will conduct a merger whereby BANDAI

development schedule of products and services and on operation

NAMCO Holdings France S.A.S., the holding company insystems, an impact on the production schedule of the Group’s factories

Continental Europe, will be the surviving company and BANDAI

and other cooperating factories, the closure of amusement facilities,

NAMCO Entertainment Europe S.A.S., the company that conducts

and an impact on the schedules or releases of visual productions.

the Network Entertainment Business, will be the disappearing

Therefore, the Group makes accounting estimates, such as deter-		The accounting process will be carried out as transactions

			 Description of business:	Sales, promotions, event sales,

conducted by commonly controlled entities, in accordance withthe “Accounting Standard for Business Combinations” and the“Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures.”

3 Financial Statement Translation
The consolidated financial statements are expressed in yen. However, solely for the convenience of the reader, the consolidated
financial statements as of and for the fiscal year ended March 31, 2021 have been translated into U.S. dollars at the rate of¥110.71=U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market on March 31, 2021.
This translation should not be construed as an indication that the amounts shown could be converted into U.S. dollars at such rate.

4 Cash and Cash Equivalents
Reconciliations of cash and cash equivalents as of March 31, 2020 and 2021 between the amounts shown in the consolidated balance sheets andthe consolidated statements of cash flows are as follows:
Millions of yen

Cash and time deposits
Marketable securities included in other current assets under current assets
Time deposits with maturities in excess of three months
Securities with maturities in excess of three months
Cash and cash equivalents

Thousands of
U.S. dollars

2020

2021

2021

¥189,856¥204,326$1,845,598

60

—

—

(1,189)(627)(5,671)

(60)

—

—

¥188,667¥203,698$1,839,926

disappearing company• ASU 2016-02 “Leases”(1) Overview

BANDAI NAMCO Europe S.A.S.

(ii) Overview of accounting processcompany. On the effective date of the merger, the trade name ofmining the recoverability of deferred tax assets and valuation of

BANDAI NAMCO Holdings France S.A.S. will be changed toassets, on the assumption that the spread of COVID-19 will affect

BANDAI NAMCO Europe S.A.S.

The breakdowns of major assets and liabilities of companies that newly became consolidated subsidiaries due to the acquisition of shares

FINANCIAL SECTION

		Absorption-type merger with BANDAI AMERICA INC. as the		Europe S.A.S.

(IASB IFRS 15 and FASB Topic 606) were published. IFRS 15 is tothe basic policy of the ASBJ in regard to the development ofEntertainment Europe S.A.S. as the disappearing company
d. Company name after combination

Continental Europe

comprehensive accounting standards related to revenue recogni-

which is one of the benefits of ensuring consistency with IFRS 15,

France S.A.S. as the surviving company and BANDAI NAMCO

France S.A.S.

name of subsidiary in North America

September 30, 2021 (scheduled date)c. Legal form of business combination
		Absorption-type merger between BANDAI NAMCO Holdings

combination

No. 29, March 31, 2020)• “Implementation Guidance on Accounting Standard for Revenue

b. Date of business combination(2) Transactions conducted by commonly controlled entities

The Company and Its Domestic Consolidated Subsidiaries:

are as follows:
Fiscal year ended March 31, 2020
SOTSU CO., LTD. and J-Broad Co., LTD. were newly consolidated into the Group through the acquisition of their shares. The breakdown of major
assets and liabilities as of the start of consolidation and the relationship between the acquisition cost of the shares of SOTSU CO., LTD. and J-Broad
Co., LTD., and the net expenditures for the acquisition, are as follows:
Current assets¥23,685 million

Fixed assets

4,465 million

Goodwill

14,355 million

Current liabilities–3,634 million

Long-term liabilities–720 million

Non-controlling interests–4,550 million

Investment value under the equity method up to the time of acquisition of control–4,961 million

Gain on step acquisitions–1,722 million

Acquisition cost of the shares of SOTSU CO., LTD. and J-Broad Co., LTD.	  26,918 million
SOTSU CO., LTD. and J-Broad Co., LTD. cash and cash equivalents–21,370 million

Net expenditures for acquisition of SOTSU CO., LTD. and J-Broad Co., LTD.

¥ 5,548 million

With respect to other consolidated subsidiaries, the information has been omitted because the amounts are insignificant.

at least the next fiscal year.

98

99

Fiscal year ended March 31, 2021

The following is a summary of the carrying amount of securities without market quotations as of March 31, 2020 and 2021:

Reflector Entertainment Ltd. was newly consolidated into the Group through the acquisition of its shares. The breakdown of major assets andliabilities as of the start of consolidation and the relationship between the acquisition cost of the shares of Reflector Entertainment Ltd., and thenet expenditures for the acquisition, are as follows:
Current assets¥1,713 million (   $15,481 thousand)Fixed assets

1,038 million (     9,382 thousand)Current liabilities–738 million ( –6,669 thousand)Long-term liabilities–1,173 million ( –10,600 thousand)Acquisition cost of the shares of Reflector Entertainment Ltd.

840 million (     7,594 thousand)Contingent consideration payments of shares of Reflector Entertainment Ltd.

–518 million ( –4,680 thousand)

Reflector Entertainment Ltd. cash and cash equivalents–184 million ( –1,667 thousand)Net expenditures for acquisition of Reflector Entertainment Ltd.

Unlisted securities
		Total

2021

2021

Carrying amount

Carrying amount

Carrying amount¥3,784¥4,783$43,208¥3,784¥4,783$43,208

Millions of yen

Equity securities

Marketable securities and investment securities as of March 31, 2020 and 2021 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2020

2021

2021

¥47,623¥102,221$ 923,331

Securities without market quotations

3,784

4,783

43,208Investments in non-consolidated subsidiaries and affiliated companies

14,59913,723

123,962

506

479

4,329

¥66,513¥121,208$1,094,831

Total

2020

Proceeds and gross realized gains and losses from the sales of securities in the fiscal years ended March 31, 2020 and 2021 are as follows:

5 Marketable Securities and Investment Securities

Contributions to investment partnerships

Thousands of
U.S. dollars

Securities without market quotations:¥ 137 million (   $ 1,245 thousand)Securities with market quotations

Millions of yen

The original cost, carrying amount (fair value), and gross unrealized gain (loss) for securities with market quotations as of March 31, 2020 and
2021 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2020

2021

2021

¥ 44

¥494

$4,462

Other

715

—

—

Proceeds from the sales of securities

¥759

¥494

$4,462Gross realized gains from the sales of securities

22

307

2,777

Gross realized losses from the sales of securities

1

0

2

Millions of yen

Thousands of
U.S. dollars

6 Trade Receivables
Trade receivables as of March 31, 2020 and 2021 are summarized as follows:

Notes receivable

2020

2021

2021

¥ 3,810¥ 3,423$ 30,922

Accounts receivable–trade

79,943

88,341

797,957

		Total¥83,754¥91,765$828,880

Millions of yen

Thousands of
U.S. dollars

2020
Gross unrealized Gross unrealized Carrying amount
Original cost
gain
loss
(fair value)

Securities with market quotations:
Equity securities
		Total¥24,487¥(962)¥47,461

161

—

(0)

161

¥24,098¥24,487¥(962)¥47,623

Millions of yen

2021
Original cost

Gross unrealized Gross unrealized Carrying amount
gain
loss
(fair value)

Securities with market quotations:
Equity securities
Corporate bond securities
		Total¥29,752¥72,380¥(11)¥102,121

100

—

(0)

100

¥29,853¥72,380¥(12)¥102,221

Inventories as of March 31, 2020 and 2021 are summarized as follows:

2020

2021

2021

Finished goods and merchandise¥22,282¥ 28,994$261,894

Work in process

51,09873,816

666,756

Raw materials and supplies

3,409

4,075

36,808¥76,790¥106,886$965,459

		TotalThe value of inventories stated in the consolidated balance sheets is calculated by writing down the carrying amount based on declining profitability,
and the valuation loss on inventories included in cost of sales is as follows:
Millions of yen

Thousands of U.S. dollars

2021
Original cost

Gross unrealized Gross unrealized Carrying amount
gain
loss
(fair value)

FINANCIAL SECTION

Corporate bond securities¥23,937

7 Inventories

Valuation loss on inventories

Thousands of
U.S. dollars

2020

2021

2021

¥6,949¥5,484$49,534

Securities with market quotations:
Equity securities
Corporate bond securities
		Total100$268,741$653,787$(104)

911

—

(4)

907

$269,652$653,787$(109)$923,331$922,423

101

8 Loss on Impairment of Fixed Assets

9 Borrowings, Lease Obligations and Bonds

For the Company and its consolidated subsidiaries, evaluation of impairment is performed by grouping assets according to management

Borrowings and lease obligations as of March 31, 2020 and 2021 are summarized as follows:

accounting classifications based on Units, excluding significant idle assets, assets scheduled for disposal, and assets for lease. In the amusement

Millions of yen

facility operations of the Real Entertainment Business, the individual facility is the smallest unit used in management accounting and is the basic

Weighted averageinterest rate (%)

¥ 700

0.31

200

0.31

246

0.47

185

0.28

1,679

1,227

2.02

1,162

1.94

10,504Long-term borrowings (less current portion)

171

0.52

20,2340.34

182,767

Lease obligations (less current portion)

3,765

1.81

4,635

1.97

41,874¥6,110—¥26,419—$238,632

Short-term borrowings

The book value of the following assets is reduced to the recoverable amount and the amount of reduction is recorded in other income (loss) as aloss on impairment.
Unit

Location

Items

Toys and Hobby

Suita-shi, Osaka and others(note 3)

Assets for business use Buildings and structures

Suita-shi, Osaka and others(note 1)

Assets scheduled for
disposal

Real Entertainment Yokohama-shi, Kanagawa andothers (note 3)
Hachioji-shi, Tokyo and others(note 1)
Yokosuka-shi, Kanagawa andothers (note 2)
Visual andMusic Production
Toys and Hobby

Mitaka-shi, Tokyo (note 3)
Nagoya-shi, Aichi (note 1)
Taito-ku, Tokyo (note 2)
Koto-ku, Tokyo (note 3)

Network
Entertainment
Real Entertainment Fukuoka-shi, Fukuoka andothers (note 1)
Minato-ku, Tokyo and others(note 2)Visual andMusic Production
		TotalAmusement operation
facilities
Amusement operation
facilities

Thousands of
U.S. dollars

2021

2021

2020

¥31

¥

—

$

—

Other property, plant and equipment
Other intangible assets
Buildings and structures

4
20
35

—
—
—

—
—
—

Other property, plant and equipment
Amusement facilities and machines

3
2,967

—
—

—
—

Other intangible assets
Other investments and assets
Amusement facilities and machines

422
31
55

—
—
—

—
—
—

Amusement facilities and machines

0

—

—

Other property, plant and equipment
Assets for business
Other property, plant and equipment
use
Assets for business use Buildings and structures
Other property, plant and equipment
Assets for business use Other property, plant and equipment
Assets for business use Other intangible assets

0
21

—
—

—
—

—
—
—
—

7
1
1
821

64
10
11
7,423

Amusement operation
facilities

Amusement facilities and machines

—

149

1,351

Other investments and assets
Amusement facilities and machines

—
—

0
26

2
238

Other property, plant and equipment
Other intangible assets
Buildings and structures

—
—
—

5
27
565

52
244
5,103

Amusement operation
facilities

Amusement operation
facilities
Assets for business use Amusement facilities and machines
Corporate assets
Other property, plant and equipment
Other intangible assets
Other investments and assets
Minato-ku, Tokyo and others
Amusement operation Amusement facilities and machines(note 4)
facilities
Tyne and Wear, U.K. and others Amusement operation Amusement facilities and machines(note 5)facilities
Assets for business use Other property, plant and equipment
Mitaka-shi, Tokyo (note 3)
Assets for business use Other property, plant and equipment

—
—
—
—
—

5,554
235
788
99
2,787

50,175
2,125
7,119
894
25,176

—

68

621

—
—

144
0

1,306
5

¥3,596¥11,284$101,928

Notes: 1. The Group recorded losses on impairment as it judged that the recoverable amounts of the fixed assets significantly decreased due to its decision to close locations. The recoverable
amount is calculated by deeming the value in use as zero.
		
2. The Group recorded losses on impairment of assets which are not expected to be used in the future. The recoverable amount is calculated by deeming the value in use as zero.
		
3. The Group recorded losses on impairment as the book value of the fixed assets is unlikely to be recoverable due to declines in the profitability of business. The recoverable amount iscalculated by deeming the value in use as zero.
		
4. The Group recorded losses on impairment as the book value of the fixed assets is unlikely to be recoverable due to declines in the profitability of business. The recoverable amounts arecalculated based on the net realizable value which was evaluated based on reasonably estimated selling prices.
		
5. The Group recorded losses on impairment as the book value of the fixed assets is unlikely to be recoverable due to declines in the profitability of business. The recoverable amounts arecalculated by value in use and calculated by discounting the future cash flows at 5.5%.

Current portion of long-term borrowings
Current portion of lease obligations

Total

Carrying
amount¥

1,806

The aggregate maturities of long-term borrowings and lease obligations (less current portion) outstanding as of March 31, 2021 are as follows:
Millions of yen

Thousands of
U.S. dollars

More than one year, within two years¥11,084$100,122

More than two years, within three years

10,87098,189More than three years, within four years

725

6,554

More than four years, within five years

692

6,250

1,497

13,524¥24,870$224,641

More than five years
Total

Bonds as of March 31, 2021 are summarized as follows:

Name

Issue

Date of issue

Balance asof April 1, 2020
(Millions of yen)

Reflector Entertainment Ltd.

Convertible bonds (note)

October 22, 2020—

Balance asof March 31, 2021
(Millions of yen)

Balance asof March 31, 2021
(Thousands of
U.S. dollars)Interest rate(%)

Pledged asset

Redemption date

¥966

$8,731

5.0

None

December 31, 2025

Millions of yen

Thousands of
U.S. dollars

As of March 31, 2021, the planned redemption amounts of bonds were as follows:

Within one year

¥ —

$

—

More than one year, within two years——

More than two years, within three years——

More than three years, within four years——

More than four years, within five years

966

8,731

More than five years

—

—

¥966

$8,731

Total

Note: The agreement calls for redemption in accordance with results for each fiscal year. However, due to the difficulty of the calculations, the planned redemption amounts listed have been
calculated as if all bonds were redeemed on their maturity date.

10 Trade Payables
Trade payables as of March 31, 2020 and 2021 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2020

2021

2021

Notes payable¥11,326¥13,327$120,381

Accounts payable–trade

58,842

69,146

624,577¥70,169¥82,474$744,958

Total

102

$

FINANCIAL SECTION

Minato-ku, Tokyo and others(note 3)

Amusement operation
facilities

Classification

Millions of yen

2021
Carrying
amountCarrying
amountIn this fiscal year, the Group recorded a loss on impairment of amusement arcades, assets for business use and corporate assets as theinvested amounts are unlikely to be recoverable mainly given that the profitability of the Real Entertainment Business as a whole declined.

2021
Weighted averageinterest rate (%)

2020

unit for evaluating impairment.

Thousands of
U.S. dollars

103

11 Retirement and Severance Benefits(d) As of March 31, 2020 and 2021, the reconciliation of the ending balances of retirement benefit obligations and plan assets with the net defined
benefit liability and net defined benefit asset recorded on the consolidated balance sheet is as follows:

1. Defined benefit plans
Millions of yen(a) For the fiscal years ended March 31, 2020 and 2021, the reconciliation of the beginning and ending balances of retirement benefit obligations is

2020

2021

2021

Retirement benefit obligations of funded plans¥ 26,317¥27,982$252,752

Plan assets(23,080)(27,276)(246,376)

3,236

705

6,375

Retirement benefit obligations of non-funded plans

6,380

6,099

55,093

Net amount of liabilities and assets recorded on consolidated balance sheet

9,617

6,805

61,469Net defined benefit liability

9,840

7,212

65,149Net defined benefit asset

(223)

(407)

(3,680)¥ 9,617¥6,805$61,469

Millions of yen

Thousands of
U.S. dollars

2020

2021

2021

Service cost

¥1,850¥1,947$17,588

Interest cost

39

40

367

Expected return on assets

(396)

(273)

(2,473)

Amortization of actuarial gains or losses

1,169

947

8,555

as follows (excluding plans for which the simplified method is applied):
Millions of yen

Thousands of
U.S. dollars

2020

2021

2021

¥29,303¥29,003$261,975

Service cost

1,850

1,947

17,588Interest cost

39

40

367

(547)

471

4,261

(1,492)(904)(8,171)

Prior service costs incurred

200

(455)

(4,115)

Effect of business combinations

(319)

—

—

Other

(30)

(46)

(416)

¥29,003¥30,056$271,491

Beginning balance of retirement benefit obligations

Actuarial gains or losses incurred
Retirement benefits paid

Ending balance of retirement benefit obligations(b) For the fiscal years ended March 31, 2020 and 2021, the reconciliation of the beginning and ending balances of plan assets is as follows(excluding plans for which the simplified method is applied):
Millions of yen

Thousands of
U.S. dollars

2020

2021

2021

¥20,318¥20,876$188,567

Expected return on assets

396

273

2,473

Actuarial gains or losses incurred

(166)

768

6,943

Contributions to plan from employer

1,613

3,341

30,185Retirement benefits paid

(983)

(518)

(4,680)Effect of business combinations

(277)

—

—

Other

(25)

(36)

(333)

¥20,876¥24,705$223,156

Beginning balance of plan assets

Ending balance of plan assets

Net amount of liabilities and assets recorded on consolidated balance sheet(e) For the fiscal years ended March 31, 2020 and 2021, the breakdown of retirement benefit expenses is as follows:

Amortization of prior service costs

65

42

381

Retirement benefit expenses calculated using the simplified method

300

312

2,825

3,028

3,016

27,245

109

80

727

¥3,137¥3,096$27,973Retirement benefit expenses related to defined benefit plans
Other (note)
Total retirement benefit expenses

Note:	In the fiscal year ended March 31, 2020, the following extra retirement payments were recorded: ¥66 million in “Selling, general and administrative expenses” and ¥43 million in “Other
income (loss).” In the fiscal year ended March 31, 2021, the following extra retirement payments were recorded: ¥80 million ($727 thousand) in “Selling, general and administrative expenses.”(f) For the fiscal years ended March 31, 2020 and 2021, the breakdown of items recorded in remeasurements of defined benefit plans (before tax
effect) is as follows:
Millions of yen

net defined benefit asset for plans using the simplified method is as follows:
Millions of yen

2020

2021

2021

¥1,250¥1,490$13,460

Retirement benefit expenses

300

312

2,825

Retirement benefits paid

(108)

(98)

(885)

Contributions to plan from employer

(187)

(286)

(2,586)

Effect of business combinations

242

—

—

Beginning balance of net defined benefit liability and net defined benefit asset, net

Other
Ending balance of net defined benefit liability and net defined benefit asset, net

(6)

35

321

¥1,490¥1,454$13,135

Prior service costs
Actuarial gains or losses
Total

2020

2021

2021

¥ (134)¥ 497$ 4,496

1,550

1,244

11,237¥1,416¥1,741$15,734(g) As of March 31, 2020 and 2021, the breakdown of items recorded in cumulative remeasurements of defined benefit plans (before tax effect)
is as follows:
Millions of yen

2020

Unrecognized prior service costs
Unrecognized actuarial gains or losses
Total

104

Thousands of
U.S. dollars

FINANCIAL SECTION(c) For the fiscal years ended March 31, 2020 and 2021, the reconciliation of the beginning and ending balances of net defined benefit liability andThousands of
U.S. dollars

Thousands of
U.S. dollars¥ (205)¥

Thousands of
U.S. dollars

2021

2021

292

$ 2,642(6,493)(5,249)(47,414)¥(6,698)¥(4,956)$(44,772)105

12 Financial Instruments(h) As of March 31, 2020 and 2021, the major categories of plan assets as a percentage of total plan assets are as follows:
2020

2021

Bonds

40%

35%

Equities

920Life insurance general account

16

14

Other (note 1)

35

31

100%

100%

Total

Notes: 1. The “other” category mainly includes cash and alternative investments.
2. The total of plan assets includes 25% and 22% representing assets contributed to a retirement benefit trust for the corporate pension plan as of March 31, 2020 and 2021, respectively.

and in addition the Company and its consolidated subsidiaries track(1) Policy for financial instruments

market trends and, as necessary, utilize forward foreign exchange

The Company and its consolidated subsidiaries manage funds by means

contracts and currency option contracts for hedging.

of highly secure financial instruments only and procures funds

Trade payables and accrued income taxes are exposed to liquidity

through borrowing from banks and other methods, such as issuingrisk. The Company and its consolidated subsidiaries manage this risk

corporate bonds.

through the formulation and revision of monthly funding plans for the

The Company and its consolidated subsidiaries utilize derivatives
to hedge the risks noted below and do not engage in speculativetransactions.

(i) For the fiscal years ended March 31, 2020 and 2021, the principal actuarial assumptions are as follows:

Company and its consolidated subsidiaries.
Borrowings are used for the purpose of securing sufficient current
liquidity in preparation mainly for a prolonged impact of the spread of
COVID-19. If borrowings are made with a floating interest rate, the

2021

2020

Discount rate

0.00%~0.60%

0.00%~0.60%

Long-term expected rate of return on assets

1.96%~2.50%

1.31%~1.46%

Salary increase rate

1.84%~5.12%

2.00%~5.12%

Method of determining long-term expected rate of return on assets
Note: To determine the long-term expected rate of return on plan assets, reference was made to the current and expected future allocations of plan assets and to the current and expected
future long-term rate of returns on the various assets that make up plan assets.

2. Defined contribution plans
For the fiscal years ended March 31, 2020 and 2021, the required contributions to defined contributions plans for the Company and its consolidated
subsidiaries were as follows:

Required contributions to defined contribution plans

1. Financial instruments

Millions of yen

Thousands of
U.S. dollars

2020

2021

2021

¥732

¥774

$6,997(2) Types of financial instruments and related risks

Company track market trends and, as necessary, utilize interest rate

With regard to credit risk posed by customers with respect to tradeswap transactions and interest rate option transactions to hedge

receivables, the Company and its consolidated subsidiaries manageinterest rate fluctuation risk.

balance by counterparty and due date, and credit information on

Derivative transactions are used for hedging purposes. With regards

major customers is updated at least once a year to minimize suchto hedging methods and hedged items, hedging policies, and methods

credit risk. The Company and its consolidated subsidiaries have aof assessing the effectiveness of hedging transactions, for which

system for immediately sharing within the Company and its consoli-

hedge accounting is applied, please refer to Note “2 Summary of

dated subsidiaries adverse credit and other information regarding

Significant Accounting Policies—(l) Derivatives and Hedging Activities.”

counterparties in the event that such information is received.
As of March 31, 2020 and 2021, designated large customers were

Derivative transactions are executed and managed according tointernal rules that determine trading authority and limits on amounts

counterparties for 13.7% and 24.1% of trade receivables, respectively.

traded. Derivatives are used in ways that minimize credit risk,

Receivables denominated in foreign currencies arising as a result ofand thus transactions are carried out only with highly creditworthy

the fact that the Company and its consolidated subsidiaries conduct

financial institutions.

business on a global basis are subject to foreign exchange rate
fluctuation risk. The Company and its consolidated subsidiaries
manage balances by counterparty and currency, and in addition the(3) Supplementary explanation on the fair value offinancial instruments

Company and its consolidated subsidiaries track market trends and,The fair value of financial instruments includes, in addition toas necessary, utilize forward foreign exchange contracts for hedging.

the value determined based on market prices, valuations calculatedMarketable securities and investment securities are principally theon a reasonable basis if no market price is available. However, as

shares of companies with which the Company has a business relation-certain variables are used for these calculations, the result of suchship. These investments are exposed to the risk of fluctuations in

calculations may vary if different assumptions are used.

market prices. The market price is confirmed at least once pereration of market conditions and relationships with counterparties.
All trade payables substantially have due dates within one year.
Certain trade payables are denominated in foreign currencies and are
exposed to the risk of fluctuations in foreign exchange rates. In the

The contract amounts of derivative transactions in Note “20Foreign Exchange Risk Management and Interest Rate Risk
Management” should not be considered indicative of the market
risk associated with the derivative financial instruments.

FINANCIAL SECTION

quarter, and the holdings are reevaluated once per year with consid-

same manner as receivables, the Company and its consolidated
subsidiaries manage balances by counterparty and currency,

106

107

13 Income Taxes

2. Fair value of financial instruments
The carrying amounts of financial instruments as stated in the consolidated balance sheets, their fair values as of March 31, 2020 and 2021,
and the differences between carrying amounts and fair values are as stated below. This table does not include assets for which it was judged

The Company and its domestic consolidated subsidiaries are subject to Japanese corporate, inhabitant, and enterprise taxes based on income

extremely difficult to assess the fair value (note 2 below).

which, in the aggregate, resulted in a normal tax rate of 30.6% for the years ended March 31, 2020 and 2021 respectively.
Millions of yen

2021

2020

(1) Cash and time
deposits

Carrying
amountFair value¥189,856¥189,856

83,75483,754(2) Trade receivables(3) Marketable securities
and investment
securities

Carrying
amountFair value

Difference—¥204,326¥204,326¥—

91,76591,765Difference¥

Thousands of U.S. dollars

2021
Carrying
amountFair value   —$1,845,598$1,845,598—

828,880

828,880

Millions of yen

Difference

$

  —
—

Income taxes–current
Income taxes–deferred		Total112,976

116,6423,666

1,020,473

1,053,589

33,115$3,694,952$3,728,068$33,115$ 744,958$ 744,958$

58,73657,261

		Total assets¥332,347¥330,872¥(1,474) ¥409,068¥412,734¥3,666(1) Trade payables¥ 70,169¥ 70,169¥¥ 82,474¥ 82,474¥(2) Accrued income taxes

5,571

5,571

—

6,820

6,820

—

61,60361,603—(3) Long-term borrowings

171

170

(1)

20,234

20,132(101)

182,767

181,849(918)¥ 75,912¥ 75,911   (1) ¥109,528¥109,427¥ (101)$ 989,329$ 988,411

		Total liabilities
Derivative financial
instruments*

Income tax expenses reflected in the accompanying consolidated statements of income for the fiscal years ended March 31, 2020 and 2021
consist of the following:

¥

337

¥

337

(1,474)

¥
¥

—

—

¥

1,284

¥

1,284

   —

¥

   —

$

11,603$

11,603

  —

2021

2021

¥24,527$221,544(1,695)(1,452)(13,121)¥20,845¥23,074$208,422

Reconciliation of the normal tax rate and the effective tax rate as a percentage of profit before income taxes for the fiscal years ended March 31,
2020 and 2021 is as follows:
2020

2021

$   (918)

30.6%

30.6%

Entertainment expenses not deductible for tax purposes

0.4

0.2

$

Corporate inhabitant tax on per capita basis

0.4

0.4

Directors’ bonuses

0.7

0.8

Change in valuation allowance for deferred tax assets

(2.3)

5.0

Differences in tax rates of foreign consolidated subsidiaries

0.9

0.9

Tax credits for research and development expenses

(5.3)

(6.3)

Tax credit for acceleration of wage increases and productivity improvement

(1.0)

—

Gain on step acquisitions

(0.7)

—

Amortization of goodwill

0.2

0.9

Other

2.6

(0.4)

Effective tax rate

26.5%

32.1%

  —

		
Liabilities
		(1) Trade payables, (2) Accrued income taxes
		 Since these are readily convertible into cash, their fair value is almost identical with the book value, and thus these are stated at the book value.
		(3) Long-term borrowings
		 The fair value of long-term borrowings is calculated by discounting the total amount of the principal and interest by the assumed interest rate for similar new borrowings.

2. Financial instruments for which fair value is extremely difficult to determine
Thousands of U.S. dollars

2020

2021

2021

Carrying amount

Carrying amount

Carrying amountUnlisted stocks¥3,784¥4,783$43,208

Stocks of affiliated companies (unlisted stocks)

3,486

2,969

26,819

506

479

4,329

FINANCIAL SECTION		
Derivative financial instruments
		 Please refer to Note “20 Foreign Exchange Risk Management and Interest Rate Risk Management.”

Contributions to investment partnerships

2020¥22,541

Normal tax rate

* Assets and liabilities derived from derivative transactions are stated on a net basis. Items for which the total is a net liability are shown in parentheses.
Notes: 1. Method for calculating the fair value of financial instruments and matters related to securities and derivative transactions
		
Assets		(1) Cash and time deposits
			 Since these are readily convertible into cash, their fair value is almost identical with the book value, and thus these are stated at the book value.
		(2) Trade receivables
			Since trade receivables that are settled in a short period of time are readily convertible into cash, their fair value is almost identical with the book value, and thus these are stated at
the book value. For trade receivables that are settled after a long period of time, the fair values are measured based on the present values calculated by discounting receivableamounts classified by certain periods of time at a rate for which time to maturity and credit risk has been taken into account.
		(3) Marketable securities and investment securities
			Stocks and others are stated at the price on the stock exchange or the price as presented by counterparty financial institutions and others. With regard to marketable securities andinvestment securities by holding purpose, please refer to Note “5 Marketable Securities and Investment Securities.”

Millions of yen

Thousands of
U.S. dollars

	As these instruments do not have readily available fair values, and their fair values are extremely difficult to determine, they are not included in “(3) Marketable securities andinvestment securities” in the table above.
3. Maturity analysis of financial assets
Millions of yen

2020
Withinone year

Cash and time
deposits
Trade receivables¥187,287
82,775More than
one year,withinfive years¥

More than
five years,
withinten years

More thanten years

Withinone year

70

¥—

¥ —

¥202,023

979

—

—

90,240More than
one year,withinfive years

Thousands of U.S. dollars

2021

More than
five years,
withinten years

More thanten years

Withinone year

—

¥—

¥ —

$1,824,797

1,525

—

—

815,103¥

More than
one year,withinfive years

$

2021

More than
five years,
withinten years

More thanten years

—

$—

$ —

13,777——

Marketable securitiesand investment
securities
Bonds(Corporate bonds)
Total

108

60

—

—

100

—

—

—

100

—

—

—

903

¥270,122¥1,049¥—¥100¥292,263¥1,525¥—¥100$2,639,900$13,777

$—

$903

109

14 Selling, General and Administrative Expenses

Significant components of deferred tax assets and liabilities as of March 31, 2020 and 2021 are as follows:
Millions of yen

Thousands of
U.S. dollars

2021

2021

2020

Significant components of selling, general and administrative expenses for the fiscal years ended March 31, 2020 and 2021 are as follows:

Deferred tax assets:
Tax loss carryforward (note 2)¥ 9,373¥ 13,799

2020

2021

2021

¥ 44,367¥ 45,203$ 408,304$ 124,641

Excess depreciation of fixed assets

16,705

18,547

167,531

Advertising expenses

Accrued employee bonuses

3,929

4,215

38,076

Directors’ remuneration and employees’ wages

48,17952,904

477,869

Inventory valuation losses

3,187

3,095

27,956

Employees’ retirement and severance benefits

3,114

3,114

28,135Net defined benefit liability

4,674

3,855

34,821

Provision for directors’ bonuses

1,885

1,640

14,814

Loss on valuation of advance payments

1,285

1,400

12,650Research and development expenses

19,03526,446

238,876

406

95

859

Loss on impairment of fixed assets

341

94

856

Accrued enterprise taxes and others

1,146

966

8,726

Research and development expenses

401

331

2,989

326

381

3,442

1,367

1,367

12,352

Allowance for doubtful receivables
Revaluation reserve for land

8,096

8,888

80,28550,83656,941

514,330(8,634)(12,799)(115,613)

Other
		 Total gross deferred tax assets
Valuation allowance for tax loss carryforward (note 2)
Valuation allowance for total deductible temporary differences(7,475)(9,301)(84,018)

Total valuation allowance (note 1)(16,110)(22,101)(199,631)

34,72534,840314,698

Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced depreciation of fixed assets

(60)

(40)

(367)

Retained earnings of foreign consolidated subsidiaries

(799)

(861)

(7,777)

Valuation difference on available-for-sale securities(7,307)(21,517)(194,363)

(249)

(199)

(1,800)

Revaluation reserve for land
Other
Total deferred tax liabilities
Net deferred tax assets

(872)

(550)

(4,972)(9,290)(23,169)(209,282)¥ 25,434¥ 11,670$ 105,416

Notes: 1.	The valuation allowance increased by ¥5,990 million ($54,108 thousand). The principal content of this increase was a increase in valuation allowance for tax loss carryforward atconsolidated subsidiaries.
2.	Amounts of tax loss carryforward and related deferred tax assets by carryforward period

2020

Within one year

Tax loss carryforward*¥ 223

Valuation allowance(223)

Deferred tax assets

0More thanMore thanMore thanMore than
one year, within two years, within three years, within four years, within
two years
three years
four years
five years

¥ 13
(13)
—

¥ 122

¥ 385

¥ 150

(118)

(385)

(147)

3

0

3

More than
five years¥ 8,477(7,746)731

Total¥ 9,373

Provision of allowance for doubtful receivables
Other		TotalMillions of yen

2020
Amounts Reclassification
arising
adjustments

Valuation difference on
available-for-salesecurities, net of tax

Beforetax effectTax effect

Net oftax effect¥(4,651)¥ (22)¥(4,673)¥1,571¥(3,101)

Deferred gains or losses onhedges, net of tax

345

(29)

315

(71)

244

Revaluation reserve forland, net of tax

—

—

—

682

682

(3,468)—(3,468)—(3,468)

180

1,235

1,416

(350)

1,065

Foreign currencytranslation adjustments
Remeasurements ofdefined benefit plans,
net of tax
Share of othercomprehensive incomeof associates accounted
for using equity method
Total

(17)

0

(17)

—

(17)

¥(7,610)¥1,183¥(6,427)¥1,831¥(4,595)(8,634)738

Millions of yen

Valuation allowance(5)

Deferred tax assets

0More thanMore thanMore thanMore than
one year, within two years, within three years, within four years, within
two years
three years
four years
five years

¥ 239
(238)
0

¥ 669

¥ 161

¥ 90

(669)

(161)

(82)

0

—

8

More than
five years¥ 12,632(11,642)
989

Total

¥ 13,799(12,799)
999* The tax loss carryforward were calculated using the normal tax rate.
Thousands of U.S. dollars

2021

Within one year

Tax loss carryforward*$ 55

Valuation allowance(53)

Deferred tax assets

1* The tax loss carryforward were calculated using the normal tax rate.

Thousands of U.S. dollars

2021
2021

¥6

613,744$1,782,603

The components of other comprehensive income for the fiscal years ended March 31, 2020 and 2021 are as follows:

Amounts Reclassification
arising
adjustments

Millions of yen

Tax loss carryforward*

67,947¥197,352

15 Other Comprehensive Income* The tax loss carryforward were calculated using the normal tax rate.

Within one year

65,182¥182,172

FINANCIAL SECTION

Millions of yen

110

Thousands of
U.S. dollars

Millions of yen

More thanMore thanMore thanMore than
one year, within two years, within three years, within four years, within
two years
three years
four years
five years$ 2,159(2,150)8$ 6,046$ 1,460$ 820(6,045)(1,460)

(744)

0

—

75

More than
five years$ 114,099(105,158)
8,941

Total

$ 124,641(115,613)
9,028

Valuation difference on
available-for-salesecurities, net of tax

Beforetax effect2021

Tax effect

Net oftax effectAmounts Reclassification
arising
adjustments¥48,846 ¥(14,210)¥34,636$443,916$(2,701)

Beforetax effectTax effect

Net oftax effect¥49,146¥(299)

Deferred gains or losses onhedges, net of tax

703

189

893

(156)

736

6,356

1,711

8,067

(1,414)

6,652

Revaluation reserve forland, net of tax

—

—

—

—

—

—

—

—

—

—

4,892

—

4,892

—

4,892

44,188—44,188—44,188

752

989

1,741

(521)

1,220

6,797

8,936

15,734(4,710)11,024

175

—

175

1,586

(2)

1,583

—

1,583

¥56,549 ¥(14,888)¥41,661$502,845$7,944Foreign currencytranslation adjustments
Remeasurements ofdefined benefit plans,
net of tax
Share of othercomprehensive incomeof associates accounted
for using equity method
Total

175

(0)

¥55,670¥879$441,215 $(128,355) $312,860$510,789 $(134,479) $376,310

111

20 Foreign Exchange Risk Management and Interest Rate Risk Management

16 Retained Earnings and Dividends
In Japan, in the event a dividend distribution of surplus is made,The Company’s retained earnings includes legal reserves of ¥1,645

Derivative financial instruments are comprised principally of forward foreign exchange contracts and currency option contracts. These instruments

the lesser of an amount equal to 10% of the dividend or the excess,million and ¥1,645 million ($14,863 thousand) at March 31, 2020 and

if any, of 25% of common stock over the total of additional paid-in

2021, respectively. Proposed appropriations of retained earnings havecapital and legal earnings reserve must be set aside as a legal

not been reflected in the consolidated financial statements at the end

reserve until the aggregate amount of capital surplus and theof the fiscal year. The Company’s approved appropriations of retained

legal reserve equals 25% of stated capital.

earnings for the fiscal year ended March 31, 2021 were cash dividends

2021 are as follows. The contract amounts in themselves should not be considered indicative of the market risk associated with the derivativeof ¥20,020 million ($180,833 thousand). In addition, a mid-year

financial instruments.

Certain foreign consolidated subsidiaries are also required toappropriate their earnings to legal reserves under the laws of thedividend may be paid based on approval by the Board of Directors,

respective countries.

which is subject to limitations. The mid-year dividend for the fiscal

are used to reduce the risk of changes in foreign exchange rates, but are not used for speculation.
The Company is exposed to credit risk related to non-performance by the counterparties to forward foreign exchange contracts and currency
option contracts, but the Company does not expect any instances of non-performance due to the high credit ratings of the counterparties.
Contract amounts, fair values, and gains or losses from valuation of forward foreign exchange contracts outstanding as of March 31, 2020 and(1) Derivative transactions not qualifying for hedge accounting

year ended March 31, 2021 was ¥4,620 million ($41,730 thousand).

Millions of yen

17 Revaluation Reserve for Land

Contract
amountHedging method

In accordance with the Law Concerning Land Revaluation (Law

Commissioner of the National Tax Agency. The Com­missioner

No. 34, promulgated on March 31, 1998), the land used for businessassesses and publishes the method to calculate land value that forms

purposes was revalued and “Revaluation reserve for land, net of tax”

the foundation for calculating taxable value for land value tax

was reported in “Net assets” in the consolidated balance sheets.

prescribed in Article 16 of the Land Value Tax Law (Law No. 69,
promulgated on May 2, 1991), as stipulated in Article 2-4 of theOrdinance Implementing the Law Con­cerning Land Revaluation

The fair value of land is determined based on official notice prices(Cabinet Order No. 119, promulgated on March 31, 1998). Reasonable

that are calculated by the method assessed and published by the

adjustments are made to the official notice prices.

18 Common Stock and Treasury Stock
SharesCommon stock (number of shares)
Number of shares at beginning of year
Number of shares at end of year

2020

2021

222,000,000
222,000,000

222,000,000
222,000,000

Estimated Unrealized
fair value gain (loss)¥1,958¥ 24¥ 24¥2,546¥121¥121$23,000$1,098$1,098

U.S. dollars

1,756

(19)

(19)

2,175

(92)

(92)

19,646

(833)

(833)

773

(0)

(0)

322

(1)

(1)

2,913

(17)

(17)
307

Purchased:
U.S. dollars

677

3

3

579

34

34

5,232

307

H.K. dollars

47

0

0

17

—

—

154

—

—

¥5,213¥ 7¥ 7¥5,640¥ 61¥ 61$50,947

$ 556

$ 556

Notes: 1.	Method of calculating fair value
		 Calculated based on prices provided by counterparty financial institutions.
2.	For certain of the above forward foreign exchange contracts, hedge accounting is applied mainly for the transactions between consolidated subsidiaries in each financial statements,
but these transactions have been eliminated in the consolidated financial statements. As a result, these transactions are not treated as effective hedges of the hedged assets and/or
liabilities in the consolidated financial statements.

(2) Derivative transactions qualifying for hedge accounting

2021

Millions of yen

2,209,402
114,918
2,324,320

2,324,320
2,432
2,326,752

Hedge accounting
methodThe Company and its consolidated subsidiaries occupy offices and other facilities and use various assets under operating lease arrangements.
Operating leases

112

Millions of yen

Thousands of
U.S. dollars

2020

2021

2021

Within one year

¥1,641¥1,048$ 9,467Over one year

2,800

1,789

16,163

		Total¥4,442¥2,837$25,630

Estimated
fair value

Contract
amountEstimated
fair value

Contract
amountEstimated
fair value

Sold:

Deferred

Future minimum payments required under non-cancellable operating leases as of March 31, 2020 and 2021 are as follows:

Hedged items

2021

Contract
amountForward foreign exchange contracts

19 Leases
As lessee

Hedging method

Thousands of U.S. dollars

2021

2020

Yen

Accounts receivable–trade¥ 9,359¥  131¥11,956¥ 663$108,000$ 5,995

U.S. dollars

Accounts receivable–trade

2,026

(18)

636

(27)

5,749

(244)
5,287

Purchased:
U.S. dollars

Accounts payable –trade

10,893

213

10,419585

94,113

Yen

Accounts payable –trade

38

0

70

(1)

632

(9)

H.K. dollars

Accounts payable –trade

89

2

29

2

270

18

124

(note 2)

238

(note 2)

2,156

(note 2)

¥22,533¥  329¥23,351¥1,223$210,922$11,047

Forward foreign exchange contracts
Foreign exchange
Purchased:
allocation method
U.S. dollars
Accounts payable –trade		Total

FINANCIAL SECTION

Number of shares at beginning of year
Purchases and other
Number of shares at end of year

2020

Estimated Unrealized
fair value gain (loss)

Yen

SharesTreasury stock (number of shares)

2021
Contract
amountSold:

		TotalThe changes in the number of common stock and treasury stock for the fiscal years ended March 31, 2020 and 2021 are as follows:

Contract
amountForward foreign exchange contracts

Euro

Revaluation method

Estimated Unrealized
fair value gain (loss)

Thousands of U.S. dollars

2021

2020

Notes: 1. Method of calculating fair value
			 Calculated based on prices provided by counterparty financial institutions.
		
2.	Forward foreign exchange contracts and other contracts for which the allocation method is applied are accounted for together with the accounts payable–trade that are the hedged
items, and as a result the fair values of those contracts are included in the fair values of the accounts payable–trade.

113

21 Commitments and Contingent Liabilities

23 Segment Information

1. Pledged assets

The reportable segments of the Company are components of the Group whose separate financial information is available and which are periodicallyevaluated by the Board of Directors in deciding how to allocate management resources and in assessing performance.

As of March 31, 2020 and 2021, details of pledged assets are as follows:
Millions of yen

Thousands of
U.S. dollars

2020

2021

2021

Cash and time deposits

¥ 27

¥27

$250

Land

300

—

—

¥327

¥27

$250

Total

serve a supporting role for these Units. The core company of each Unit leads the planning and promotion of the business strategies of the unit forJapan and overseas.
Accordingly, the Group has the following five reportable segments: Toys and Hobby Business, Network Entertainment Business, Real Entertainment
Business, Visual and Music Production Business, and IP Creation Business.
The Toys and Hobby Business conducts production and sales of toys, candy toys, and products for vending machines. The Network

As of March 31, 2021, there were no claims relating to pledged assets.
In addition to the above, there were assets deposited as a security deposit for issuance under the Payment Services Act of ¥1,937 million and¥1,946 million ($17,584 thousand) in “Other investments and assets” at March 31, 2020 and 2021, respectively.

Entertainment Business conducts planning, development, and distribution of network content, and planning, development, and distribution ofhome video games, etc. The Real Entertainment Business conducts planning, production, and sales of arcade games, etc., and planning andoperation of amusement facilities. The Visual and Music Production Business conducts planning, production, and sales of visual and music content
and packaged software, and live entertainment operations. The IP Creation Business conducts planning and development of animations, etc., and

2. Commitments

management and administration of copyrights and other rights, etc.

Commitments as of March 31, 2020 and 2021 are summarized as follows:

Guarantee of obligation resulting from rental contracts of unconsolidated subsidiary

The Group is made up of (1) five Units, one for each business domain, namely the Toys and Hobby Unit, the Network Entertainment Unit, theReal Entertainment Unit, the Visual and Music Production Unit, and the IP Creation Unit, and (2) the affiliated business companies that mainly

Millions of yen

Thousands of
U.S. dollars

2020

2021

2021

¥20

¥55

$498

Effective from the current fiscal year, the classification of SOTSU CO., LTD., which previously was classified as a business belonging to the Other
segment, was changed to a business belonging to the IP Creation Business in order to strengthen the IP axis strategy.
Segment information of the prior fiscal year is prepared and disclosed based on the reportable segment classifications after the change.
The accounting method used for the business segments reported is the same as the accounting method stated in Note “2 Summary of
Significant Accounting Policies.” Segment profit or loss in the segment information below is measured by operating profit, and segment assets aremeasured by total assets. Amounts of inter-segment transactions are based on the prevailing market prices.

22 Real Estate for Lease

Millions of yen

2020

The Company and certain consolidated subsidiaries own real estate for lease (including land) in Tokyo and other regions. Lease income or loss

Reportable Segment

associated with this real estate for lease in the previous fiscal year was ¥141 million (lease revenues recorded in other income (loss); major lease
expenses recorded in SG&A expenses); and gain on sale was ¥1,013 million (recorded in other income (loss)).
In this fiscal year, lease income or loss associated with this real estate for lease was ¥199 million ($1,805thousand) (major lease revenues
recorded in other income (loss); major lease expenses recorded in SG&A expenses); and gain on sale was ¥45 million ($408 thousand) (recorded inother income (loss)).
Also, the book value stated in the consolidated balance sheet, change during the period, and fair value at end of year are as follows:

2020

Millions of yen

Thousands of
U.S. dollars

2021

2021

¥34,506¥33,960$306,753

(545)

(88)

(799)

Balance at end of year

33,96033,872305,953

Fair value at end of year

¥38,578¥35,362$319,411

Balance at beginning of year
Changes during the period

Notes: 1. The book value stated in the consolidated balance sheet is calculated by deducting accumulated depreciation from acquisition cost.
2.	Among the changes during the year, the principal decrease in the previous fiscal year was sale of real estate—¥713 million. The principal decrease in this fiscal year was depreciation
and amortization—¥53 million ($485 thousand).			
3.	The fair value as of the end of this fiscal year is the amount calculated based mainly on “real property appraisal reports” prepared by external real property appraisers.

114

Network
Entertainment

Real Entertainment

Visual andMusic
Production

IP Creation

Subtotal

Other(note 1)

Total

¥245,880¥322,872¥90,983¥38,742¥16,084¥714,563¥ 9,426¥723,989

7,834

5,207

770

8,209

7,412

29,433

21,628¥253,714¥328,079¥91,753¥46,951¥23,497¥743,996¥31,054

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers
Total

¥

—

¥723,989

51,061(51,061)—¥775,051¥(51,061)¥723,989

Segment profit (loss)

26,73343,879(1,502)

8,032

6,269

83,412

1,346

84,759(5,983)78,775

Segment assets

121,625

168,058

62,79324,38455,489432,351

32,408464,760

155,059

619,819

2,555¥ 7,974

48¥ 21,913

588¥ 22,502¥

737¥ 23,239

Other items:
Depreciation andamortization¥ 10,815

¥

¥

519

¥

¥

	Amortization of goodwill

215

—

14

21

415

667

—

667

—

667

	Loss on impairment of
fixed assets

96

—

3,478

21

—

3,596

—

3,596

—

3,596

	Investments in associates
accounted for using
equity method

801

—

—

—

—

801

10,677

11,479—11,479	Increase in property,
plant and equipment
and intangible assets

11,908

3,692

10,160650

979

27,392

1,193

28,5854,820

33,406

FINANCIAL SECTION

Consolidated balance sheet

Toys and
Hobby

115

Millions of yen

2021
Reportable Segment
Toys and
Hobby

Network
Entertainment¥287,745¥340,434

Real Entertainment

Visual andMusic
Production

IP Creation

Subtotal

Other(note 1)

Total

¥62,703¥23,405¥16,416¥730,705¥10,198¥740,903

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers¥—

This information is omitted because the same information has been presented in Segment Information.
2. Information by geographic region
Net sales and property, plant and equipment
Millions of yen¥740,903

8,270

3,716

1,219

4,684

11,796

29,68723,88953,577(53,577)—¥296,016¥344,150¥63,923¥28,089¥28,213¥760,392¥34,088¥794,481¥(53,577)¥740,903

Segment profit (loss)

38,22057,356(8,379)

969

2,740

90,907

1,445

92,352(7,698)84,654

Segment assets

140,292

211,356

56,631

25,531

45,633

479,445

30,986510,431

222,350

732,782

Total

Additional segment information as of and for the fiscal years ended March 31, 2020 and 2021 is as follows:
1. Information by product and service

2020

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥500,952¥91,118¥61,374¥70,543¥723,989

80,938

2,084

8,159

5,723

96,906

Property, plant and equipment

Millions of yen

2021

Other items:
Depreciation andamortization

2,379¥ 6,816657¥ 22,233

610¥ 22,844¥ 1,840¥ 24,684

	Amortization of goodwill

333

—

8

15

1,951

2,309

—

2,309

—

2,309

	Loss on impairment of
fixed assets

9821

10,4960—

11,328—

11,328(43)

11,284

	Investments in associates
accounted for using
equity method

915

—

—

—

—

915

10,285

11,200—

11,200	Increase in property,
plant and equipment
and intangible assets

16,289

5,332

6,374

489

1,413

29,900825

30,725782

31,507¥ 11,820

¥

¥

559

¥

¥

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥489,994¥102,983¥72,602¥75,323¥740,903

72,327

457

8,058

7,497

88,341

Property, plant and equipment

Thousands of U.S. dollars

2021

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total$4,425,932$930,205$655,794$680,363$6,692,295

653,310

4,133

72,78867,722797,954

Property, plant and equipment

Thousands of U.S. dollars

2021
Reportable Segment
Toys and
Hobby

Network
Entertainment$2,599,092

3. Information by major customer
Fiscal year ended March 31, 2020

IP Creation

Subtotal

Other(note 1)

$3,075,010$566,373$211,411$148,285$6,600,173$ 92,121$6,692,295

74,70633,566

11,01942,309106,552

268,154

215,787

483,942$2,673,799$3,108,576$577,393$253,721$254,838$6,868,328$307,908$7,176,237

345,234

518,077(75,690)

8,755

24,751

821,127

13,060834,188(69,535)

764,653

1,267,208

1,909,099

511,531230,612412,187

4,330,638

279,888

4,610,527

2,008,407

6,618,934

Adjustments Consolidated
Total(note 2) total (note 3)

Inter-segment sales
and transfers
Total
Segment profit (loss)
Segment assets$—$6,692,295(483,942)—

Apple Inc.

$ 106,772 $

21,493$ 61,567

$

5,052

$

5,943 $ 200,829$

5,517 $ 206,347$ 16,620 $ 222,967

	Amortization of goodwill

3,011

—

79

142

17,62520,858—20,858—20,858	Loss on impairment of
fixed assets

86

7,423

94,807

5—

102,322—102,322(394)

101,928

	Investments in associates
accounted for using
equity method

8,272

—

—

—

—

8,272

92,901

101,173—

101,173	Increase in property,
plant and equipment
and intangible assets

147,138

48,17057,575

4,421

12,769270,075

7,453

277,5297,068

284,597

Network Entertainment Business, andToys and Hobby Business,

Google Inc.

¥77,590

Network Entertainment Business, andVisual and Music Production Business$(483,942) $6,692,295

Notes: 1.	The “Other” category is a business segment not included in reportable segments under which operations such as logistics services and printing for each of the Group companies are classified.
2. The details of adjustment amounts are as follows:		(1)	The adjustment to segment profit (loss) of -¥5,983 million for the fiscal year ended March 31, 2020 includes elimination of inter-segment transactions of ¥928 million andcorporate expenses not allocated to reportable segments of -¥6,911 million. The adjustment to segment profit (loss) of -¥7,698 million (-$69,535 thousand) for the fiscal year
ended March 31, 2021 includes elimination of inter-segment transactions of ¥272 million ($2,462 thousand) and corporate expenses not allocated to reportable segmentsof -¥7,970 million (-$71,997 thousand). Principal corporate expenses are expenses related to administrative divisions not belonging to reportable segments.
		(2)	The adjustment to segment assets of ¥155,059 million as of March 31, 2020 includes elimination of inter-segment transactions of -¥33,424 million and corporate assets notallocated to reportable segments of ¥188,484 million. The adjustment to segment assets of ¥222,350 million ($2,008,407 thousand) as of March 31, 2021 includes eliminationof inter-segment transactions of -¥42,497 million (-$383,867 thousand) and corporate assets not allocated to reportable segments of ¥264,848 million ($2,392,275 thousand).
Principal corporate assets are cash and deposits, investment securities, and assets related to administrative divisions not belonging to reportable segments.
		(3)	The adjustment to depreciation and amortization expense of ¥737 million for the fiscal year ended March 31, 2020 includes elimination of inter-segment transactions of-¥378 million and depreciation and amortization expense not allocated to reportable segments of ¥1,116 million. The adjustment to depreciation and amortization expense of¥1,840 million ($16,620 thousand) for the fiscal year ended March 31, 2021 includes elimination of inter-segment transactions of -¥137 million (-$1,240 thousand) and depreciation
and amortization expense not allocated to reportable segments of ¥1,977 million ($17,861 thousand).
		(4)	The adjustment to loss on impairment of fixed assets of -¥43 million (-$394 thousand) for the fiscal year ended March 31, 2021 is related to elimination of inter-segment
transactions.
		(5)	The adjustment to increase in property, plant and equipment and intangible assets of ¥4,820 million and ¥782 million ($7,068 thousand) as of March 31, 2020 and 2021,
respectively, are related to corporate assets not allocated to reportable segments.
3. Segment profit (loss) is adjusted with operating profit or loss in the consolidated statements of income.

116¥102,697

Visual and Music Production BusinessNote: Apple Inc. and Google Inc. are both platform-provision companies. The actual results of sales to these companies are usage fees, etc., for users (ordinary users) of game services provided
by the Group.

Other items:
Depreciation andamortization

Name of related segment

Toys and Hobby Business,

Net sales:
To external customers

Net sales(Millions of yen)

Name

Fiscal year ended March 31, 2021

Name

Net sales(Millions of yen)

Net sales(Thousands of U.S.
dollars)

Name of related segment

Toys and Hobby Business,
Apple Inc.

¥105,334$951,443

FINANCIAL SECTION

Real Entertainment

Visual andMusic
Production

Network Entertainment Business, andVisual and Music Production Business
Toys and Hobby Business,

Google Inc.

¥75,272$679,911

Network Entertainment Business,
Visual and Music Production Business,
and IP Creation BusinessNote: Apple Inc. and Google Inc. are both platform-provision companies. The actual results of sales to these companies are usage fees, etc., for users (ordinary users) of game services provided
by the Group.

117

4.	By reportable segment, information regarding the amount of amortization of goodwill for the fiscal years ended March 31, 2020 and 2021, andthe unamortized balance of goodwill as of March 31, 2020 and 2021, is as follows:
Millions of yen

2020

Toys and Hobby

Network
Entertainment

RealEntertainment

Visual andMusic
Production

Amortization of
goodwill

¥ 215

¥—

¥14

¥21

Unamortizedbalance of goodwill

1,429

—

14

38

IP Creation

¥

Other

Corporate andeliminations

Total

415

¥—

¥—

¥667

14,221——

15,704

Millions of yen

2021

Toys and Hobby

Network
Entertainment

RealEntertainment

Visual andMusic
Production

Amortization of
goodwill

¥ 333

¥—

¥8

¥15

¥ 1,951¥—¥—¥ 2,309

Unamortizedbalance of goodwill

1,100

—

—

22

15,946——

17,069IP Creation

Other

Corporate andeliminations

Total

24 Related-Party Disclosures
Fiscal year ended March 31, 2020
(1) Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type
Affiliatedcompany

Toys and Hobby

Network
Entertainment

RealEntertainment

Visual andMusic
Production

Amortization of
goodwill$3,011

$—

$79

$142

Unamortizedbalance of goodwill

9,938

—

—

204

IP Creation

Other

Corporate andeliminations

Total$ 17,625$—$—$ 20,858

144,041——

154,184

Happinet
Corporation

Address
Taito-ku,
Tokyo¥2,751 million

Content of business
Wholesaler of toys,
video games, andamusement products

Ratio of voting rights
ownership
Holding
directly 26.8%
indirectly 0.3%

Relationshipwith related
party
Sales agency

Content
Sales ofproducts, andothersTransaction
amount¥51,669 million

Account items
Accounts
receivable–
trade

Balance asof March 31,
2020¥7,517 million

Notes: 1. The above “Transaction amount” does not include consumption tax; the balance includes consumption tax.
2. Transaction terms and policy for determining transaction terms
		 For the transaction stated above, the products were sold on the same terms as general transactions with third parties in the ordinary course of business.

(2) Transactions between the Company and related parties
Directors, Audit & Supervisory Board Members, major shareholders (limited to individuals), etc.

Type

OfficerThousands of U.S. dollars

2021

Company

Capital orcontribution
to capital

Officer

Personequivalent
to Officer

Name

Mitsuaki
Taguchi

MasaruKawaguchi

Satoshi
OshitaAddress

—

—

—

—

Officer

SatokoKuwabara

—

—

—

—

Content of businessPresident andRepresentative Directorof the Company

Director of theCompany

Adviser of theCompany

Ratio of voting
rights ownership

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Relationshipwith related
partyTransaction
amountAccount items

Balance asof March 31,
2020—

Disposal of treasury
stock accompanying
contribution in kindof the monetarycompensation
claims (note 1)¥17 million

—

—

—

Disposal of treasury
stock accompanying
contribution in kindof the monetarycompensation
claims (note 1)¥14 million——

Disposal of treasury
stock accompanying
contribution in kindof the monetarycompensation
claims (note 1)¥15 million——

Payment of advisory
fees (note 2)¥18 million——¥12 million——¥21 million

—

—

—

Content—

Director of theCompany

Ownership
directly 0.0%—

Disposal of treasury
stock accompanying
contribution in kindof the monetarycompensation
claims (note 1)—

Director of theCompany
Attorney-at-law——

Payment of lawyers’
fees to Mori Hamada& Matsumoto law
firm (note 3)

Notes: 1.	These items are due to contribution in kind of monetary compensation claims accompanying the performance-based stock compensation plan. The disposal price of treasury stock is
determined based on the closing price of common stock of the Company on the First Section of the Tokyo Stock Exchange on June 21, 2019 (the business day immediately preceding
the date of the resolution at the Board of Directors Meeting).
2. Advisory fees are determined through negotiations between both parties.
3.	Lawyers’ fees are transactions with Mori Hamada & Matsumoto law firm, at which Satoko Kuwabara, a director of the Company, is a partner. Decisions about these fees are madebased on negotiations, with consideration for ordinary transaction terms, contract details, etc.

118

FINANCIAL SECTION

Officer

Kazumi
Kawashiro

Capital orcontribution
to capital119

25 Business Combinations

Fiscal year ended March 31, 2021
(1) Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type

Company

Address

Affiliatedcompany

Happinet
Corporation

Taito-ku,
Tokyo

Capital orcontribution
to capitalContent of business¥2,751 million($24,850
thousand)

Wholesaler of toys,
video games, andamusement products

Ratio of voting rights
ownership
Holding
directly 26.8%
indirectly 0.3%

Relationshipwith related
party
Sales agency

Content

Transaction
amountSales ofproducts, andothers¥55,619 million($502,391
thousand)Account items

Balance asof March 31,
2021

Accounts
receivable–
trade¥10,969 million($99,078
thousand)

Notes: 1. The above “Transaction amount” does not include consumption tax; the balance includes consumption tax.
2. Transaction terms and policy for determining transaction terms
		 For the transaction stated above, the products were sold on the same terms as general transactions with third parties in the ordinary course of business.

Officer

Officer

Officer

Officer

Officer

Officer

Officer

Officer(note 2)

Mitsuaki
Taguchi

MasaruKawaguchi

Shuji
Ohtsu

Yuji
Asako

Yasuo
Miyakawa

HitoshiHagiwara

Kazumi
Kawashiro

MakotoAsanuma

YusukeFukudaAddress

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Content of business

Chairman and
Representative Directorof the Company

President andRepresentative Directorof the Company

Director of theCompany

Director of theCompany

Director of theCompany

Director of theCompany

Director of theCompany

Director of theCompany

President andRepresentative Directorof a subsidiary of theCompanytransactions that led to the acquisition of control(1) Name and description of business of the acquired company
		

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Relationshipwith related
party

—

—

—

strategies in the Group’s Mid-term Plan. The purpose of theContent

Disposal oftreasury stock
accompanying¥19 million
contribution in kind($177 thousand)of the monetarycompensation
claims (note 1)
Disposal oftreasury stock
accompanying¥16 million
contribution in kind($144 thousand)of the monetarycompensation
claims (note 1)
Disposal oftreasury stock
accompanying¥10 million
contribution in kind($91 thousand)of the monetarycompensation
claims (note 1)

Account items

—

—

—

Amortized over 10 years by the straight-line method
7. Amounts and breakdown of assets acquired and liabilities assumed

Acquisition of shares in consideration for cashon the date of the business combination

No change.

(6) Ratio of voting rights acquired
business combination:

22.79%

		 2. Ratio of voting rights acquired additionally on the——

day of the business combination:acquired the shares in consideration for cash.

Disposal oftreasury stock
accompanying¥14 million
contribution in kind($128 thousand)of the monetarycompensation
claims (note 1)——

720 million

the consolidated statement of income for this fiscal year, assuming
the business combination had been completed at the start of thedated financial statements

Profit before income taxes¥810 million

From December 1, 2019, to March 31, 2020

Profit attributable toowners of parent¥197 million

Earnings per share¥0.90

ingly the business results from March 1, 2019 to November 30,

of consideration¥6,683 million

	Consideration for shares acquired on the

net sales and earnings information calculated as if the businesscombination had been completed at the start of the date of the fiscal
year, and the net sales and earnings information on the consolidated
statements of income. From the net sales and earnings information
calculated as if the business combination had been completed on thestarting date of the fiscal year, the share of (profit) loss of entities
accounted for using equity method related to the acquired company,

date of the business combination: Cash
¥26,918 million

Acquisition cost¥33,602 million

4. Details and amounts of major acquisition-related expenses
Advisory expenses, etc.: ¥172 million(Calculation Method for Estimated Amounts)
The estimated amounts of the impact are the difference between the

3.	Breakdown of the acquisition cost of the acquired company by type



—

¥

¥ 4,354 million¥11,216million

immediately before business combination:

Disposal oftreasury stock
accompanying¥10 million
contribution in kind($91 thousand)of the monetarycompensation
claims (note 1)

Long-term liabilities
Total liabilities¥883 million

Market value at time of business combination of shares owned—¥28,151 million¥ 3,634 million

Operating profit

2. Period of business results of acquired company included in consoli-using equity method.

—

Total assets
Current liabilities

fiscal year

2019, are recorded as share of (profit) loss of entities accounted for—¥ 4,465 million

Net sales	The acquired company was an equity-method affiliate, and accord-—¥23,685 million

Fixed assets

8. Estimated amounts and calculation method regarding the impact on		The Company was identified as the acquiring company since it—

Current assets

59.26%

		 3. Ratio of voting rights after acquisition: 82.05%(7) Main reasons for identification of the acquiring company—

3. Amortization method and period

December 2, 2019		 1. Ratio of voting rights owned immediately before

—

—

		

		

—

—

expected to result from future business development.

(5) Name of company after combination

Disposal oftreasury stock
accompanying¥17 million
contribution in kind($161 thousand)of the monetarycompensation
claims (note 1)—

The goodwill arose primarily due to excess earning power

axis strategy,” etc., in a more certain and rapid manner through(4) Legal form of business combination—

Disposal oftreasury stock
accompanying¥13 million
contribution in kind($123 thousand)of the monetarycompensation
claims (note 1)—¥14,355 million
2. Cause of goodwill

business combination is to advance “Accelerate evolution in IP
the further strengthening of collaboration with SOTSU CO., LTD.

		—

Disposal oftreasury stock
accompanying¥10 million
contribution in kind($91 thousand)of the monetarycompensation
claims (note 1)

Balance asof March 31,
2021(3) Date of business combination

Disposal oftreasury stock
accompanying¥10 million
contribution in kind($91 thousand)of the monetarycompensation
claims (note 1)—

1. Goodwill amounts arising		“Accelerate evolution in IP axis strategy” is one of the main

Transaction
amount

6.	Amount, cause, amortization method, and amortization period of
goodwill arising on the acquisition(2) Main reasons for business combination

Ratio of voting
rights ownership

Gain on step acquisitions: ¥1,722 million

Name of the acquired company: SOTSU CO., LTD.

FINANCIAL SECTION

OfficerName

and the total amount of the acquisition costs of the individual

1. Overview of business combination

sports businessDirectors, Audit & Supervisory Board Members, major shareholders (limited to individuals), etc.

Type

5.	Difference between the acquisition cost of the acquired company

Business Combination through Acquisition		Description of business: Media business, rights business, and(2) Transactions between the Company and related parties
Capital orcontribution
to capital

Fiscal year ended March 31, 2020

which the Company recorded for the current consolidated fiscal year,
is subtracted. In regard to amortization of goodwill, the goodwill
recognized on the date of the business combination is calculated ashaving arisen at the start of the date of the fiscal year. This note 8 has
not been audited by the independent auditor.

—

Notes: 1.	These items are due to contribution in kind of monetary compensation claims accompanying the performance-based stock compensation plan. The disposal price of treasury stock is
determined based on the closing price of common stock of the Company on the First Section of the Tokyo Stock Exchange on June 19, 2020 (the business day immediately preceding
the date of the resolution at the Board of Directors Meeting).
2.	Mr. Yusuke Fukuda retired from office as President and Representative Director of a subsidiary of the Company on March 31, 2021, and the above-stated transactions are those during
his term of office.

120

121

Fiscal year ended March 31, 2021

4.	Amount, cause, amortization method, and amortization period of

Additional Acquisition of Stock of a Subsidiary

goodwill arising on the acquisition

The Company acquired court permission and implemented an acqui-(1) Goodwill amounts arisingsition of fractional shares pursuant to the provisions of Article 234,
mutandis pursuant to Article 235, Paragraph 2 of the same act withthat SOTSU CO., LTD. carried out with an effective date of March 1, 2020.

		 Total

As a result, SOTSU CO., LTD. became a wholly owned subsidiary of theCompany.

the combination

¥518 million ($4,680 thousand)Acquisition cost¥840 million ($7,594 thousand)(2) Cause of goodwill(3) Amortization method and period

Advisory expenses, etc.: ¥87 million ($793 thousand)¥1,038 million ($ 9,382 thousand)Total assets¥2,752 million ($24,863 thousand)Current liabilities¥ 738 million ($ 6,669 thousand)Long-term liabilities¥1,173 million ($10,600 thousand)Total liabilities¥1,911 million ($17,269 thousand)combination agreement and future accounting process(1)	Details of contingent consideration

5.	Amount, cause, amortization method, and amortization period of		The contract calls for additional payment of contingent consider-

goodwill arising on the acquisition

ation based on the acquired company’s level of achievement of
results, etc., in a specified period (up to FY2026.3).

1. Overview of business combination(2)	Future accounting process(1)	Name and description of business of the company involved in		The variable portion of the above-mentioned contingent

the combination(3) Legal form of business combination¥1,713 million ($15,481 thousand)Fixed assets

7.	Details of the contingent consideration specified in the businessBusiness combination through acquisition

May 15, 2020

Current assets

4. Details and amounts of major acquisition-related expenses

There was no goodwill or negative goodwill arising.

(2) Date of business combinationconsideration is recognized in accordance with IFRS.

		Name of the acquired company: Reflector Entertainment Ltd.

Acquisition of shares in consideration for cash		Description of business: Content planning and production, and(4) Company name after combination
			Contingent consideration for the acquisition¥18,032 million

Name: SOTSU CO., LTD.
sports business		

¥3,676 million ($33,206 thousand)		 Amortized over 10 years by the straight-line method		Description of business: Media business, rights business, and		

¥14,355 million¥322 million ($2,913 thousand)expected to result from future business development.

(1)	Name and description of business of the company involved in
		



		
The goodwill arose primarily due to excess earning power

1. Overview of business combinationon the date of the business combination

	Consideration for the acquisition: Cash		At the time of additional acquisition

respect to fractional shares that arose from the share consolidation

6. Amounts and breakdown of assets acquired and liabilities assumedof consideration

		At the time of controlling interest acquisition

Paragraph 2 of the Companies Act of Japan as applied mutatis

3.	Breakdown of the acquisition cost of the acquired company by type

8.	Estimated amounts and calculation method regarding the impact on

development of home video games, etc.

the consolidated statement of income for this fiscal year, assuming

No change

the business combination had been completed at the start of the(5) Ratio of voting rights acquired(2) Main reasons for business combination

		 1. Ratio of voting rights owned immediately before
business combination:

82.05%

	  The information has been omitted because the amounts are

April 2018, the Group is strengthening the IP axis strategy in the		 2. Ratio of voting rights acquired additionally on the
day of the business combination:

fiscal year.

		In accordance with our three-year Mid-term Plan started in

17.95%

accelerate evolution without being bound by previous business		 3. Ratio of voting rights after acquisition: 100.00%

models and established ideas, and aiming for the next stage as
an entertainment company.

2.	Overview of accounting process		  Currently, the Network Entertainment Business, in order to	The additional acquisition is treated as part of a single transaction

increase the presence of the home video game business andtogether with the acquisition of shares by public tender conducted

network content business in the global market, is working toon December 2, 2019, in accordance with the “Accounting Standard

improve the quality of its titles, enhance the developmentfor Business Combinations” (ASBJ Statement No. 21, January 16,

system and strengthen its marketing.
		  Reflector Entertainment Ltd. (“Reflector”) possesses highCombinations and Accounting Standard for Business Divestitures”

technical development capabilities in the development of home

(ASBJ Guidance No. 10, January 16, 2019), and the goodwill related

video game titles, and is currently developing the new title

to equity interests that were additionally acquired after controlling“Unknown 9: Awakening” in partnership with BANDAI NAMCO

interest acquisition is calculated on the assumption that the goodwill

Entertainment Europe S.A.S. (“BNEE”). Through this share

was recognized at the time of controlling interest acquisition.

acquisition where Reflector, an important business partner,

26 Significant Subsequent Events(Change to Reportable Segments).
The Group reorganized the structure based on Units comprising operating companies in April 2021 from its previous five Unit structure to a three
Unit structure ahead of the start of the next Mid-term Plan from April 2022.
In conjunction with this organizational restructure, effective from the following fiscal year, the reportable segments will be changed from theToys and Hobby Business, Network Entertainment Business, Real Entertainment Business, Visual and Music Production Business, and IP Creation
Business to the Digital Business, Toys and Hobby Business, Visual and Music Business, Creation Business, and Amusement Business.
Information regarding the amounts of net sales, profit/loss, assets and others by reportable segment for the fiscal year ended
March 31, 2021, assuming the classification of its reportable segments after the organizational change is as follows:
Millions of yen

2021
Reportable Segment

became a subsidiary of BNEE, the Company aims to build a
3.	Breakdown of the acquisition cost of the acquired company by typeportfolio of home video games for the Americas and Europeof consideration

with a proper balance of Japan-developed and locally developed

At the time of controlling interest acquisition

titles by strengthening the development system necessary toMarket value at time of business combination of shares owned
immediately before business combination:

create and expand locally developed home video game titles.
(3) Date of business combination¥6,683 million

	Consideration for shares acquired on the		October 22, 2020

(4) Legal form of business combination

date of the business combination: Cash		¥26,918 million

Acquisition cost¥33,602 million

Acquisition of shares(5) Company name after combination		

Reflector Entertainment Ltd.

(6) Ratio of voting rights acquired
At the time of additional acquisition
	Consideration for shares acquired on thedate of the business combination: Cash


¥8,154 million ($73,658 thousand)Acquisition cost¥8,154 million ($73,658 thousand)		 100%(7) Identification of the acquiring company
		BNEE was identified as the acquirer since it acquired the sharesin exchange for cash.
2.	Period of business results of acquired company included inconsolidated financial statements

FINANCIAL SECTION

2019) and the “Guidance on Accounting Standard for Businessinsignificant.

global market, continuing to empower, gain momentum, andDigitalBusiness

Toys and
Hobby
Business

Visual andMusic
Business¥334,303¥292,099¥29,535

Creation Amusement
Business
Business

Subtotal

Other(note 1)

Total

¥16,416¥735,059¥ 5,844¥740,903

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers
Total¥62,703¥—¥740,903

3,660

8,715

4,684

11,796

1,219

30,076

18,81048,887(48,887)—¥337,964¥300,815¥34,219¥28,213¥63,923¥765,136¥24,655¥789,791¥(48,887)¥740,903

Segment profit (loss)

56,77639,086

1,549

2,740

(8,379)91,772602

92,374(7,720)84,654

Segment assets

208,475

144,095

28,462

45,63356,631

483,298

26,438509,736

223,045732,782

Others:Depreciation andamortization

2,331¥ 11,972

657¥ 6,816¥ 22,385

458¥ 22,844¥ 1,840¥ 24,684

	Amortization of goodwill

—

333

15

1,951

8

2,309

—

2,309

—

2,309

	Loss on impairment of
fixed assets

821

9

0

—

10,496

11,328—

11,328(43)

11,284

	Investments in associates
accounted for using
equity method

—

915

—

—

—

915

10,285

11,200—

11,2005,243

16,329

578

1,413

6,374

29,940785

30,725782

31,507	Increase in property,
plant and equipment
and intangible assets

¥

¥

607

¥

¥

From October 23, 2020, to March 31, 2021

122

123

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s ReportThousands of U.S. dollars

2021
Reportable Segment
DigitalBusiness

Toys and
Hobby
Business

Visual andMusic
Business

Creation Amusement
Business
Business$3,019,636$2,638,424$266,785$148,285

33,06378,72442,309$3,052,699$2,717,149

512,839
1,883,074

Subtotal

Other(note 1)

Total

Adjustments Consolidated(note 2) total (note 3)$566,373$6,639,505$ 52,789$6,692,295 $

106,552

11,019271,669

169,911441,581$309,094$254,838$577,393$6,911,175$222,700

353,051

13,99224,751(75,690)828,9445,440834,385(69,732)

764,653

1,301,558

257,094

412,187

511,5314,365,446

238,806

4,604,252

2,014,682

6,618,934

Net sales:
To external customers
Inter-segment sales
and transfers
Total
Segment profit (loss)
Segment assets—$6,692,295(441,581)—$7,133,876 $ (441,581) $6,692,295

Others:Depreciation andamortization$

21,061 $ 108,144

	Loss on impairment of
fixed assets

5,484

$

5,943

$ 61,567 $ 202,201$

4,145 $ 206,347$

16,620 $ 222,967

3,011

142

17,62579

20,858—20,858—20,858

7,423

86

5

—

94,807102,322—102,322(394)

101,928

—

8,272

—

—

—

8,272

92,901

101,173—

101,173

47,366

147,499

5,224

12,76957,575

270,436

7,092

277,5297,068

284,597

	Investments in associates
accounted for using
equity method	Increase in property,
plant and equipment
and intangible assets$—

	Amortization of goodwill

Notes: 1. The “Other” category is a business segment not included in reportable segments under which operations such as logistics services for each of the Group companies are classified.
2. The details of adjustment amounts are as follows:		(1)	The adjustment to segment profit (loss) of -¥7,720 million (-$69,732 thousand) includes elimination of inter-segment transactions of ¥250 million ($2,265 thousand) and corporate
expenses not allocated to reportable segments of -¥7,970 million (-$71,997 thousand). Principal corporate expenses are expenses related to administrative divisions not belonging toreportable segments.
		(2)	The adjustment to segment assets of ¥223,045 million ($2,014,682 thousand) includes elimination of inter-segment transactions of -¥41,803 million (-$377,593 thousand) and corporate
assets not allocated to reportable segments of ¥264,848 million ($2,392,275 thousand). Principal corporate assets are cash and deposits, investment securities, and assets related toadministrative divisions not belonging to reportable segments.
		(3)	The adjustment to depreciation and amortization expense of ¥1,840 million ($16,620 thousand) includes elimination of inter-segment transactions of -¥137 million (-$1,240 thousand) anddepreciation and amortization expense not allocated to reportable segments of ¥1,977 million ($17,861 thousand).
		(4)	The adjustment to loss on impairment of fixed assets of -¥43 million (-$394 thousand) is related to elimination of inter-segment transactions.
		(5)	The adjustment to increase in property, plant and equipment and intangible assets of ¥782 million ($7,068 thousand) is related to corporate assets not allocated to reportable segments.
3. Segment profit (loss) is reconciled to operating profit or loss in the consolidated statements of income.

To the Board of Directors of BANDAI NAMCO Holdings Inc.:
OpinionWe have audited the accompanying consolidated financial statements of BANDAI NAMCO Holdings Inc. (“the Company”) and its consolidated
subsidiaries (collectively referred to as “the Group”), which comprise the consolidated balance sheets as at March 31, 2021 and 2020, and theconsolidated statements of income and consolidated statements of comprehensive income, consolidated statements of changes in net assets andconsolidated statements of cash flows for the years then ended , and the notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial positionof the Group as at March 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of theGroup in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we havefulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole,and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Valuation of work in process for home video games in main domestic development bases
The key audit matter

How the matter was addressed in our audit

In the consolidated balance sheets of BANDAI NAMCO Holdings Inc.

The primary procedures we performed to assess the reasonablenessand its consolidated subsidiaries (collectively called the “Group”),

of the valuation of work in process for home video games in main

work in process of ¥73,816 million was reported as of March 31,

domestic development bases included the following:2021(See Note 7 for the amount of work in process). As described in(Disposal of Treasury Stock as Stock Compensation)(7)	Other

Note 2 (p) “Significant Accounting Estimates, 1. Valuation of work in(1) Internal control testingprocess for home video games in main domestic development bases”,

We tested the design and operating effectiveness of the Group’s

The taking effect of the securities registration statement filed in

the reported amount included ¥43,082 million of work in process forinternal controls relevant to the valuation of work in process for home

21, 2021, a disposal of treasury stock as stock compensation has

accordance with the Financial Instruments and Exchange Act ishome video games in main domestic development bases belonging tovideo games in main domestic development bases. In this assessment,

been implemented, as follows:a condition for this disposal of treasury stock.

the Network Entertainment Business segment, representing 5.9% of

we focused our testing on the following controls:

total assets in the consolidated financial statements.

• controls to assess the reasonableness of the sales forecasts of

1. Overview of disposal(1)	Date of disposal
July 9, 2021(2)	Class and number of shares to be disposed

Notes:
1. Company Directors (excluding those serving concurrently as President and Representative
Director of BANDAI CO., LTD., BANDAI NAMCO Entertainment Inc., BANDAI NAMCO
Amusement Inc., BANDAI NAMCO Arts Inc., and SUNRISE INC., and Outside Directors)
2. Directors (excluding Non-executive Directors) of BANDAI CO., LTD., BANDAI NAMCOEntertainment Inc., BANDAI NAMCO Amusement Inc., BANDAI NAMCO Arts Inc., SUNRISE
INC., and BANDAI SPIRITS CO., LTD.

¥7,808 per share(4) Total disposal value¥345 million(5) Method of offering or disposal
Stock compensation allotment method(6) People eligible for allotment, number of eligible people, numberof shares to be allottedbalance sheets is calculated by writing down the book value based on
declining profitability. In writing down the book value based on thegame titles subject to valuation; and• controls to check the production progress by game title and review
the production costs in a timely and appropriate manner.

declining profitability, the Group compares the book value of work inprocess with the net realizable value (projected sales volume x unit

44,200 shares of the Company’s common stock(3) Disposal value

The value of this work in process stated in the consolidated(2) Assessment of the reasonableness of the estimated
net realizable value

2. Objective and reasons for the disposal

sales price – estimated additional production costs – estimated direct	As performance-based remuneration related to this fiscal year,

selling expenses). If the book value of work in process exceeds the

In order to assess the reasonableness of key assumptions used in the

net realizable value, the excess is written down.

estimate of the net realizable value of work in process for home video

monetary compensation claims from the Company and subsidiaries
are granted to the directors of the Company and subsidiaries

In estimating the net realizable value, in particular, the projected(“eligible directors”). Eligible directors pay in the monetarysales volume is highly uncertain and highly dependent on manage-games, among others, we:• assessed the reasonableness of the benchmarks that were deter-

compensation claims as property contributed in kind to receive

ment’s judgment of main domestic development bases, since they aremined in terms of similarities of game titles, such as gamedelivery of the Company’s common stock.

significantly affected by the reaction of users and the market valua-concepts and awareness of IP (Intellectual Property: meaningtions after the release of home video games. In addition, if the releasecharacters and other intellectual property);		Directors of the Company (note 1)

date of home video games is postponed due to quality improvement• compared the expected sales volumes by area of the game titles

3 individuals 6,700 sharesmeasures as a result of the verification in the production processes,

subject to valuation with the sales results by area of the similar

the production costs will increase from the initial budget and thegame titles determined as benchmarks, and assessed the reason-		Directors of subsidiaries of the Company (note 2)
31 individuals 37,500 shares

FINANCIAL SECTION

Based on a resolution at a Board of Directors meeting held on June

production period will be prolonged. As a result, the estimatedadditional production costs are likely to be more uncertain.

ableness of the projected sales volume and• inspected the contracts and the quotations agreed with development

We, therefore, determined that our assessment of the valuation of work

contractors and assessed whether the additional production costs

in process for home video games in main domestic development basesstated in the contracts and the quotations were reflected in thewas one of the most significant in our audit of the consolidated financial

estimated net realizable value.

statements for this fiscal year, and accordingly, a key audit matter.

124

125

Reasonableness of the recognition and measurement of an impairment loss on property, plant and equipment
and intangible assets related to BANDAI NAMCO Amusement Inc.
The key audit matter

How the matter was addressed in our audit

Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.

As described in Note 8 “Loss on Impairment of Fixed Assets,” theThe primary procedures we performed to assess the reasonableness

impairment loss reported in the consolidated statements of incomeof management’s judgment as to the recognition and measurement

included an impairment loss of ¥10,214 million on property, plant andof an impairment loss on property, plant and equipment and intangible

equipment and intangible assets related to BANDAI NAMCO

assets related to the company included the following:

the design, implementation and maintenance of the Group’s financial reporting process.

result of the impairment loss, the balance of property, plant and(1) Internal control testing

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

equipment and intangible assets in the company was ¥1,889 million

We tested the design and operating effectiveness of the company’s

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material

at the end of the current fiscal year, as described in Note 2 (p)internal controls relevant to management’s judgment as to themisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of“Significant Accounting Estimates, 2. Valuation of property, plant andrecognition and measurement of an impairment loss on property,

assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detect aequipment and intangible assets related to the company.”plant and equipment and intangible assets related to the company.

material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

Whenever there is an impairment indicator for these property,

In the assessment, we focused our testing on the following controls:

they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

plant and equipment and intangible assets, they need to be tested for• controls to assess the reasonableness of the assumptions included

impairment by comparing the undiscounted future cash flows that arein the business plan for the improvement of net sales based on theprofessional skepticism throughout the audit. We also:

expected to be generated from the related asset groups with their bookoutlook for when COVID-19 infections will end, as well as the cost

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design andvalue. If the recognition of an impairment loss is deemed necessary,

reductions through the closure of facilities and the negotiation on

perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

the book value is reduced to the recoverable amount (the higher of

their rents, which were the basis for estimating future cash flows;

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,

either the net realizable value or the value in use), and the resulting• controls to assess the reasonableness of the discount rate used in

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’ performance of their duties with regard to

Amusement Inc. (“the company”) for the current fiscal year. As adecrease in the book value is recognized as an impairment loss.
The company conducted temporary closures and shorter operating
hours of its domestic amusement facilities due to the spread of thethe calculation of the value in use; and• controls to assess the reasonableness of the estimated net
realizable value.

novel coronavirus disease (“COVID-19”), which had a significant
impact on both the operations of facilities and the sales of amusement
machines. Accordingly, the company recorded an operating loss for

As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain

forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,while the objective of the audit is not to express an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures madeby management.

(2) Assessment of the reasonableness of the estimatedrecoverable amount• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going

the second consecutive fiscal year and determined that there was

In order to assess the reasonableness of key assumptions adopted inconcern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures

an impairment indicator for the property, plant and equipment andpreparing the business plan of the company, which was used as thein the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit

intangible assets. As a result of the impairment testing, the recogni-

basis for estimating future cash flows, among others, we:evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as ation of an impairment loss was deemed necessary, and the difference• inquired of management, the personnel responsible for the opera-

between the book value and the recoverable amount was recognized

tions of facilities and the sales of amusement machines as to theas an impairment loss.

improvement of the operations of facilities and the sales of amuse-going concern.
• Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with accounting standards generally
accepted in Japan, the overall presentation, structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

was based on the business plan prepared by the company, which

will end, as well as assessed the reasonableness of the assump-• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express

reflected the improvement of net sales related to the operations oftions concerning the expected improvement of net sales related toan opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit.

facilities and the sales of amusement machines based on the outlook

the operations of facilities and the sales of amusement machines

We remain solely responsible for our audit opinion.

for when COVID-19 infections will abate, as well as the cost reductions

described in the business plan based on the most recent results;

through the closure of facilities and the negotiations on their rents.

• inspected the minutes of negotiations with external parties, theWe communicate with corporate auditors and the board of corporate auditors regarding, among other matters, the planned scope and timingof the audit, significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

The forecasts of these effects relied on management’s judgment due

request for approval, and other relevant documents for the expected

to a high degree of uncertainty. In addition, the discount rate adopted

cost reductions through the closure of facilities and the negotiations

regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our

by management, for the purpose of calculating the value in use, had aon their rents, and assessed the consistency with the assumptions

independence, and where applicable, related safeguards.

significant effect on the value in use, and selecting which data to use

adopted;as various indicators adopted in the calculation of the discount rate

As to the various input data used to calculate the discount rate, by

significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe theseengaging a valuation specialist within our KPMG network firms, we

matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,inquired of the specialists used by management, conducted quantita-

we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably beon the policy for determining the selling price and the historical experi-

tive verification, compared them with available external data, andexpected to outweigh the public interest benefits of such communication.

ence of the price. This estimation involved management’s judgment.

comprehensively assessed the reasonableness of the input data.

involved management’s judgment.
Furthermore, management estimated the net realizable value based

We, therefore, determined that our assessment of management’s

FINANCIAL SECTION

ment machines based on the outlook for when COVID-19 infections

The estimated future cash flows used to calculate the value in use

We also provide corporate auditors and the board of corporate auditors with a statement that we have complied with relevant ethical requirements

From the matters communicated with corporate auditors and the board of corporate auditors, we determine those matters that were of most

We reviewed the policy for determining the net realizable value

judgment as to the recognition and measurement of an impairment

used by management and the historical experience of the price as theloss on property, plant and equipment and intangible assets relatedbasis of the estimate of the net realizable value and assessed theto the company was one of the most significant in our audit of thereasonableness of the estimated price.

consolidated financial statements for this fiscal year, and accordingly,
a key audit matter.

126

127

CORPORATE DATA
As of March 31, 2021

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2021 are presented solely
for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made on the basis described in Note 3 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Corporate Name:BANDAI NAMCO Holdings Inc.

Head Office:

BANDAI NAMCO Mirai Kenkyusho, 5-37-8, Shiba, Minato-ku, Tokyo 108-0014, Japan
URL: www.bandainamco.co.jp/

Capital:¥10 billion

Stock Exchange Listing:Tokyo Stock Exchange, First Section (Code number: 7832)

Main Business:

Planning and execution of medium- to long-term management strategies for the BANDAI
NAMCO Group; provision of support for business strategy implementation by Group companies;
and management of business activities

Stock Information:

Number of shares authorized:

1,000,000,000 shares

Number of shares issued:

Naoki Matsumoto
Designated Engagement Partner

Number of shareholders of share units:

Certified Public Accountant

Number of shares per trading unit:

Shareholders:

222,000,000 shares
28,243100 shares

Number of shares(Thousands)% of total

The Master Trust Bank of Japan, Ltd. (Trust account)

34,71015.78

Custody Bank of Japan, Ltd. (Trust account)

17,339

7.88

JP MORGAN CHASE BANK 380815(Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division)

10,780

4.90

XIL, LTD.

6,000

2.73

Kyoko Nakamura

5,703

2.59

The Nomura Trust and Banking Co., Ltd. (Retirement and severance
benefits trust; MUFJ Bank, Ltd., account)

4,586

2.08

Designated Engagement Partner

MAL Ltd.

4,400

2.00

Certified Public Accountant

Nintendo Co., Ltd.

3,845

1.75

KOREA SECURITIES DEPOSITORY-SAMSUNG(Standing Proxy: Citibank, N.A., Tokyo Branch)

3,348

1.52

3,242

1.47

Number of shares(Trading units)% of total——

Financial institutions

873,392

39.38

Brokerage

53,885

2.43

Other corporate entities

256,202

11.55

Foreign corporate entities and others

779,427

35.14

Individuals, etc.

255,152

11.50

Mayuka Katsuki
Designated Engagement Partner
Certified Public Accountant

Yasuko Kawamata

Name

STATE STREET BANK WEST CLIENT - TREATY 505234

KPMG AZSA LLC
Tokyo Office, Japan(Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division)

August 10, 2021

Note: The shareholding ratio is calculated after reduction of the number of treasury stocks.

Ownership Breakdown:

Status of Inclusion in Indexes:

Public entities• Nikkei Stock Average (Nikkei 225)
• TOPIX 100• JPX-Nikkei Index 400• MSCI Japan Empowering Women Index (WIN)©窪岡俊之 ©BANDAI NAMCO Entertainment Inc. ©アイドリッシュセブン ©BNOI/アイナナ製作委員会 ©円谷プロ©ウルトラマントリガー製作委員会・テレビ東京 ©創通・サンライズ ©2021 石森プロ・テレビ朝日・ADK EM・東映 ©2021 テレビ朝日・東映 AG・東映 ©やなせたかし／フレーベル館・TMS・NTV

PAC-MAN™&©BANDAI NAMCO Entertainment Inc. ©BANDAI ©ABC-A・東映アニメーション © バードスタジオ／集英社・東映アニメーション ©2021 プロジェクトラブライブ!スーパースター !! ©岸本斉史 スコット／集英社・テレビ東京・ぴえろ ©尾田栄一郎／集英社・フジテレビ・東映アニメーション©BIRD STUDIO/SHUEISHA, TOEI ANIMATION ©TEKKEN™7 & ©BANDAI NAMCO Entertainment Inc. 暗界神使 ®&BANDAI NAMCO Entertainment（SHANGHAI）CO., LTD.

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129

OVERVIEW OF MAIN GROUP COMPANIESAs of August 31, 2021

BANDAI NAMCO Holdings Inc.	Planning and execution of the BANDAI NAMCO Group’s medium- to long-term management strategies; provisionof support for business strategy implementation by Group companies; management of business activities(Tokyo Stock Exchange, First Section)
BANDAI NAMCO Holdings USA Inc.	Regional headquarters in the Americas, providing support for the implementation of strategies by operatingcompanies, etc.
BANDAI NAMCO Holdings UK LTD.	Regional headquarters in Europe, providing support for the implementation of strategies by operating companies in
EuropeBANDAI NAMCO Holdings ASIA CO., LTD.	Regional headquarters in Asia, providing support for the implementation of strategies by operating companies in
Asia (excluding China)
BANDAI NAMCO Holdings CHINA CO., LTD. 	Regional headquarters in China, providing support for the implementation of strategies by operating companies, etc.

IP Production Unit
<Visual and Music Business>
BANDAI NAMCO Arts Inc. 	Planning, production, and management of visual and music content, artist discovery and development,
production of live events, etc.
Actas Inc.

Planning and production of animation

BANDAI NAMCO Live Creative Inc.	Planning and production of live performances and events; ticket sales; planning, production, and sales of goods;
management of live viewings, etc.
BANDAI NAMCO Rights Marketing Inc. 	Development, operation, and sales of online video distribution platform services; development, operation, and salesof various communications services and related tools

BANDAI NAMCO Holdings France S.A.S.	Regional holding company in Europe, providing support for the implementation of strategies by operating companies
in Europe<Creation Business>
SUNRISE INC.

Planning and production of animation; management and administration of copyrights

Entertainment Unit
<Digital Business>

BANDAI NAMCO Pictures INC.

Planning and production of animation; management and administration of copyrights

SUNRISE BEYOND INC.

Planning and production of animation; management and administration of copyrights

BANDAI NAMCO Entertainment Inc.	Planning, distribution, and sales of entertainment content, such as network content and home video games

SUNRISE Music INC. 	Production of music related to animations and planning and use of music and masters, centered on SUNRISE andBANDAI NAMCO Pictures

BANDAI NAMCO Studios Inc.	Planning, development, and operation of home video games, network content, PC content, etc.
BANDAI NAMCO Online Inc.	Planning, development, and operation of Internet-based online games, other software, and services
D3PUBLISHER INC.	Planning, development, and sales of home video games; planning, development, and distribution of network content
B.B.STUDIO CO., LTD.	Planning and development of home video games, network content, and amusement machines
BANDAI NAMCO Network Services Inc. 	Content operation, distribution, localization, and technical support for network services
BANDAI NAMCO Sevens Incorporated	Development and sales of pachinko and pachislot machines; development, manufacturing, and sales of visual
substrates; planning and operation of other new businesses
BANDAI NAMCO Research Inc.	Development of technologies, demonstration and verification in new business fields for use in Groupwide services
for the BANDAI NAMCO GroupSOTSU CO., LTD.	Planning, production, and copyright business for TV animation programs; production and agency operations in
sports entertainment
Evolving GUNDAM Inc.	Operation of entertainment areas; management of restaurants; sales of toys, models, daily use sundries, and otherproducts; etc.
SUNRISE (SHANGHAI) CO., LTD. 	Visual product copyright management and use for animation products, etc.; business operations making
comprehensive use of characters

Amusement Unit
BANDAI NAMCO Amusement Inc.

Planning, development, operation, and sales of facilities, machines, and services related to real entertainment

BANDAI NAMCO Nexus Inc.	Development, operation, and analysis of online games, online distribution platforms, and services for IP fans, etc.

PLEASURECAST CO., LTD.

Planning and operation of entertainment facilities

BANDAI NAMCO Entertainment America Inc.	Planning, development, and sales of home video games; planning, development, and distribution of network content

HANAYASHIKI CO., LTD.	Planning, operation, etc., of ASAKUSA HANAYASHIKI amusement park, ASAKUSA KAGEKIJO multipurpose hall,restaurants, etc.

BANDAI NAMCO Entertainment Europe S.A.S.	Planning, development, and sales of home video games; planning, development, and distribution of network content;
holding company; shared services company
Reflector Entertainment Ltd.

Planning and production of entertainment content, such as network content, home video games, etc.

BANDAI NAMCO Mobile S.L.	Development and marketing of network content
D3Publisher of America, Inc.	Planning, development, and distribution of network content
BANDAI NAMCO Studios Singapore Pte. Ltd. 	Planning and development of home video games, amusement machines, etc.
BANDAI NAMCO Entertainment (SHANGHAI) CO., LTD.	Planning, operation, and production of network content<Toys and Hobby Business>
BANDAI CO., LTD.	Planning, development, manufacturing, and marketing of toys, capsule toys, cards, candy toys, confectionery,
and foods, apparel, sundries, and other products
BANDAI SPIRITS CO., LTD. 	Planning, development, manufacturing, and sales of toys and plastic models for the mature fan base as well as
prizes, sundries, etc.
MegaHouse Corporation	Planning, development, production, and sales of toys, candy toys, figures, etc.
CCP Co., Ltd.	Planning, development, production, and sales of consumer electronics and sundries
SUN-STAR STATIONERY CO., LTD.	Planning, development, production, and sales of character stationery, fancy stationery, schoolchildren’s stationery,creative stationery, premium stationery, and other sundries
HEART CORPORATION	Planning, production, processing, and wholesale sales of seasonal special event candy and candy toys
PLEX CO., LTD.	Planning, design, development, and sales of character-based products
SEEDS CO., LTD.	Planning, development, and manufacturing of toys, plastic models, medical equipment (ISO 13485 certified),pachinko and pachislot machines, electronic-related equipment, etc.; contract operations for various types ofinspecting and testing (ISO 17025-accredited testing organization)BANPRESTO SALES CO., LTD.	Sales of prizes, etc., for amusement facilities
ARTPRESTO CO., LTD.	Planning, design, and printing (packages, catalogs, posters, cards); website production, event planning, andadministration
People Co., Ltd.*	Planning, development, and sales through outsourced contract production for toys, playground equipment, bicycles,
and furniture
TSUBURAYA PRODUCTION CO., LTD.*	Planning, production, and distribution of visual products, etc.

BANDAI NAMCO Technica Inc. 	After-sales service operations related to amusement machines; stocking and sales of pre-owned amusement
machines and products from other companies; development of original products
BANDAI NAMCO Amusement Lab Inc.	Operations related to the research, planning, and development of content for entertainment facilities and areas
related to amusement machines
BANDAI NAMCO Amusement America Inc.

Sales of amusement machines

NAMCO UK LTD.

Planning and operation of entertainment facilities

BANDAI NAMCO Amusement Europe Ltd.

Sales of amusement machines

NAMCO ENTERPRISES ASIA LTD.

Planning and operation of entertainment facilities

BANDAI NAMCO Amusement (SHANGHAI) CO., LTD.

Planning and operation of entertainment facilities

Affiliated Business Companies
BANDAI LOGIPAL INC.	International distribution, customs brokerage, amusement-related business, product inspection, product­manufacturing support, etc.
LOGIPAL EXPRESS INC.	Truck freight, industrial waste collection and transportation, logistics management, warehouse operations, vehicle
maintenance, etc.
BANDAI NAMCO Business Arc Inc.	Work related to the BANDAI NAMCO Group’s general affairs, personnel, finance and accounting,and information systems
J·Broad Co., LTD. 	Consulting related to new graduate and mid-career hiring plans; planning, production, and publication of employment public relations media; acquisition, analysis, and provision of employment-related information; sales of
employment aptitude tests for companies; planning related to public relations and education for colleges, juniorcolleges, etc.; implementation of practice employment tests for students; employment personnel referral business(Permit No.: 13-ユ-010991)
HAPPINET CORPORATION*	Distribution of toys, visual and music products, video games, and amusement products (Tokyo Stock Exchange,
First Section)
Drecom Co., Ltd.*

Game business; advertising and media business

Italian Tomato Ltd.*	Management of restaurants; franchise operations; production, sales, and provision of production guidancefor pastries* Companies accounted for by the equity method

BANDAI AMERICA INCORPORATED	Sales of toy-related products in the Americas
BANDAI NAMCO Collectibles LLC	Sales, promotions, event sales, e-commerce, etc., for collectible figures and other products for the mature fan base
BANDAI S.A.S.	Sales of toy-related products in France
BANDAI UK LTD.	Sales of toy-related products in the U.K.
BANDAI ESPAÑA S.A.	Sales of toy-related products in Spain
BANDAI NAMCO ASIA CO., LTD.	Procurement, sales, importing, and exporting of toys, etc., in Asia (excluding Japan)
BANDAI NAMCO Toys & Hobby (SHANGHAI) CO., LTD.	Manufacturing and sales of toys, etc., for China
BANDAI (SHENZHEN) CO., LTD.	Production guidance and development support for cooperating plants; provision of services related to quality control,etc.; provision of quality testing, plant auditing, and other services; planning and sales of toy-related products in
China
BANDAI NAMCO KOREA CO., LTD.	Planning and sales of toy-related products in South Korea
BANDAI NAMCO (THAILAND) CO., LTD.	Production of Super Sentai series robot toys as well as molds
BANDAI NAMCO PHILIPPINES INC.	Manufacturing of toys (principally capsule toys, figures, and lower-priced toys)BANPRESTO (HK) LIMITED	Manufacturing and production management of prizes for amusement facilities and convenience stores
BANDAI CORPORACION MEXICO, S.A. de C.V.	Sales of toy-related products in Mexico

130131