BANDAI NAMCO GroupI N T E G R AT E D R E P O R T 2 0 1 8

The BANDAI NAMCO Group develops entertainment-related
products and services in a wide range of fields, including
toys, network content, home video games, amusement machines,
amusement facilities, and visual and music content.
Under the Mid-term Plan, which was launched in April 2018,
the Group aims to achieve “CHANGE” to progress to the next stage,
with a Mid-term Vision of CHANGE for the NEXT: Empower,
Gain Momentum, and Accelerate Evolution.

1

OUR MISSION STATEMENT

Dreams, Fun and Inspiration“Dreams, Fun and Inspiration”are the Engine of Happiness.
Through our entertainment products andservices, BANDAI NAMCO will continue to provide“Dreams, Fun and Inspiration” to people around the world, basedon our boundless creativity and enthusiasm.

OUR VISION

The Leading Innovator in
Global Entertainment
As an entertainment leader across the ages,
BANDAI NAMCO is constantly exploring new areas andheights in entertainment. We aim to be loved by people whohave fun and will earn their trust as“the Leading Innovator in Global Entertainment.”

2

CONTENTS

04

THE BANDAI NAMCO Group — 1 Year of Results (FY2018.3)

06

UNITS — 1 Year of Results (FY2018.3)

08

THE GROUP’S GREATEST STRENGTH — The IP Axis Strategy

10

MAJOR IP IN GROUP PRODUCTS AND SERVICES

12BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS

14

OVERVIEW OF THE MID-TERM PLAN

16

PRESIDENT’S MESSAGE

20MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIES

25

SPECIAL FEATURE: MAIN STRATEGIES IN THE MID-TERM PLAN

40

DISCUSSION AMONG OUTSIDE DIRECTORS44

CORPORATE GOVERNANCE

51

CSR INITIATIVES

55

FINANCIAL SECTION

95

CORPORATE DATA96

OVERVIEW OF MAIN GROUP COMPANIESAbout Integrated Report 2018
IR

CSR

In editing this report, we made reference to the International Integrated Reporting
Framework of the International Integrated Reporting Council (IIRC).
Forward-Looking Statements

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.

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

The forward-looking statements in this report are based on the information available tomanagement as of August 2018 and include various risks and uncertainties. Accordingly,
actual results may differ materially from these 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.
Notes:
1. All figures in this report are rounded to the nearest unit.
2. FY2018.3 and the year under review represent the one-year period ended March 31, 2018.
3. Figures in this report are as of August 2018.

3

FY2018.3

THE BANDAI NAMCO Group —1 Year of Results

BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31

Net Sales

Operating Profit¥¥

678.3 billion
9.4%

YOY

507.7

565.5 575.5

Net Sales
16.0

75.0 billion
18.6%

YOY
678.3
620.1

75.0
63.2

56.3

22.4

(¥ billion)

Overview of Results

20.6

Operating
Profit20.5

16.7(¥ billion)

49.6

44.7
10.0

8.8

10.2

8.6

11.1

Operating
ProfitMarginOverseas
Sales
Proportion

(%)

(%)
2014

2015

2016

2017

2014

2018

2015

Segment Sales Ratio
IP Creation

2017

2018

Segment Profit Ratio
Other

2.3%

2016

To strengthen the IP axis strategy, theCompany advanced initiatives in a numberof areas, such as creating and nurturing
new IP, extending target age ranges, andexpanding new businesses. Overseas, theGroup worked to expand its IP lineups,
business fields, and areas.
Looking at business operations, in
network content, smartphone game apps,
etc., recorded favorable results in Japan andoverseas, and home video games registeredsolid results in overseas markets. In addition,
key IP products and services recorded
strong results in each business.
As a result, in FY2018.3 the BANDAI
NAMCO Group achieved record-high sales
and operating profit on a consolidated basis.

IP Creation

3.8%

Other

6.5%

1.0%

Visual and Music
Production

Visual and Music
Production

5.6%

8.2%

Toys and Hobby

30.7%

Real
Entertainment

Toys and Hobby

18.0%

Real
Entertainment

12.5%

4.0%

Network
Entertainment

45.1%

Network
Entertainment

62.3%

Notes: Percentage figures are calculated based on sales before elimination of inter-segment transactions.
The Group’s organizational structure was changed from the fiscal year ending March 31, 2019,
and accordingly information is presented based on the reportable segment classification after the change.

Contributions to Net Sales byGeographic Region
Asia, excluding Japan
Europe6.7%

6.2%

Return on Assets(ROA)

Return on Equity
(ROE)

14.7%

14.7%

387.4

Americas

7.6%

303.5

Total Net
Assets79.5%
Note: Percentage figures are calculated based on
external sales. Figures are estimates basedon management accounting.

4

ROE

317.3
405.1

268.0
13.2

(¥ billion)

Japan

540.5

348.8

11.2

14.7

13.3

Total
Assets(¥ billion)
9.7

441.8 448.3
14.0

12.2

488.0

14.7

13.5
11.4

ROA

(%)

(%)

2014

2015

2016

2017

2018

2014

2015

2016

2017

2018

¥

Shareholders’ Equity Ratio–8.2 billion
30.6

26.9

Debt / Equity Ratio*

71.5%

0.00 times
394.1

51.1

(¥ billion)

THE BANDAI NAMCO Group — 1 Year of Results

Free Cash Flows*

357.6

34.6

304.1

274.3

325.1
70.6 71.3

71.5

68.6

Total
66.0
Shareholders’EquityInterestBearing Debt(¥ billion)(¥ billion)

–8.2
2014

2015

2016

2017

(%)

2014

2015

2016

2017

2018

Basic Earnings per Share

¥

¥

¥

41

123*3

(Yen)

30.7

Consolidated
Dividend
Payout Ratio
(%)

52

35

36.2 33.0

2014

2015

2016

40.8

¥

246.290.01 0.00
2016

2017

2018

0.00

49.9

102

Ratio of Female Managers to
All Managers*

201.03
171.10157.4316.9%

114.05

Number of Independent
Directors or Independent Audit &Supervisory Board Members
2017

2014

2018

2015

2016

2017

2018

*1 FY2015.3 includes a special dividend of ¥10.
*2 FY2017.3 includes a special dividend of ¥20.
*3 FY2018.3 includes a special dividend of ¥25.

6

* Figures are for three business segment corecompanies in FY2018.3.

Sales of IPs* (Group total)

Game Content R&D Investment andCapital Investment

97.9 billion¥

DRAGON BALL
series20182017¥61.1 billion

Mobile Suit Gundam
series2018¥

ONE PIECE

2015

Number of Female Managers*

45.26

YOY

82*2
62*1

0.01

ESG

246.29(Yen)

Cash Dividends
per Share

2014

1.5

0.9

* Debt / equity ratio = Interest-bearing debt /Total shareholders’ equity

Cash Dividends per Share

YOY

1.9

0.03

(Times)* Free cash flows = Net cash provided by operating activities+ Net cash used in investing activities

123

4.4

Debt /
Equity Ratio*

Shareholders’Equity Ratio

2018

9.2

71.0

68.3 billion¥74.3 billion

201729.4 billion

2018

¥

2017

¥30.4 billion

26.4 billion¥

KAMEN RIDER
series

2018

Power Rangers
series

2018

¥

2017

¥21.0 billion¥22.3 billion

2017

19.4 billion* IP: Characters and other intellectual property

51.8

Game
Content
R&D
Investment(¥ billion)

55.8 54.6

23.5

22.3

59.0

54.8

21.3 19.6

CapitalInvestment(¥ billion)

2014

2015

2016

2017

2018

5

FY2018.3

UNITS —

1 Year of Results

BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31
The Group’s organizational structure was changed from the fiscal year ending March 31, 2019,
and accordingly information is presented based on the reportable segment classification after the change.

GROUP ORGANIZATION

Toys and Hobby Unit
Network Entertainment Unit
Real Entertainment Unit
Visual and Music Production Unit
IP Creation Unit
Affiliated Business Companies

Toys and Hobby Unit

Net Sales

Core Company: BANDAI CO., LTD.
Planning, development, production, and sales of toys, capsuletoys, cards, confectionery and foods, apparel, sundries,
plastic models, prizes, stationery, and other products

Toys for boys

Toys for girls

Network Entertainment Unit
Core Company: BANDAI NAMCO Entertainment Inc.
Planning, developing, and distributing network content; planning,developing, and sales of home video games

222.4

¥

6

billion

14.5¥

Vending machine capsule toys, cards

Net Sales

326.5

¥

Home video games

Network content

Operating Profit

billionPlastic models

Operating Profit

billion50.2¥

billionUNITS — 1 Year of Results

Real Entertainment Unit

Net Sales

Core Company: BANDAI NAMCO Amusement Inc.
Real entertainment business, including planning, production,and sales of amusement machines; planning and operation ofamusement facilities, etc.

Amusement machines

billion

3.2¥

billionAmusement facilities

Visual and Music Production Unit
Core Company: BANDAI NAMCO Arts Inc.
Planning, production, and sales of visual and music content
and visual and music package software; and conducting live
entertainment operations

Visual packaged products

90.5

¥

Operating Profit

Net Sales

40.7¥

Operating Profit

billionMusic packaged products

IP Creation Unit
Planning and production of animations; management andadministration of copyrights and other rights; production ofmusic related to animations and planning and use of music andmasters related to animations

billionLive events

Net Sales

Core Company: SUNRISE INC.

6.6

¥

17.0

¥

Operating Profit

billion

5.3¥

billionAnimations

7

THE GROUP’S GREATEST STRENGTH —The IP Axis Strategy
The IP axis strategy is the greatest strength of the BANDAI NAMCO Group, which has a diverse
range of 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 Groupis aiming to achieve further growth in global markets.

Maximizing IP Value
The optimal

time

CONFECTIONERY
and FOODSTOYS

AMUSEMENTFACILITIESThe optimal

outletThe optimal

regionLIVE ENTERTAINMENTNETWORKCONTENTHOME VIDEO
GAMES

CARDS

VIDEO ON
DEMAND(VOD)
CONTENT

PLASTICMODELS

MOVIES

VISUALand MUSIC
PACKAGENEW
DEVICESAMUSEMENT
MACHINES

Introducing products and services thatleverage the worldviews of IPs

Accu
mula
know
ted
-how

I

Cultivation

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

8

ent

estm
v
n
i
P

Creation

Co-creation

FY2008.3 sales

50.9

¥

billion

FY2018.3 sales+34.2 %

68.3¥

billionTHE GROUP’S GREATEST STRENGTH — The IP Axis Strategy

EXAMPLE — MOBILE SUIT GUNDAM SERIESCARD GAMESLIVE EVENTSNETWORK CONTENTVIDEO ON DEMAND (VOD)
AMUSEMENT MACHINES
VISUAL PRODUCTS

FACILITIESPLASTIC MODELSHOME VIDEO GAMESIP creation

Mobile Suit Gundam Series
VISUAL PRODUCTS

9

MAJOR IP IN GROUP PRODUCTS
AND SERVICES
IP plays the central role in BANDAI NAMCO’s efforts to advance the IP axis strategy.
This section introduces examples of the major IP for which the Group is rolling out products and services.
Units Implementing IP Business Development Initiatives
Toys and Hobby

10

Network Entertainment

Real Entertainment

Visual and Music Production

IP Creation

THE IDOLM@ STER Series

GIRLS und PANZERFor this IP, we are rolling out
products and services on aGroupwide basis, such asmusic CDs, live music,
animations, comics, Web
radio, and a variety ofmerchandise, centered on idol
production game content for
smartphones and home
video games.

This is an original animationthat was first rolled out in2012. The BANDAI NAMCO
Group is widely involved in
IP development initiatives,
including visual production,
visual and music packaged
products, live events, andcommercialization ofrelated goods.

Ultraman Series

Mobile Suit Gundam Series

Ultraman has earned the
support of a wide range of age
groups, extending to two oreven three generations. The
BANDAI NAMCO Group
provides Ultraman products
and services, such as toys andvisual 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, and network
content. In addition to Japan,
Mobile Suit Gundam initiatives
are being rolled out around theworld, including appearancesin Hollywood films.

KAMEN RIDER Series

Super Sentai Series

The KAMEN RIDER series has
been popular among boys formore than 45 years and hasearned the support of a wide
range of age groups in Japanand overseas. The BANDAI
NAMCO Group provides a wide
range of KAMEN RIDER products and services, such as
toys and home video games.

Super Sentai has been popular among boys for morethan 40 years, and it has also
earned strong support in
Asia. The BANDAI NAMCO
Group provides a wide rangeof Super Sentai products andservices, such as toys andhome video games.

PAC-MAN

Anpanman has been popularamong parents and children
for many years. The BANDAI
NAMCO Group provides
Anpanman products andservices, centered on toys
for infants.

In 2005, PAC-MAN wasrecognized by Guinness
World Records as the mostsuccessful coin-operated
amusement machine. Today,
this BANDAI NAMCO Grouporiginal IP is still populararound the world.

Tamagotchi Series

PRETTY CURE! SeriesThis original IP has been
supported for more than
20 years since it was createdas a portable digital nursing
game. Through a variety of
products and services, thishas become an establishedIP that is popular with twogenerations, parents andtheir children.

The PRETTY CURE!
series has been popularamong girls for 15
years. The BANDAI
NAMCO Group provides
a wide range of
PRETTY CURE! products
and services, suchas toys and home
video games.

DRAGON BALL Series

Love Live! Series

DRAGON BALL comics andanimations have earned the
support of customers formany years in Japan andoverseas. The BANDAI
NAMCO Group provides awide range of DRAGON BALL
products and services, suchas home video games, network content, card products,
and figures.

This IP was created from a
project linking magazines,
visual products, and music.
In addition to magazine
pages and visual and music
packaged products, live
events are also highly popular.

BORUTO / NARUTOONE PIECE

Comics and animations havebeen popular for many years
in Japan and overseas. The
BANDAI NAMCO Group isproviding a wide range of
products and services,
centered on home video
games and network content.

ONE PIECE comics and animations have been popular
for many years in Japanand overseas. The BANDAI
NAMCO Group provides awide range of ONE PIECE
products and services, suchas home video games, network content, and figures.

MAJOR IP IN GROUP PRODUCTS AND SERVICES

Anpanman11

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS
As of June 18, 2018

Mitsuaki Taguchi
Satoshi Oshita

Kazumi Kawashiro

Hitoshi Hagiwara

Yasuo Miyakawa

Masaru Kawaguchi

12

AUDIT & SUPERVISORY
BOARD MEMBERS

BOARD OF DIRECTORS

Mitsuaki Taguchi
Director

Shuji Ohtsu

Director (Part-time)

Director (Part-time)

President and Representative Director of
BANDAI NAMCO Entertainment Inc.

President and Representative
Director of SUNRISE INC.

Director (Part-time)

Director (Outside)

Satoshi Oshita

Yasuo Miyakawa

Hitoshi Hagiwara

Director

Yuji Asako

President and Representative Director of
BANDAI NAMCO Amusement Inc.

Director (Part-time)

Director (Part-time)

President and Representative Director of
BANDAI CO., LTD.

President and Representative Director of
BANDAI NAMCO Arts Inc.

Masaru Kawaguchi

Kazumi Kawashiro

Yuzuru Matsuda

Audit & Supervisory Board
Member (Full-time)

Masataka Nagaike

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

Toru Shinoda

Director (Outside)

Audit & Supervisory Board
Member (Outside)

Satoko Kuwabara

Osamu Sudoh

Director (Outside)

Audit & Supervisory Board
Member (Outside)

Mikiharu Noma

Katsuhiko Kamijo

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS

President andRepresentative Director

Mikiharu Noma
Shuji Ohtsu

Satoko Kuwabara
Yuji Asako

Yuzuru Matsuda

13

OVERVIEW OF THE MID-TERM PLAN

Mid-term Plan of the BANDAI NAMCO Group (From April 2018 to March 2021)
The BANDAI NAMCO Group commenced a new three-year Mid-term Plan in April 2018. Under the new plan, the Group willleverage the worldview and unique characteristics of its IPs and provide the optimal products and services in the optimal
regions at the optimal times. In this way, we will maximize IP value by further evolving the IP axis strategy and achieving
penetration and expansion in global markets. In addition, we will drive the creation of new IP and regionallyoriented strategies by unifying the efforts in each region under the ALL BANDAI NAMCO concept. In this way, we will aim
to be a Group that is changing in all aspects in order to progress to the next stage without being bound by previous
business models and established ideas.

MID-TERM VISION

The BANDAI NAMCO Group aims to achieve “CHANGE” to progress to thenext stage by continuing to empower, gain momentum, and accelerate evolution
without being bound by previous business models and established ideas. The“CHANGE” concept encompasses change to an IP-creating company, change toa new business model, change to a unifying ALL BANDAI NAMCO concept, andchange to a corporate group centered on people.

14

MAIN STRATEGIES
Under the Mid-term Plan, we are promoting four main strategies.

ACCELERATE EVOLUTION IN IP AXIS STRATEGY
To further solidify the IP axis strategy, the Group’s greatest strength, we will drive the creation of
new IP while fostering continued innovation with long-established IP.

Boost capability to create IP(structural changes)

BUSINESSSTRATEGY

To empower a push into new entertainment, we will upgrade and enhance our business infrastructure, expand and strengthen our business fields, and promote incubation.

Expand and strengthenbusiness fields

Promote incubation

GAIN MOMENTUM WITH ALL BANDAI NAMCO
The regional holding companies and the business companies in each Unit will form a unifying ALL
BANDAI NAMCO concept to advance the Group’s strategies autonomously on a regional basis
through their deep knowledge of the customer base in each region.
Make full-blown entry into Chinese market

PERSONNEL
STRATEGY

Invest aggressively in IP creation

EMPOWER PUSH INTO NEW ENTERTAINMENT

Establish and enhancebusiness infrastructure

REGIONSTRATEGYOVERVIEW OF THE MID-TERM PLAN

IP AXISSTRATEGY

Establish system for ALL BANDAI NAMCO

MAKE PERSONNEL THE CORE OF THE GROUP
We have been working for some time on such initiatives as training the necessary global personnel,
actively enabling personnel exchange, and establishing systems for promoting active participationof a diverse workforce. In addition, we will advance a proposal system for employees to take up newchallenges, as well as systems for supporting their endeavors.
Establish environment to optimize employees’ performance by tapping
their individual strengths, and to empower new ventures

NUMERICAL TARGETS

Net sales:¥750 billion

Operating profit margin:

10% or more

Operating profit:
Numerical targets
for the fiscal year
ending March 31,
2021

ROE:

¥75 billion

10% or more

15

PRESIDENT’S MESSAGE

By continuing to “Empower,
Gain Momentum, and
Accelerate Evolution” as wetarget the future that lies
beyond change, we will
provide value that is only
available from BANDAI NAMCO.
Mitsuaki Taguchi
President and Representative Director
BANDAI NAMCO Holdings Inc.

AIMING TO BE A GROUP THATCONTINUES TO EVOLVE
Under a system of two representative directors, theBANDAI NAMCO Group implemented a three-year Midterm Plan starting in April 2015, and we basically achieved
our initial targets. In April 2018, we launched the current
Mid-term Plan, aiming to accelerate evolution in the IP axis
strategy and to achieve dramatic growth in global markets.
At that time, the Group implemented an organizational
restructuring to facilitate the execution of the main strategies more rapidly. We also changed to a system of one
representative director. Under this system, as president
and representative director I have overalll responsibility for
the Group.
The pace of change in the operating environment isaccelerating, and new opportunities for growth are increasing. On the other hand, we have reached a stage where
simply following the previous business models and concepts
will not be enough. It is increasingly important that we not
be satisfied with the status quo and strive to foster continued
change. In order to make progress toward becoming theleading entertainment company that we want to be in 10
years, and to demonstrate our global presence, the entire
Group will work together to advance the current Mid-term
Plan, for which the key word is “CHANGE.”

16CURRENT MID-TERM PLAN
(APRIL 2018 TO MARCH 2021)

Record-High Net Sales and Operating Income.
Basically Achieved Initial Strategic andNumerical Targets

Taking On the Challenge of Advancing the IP Axis
Strategy and Achieving Sustained Growth

In FY2018.3, the final year of the previous Mid-term Plan,
all employees continued to do their utmost right up to
the end of the fiscal year, and as a result we were able toachieve record-high results. In the home video game andnetwork content businesses, which have high profit margins, we generated growth, centered on overseas markets.
Moreover, in each business the key IP products and services recorded favorable results. With net sales of ¥678.3
billion and operating profit of ¥75.0 billion, we achieved
record-high results and substantially surpassed thenumerical targets that were established when the initial
Mid-term Plan was formulated.
Under the previous Mid-term Plan, innovation had
beneficial effects for established IP products and services,such as the Mobile Suit Gundam and the DRAGON BALL
series. In addition, we took steps to nurture and strenghen
new IP and develop them into established IP, such as theLove Live! series, GIRLS und PANZER, and IDOLiSH7.
Furthermore, we made steady progress with initiatives forthe mature fan base in Japan and overseas, and we also
substantially expanded IP outlets, including live events inJapan as well as video games and network content overseas. On the other hand, we could have done more in thecreation of new IP. There are also some businesses andareas that still face challenges. Under the current Mid-term
Plan, we will work to further enhance our results anddirectly tackle the challenges that we face.

Results Under the Previous Mid-term Plan
Net Sales

530.0

Operating Profit

575.5
560.0

63.2

678.3

620.1

600.0

75.0

60.0

49.6 50.0
45.0

Results(¥ billion)
Initial targets
when the plan
was formulated(¥ billion)

2016

2017

2018

2016

2017

2018

For the Fiscal Years Ended March 31

Under the current Mid-term Plan, our Mid-term Vision is
CHANGE for the NEXT: Empower, Gain Momentum, and
Accelerate Evolution. From a range of perspectives, we will
move forward with the plan’s main strategies, which are“Accelerate evolution in IP axis strategy,” “Empower push
into new entertainment, “Gain momentum with ALL BANDAI
NAMCO,” and "Make personnel the core of the Group.”
Looking at numerical targets, average levels of net sales
and operating profit increased substantially. In this way, we
have strengthened our business foundation. Under the newplan, in an operating environment marked by dramaticchange, we aim to further strengthen our foundation sothat we can make steady progress, without regard towhether or not we have hit products. On that basis, we will
strive to achieve sustained growth. In FY2021.3, the final yearof the new plan, we are aiming for record-high results, with
net sales of ¥750.0 billion, operating profit of ¥75.0 billion,
operating profit margin of 10% or more, and ROE of 10% ormore. For fiscal 2019.3, the first year of the plan, we areforecasting net sales of ¥650.0 billion and operating incomeof ¥60.0 billion.

PRESIDENT’S MESSAGE

EVALUATION OF FY2018.3 AND THE
PREVIOUS MID-TERM PLAN

Accelerating Reform Under the Five-Unit System
We have changed our organization from the previous systemof three strategic business units (SBUs) to a system of five
Units, including the newly formed Real Entertainment Unit
and IP Creation Unit. The presidents of the Unit core companies also serve concurrently as Directors of BANDAI NAMCO
Holdings Inc., and we are rapidly advancing our strategies
from the viewpoint of overall optimization.
To accelerate evolution in IP axis strategy, which is ourhighest priority, each Unit will work to create IP originatingfrom each business. We will also take steps to create IP
through collaboration with a wide range of external partners,
without limiting ourselves to internal Group resources. The
newly established IP Creation Unit will also advance thecreation of IP in close coordination with each Unit’s products
and services. In addition, the holding company’s IP Strategy
Division will implement Groupwide initiatives with a focus on
the medium to long term. To advance these measures, overthree years, on top of normal investments we will implement¥25.0 billion in strategic investments on a Groupwide basis,
and we will work from a variety of perspectives as weleverage our approaches and take on challenges in orderto create and nurture new IP.

17

PRESIDENT’S MESSAGE

Correlation Diagram for Each Strategy
Business and regional coordination

IP axis strategy
Business strategy
Empower push into newentertainment

Businesscoordination

Establish and enhance business infrastructure
Expand and strengthen business fields
Promote incubation

Personnel strategy

Accelerate evolution
in IP axis strategy
Boost capability to create IP(structural changes)

IP creation
andco-creation

Invest aggressively in IP creation

Region strategy
Gain momentum with
ALL BANDAI NAMCO
Make full-blown entry into
Chinese market

IP creation
andco-creation

Establish system for
ALL BANDAI NAMCO

Make personnel the core of the Group

Under our business strategy, will aggressively target
promising fields, such as the mature fan base and live
event markets in Japan and overseas. Moreover, we willtake steps to nurture new businesses, such as launching
new platforms.
Under our region strategy, in the domestic market wewill continue to focus on the number one position, and inoverseas markets our regional operations, which have thebest understanding of the characteristics of each market,
will take the lead in advancing our strategies. Moreover,each Unit will strive to foster energetic collaboration, forma unifying ALL BANDAI NAMCO concept, demonstratecomprehensive strengths, and develop an ongoing series
of initiatives. In addition, we will expand IP lineups andbusiness fields. In particular, we will continue working to
expand the scale of our business in China, which has
high growth potential, and will commence full-blown
business initiatives.
In regard to the personnel strategy, we will step up job
rotation measures that extend across regional and business boundaries, and will strive to nurture personnel witha wide range of experience and perspectives.
In addition, we will take steps to further enhance thesystems and frameworks that support employees as theytake on challenges.

CORPORATE GOVERNANCE
Securing Objectivity in Group Management
through External Viewpoints and the PDCA Cycle
Targeting sustained efforts to maximize corporate value,
we have formulated the Basic Philosophy on Corporate
Governance. Furthermore, we rigorously observe Japan’s
Corporate Governance Code and disclose the status ofinitiatives related to each principle.

18

Regional
coordination

Three of 11 directors and 3 of 4 Audit & Supervisory
Board Members are outside officers (Independent Directors
and Audit & Supervisory Board Members), and these six
officers make up the Independent Directors and Audit &Supervisory Board Members Committee. In this way, we
have further enhanced the management supervision function. In addition, the Independent Directors and Audit &Supervisory Board Members Committee is implementing
annual evaluations of the effectiveness of the Board of
Directors, and we are responding rapidly to the opinions of
the Committee. In these ways, we are utilizing the plan–do–
check–act (PDCA) cycle. We consider these external viewpoints to be an extremely valuable asset.

SHAREHOLDER RETURN
Changing the Basic Policy to Implement an
Enhanced Focus on Cost of Capital and ROE
In launching the current Mid-term Plan, with consideration
for the management environment, the main strategies for
growth, and other factors, we evaluated the basic policy on
returning profits to shareholders from various perspectives.
The Company strives to maintain a stable level of dividends
over the long term and to increase the focus on the cost ofcapital and ROE. On that basis, we transitioned to a basic
policy of providing a return to shareholders that targets a
total return ratio of 50% or more based on stable dividend
payments of 2% of DOE (dividends on equity). In addition,
we decided to apply this new policy in advance, startingwith the year-end dividend for FY2018.3.
As a result, for the FY2018.3 year-end dividend, on top of
the base dividend of ¥32 per share, we added a performancebased dividend of ¥66 per share and a special dividendof ¥25 per share due to the achievement of record-highresults, resulting in an annual dividend of ¥123 per sharefor the fiscal year.

Per Share Dividends and Dividend Payout Ratio
123

49.9

62
36.2
Per Share Dividends(Yen)
Consolidated Dividend
Payout Ratio
2015
(%)

52

40.8

33.0

2016

2017

2018

For the Fiscal Years Ended March 31
FY2015.3 includes a special dividend of ¥10,
FY2017.3 includes a special dividend of ¥20,
and FY2018.3 includes a special dividend of ¥25.

The dividends for FY2019.3 will be considered in accordance with the basic policy for shareholder returns.

IN CLOSING
Taking the IP Axis Strategy to the Second Stage
as “Open BANDAI NAMCO”
The Group’s operating environment is at a major turning
point. Due to the growth of the network environment, pointsof contact with consumers are shifting to digital and also
expanding. In addition, venues for communication among
consumers have become sources for the transmission of IP
and content. The Mid-term Vision of “CHANGE for the
NEXT: Empower, Gain Momentum, and Accelerate Evolution”
expresses our sense of crisis that the previous ways of
doing things will not, by themselves, enable us to adapt tothe times. It also communicates our strong commitment tocontinuing to change and stay one step ahead of the times.
Targeting growth over the medium-to-long-term, we will
aggressively step up collaboration and co-creation with awide range of external partners. In this way, we will work to
be the “Open BANDAI NAMCO.” By drawing on the extra
motivation provided by external partners and leveraging
synergies, we will work to expand new business fields andmaximize IP value.

PRESIDENT’S MESSAGE

82

scale of our business, we will also work to build foundations to foster communication among people around theworld through IP. In this way, we will implement businessinitiatives with a sense of pride and responsibility about ourwork. Moving forward, we must strive to further extend theappeal of IP to people around the world and to continuallycreate new IP. The IP axis strategy business model aims tomaximize the appeal and value of IP. Rebuilding this model
into a new style that is aligned with the times is a major
theme of the current Mid-term Plan. In our markets, thecompetitors, and the business models themselves, arechanging, and that change is moving at a pace exceeding
expectations. In this setting, we aim to move beyond thecurrent ways of doing things, to establish new valuecreation frameworks and to continue to meet the
expectations of customers.
I believe that the BANDAI NAMCO Group’s IP axis strategy has entered the second stage, which is full of possibilities. Targeting the realization of our vision of becoming “theLeading Innovator in Global Entertainment,” we will strive
to increase the number of BANDAI NAMCO fans and, throughour products and services, to provide the kind of value thatis only available from BANDAI NAMCO. I would like to ask
our shareholders, investors, and other stakeholders fortheir continued support of the BANDAI NAMCO Group as
we continue to take on challenges in the years ahead.

August 2018

Mitsuaki Taguchi
President and Representative Director
BANDAI NAMCO Holdings Inc.

BANDAI NAMCO’s Mission — Extending the
Appeal of IP to Fans Around the World
Since I became president, I have personally developed astrong understanding of how Japan’s high-quality, highly
diverse IP is once again the global standard. Looking at
markets around the world, there is a wide range of highquality IP. IP has the power to facilitate connections amongpeople around the world in a way that transcends languages and national boundaries. BANDAI NAMCO’s mission
is to deliver the appeal of IP to people around the world
through products and services. In addition to expanding the19

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIES

Toys and Hobby
MID-TERM VISION

Break Out of the Box. Wow the World!
MAIN STRATEGIESCreate, nurture, and obtain
new IPs
Positioning and business growth
Break into the Chinese market
Expand new business domains
Strengthen functions tomaximize business
FY2021.3 NUMERICAL TARGETS

Segment Sales
Segment Profit¥

275.0 billion¥20.0 billion

The Mid-term Vision of the Toys and Hobby Unit is to “Break Out of the Box.
Wow the World!” by breaking through existing concepts and creating newentertainment. To move up to the next stage, the current Mid-term Plan
calls for the Unit to implement an organizational restructuring in Japan andto change its approach to overseas markets.
In Japan, we will implement initiatives in line with two strategies —expanding the scope of our businesses in toys and toy-related areas andstrengthening our brand among the mature fan base. BANDAI CO., LTD.,
the Unit’s core company, will utilize an in-house company system and aim
to implement strategic business initiatives with a sense of speed. Overseas,
we will restructure our business in Europe and the Americas and implement full-blown initiatives in China, the largest market in Asia. To strengthen
our business for the mature fan base, for which the market is expanding
worldwide, we established a new company, BANDAI SPIRITS CO., LTD., in which
we have drawn together our business for this fan base. By specializing in
the mature fan business, BANDAI SPIRITS will respond rapidly to customer
and market needs and accelerate growth, with a focus on expanding overseas business.
In addition to the mature fan base, the Toys and Hobby Unit has a large
number of business initiatives in products for children. We are working tocreate products that customers might encounter for the first time in theirlives, and that might play a role in the development of those customers into
BANDAI NAMCO fans in the future. In this regard, we have extremely
important roles and responsibilities. Accordingly, as we step up collaboration and cooperation throughout the BANDAI NAMCO Group, we will strive
to provide products and services that astonish our customers.

FY2018.3 RESULTS AND RELATED DATA
Sales of IPs (Toys and Hobby Business in Japan)(¥ billion)

Aikatsu!

Mobile Suit Gundam series

Pokémon¥¥¥

2.3 billion

26.2 billion

Anpanman

Super Sentai series

ONE PIECE¥¥¥

10.9 billion

9.1 billion

Ultraman series

DRAGON BALL series¥¥

4.3 billion

14.2 billion

KAMEN RIDER series

PRETTY CURE! series¥¥

24.8 billion

8.1 billion

Masaru Kawaguchi

Director (Part-time)
BANDAI NAMCO Holdings Inc.
President and Representative Director of
BANDAI CO., LTD.

20

4.0 billion
4.6 billion

Network Entertainment
MID-TERM VISION“Transnational Company” Creating Value for Consumers
MAIN STRATEGIESShift to a customer-centricbusiness mindset
Continued transformation into a“transnational company”
FY2021.3 NUMERICAL TARGETS

Segment Sales
Segment Profit¥

310.0 billion¥41.0 billion

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIESAs technological progress advances the network environment, businesses
are increasingly targeting the entire world, and in addition there is a growing “individual” presence as users directly contribute information over theInternet. In this setting, the Network Entertainment Unit’s Mid-term Vision
is to be “a ‘Transnational Company’ creating value for consumers.” Under
the previous Mid-term Plan, we believe that we established a foundationfrom which we can aim to because a “transnational company.” Under thecurrent Mid-term Plan, we will make full use of that foundation as we strive
to connect with our customers, who are the users of our products andservices, and to be a company that continues to anticipate emerging needs.
We would like us to be a unit in which each region is independent andwe have a global viewpoint.
We have two main strategies — to establish a new business style witha “customer-centric” and to develop into a “transnational company.”“customer-centric” refers to thinking from the customer’s point of view inorder to make decisions about what businesses are needed, what operations should be expanded further, and which IP should be utilized. The
phrase “transnational company” refers to an approach to business that is
not centered on Japan. Rather, each region takes the lead and devises andimplements strategies in line with markets, thereby operating independently in rolling out business initiatives. In addition, to implement common
strategies, we will work to foster collaboration on a worldwide basis.
There is no doubt that the key to achieving the Mid-term Plan will be“growth overseas.” All employees should have an awareness that they canalways refine and discuss the “global strategy.” We believe that this will
enable us to establish a presence as a transnational company.

FY2018.3 RESULTS AND RELATED DATA
Sales by Major Category
Network content¥

199.6 billion

Home video games

98.4 billion¥

Network content
Overseas sales ratio

25%

Home video games
Unit sales ofhome video games

28,867 thousand

Satoshi Oshita

Director (Part-time)
BANDAI NAMCO Holdings Inc.
President and Representative Director of
BANDAI NAMCO Entertainment Inc.

21

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIESReal Entertainment
MID-TERM VISIONWe Create “Entertainment Experience Here and Now” Worldwide
MAIN STRATEGIESBuilding a real platform
Leveraging the distinctive
strengths of the BANDAI NAMCO
Group
FY2021.3 NUMERICAL TARGETS

Segment Sales
Segment Profit¥

130.0 billion¥8.0 billion

The core company of the newly established Real Entertainment Unit is
BANDAI NAMCO Amusement Inc., which combines the development andoperation of amusement facilities and the amusement machine business.
We provide real entertainment that draws on the unique strengths of the
BANDAI NAMCO Group, combining real-world venues, which are points ofcustomer contact; technological development capabilities; and expertise inleveraging IP worldviews.
Markets are undergoing dramatic change. In addition to the consumptionof tangible products that offer value through ownership, a central role intoday’s society is now being played by the consumption of intangible products that offer value through special services and experiences. In thissetting, we have real networks that offer multifaceted entertainment
experiences and can be rolled out on a global scale, from Asakusa Hanayashiki,
the oldest amusement park in Japan, to VR ZONE, which draws on virtual
reality (VR) and other leading-edge technologies.
In those initiatives, we will draw on our strength in having an integrated
value chain that extends from the development of machines to the operationof facilities. We will work to implement efficient management and focus on
multifaceted initiatives, such as facilities that are differentiated through
BANDAI NAMCO’s distinctive strengths, new types of facilities coordinatedwith other Units, and advanced versions of existing facilities.
In each region and business, the Real Entertainment Unit will provide
venues that offer experiences transcending the imagination and create
a new world of entertainment with no borders. In this way, we aim to realize
our Mid-term Vision.

FY2018.3 RESULTS AND RELATED DATA
Sales by Major Category
Amusementmachines¥

Number of Amusement facilities(Total of Japan and overseas)

293
Revenue-sharing facilities* 1,563
Other
14
Total
1,870
Directly managed facilities

28.2 billion

Amusement
facilities¥

64.2 billion* Revenue-sharing facilities: Revenues from the operation ofamusement machines are shared.

Hitoshi Hagiwara
Director (Part-time)
BANDAI NAMCO Holdings Inc.
President and Representative Director of
BANDAI NAMCO Amusement Inc.

22

Visual and Music Production
MID-TERM VISION

No. 1 Group in Visual, Music, and Live
MAIN STRATEGIESStrengthen capacity for creating
hit IPs
Empower integrated IP production
focused on visual products, music,
and live performance
Promote IP use with a global vision
FY2021.3 NUMERICAL TARGETS

Segment Sales
Segment Profit

40.0 billion¥8.0 billion¥

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIES

Through seamless collaboration among three businesses — visual, music,
and live — the Visual and Music Production Unit will implement IP production that is increasingly three dimensional and aim to be the No. 1 Group of
Visual, Music, and Live.
In launching the Mid-term Plan, we will strive to achieve further growthand step up our initiatives. BANDAI NAMCO Arts Inc., which combines thevisual and music businesses, will be the core company and advance ourstrategies. We will take steps to consolidate our IP outlet strategies andwork to increase our efficiency and extend our strengths while providing
mutual support in areas that need to be reinforced. In this way, we willleverage synergy effects.
The live event market continues to record growth in Japan and overseas.
For this market, we will further reinforce production initiatives with a focus
on collaboration among visual products, music, and live events. For overseas IP fans, we will bolster live events, live viewings, and sales of goods,
and will also take on the challenge of events in new genres. In Japan, we
will construct a multipurpose facility, including an event hall, on land that
we have purchased in Shibuya-ku, Tokyo. We plan to make flexible use ofthis venue, which will leverage the Group’s strengths. In this way, we willtake on the challenge of creating new entertainment that combines visual,music, and live events.
We will also accelerate the creation of IP that features enhanced collaboration among visual, music, and live elements. IP brimming with originality
is the cornerstone of our business. Moving forward, we will devoteresources to the establishment of rules and environments that encourage
employees to transcend borders between companies and departments andtake on challenges with a strong focus on the creation of IP.

FY2018.3 RESULTS AND RELATED DATA
Visual and Music Production Unit:
Number of Copyrighted Products(As of 2018.3)

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

806 products / 2,830 hours
Number of musical works
BANDAI NAMCO Arts Inc.
Number of works withmaster license recordings
Approx.

40,500

Number of Live Events Held
Number oflive tours*1

84

Number of
performances*2692*1 Number of live tours implemented by
BANDAI NAMCO Arts Inc.
*2 Number of performances held by
BANDAI NAMCO Live Creative Inc.

Number of works published
Approx.

22,500Kazumi Kawashiro
Director (Part-time)
BANDAI NAMCO Holdings Inc.
President and Representative Director of
BANDAI NAMCO Arts Inc.

23

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIESIP Creation
MID-TERM VISION

Evolving from an Animation Production Company to IP Development
MAIN STRATEGIES

Improving creativity
Improving communication
Improving branding
FY2021.3 NUMERICAL TARGETS

Segment Sales
Segment Profit

18.0 billion¥6.0 billion¥

The IP Creation Unit was established in conjunction with the current Midterm Plan, and our most important mission is the creation of IP.
The greatest strength of the BANDAI NAMCO Group is the IP axis strategy, under which we develop characters and content, which are IP seeds,
into a variety of forms, such as products and services. In this way, we
increase their value and ensure that they bloom into substantial flowers.
SUNRISE INC., which is the core company of the IP Creation Unit, hascontinued to create IP, the starting point of the IP axis strategy, over many
years through the production of animations, such as the Mobile Suit Gundam
series. To create original IP from “thin air,” we need flexible thinking andknowledge to break through fixed ideas, imagination, and — more thananything else — strong conviction. The Unit has a track record and experience in continually maintaining our dedication to original products, and thishas become a part of our corporate DNA. This DNA will be the driving force
as we work to fulfill our role and mission of continually creating IP seeds
that can be nurtured by the entire Group in line with the times and theoperating environment.
We will create original IP from “thin air,” and the entire Group will nurture that IP and increase its value by 100 or even 1,000 times. I believe that,by adding speed and depth to this process of creation and nurturing, theBANDAI NAMCO Group will be able to demonstrate its presence on a moreglobal level. We have recorded growth to date as a production company
specialized in animations. Moving forward, we will extend our focus beyond
animation to include all IP, which is an element of entertainment. On thatbasis, we will continue to foster IP creation as we change into an IP development company.

FY2018.3 RESULTS AND RELATED DATA
IP Creation Unit: Number of Copyrighted Products(As of 2018.3)

Number of copyrighted products / Total number of hours products
SUNRISE INC. and BANDAI NAMCO Pictures Inc.

309 products / 2,560 hours
Yasuo Miyakawa
Director (Part-time)
BANDAI NAMCO Holdings Inc.

President and Representative Director of
SUNRISE INC.

24

SPECIAL FEATURE

SPECIAL FEATURE: MAIN STRATEGIES IN THE MID-TERM PLAN

MAIN STRATEGIES IN THE
MID-TERM PLAN
Under the current Mid-term Plan, we aim to achieve “CHANGE” toprogress to a next stage by aiming to be a Group that changes in a wide
range of ways without being bound by previous business models andestablished ideas.
This section introduces specific initiatives about the four main
strategies for realizing sustained growth and includes messages fromkey executives.
26

IP Axis Strategy:
Accelerate Evolution in IP Axis Strategy

30

Business Strategy:
Empower Push into New Entertainment

34

Region Strategy:
Gain Momentum with All BANDAI NAMCO

38

Personnel Strategy:
Make Personnel the Core of the Group25

MAIN STRATEGIES IN THE MID-TERM PLAN

IP Axis Strategy Accelerate Evolution in IP Axis Strategy

Aiming for IP Development— IP Creation Unit

Yasuo Miyakawa
Director (Part-time)
BANDAI NAMCO Holdings Inc.
President and Representative Director
SUNRISE INC.

The IP Creation Unit was established in April 2018 with the mission of further strengthening thecreation and nurturing of new IP.
Working in close cooperation with other units, the IP Creation Unit will advance the creation andnurturing of IP coordinated with products and services.

A Developer that Creates IP from “Thin Air”
The Mid-term Vision of the IP Creation Unit is “Evolving froman Animation Production Company to IP Development,” andour role is to create the IP seeds that will be needed for the IP
axis strategy. The corporate philosophy of SUNRISE INC. is“Building Frontiers from Thin Air.” SUNRISE has created awide array of original IP, and moving forward we aim to create
an even larger number of IP seeds. We are committed totaking on the challenge of creating diverse, original IP while
making effective use of the strategic investment that is a partof the current Mid-term Plan.
In the creation of IP, it is essential that we work in close
collaboration and cooperation with other Units of the Group.

26

Our creators and producers, who are in frequent communication with employees from other Units, are working to implement IP creation while considering how a wide range of
products and services can be rolled out.
One of the strengths of the BANDAI NAMCO Group is theability to create IP in-house, to choose from a wide range ofoptions, and to work in-house to develop that IP as products
and services. Moving forward, we will strive to create original
IP from “thin air,” to roll out that IP throughout the Group, andto leverage a range of content outlets. In this way, we will work
to increase the value of the IP by 100 or even 1,000 times.

Contributing to the Strengthening of the IP Creation Function (System)

Drive IP creation
IP Creation
Unit

Collaborate in an open
manner to create IP

External
partners

Toys and Hobby
Unit

Network Entertainment
Unit

Real Entertainment
Unit

Visual and Music Production
Unit

Together with Highly Enthusiastic Employees
To create original IP, we need flexible thinking and knowledge
in order to break through fixed concepts. We also need imagination and — more than anything else — strong conviction.
One of my important tasks is to create an environment that will
fully leverage the enthusiasm of the employees who want tocreate new IPs. The creation of original IP is always accompanied
by risk and it is uncommon for IP to become a hit immediately
after it is launched. To enhance our ability to create IP, we needto create an environment in which it is easy for employees totake on challenges without fear of failure, and we need topatiently trust and nurture their enthusiasm, even when strong

SPECIAL FEATURE: MAIN STRATEGIES IN THE MID-TERM PLAN

Create and roll out optimal IP through cooperationand collaboration with each business and service

results are not immediately achieved. I believe that the creationof IP that earns the enduring support of fans results from the
combination of employees who are strongly committed to theirideas and executives who support them.
In addition, to continue to secure and develop highly capableand enthusiastic staff members, I believe it is important that
we achieve a large number of hits and invest the resulting
profits in next-generation creators. In this way, we should be
able to establish a cycle that leads to the next hit IPs andensures business continuity and growth potential.

Extending Our Presence around the World through Original IP
I repeatedly tell our employees that “we are not just an animation production company.” Clearly, SUNRISE grew as a company that produces animations, but at this point it is important
for the Group that SUNRISE extends its reach beyond animations. We need to create IP that can be utilized on a Groupwide
basis. Going forward, rather than restricting our business toanimations, we will strive to create IP in all entertainment
genres, including novels, live-action movies, and illustrations.
The phrase “evolving to IP development” incorporates thisidea. I believe that this concept has penetrated to the front
lines of our operations and reinforced our foundation. We are
now at the stage where we will aggressively take the initiative
as we move forward. In July 2018, we announced that we would
work together with Legendary, of the U.S., to make a Hollywood
live-action film versions of Mobile Suit Gundam, which has been

involved in multiple films that have become worldwide hits.
Films that have the power of worldwide distribution are
extremely effective in the communication of IP and are an
important outlet. At SUNRISE, we have implemented various
approaches targeting global markets, such as selling programming in countries around the world, implementing online distribution, and holding events. Moving forward, we
will further reinforce our global initiatives, including the useof films.
In this way, we will move forward toward a larger world. My
vision for the future of IP Creation Unit involves original IP that
extends around the entire world. The BANDAI NAMCO Group
has a range of resources that can be used to maximize IP
value. Moving forward, we will strive to focus the Group’s
strengths and achieve that vision.

27

MAIN STRATEGIES IN THE MID-TERM PLAN

IP Axis Strategy Accelerate Evolution in IP Axis Strategy

The Multiple Forms of IP Creation
IP can be created from a variety of customer contact points, including visual products and other products
and services. The BANDAI NAMCO Group, which is active in a wide range of business areas in the field ofentertainment, is leveraging the strengths of each of its companies and Units and continuing to take on
the challenge of creating new IP from original perspectives. In addition, we are taking steps to establish
Groupwide frameworks for the creation of IP, including the implementation of strategic investment.

IP Created from a Variety of Consumer Contact Points
The BANDAI NAMCO Group creates IP originating from visual
products from the Group’s visual production companies, suchas the Mobile Suit Gundam series. In addition, the Group has
also worked to create IP originating in products and services,such as PAC-MAN (originating from an amusement machine),
Tamagotchi (originating from a toy), the Aikatsu! series (originatingfrom a card product), and IDOLiSH7 (originating from network content).
Accompanying the acceleration of digitalization in recent
years, the number of individuals who are producing and distributing their own content is increasing. In this setting, we arealso working to foster creation in line with the changes in thetimes. These initiatives include working together with customers to leverage user-generated content in the implementationof projects supporting the creation and nurturing of IP.
In these ways, we will leverage the strengths of the Group,
which has a wide range of customer contact points; strive to be
the first to respond to diversifying customer needs; and continue to take on the challenge of creating new IP.

PAC-MAN, which originatedfrom an amusement machine

Tamagotchi, which originated from a toy

Project LayereD, a user-participation project

Taking On the Challenge of Groupwide IP Creation and Nurturing
The Original Star IP Office solicits submissions of original IP
from within the Group. Employees are encouraged to submit
their own IP ideas, which are then screened. The project also
includes the creation of proposals and pilot videos, theformulation of business schemes in cooperation with Group
companies that are interested in utilizing the IP, and theimplementation of other initiatives. In these ways, the Original
Star IP Office is aiming to rapidly commercialize new IP.
In addition, the IP Strategy Division, which was establishedin BANDAI NAMCO Holdings Inc., is formulating and advancing the IP axis strategy, targeting growth for the Group overthe medium-to-long-term. To that end, the Division is
implementing worldwide roll outs of established IP, such as
the DRAGON BALL and the Mobile Suit Gundam series, andlaunching a variety of projects aiming to roll out IP for
female customers in the mature fan base.
Moreover, in April 2018 we launched the BANDAI NAMCO
Accelerator, which provides business support for startup
companies. Through this program, we are aiming to develop
innovative businesses and IP by combining the new ideas,
speed, and execution capabilities of startup companies with28

the resources of the Group. Including these initiatives,
under the current Mid-term Plan we will implement strategic
investments on top of normal investments. Over three years,
we plan to implement strategic investment of ¥25.0 billion
in IP creation.
In these ways, we will continue working to strengthen the
IP axis strategy, which is the Group’s greatest strength. Tothat end, we will collaborate with a variety of partners andtake on the challenge of creating and nurturing IP.

BANDAI NAMCO Accelerator advance seminor

Case
Study

1

Original IP Originating from a Card GameMUSIC

LIVE EVENTS

SPECIALTY SHOPSANIMATIONSAPPAREL

CONFECTIONERYSPECIAL FEATURE: MAIN STRATEGIES IN THE MID-TERM PLAN

The Aikatsu! series is a popular IP
that was created from a card game.
Its fans are centered on elementary
school girls. Aikatsu! was launchedin 2012 as DATA CARDDASS Aikatsu!,
a digital children’s card game fromBANDAI CO., LTD. In conjunction
with the operation of the game,broadcasts of an animation fromSUNRISE INC. (currently produced
by BANDAI NAMCO Pictures Inc.)
were commenced. As of 2018, thelatest series — Aikatsu Friends!
— has become an establishedGroup IP. Centered on cards andanimations, we are rolling out awide range of Aikatsu! products andservices, including apparel, music,
live events, and specialty shops.

CARD GAMES

Case
Study

2

Original IP Originating from Network Content

IDOLiSH7 is an IP that originatedwith a smartphone game app. In
2015, BANDAI NAMCO Online Inc.
placed IDOLiSH7 into service as afull-scale rhythm game. It has
become widely popular among fans,centered on women. Based on aworldview that reflects a commitment to the scenario and the music,
TV animation broadcasts werestarted in January 2018, and in
addition we are working on aGroupwide basis to roll out live
events, other events, goods, etc. In
these ways, we are implementing avariety of initiatives to expand the IP.

EVENTSLIVE EVENTSANIMATIONS

GOODS

MUSIC

SMARTPHONE GAME APPS

29

MAIN STRATEGIES IN THE MID-TERM PLAN

Business Strategy Empower Push into New Entertainment

Aiming to Further Expand Business Fields— Network Entertainment Unit

Nao Udagawa
Managing Director
BANDAI NAMCO Entertainment Inc.

The Network Entertainment Unit is advancing business initiatives centered on digital services, such as
network content and home video games. The Unit is taking on the challenge of further expanding its
business fields.

Working Together with Customers to Nurture and Provide Services
that Can Be Enjoyed for Long Periods of TimeThe rapid progress of digitalization is significantly changing thebusiness environment. The market for network content also
continues to expand on a global scale. On the other hand, ourmarkets are undergoing dramatic change, including the intensification of competition, the emergence of titles with substantial
sales, and the diversification of consumer purchasing behavior.
In this environment, the DRAGON BALL Z DOKKAN BATTLE
smartphone game app continues to maintain its popularity
even today, more than three years after the launch of online
distribution. This will be a model of successful initiatives in
our future endeavors.
Operational factors play a key role in the development of a
product into a long-seller. With a focus on customers having
fun, we have implemented ongoing initiatives that have provento be effective. For example, we have analyzed customer activity within the game and other factors, and we added new elements, implemented updates, and held events. I believe that
this style, in which we listen to feedback from customers
around the world and cooperate with them to nurture games,30

is behind the success of DRAGON BALL Z DOKKAN BATTLE.
These types of initiatives have also been reflected in otherlong-seller titles in smartphone game apps, such as ONE
PIECE and THE IDOLM@ STER series. In addition, in home video
games we are starting to see an increase in titles that areoperated for long periods of time due to initiatives in suchareas as the sale of download content and digital items and theimplementation of in-game events. These titles include the
DARK SOULS series and the DRAGON BALL XENOVERSE series.
In June 2018, we started worldwide online distribution of
DRAGON BALL Legends, a new smartphone game app. This
game incorporates the latest technologies and our own methods of expression to the greatest extent possible, and we areproud of its high quality, which amazes customers. In a varietyof smartphone game apps and home video games, we will
enhance the quality of our development, operation, and marketing activities and strive to implement initiatives that customers enjoy for a long period of time.

Taking On the Challenge of Creating New Entertainment
initiatives while cooperating with industry organizations
and manufacturers.
In addition, we are utilizing a variety of approaches to expand
our fields of business. For example, we have opened a newentertainment-commerce site coordinated with online video
distribution and user-participation network services andintroduced a membership system.

Titles for enza
THE IDOLM@ STER SHINY COLORS

Aiming to provide new purchaseexperiences
Asobistore entertainment commerce site

SPECIAL FEATURE: MAIN STRATEGIES IN THE MID-TERM PLAN

The Network Entertainment Unit is actively taking on the challenge of creating new entertainment. enza, a platform that wasdeveloped by BXD Inc., facilitates the enjoyment of games
using browsers. The use of HTML5 technology enables theprovision of high-quality titles, and multiple IP titles havealready been launched. enza was developed with the idea that
it would be used in close collaboration with products, services,and events from Group companies, and media. Accordingly,
we will strive to ensure that it is effectively leveraged asa Group platform.
In addition, the field of e-sports is currently drawing attention, and we are also focused on this field as a new IP outlet.
We are independently developing professional licenses inJapan for major titles, such as TEKKEN7, as well as holding
events. We believe that e-sports have the potential to raisethe value of the entire game industry as well as the games
themselves. Moving forward, we will aggressively implement

We Want to Provide Entertainment in a Variety of Settings
In this way, each day we are taking on the challenges of newentertainment. Through the use of the latest digital and network technologies, we are strengthening collaboration among
the Group’s various businesses and customer contact points,
and we are starting to see the emergence of a favorable cyclethat facilitates our responses to a wide range of customer
needs and changes. Moving forward, we will strive to enhancecontent value and to provide services that customers can enjoy
for long periods of time. To that end, we will execute multifaceted initiatives while paying careful attention to feedback from
customers.
The corporate philosophy of BANDAI NAMCO Entertainment
Inc. is “more fun for everyone.” We will continue to advance avariety of initiatives in accordance with the concept of providing
entertainment to customers in a wide range of settings. While
responding to change, we will take steps to nurture our content

BANDAI NAMCO Group
Network Content Sales
199.6(¥ billion)(Total for iOS, Google Play / Prepared by App Annie based on 2017 revenue figures)
Rank

190.0

103.9

2017

2018

Smartphone game app
DRAGON BALL Legends

Top Publishers in the Global App Market

158.6

2016

and work together with customers from a long-term viewpoint
in order to enhance content appeal. We are excited about the future.

2019(forecast)

1

Name of publisher
Tencent

Country
China

2

NetEaseChina

3Netmarble

South Korea

4

Activision Blizzard

U.S.

5

SupercellFinland

6

mixi

Japan

7

BANDAI NAMCO

Japan

8

Sony

Japan

9

Machine Zone

U.S.

10

LINE

Japan

Source: App Annie

For the Fiscal Years Ended March 31

31

MAIN STRATEGIES IN THE MID-TERM PLAN

Business Strategy Empower Push into New Entertainment

Working to Expand Business for the Mature
Fan Base — Toys and Hobby Unit

Kazuhiro Takenaka
Director
BANDAI SPIRITS CO., LTD.

The newly established BANDAI SPIRITS CO., LTD., combines the mature fan base business of BANDAI
CO., LTD., including plastic models and collectable figures, and the prizes business of BANPRESTO CO.,LTD. This new company will play a new strategic role in the Toys and Hobby Unit and will work to
expand business in the mature fan base market, which is growing rapidly.

Taking On the Challenge of Expanding Business by Rolling Out
Distinctive BANDAI NAMCO Products
The vision of BANDAI SPIRITS is to be “the world’s number one
comprehensive hobby entertainment company,” and on thatbasis we are working to roll out toys and hobby products forthe mature fan base. In the mature fan base market, we must
address needs that differ from those in the children’s market,
such as diverse preferences and purchasing behavior. Throughthe establishment of BANDAI SPIRITS, we have consolidated
the departments that handle products for the mature fan base,and moving forward we will move rapidly to address changes in
consumer needs as we well as the market.
In product development, we will further advance the originaltechnologies and know-how cultivated to date by BANDAI CO.,LTD., and BANPRESTO CO., LTD., and strive to roll out highquality products that amaze consumers. Furthermore, wewill implement wide-ranging development through the ALL
BANDAI NAMCO concept rather than narrowly focused development of products themselves. We believe that this will leadto the extension of three-dimensional development of IP
worldviews and increases in IP value. We have engaged incollaboration within the Group, and moving forward we will
actively collaborate and cooperate with each Unit from the IP

32

creation stage. In this way, we will develop the mature fan basemarket. In addition to IP originating in Japan, we will alsocommercialize IP that has become popular around the world
and aim to expand our business on a global scale.
Our employees on the front lines are enthusiastic and eager
to take on challenges, and as a result our businesses continue
to record favorable growth. By providing distinctive BANDAI
NAMCO products that amaze customers, we will take on thechallenge of leveraging our distinctive presence and expanding
our business.

1

2

3

4

With original technical capabilities, we were able
to achieve a plastic model that features a realistic
skin texture that was not previously possible.

Offering high-quality figuresthat reflect careful attention
to detailInitiatives Targeting Expansion of the BANDAI NAMCO Group’s Business Fields

Case
Study

1

e-Sports

Case
Study

2

Official TEKKEN7
tournament

Official DRAGON BALLFighterZ tournament

In FY2019.3, we will actively take on multiple challenges witha variety of titles and approaches, accumulate experience, andstrive to foster future growth.

SPECIAL FEATURE: MAIN STRATEGIES IN THE MID-TERM PLAN

In overseas markets, e-sports have already garnered strong
popularity, and there is a trend toward the inclusion of e-sports
as regular events in official international tournaments. In
Japan, the first organization that issues professional licenses— a general incorporated association known as the Japan
e-Sports Union (JeSU)— has been established, and e-sports
are expected to enjoy growing popularity.
The Network Entertainment Unit established an organization
specializing in e-sports, and the Unit is now accelerating its
initiatives in this field. There are already TEKKEN7 professional
license holders, and in addition we are utilizing titles suchas DRAGON BALL FighterZ and TAIKO: DRUM MASTER andparticipating in a variety of events and tournaments.
In taking on the challenge of new genres, one of the BANDAI
NAMCO Group’s major strengths is our ability to provide anabundant range of game titles for a variety of platforms,
including home, mobile, amusement, and PC platforms.

Creating Spaces that Leverage
BANDAI NAMCO’s Distinctive Strengths

The Real Entertainment Unit was created under the current
Mid-term Plan, and one of the Unit’s main strategies is toleverage the distinctive strengths of the BANDAI NAMCO Group.
The Unit is aiming to expand the amusement machine andamusement facility business.
As one part of those initiatives, we opened the VS PARK
variety sports facility, which features differentiation and novelty
in comparison with existing facilities. In response to the growing enthusiasm for sports in Japan, VS PARK is a new facility
that offers highly entertaining sports activities that are similar
to making an appearance on a variety TV program. Anyone canenjoy sports, without regard to gender or athletic ability. In
addition, at VR ZONE SHINJUKU, one of Japan’s largest VR
entertainment facilities, we are introducing a range of newcontent that is earning popularity. For example, we havestarted operation of Dragon Quest VR, which enables 360degree enjoyment of the world of Dragon Quest.
Moving forward, with BANDAI NAMCO’s distinctive ideas andstrengths, we will continue to provide “venues with value” forcustomers.

VS PARK

Dragon Quest VR

33

MAIN STRATEGIES IN THE MID-TERM PLAN

Region Strategy Gain Momentum with All BANDAI NAMCO

Leveraging Regional Characteristics toAdvance Global Initiatives
The BANDAI NAMCO Group, which aims to be “the Leading Innovator in Global Entertainment,” wants toutilize products and services as communications tools that connect IP fans around the world. To that end,
initiatives to foster worldwide expansion are important.
In accordance with this idea, the region strategy is to “Gain momentum with ALL BANDAI NAMCO.” On
that basis, we are working to make a full-blown entry into the Chinese market and to establish a system
for ALL BANDAI NAMCO.

Toward the ALL BANDAI NAMCO Concept
Rolling Out Business Initiatives with a Regional Axis and a Business Axis
Our regional operations have the best understanding of local
fans, and accordingly these operations will take the lead as wework to expand our business initiatives on a worldwide basis. In
addition, it will be necessary for all of the Units to work together
and strive to leverage the Group’s comprehensive strengths
under the ALL BANDAI NAMCO concept. To that end, theBANDAI NAMCO Group has established BANDAI NAMCO
Holdings, which is responsible for medium-to-long-term strategies
for the entire Group, as well as companies that oversee regions.
To strengthen the provision of implementation support forbusiness companies and business strategies and to bolster
monitoring in each region, these companies are working toreinforce the internal control and internal auditing functions andto establish crisis management systems. We aim to expand ouroverseas operations through two axes — this regional axis andthe business axis.

In addition, we are taking steps to cultivate a sense of unity
under the ALL BANDAI NAMCO concept, such as introducing
integrated offices in which employees from multiple units workin a single office. By fostering the penetration of the ALL
BANDAI NAMCO concept in terms of both systems and attitudes, we are working to promote the natural developmentof information sharing and collaboration among businesses.

Cultivating a sense of unity through the introduction of integrated offices

Regional Axis and Business Axis

Toys and Hobby Unit

Regional axis
BANDAI NAMCO Holdings UK LTD.

BANDAI NAMCO Holdings Inc.

Network Entertainment Unit
Business axis

Real Entertainment Unit

Visual and Music Production Unit

IP Creation Unit

34

BANDAI NAMCO Holdings
USA Inc.

BANDAI NAMCO Holdings
France S.A.S.

BANDAI NAMCO Holdings
CHINA CO., LTD.

BANDAI NAMCO Holdings
ASIA CO., LTD.

Initiatives in Europe and the Americas
Network Entertainment

Network Content
Net Sales / Overseas Sales Ratio
199.6

Network Content — Game Development andOperation that Reflect Regional Characteristics

158.6(¥ billion)

27

25

Net Sales
103.9

18

10

Overseas
Sales Ratio
(%)
2016

2017

2018

2019
(forecast)

For the Fiscal Years Ended March 31

DRAGON BALL Z
DOKKAN BATTLE

Cultivating Home Video Games with Long Lifespansthrough the Sustained Provision Of New Kinds of Fun
In home video games, against a background of game platform
uptake, worldwide titles — such as the DRAGON BALL series,
TEKKEN series, and DARK SOULS series — have achieved
popularity. As with network content, in home video games
there is a trend toward products remaining popular for longer
periods of time, extending over multiple years, and by continuing such measures as the sales of additional content, theprovision of information, and the implementation of updates,
we are continually working to provide customers with newforms of entertainment.
Moving forward, we will continue to launch major titles inworldwide markets and to provide new entertainment while
analyzing the results of various measures. In these ways,

DRAGON BALL FighterZ

SPECIAL FEATURE: MAIN STRATEGIES IN THE MID-TERM PLAN

In the network content business in FY2018.3, core titles madestable progress in each region, and we were able to achievefavorable growth in the overseas sales ratio.
In rolling out titles, we implement planning and development
initiatives that consider global markets. In addition, we carefully analyze customer trends for each region, and the results
are used to improve game content in line with local characteristics as well as to enhance events. The continuation of these
initiatives has led to the roll out of titles that have maintained
support over long periods of time, such as DRAGON BALL Z
DOKKAN BATTLE (online distribution launched in 2015 in Japanand overseas) and ONE PIECE Treasure Cruise (online distribution launched in 2014 in Japan and in 2015 overseas).
Moving forward, we aim to achieve stable progress withexisting core titles. In addition, we will launch new titles with afocus on quality and build a portfolio of titles that address thepreferences of a wide range of customers.

190.0

ONE PIECE Treasure CruiseHome Video GamesNet Sales / Overseas Sales Ratio
98.4

95.7

Net Sales ofHome Video
Games

86.6
66

69

90.0

72

67

(¥ billion)

Overseas
Sales Ratio
(%)
2016

2017

2018

2019
(forecast)

For the Fiscal Years Ended March 31

DARK SOULS REMASTERED

35

MAIN STRATEGIES IN THE MID-TERM PLAN

we will roll out titles that earn support over long periods oftime. Moreover, we will utilize our in-house sales network,
centered on Europe, and continue to promote and sell titles
from other companies. In addition to implementing an aggressive response to new game platforms, we will leverage a wide
range of title variations and step up initiatives in the area of
e-sports, which is recording growing popularity, centered onoverseas markets. We have already established an organization specializing in e-sports, and in the future we will consider
measures to activate communities, issue licenses, and implement in-house sponsorship of tournaments. (For further information about e-sports, please refer to page 33.)

Implementing worldwide launches of new titles
with a focus on quality

Toys and Hobby

In conjunction with the launch of the Mid-term Plan, the Toys and Hobby Unit will revise its
strategies. In addition to the previous initiatives for children, we will bolster our approaches tothe mature fan base market, for which growth in scale is anticipated. Also, we aim to improve
profits by taking steps to increase business efficiency, including our organizational structure.
Expanding Our Approaches to the
Mature Fan Base Market
In the Toys and Hobby Unit, the mature fan base market isexpanding not only in Japan but also in Europe and theAmericas. To address that market, we will reinforce our
product initiatives, including figures that show carefulattention to detail. In implementing initiatives in Europe andthe Americas, in addition to popular IP originating in Japan,
we will also take steps to further expand IP product initiatives related to movies that are popular around the world.
Furthermore, as a new category we launched a card gamefor DRAGON BALL, for which home video games and gameapps are highly popular.
Moving forward, as we target the mature fan base market
in Europe and the Americas we will pursue the development of high-quality products that leverage Japan’s technical capabilities. We will also take steps to increase
recognition among customers, such as sponsoring regular
events. In FY2019.3, we will participate in animation eventsin Europe and the Americas, and we are also operating alarge-scale booth on the DRAGON BALL NORTH AMERICA
TOUR 2018, which are being held in seven cities in North
America. In addition, through collaborative initiatives withlocal partners, we will strive to complement toy distribution
routes with the inclusion of new sales routes, such as thosefor hobby and card sales. Furthermore, we will actively
collaborate with other Group operations, such as home
video games and game apps, and implement marketing
initiatives. In these ways, we will aim to draw on the comprehensive strengths of the ALL BANDAI NAMCO concept.

36

Enhancing our IP lineup with movie IP productsthat are popular in Europe and the Americas

Entering new categories by leveraging IP that is highly
popular in local markets

Promoting products byimplementing exhibits
at events

Implementing Full-Blown Business Initiatives in the Chinese Market
Making a Full-Blown Entry into China’s Growing
Entertainment Market

Toys and Hobby

Opening Gundam plastic model flagship store in
Shanghai(Including Japan accounts)¥30.0
billion¥13.0
billion20182021
targetFiscal Years Ended / Ending March 31

BANDAI NAMCO Holdings CHINA CO., LTD.

Toys and Hobby
Company

Game Company

New establishment
plannedSPECIAL FEATURE: MAIN STRATEGIES IN THE MID-TERM PLAN

Further market growth is anticipated in China, where there aremany IP fans, and under the current Mid-term Plan we havepositioned China as a focus region. Accordingly, we will launcha full-blown entry into the Chinese market.
In December 2017, we established a holding company inShanghai that has responsibility for mainland China. Throughthe holding company, which oversees the region, we will aggressively implement unified initiatives under the ALL BANDAI
NAMCO concept, as well as collaboration with local partners.
The Network Entertainment business company is working todevelop and operate game apps and online games with local
partners, and is earning popularity among local IP fans. We arealso moving forward with preparations for the establishmentof a business company in the Toys and Hobby business, which
will enable us to roll out products for a wide range of customer
age groups, including products for the mature fan base as wellas toys for children. In addition, we will reinforce marketing
initiatives that leverage networks, such as e-commerce sales.
Furthermore, the Visual and Music Production business has
been active in the Asian region, and moving forward the business will bolster its initiatives integrating visual, music, andlive events in China as well.
By advancing these measures, we will build a foundation forthe strengthening of business initiatives in the Chinese market
and work to expand the scale of our operations.

Sales of Products and Services in Mainland China

Visual andMusic Company
New establishment
plannedNetwork EntertainmentULTRAMAN are also highly
popular in China

Visual and Music Production

Strengthening live-related businesses, such as live events and live viewings

Network content based on collaboration with local partners

Measures to Deal with Counterfeit Products
As one example of measures to deal with counterfeit products overseas, with figure brands for themature fan base, a logo mark that serves as proofof product reliability will be applied to all products
launched in September 2018 or thereafter. The logo
mark will be applied as a hologram seal withspecial specifications that include processing toprevent fakes. We will take steps to promote awareness in Japan and overseas that products to which
the mark has been applied are genuine products.

37

MAIN STRATEGIES IN THE MID-TERM PLAN

Personnel Strategy Make Personnel the Core of the GroupA Group Centered on Human Resource Management,
Particularly on Entertainment and Imagination
The BANDAI NAMCO Group’s human resources (employees) are its most important asset in achieving
sustained growth. In accordance with the concept of aiming to be a group centered on human resource
management, particularly on entertainment and imagination, the BANDAI NAMCO Group is working toestablish an environment in which employees can work energetically and with peace of mind while
enjoying their work. We are striving to show respect for and to ensure the individuality and diversity of
our employees. At the same time, our operating environment is undergoing dramatic change, and wecontinue working to strongly advance the IP axis strategy, the Group’s greatest strength. To that end, weare focusing our capabilities on the development of human resources who can address change.

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.
Furthermore, we have established a variety of systems, such as theGroupwide IP recruitment system and idea proposal systems for
Units and companies. We have established frameworks that transcend boundaries between companies and departments andenable employees to make proposals. In addition, we are advancing
the delegation of authority to the front lines, implementing personnel rotations that transcend boundaries between Units as well as

between Japan and overseas regions, and introducing systems thatgive recognition to departments and employees for taking onchallenges. In these ways, we are working to develop humanresources and taking steps to establish foundations and corporate
cultures that make it easier to take on challenges.

BANDAI NAMCO Awards

Initiatives to Cultivate Global Human Resources
The cultivation of global human resources is essential for theGroup to achieve sustained growth over the medium-to-longterm. In addition to actively implementing personnel rotations
that transcend the boundaries between Japan and overseas
locations, from FY2019.3 we are also operating the BANDAI NAMCO
IP College, a program for employees at overseas Group companies. Under this program, we are conducting training at Group
worksites involved with the IP axis strategy, such as directly
operated facilities that utilize IP and development bases, andimplementing discussions with employees at Group companies
in Japan. In this way, we are working to promote understandingof the IP axis strategy, develop know-how for creating andnurturing IP originating overseas, and cultivate the spirit oftaking on challenges.

BANDAI NAMCO IP College

Initiatives that Use Stock
We introduced measures utilizing an employee stock ownership plan. The objectives of this initiative are to cultivate agreater sense of unity within the Group and to foster interest in
the activities of the entire Group from the perspective of shareholders. Group employees in Japan who support the objectivesof the initiative and contribute a set amount or more eachmonth for three years or more from April 2018, when the
Mid-term Plan started, receive 50 shares of BANDAI NAMCO
Holdings stock. In addition, prior to shareholders’ meetings,
a proposal briefing is provided to employee shareholders to
explain the importance of the shareholders’ meetings and thedetails of proposals.

Working-Style Reform Initiatives
We are implementing a variety of initiatives so that employees
can work while remaining healthy in body and mind. As a38

mental health measure, we have implemented stress checks
and established a system for personal consultations with

industrial physicians. In addition, we have taken a number ofsteps from the viewpoint of countermeasures to long work
hours. For example, we have instituted a rule that, in principle,
prohibits overtime work after 10 p.m., and we have establisheda system that encourages employees to take paid leave. Also,

we have established departments with responsibility for countermeasures to long work hours. Moving forward, in addition to
reducing work hours we will advance initiatives to increase
productivity as a Group that provides “Dreams, Fun andInspiration.”

Initiatives to Achieve Work-Life Balanceand provided facilities to day care centers certified by Tokyo
Prefecture. In addition, we have introduced lifestyle-support
system that facilitate acquisition of leave time, shorter working
hours, and flextime in order to address family circumstances,including not only child-rearing but also family nursing andcaregiving, infertility treatment, etc.

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

Childcare leave

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

Childcare support

Available until the child completes third grade. In addition to shorter working hours, includes exemption from overtime andlate-night work.

Childbirth leave formale 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

For employees who are raising children who have not yet started junior high school, normal working hours are determined not
on a daily basis but on a monthly basis.

Provision of support
funds for childbirth andchildcare

Provision of ¥200,000 at the birth of each of the first and second children.
Provision of ¥2,000,000 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.)

SPECIAL FEATURE: MAIN STRATEGIES IN THE MID-TERM PLAN

We have introduced a variety of systems to establish workplaceenvironments that support the achievement of work-life balance. We are operating a variety of systems to support childrearing with peace of mind. For example, we have instituted
flexible working arrangements using childcare leave, flextime
systems, and shorter working hours; introduced a childbirthallowance benefit system to support childbirth and childcare;

Introducing lifestyle-support system with the objective of establishing supportive environments for employees in a variety ofhousehold circumstances.
Lifestyle-support system Offering 30-day leaves 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 and 1st and 2nd
degree relatives of employees, (4) receiving outpatient care at medical facilities due to disease
Note: Systems used by Group companies are different.

Initiatives to Facilitate Active Participation by Diverse Human Resources
The BANDAI NAMCO Group is working to create environments
in which diverse human resources with abundant individuality
can work energetically, without regard to such factors as
gender, work experience, nationality, or cultural background.
We offer training programs to develop employees in line with avariety of positions and characteristics, from newly hired
employees to candidates for the next generation of managers.

In addition, promotions are not influenced by gender, age, work
experience, nationality, or cultural background.

Examples of Training Systems• Training for new hires• Fifth-year training• Training to promote active
careers for women• Training for newly appointed
managers

Number of Female Managers*

93

2017

102
2018

• Next-generation managers
development training• Training for newly appointed
officers• BANDAI NAMCO IP College

Training to promote
active careers for women

Establishment of special subsidiary for promoting
the employment of people with disabilities

Ratio of Female Managers to All Managers*

15.4%
2017

For the Fiscal Years Ended March 31* Figures are for three business segment core companies in FY2018.3

16.9%
2018

Employment Ratio for People with
Disabilities*

2.04%
2017

2.04%
2018

For the Fiscal Years Ended March 31* For consolidated subsidiaries that entrust work to special
subsidiary BANDAI NAMCO Will Co., Ltd.

39DISCUSSION AMONG OUTSIDE DIRECTORS

Satoko Kuwabara

Yuzuru Matsuda

Mikiharu Noma

We will continue to support achievement of the
Mid-term Plan and to implement appropriate monitoring.
The BANDAI NAMCO Group is implementing initiatives to strengthen corporate governance, including the establishment of
the Independent Directors and Audit & Supervisory Board Members Committee, which comprises outside directors andoutside Audit & Supervisory Board members. The three outside directors participated in the formulation of the Mid-term
Plan that was launched in April 2018. They met for an open discussion on a range of topics, including the background of
the plan’s formulation, such as discussions and opinions offered at meetings of the Board of Directors; the Company’s
approach to human resource development; the best approach to collaboration with managers; and the driving force thatwill generate sustained growth.

Independent Directors and Audit & Supervisory Board Members Committee
To evaluate from an objective standpoint whether the Board of Directors is functioning appropriately, the Company has formed the Independent
Directors and Audit & Supervisory Board Members Committee. This committee is comprised of just three independent outside directors andthree independent outside Audit & Supervisory Board members, and its secretariat function has been established within a third-party specialist organization. This arrangement facilitates the maintenance of a more-effective oversight function in the Board of Directors.

Members of the Independent Directors and Audit & Supervisory Board Members Committee

Outside Directors

Yuzuru Matsuda

Satoko Kuwabara

Mikiharu Noma

Head of Kato Memorial Bioscience Foundation
Outside Director of KUBOTA Corporation
Outside Director of JSR Corporation

Partner of Mori Hamada & Matsumoto

Associate Professor, Graduate School of Business
Administration,
Hitotsubashi University Business School

Attendance at meetings of the Board of Directors:
18 / 18 meetings

Attendance at meetings of the Board of Directors:
18 / 18 meetings

Attendance at meetings of the Board of Directors:
18 / 18 meetings

Reasons for Appointment: Given Mr. Matsuda’s extensive
experience in corporate management and his excellent
character and insight, the Company anticipates that hewill be able to further strengthen management oversight and checking functions, and introduce a broader
managerial perspective, and thus believes that he will
be able to perform the duties of an outside director
appropriately.

Reasons for Appointment: Although Ms. Kuwabara has notbeen involved in corporate management other than
through serving as an outside director, given her many
years of experience as an attorney-at-law, the Company
believes that she will be able to further 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.

Reasons for Appointment: Although Mr. Noma has notbeen involved in corporate management other than
through serving as an outside director, given his
profound scholarly knowledge accumulated throughout
his study and teaching activities in the field of corporate
strategy, the Company anticipates that he will be able tofurther strengthen management oversight and checking
functions, and thus believes that he will be able toperform the duties of an outside director appropriately.

Outside Audit & Supervisory Board Members

Toru Shinoda

Osamu Sudoh

Katsuhiko Kamijo(Full-time)

Partner in Sudoh & Partners
Outside Audit & Supervisory Board Member of
MITSUI-SOKO HOLDINGS Co., Ltd.
Outside Corporate Auditor of PRONEXUS INC.
Statutory Auditor of Keikyu Corporation

Professor at Faculty of Law of Teikyo University
Outside Audit & Supervisory Board Member of The
Resolution and Collection Corporation

Attendance at meetings of the Board of Directors:—*
Attendance at meetings of the Audit & Supervisory
Board: —*Reasons for Appointment: Given his many years mastering
the audit practices, and given he is a certified public
accountant, the Company expects Mr. Toru Shinoda toutilize his wealth of knowledge and experience inaccounting and auditing for the audit & supervisorysystem of the Company.

Attendance at meetings of the Board of Directors:
18 / 18 meetings
Attendance at meetings of the Audit & Supervisory
Board: 14 / 14 meetings
Reasons for Appointment: Given his many years ofexperience as an attorney-at-law, the Company expects
Mr. Osamu Sudoh to utilize his wealth of knowledge andexperience in legal affairs for the audit & supervisorysystem of the Company.

Attendance at meetings of the Board of Directors:
18 / 18 meetings
Attendance at meetings of the Audit & Supervisory
Board: 14 / 14 meetings
Reasons for Appointment: Given his many years mastering
tax affairs, and given that he is a certified public tax
accountant, the Company expects Mr. Katsuhiko Kamijo
to utilize his wealth of knowledge and experience in tax
affairs for the audit & supervisory system of the Company.

* Mr. Toru Shinoda was elected at the Thirteenth Ordinary General Meeting of Shareholders held on June 18, 2018, and accordingly did not attend meetings of the Board of Directors, etc. in FY2018.3.

40

Review of the Previous Mid-term Plan
Under the previous Mid-term Plan, the numericaltargets for the plan’s final year were reached one
year ahead of schedule, and the Company achieved record-high
net sales for six consecutive years and record-high operating
income for two consecutive years. The objective of continuing
to steadily generate net sales of more than ¥500.0 billion andoperating profit of more than ¥50.0 billion was achieved, andI believe that the foundation was significantly reinforced.
However, as the Group aims for one stage higher, it willbe essential to strengthen the IP axis strategy, which is themainstay of management, and, in particular, to continuallycreate original IP. By extending the initiatives that have been
implemented to date, a variety of measures are being implemented under the current Mid-term Plan. Accordingly,
I would like to see the Company achieve further dramatic
growth, without being satisfied with the status quo.
MatsudaI am also focused on the level of ROE. When profits
grow, there is a tendency for ROE to decline as
equity increases. Nonetheless, the Company has also achieved
its target of ROE of 10% or more on a consistent basis. I also
have a high evaluation of how the Group has pursued profits
while simultaneously implementing the investment necessary
for growth and aggressive shareholder returns.
On the other hand, as indicated by Ms. Kuwabara, I thinkthat certain Units and business areas have room for further
growth. Measures to address technological innovation are
already being implemented, but I think that it might be necessary to build a stronger earnings model.
Noma

Key Points of the Current
Mid-term Plan
In formulating the current Mid-term Plan, theCompany did not follow the typical method ofsetting targets based on past results. Rather, the Company
MatsudaDISCUSSION AMONG OUTSIDE DIRECTORS

I also think that the management results wereexcellent. There are certain areas in which moreprogress could have been made, but a significant step was
taken in the sense of identifying areas with room for growthand linking them to measures in the current Mid-term Plan.
In regard to the IP axis strategy, I think it will be necessary
to continue to enhance both the ability to create IP in-houseand the ability to discover and nurture external IP. Moreover,in formulating the current Mid-term Plan the Company has
stated that its vision for 10 years in the future is to be the“Leading Entertainment Company.” To achieve this, further
global growth will be essential. I think it will be important tostreamline targets and regions and implement initiatives
strategically, while working from a medium-to-longterm perspective.
Kuwabara

first clarified its vision for 10 years in the future, and then,looking back from that point, utilized backcasting in orderto determine what needs to be done now. For example, inwhat sense are we aiming to be the number one Group?
Exactly what do we mean by the word “global?” Theseessential issues were repeatedly discussed by all of theofficers at the off-site meeting. I was very pleased that anagreement was reached.
When we worked on the Mid-term Plan at theoff-site meeting, we worked on an intermediatestage draft proposal and discussed it without restrictions. As
a result, we were able to understand the background to the
Mid-term Plan and to introduce external, objective viewpoints. In this way, I believe that we were able to develop a
Mid-term Plan that is more clear and easy to understand.
Kuwabara

In addition, one thing about the current Mid-term
Plan that deserves special mention is that itreflects both a focus on mid-tern numerical targets and a commitment to increasing competitiveness overthe long term. Furthermore, it was also significant thatduring the discussion process we were able to confirm thatthe executives have a forward-looking, sound sense of crisis.
Noma

Another important point is the inclusion of thecorporate branding perspective. It has been 13
years since the management integration, and I believe that
this is now the right time to emphasize the ALL BANDAI
NAMCO concept. From the viewpoint of branding, this will
likely hold the key to rolling out global business initiatives.
MatsudaIn regard to global business activities, I believe
it is important to do more than simply dispatch
employees overseas. The Group should also work to develop
local human resources and strive to nurture employees inJapan so that they can be effective in global settings.
I think that these will be issues for the Group to address inthe future.
Kuwabara

41

DISCUSSION AMONG OUTSIDE DIRECTORSTo realize growth under the ALL BANDAI NAMCO
concept, it is necessary to accelerate lateraldevelopment of IP across Unit and regional boundaries. In
developing IP laterally across regions, I think the Company
should not just implement overseas development of IP
originating in Japan but also nurture IP originating overseas and extend it to other regions, including Japan.
Noma

Targeting the Development ofDiverse Human Resources
I think that there are three important points
in regard to hiring and developing humanresources. These are developing “human resources whoare strong in business operations” and can turn IP assets
into earnings; developing “human resources who canmanage” and can increase corporate value while engaging
in dialogue with the capital markets; and finally, aggressively drawing on talented creators.
At a Group that is active in a wide range of businesses, thecapabilities and skills that are needed for each position are
different. In regard to the development and treatment of
human resources, it is only natural that creators who are
active around the world are handled differently than those
employees who work in operations and management. For
the Company to be able to attract the type of people who docreative work, perhaps we should have a wider range ofoptions in such areas as personnel systems.
Noma

In regard to the promotion of active careers for
Kuwabara
women, female officers have been appointed
in major business companies, but I think that the ratio of
female officers has room for further growth. In this setting,I think the Company has done a good job with steady initiatives, such as providing career formation support with attention to life events and creating networks among female
employees. It might take a little more time until visible
results are achieved, but executives have clearly set out theCompany’s approach to promoting active careers for women,
and there are a growing number of senior employees who
can act as role models for younger employees. I would liketo see the Company continue this solid work going forward.
One could say that the careers of working people
Matsudaare a series of learning experiences, right up to
the end of their careers. In addition to desk-based study, howmuch experience are they accumulating on the front lines?
Are they expanding their own horizons? Even after they
become executives, the importance of study does not change.
I think this topic involves the theme of the “next generationof managers.” In that regard, in line with the issues that webrought forward, President Taguchi’s thoughts were put into
written form and introduced as a new framework, the NextGeneration Managers Development Program. The three of42

us will be lecturers in this program, which will include
people with a wide range of viewpoints. I believe that thissteady implementation of human resource development
initiatives is worthy of high evaluation.
In regard to human resource development, monitoring is the responsibility that we have to fulfill.
In other words, rather than participating directly in the selection process, we check to ensure that this process is implemented in a fair manner in accordance with impartial
procedures. Based on an objective viewpoint, I would like us
to play a role in ensuring that selection is highly transparent.
Kuwabara

Responding to Opinions Rapidly
The process of evaluating the effectiveness of theBoard of Directors* revealed a shared understanding of the problem of overseas business risk. In regard
to the issue of how to monitor potential risk in global business initiatives, the Independent Directors and Audit &Supervisory Board Members Committee, which conducts
effectiveness evaluations, has conducted repeated discussions. At regular Group Business Report Meetings, we havethe opportunity to interview representatives from regional
headquarters companies, which also provides a source of
feedback for our discussions.
Kuwabara

Outside directors are the advocates of shareholders. I believe that our mission is to act on behalfof shareholders to track risk and other information and tooffer opinions about the course of action that the Company
should take.
The approach of executives to the opinions of outside
directors varies from company to company. In that regard,
the BANDAI NAMCO Group’s system for handling these
opinions is distinctive. I believe that the ability of outside
directors to speak freely is a result of the executives
cultivating a venue that makes it possible for us tocommunicate freely.
NomaOn the other hand, the fact that the Company can maintainsteady growth in a highly volatile environment is due to theimplementation of strategic portfolio management. In otherwords, I think that resources are being allocated appropriately to Units that need to contribute to results in the shortterm and Units that need to contribute to results in the
future. In addition, management decisions regarding withdrawal from unprofitable businesses are made rapidly, andthe Company is doing an excellent job in the implementationof “decisive decision-making” as discussed in Japan’s
Corporate Governance Code.

The establishment of “venues” for free expression
are extremely important for company management. And it is equally important that the conclusions thatare reached at those venues are moved on to the implementation stage. That sense of speed is notable at BANDAI
NAMCO. The beginning of off-site meetings with all officers
also resulted from opinions offered in the effectivenessevaluation. In consideration of our opinion that it was necessary to create IP in a Groupwide manner, the current Midterm Plan includes a variety of initiatives. In any event, I havebeen surprised by the quick action taken in response toproposals, the majority of which have been implemented
by the following fiscal year.
MatsudaDISCUSSION AMONG OUTSIDE DIRECTORSAt many companies there is a pattern where thebusinesses that are doing well always do well,and the others remain in weak shape. In the Company’scase, however, there are periods when favorable conditionsin the toys and hobby business drive results, and other periods when home video games and network content drive
results. In those periods, other businesses can steadily
accumulate strength and prepare for their next stage ofdramatic growth. This situation — in which many businesses
vie for top position and the lead dynamically changes hands— is a very favorable cycle for investors. I look forward to
great things from the BANDAI NAMCO Group in the future,and I would like to implement monitoring to support
achievement of the objectives in the current Mid-term Plan.
MatsudaThe Source of
BANDAI NAMCO’s Strength
IP initiatives are typically implemented with afocus extending several years into the future.
Conversely, the current favorable results are attributable to
the Company’s continuous effort from several years ago. To
understand the background to those favorable results, following a recommendation from Mr. Matsuda, I attend policy
briefings for each Unit, which offer opportunities for contact
with people from the business companies. At those briefings
I directly experience how the people on the front lines are
dynamic, forward-looking, and energetic.
I would like to support their efforts from the perspectiveof an independent, outside director.
Kuwabara

In the entertainment industry, dynamism andexcitement on the front lines, in other words, thelevel of employee satisfaction, leads directly to customer
satisfaction. BANDAI NAMCO’s corporate culture of taking
on challenges and tolerating failure stems from this type ofenvironment. I hope that this value will continue to be highly
regarded in the future.
Noma* Evaluations of Effectiveness of the Board of Directors
To heighten the effectiveness of the Board of Directors andincrease corporate value, the Company periodically conducts
evaluations of the effectiveness of the Board of Directors.
Specifically, questionnaires regarding the effectiveness of
the Board are implemented, and responses are obtained
from all directors and Audit & Supervisory Board members.
Then, the Independent Directors and Audit & Supervisory
Board Members Committee conducts analysis and verification based on the results and provides opinions to the Boardof Directors. Based on these opinions, the Board shares theresults of the evaluation of present circumstances as well as
issues and holds constructive discussions regarding future
action plans. An overview of the results of the evaluation aredisclosed on the Company’s website.

43

CORPORATE GOVERNANCE

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.*”* For more information, please visit the Company’s website.

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

Corporate Governance System
Strengthen the Management Oversight Function
Number of Outside Directors

3 / 11
Number of Outside Audit & Supervisory
Board Members

Clarify the Responsibilities of Directors

Number of Independent
Directors or Independent Audit &Supervisory Board Members

Term of Directors

6

Organization

1Year or Less

Company with Company Auditors

3/ 4

The Company believes that the auditing
system based on the Audit & Supervisory
Board, including outside Audit & Supervisory
Board members, is an effective means of
implementing the management oversightfunction.

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

General Meeting of Shareholders
Appointment /Dismissal

Appointment /Dismissal

Audit & Supervisory
Board Members
Audit & Supervisory Board

Board of Directors
11 directors(of whom 3 are outside directors)

Auditing

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

Auditing

Representative Director

Personnel Committee

Directions
Directions

Reports

Reports

Reports

Cooperation

Committees

Internal Auditing Division

Group CSR Committee
Group Risk Compliance Committee

Group Business Report MeetingGroup Management Meeting
Content Business Strategy MeetingGroup Information Security Committee
Support

Auditing

Internal Control Committee

IP Strategy Division Meeting
Policy Directions

Reports

Policy Directions

BANDAI NAMCO Group Companies
As of June 18, 201844

Board of Directors

The Company is a pure holding company, and the representative
directors of the major subsidiaries concurrently serve as directors of the Company. Therefore, directors 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 important mattersrelated to the Company and the Group, such as matters stipulated in laws and regulations or in the articles of incorporation,
M&As, organizational restructuring, the election of major subsidiaries’ directors and Audit & Supervisory Board members, andAudit & Supervisory Board

Personnel Committee

The Company has established the Personnel Committee, which
objectively and neutrally considers personnel and compensation
issues regarding directors, as well as other matters about which

conduct audits regarding the 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 theGroup as a 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 the Group’sbusiness operations is monitored, issues are identified andunderstood, and recommendations for resolving those issues
are provided.

CORPORATE GOVERNANCE

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 are outside Audit& Supervisory Board members) attend important meetings, suchas 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, and the implementation standards and auditing plans related to internal control systems, andin accordance with audit plans determined by the Audit &Supervisory Board, the Audit & Supervisory Board members

the acquisition and disposal of assets with large monetary value.
Concerning matters resolved by the Company’s Board of
Directors and matters delegated the authority as the businessexecution of subsidiaries, rules for criteria for matters on the
Board of Directors’ meeting agenda, etc., have been preparedand clarified. The Chairman of the Board of Directors is President
and Representative Director Mitsuaki Taguchi.
In addition, with the objectives of heightening the effectivenessof the Board of Directors and increasing corporate value,evaluations of the effectiveness of the Board of Directors are
conducted periodically.

it has received inquiries, in particular from the representative
directors. The majority of the committee members are independent outside directors.

Electing Directors and Audit & Supervisory Board Members
When electing candidates for director, the Company considers
the necessary abilities, experience, personality, and others
according to the role, and decisions are made by the Board of
Directors following discussions and recommendations by the
Personnel Committee, as well as following interviews by outside
directors. When electing candidates for Audit & Supervisory
Board members, the Company considers the necessary abilities,
experience, personality, and others according to the role, anddecisions are made by the Board of Directors after receiving
consent from the Audit & Supervisory Board.
The election 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 have experience inwhich are required in order to provide management oversight.
The Articles of Incorporation stipulate that the basic policy is toappoint at least two independent outside directors.
Specifically, the election of outside directors is made withconsideration for an appropriate balance of individuals who
possess a wealth of experience as corporate managers,
individuals who possess deep academic knowledge on corporate
strategy, and attorneys-at-law and other individuals who havethorough knowledge regarding compliance and other aspects ofinternal control.

President and Representative Director

Director

Mitsuaki Taguchi

Shuji Ohtsu

Number of Company shares owned: 69,000 shares
Attendance at meetings of the Board of Directors: 18 / 18 meetings

Division General Manager of the Group Administrative Headquarters

Reasons for Appointment: Mr. Taguchi has supervised the business appropriately since he wasappointed as President and Representative Director of the Company in 2015 and he achieved
the previous Mid-term Plan through his leadership skills based on extensive business experience and broad knowledge. He was nominated for director as the Company considers him
capable of ensuring that the Group continues to grow.

Number of Company shares owned: 33,200 shares
Attendance at meetings of the Board of Directors: 18 / 18 meetings
Reasons for Appointment: Mr. Ohtsu possesses specialist expertise as a certified public
accountant, as well as extensive experience and achievements as Division General Managerof the Group Administrative Headquarters of the Company. He was proposed as a candidatefor director as the Company considers him capable of strengthening Group management
structures and ensuring highly transparent management.

Note: Number of shares held is as of the end of March 2018.

45

CORPORATE GOVERNANCE

Directors

Yuji Asako

Masaru Kawaguchi

Satoshi Oshita

Division General Manager of the Corporate Planning
Division

Director in charge of the Toys and Hobby Unit

Director in charge of the Network Entertainment Unit

Number of Company shares owned: 39,400 shares
Attendance at meetings of the Board of Directors:
18 / 18 meetings

Number of Company shares owned: 58,800 shares
Attendance at meetings of the Board of Directors:
17 / 18 meetings

Reasons for Appointment: Mr. Kawaguchi possesses
extensive experience, achievements, and knowledge in
the Toys and Hobby Business and has driven the businessforward as the President and Representative Director of
BANDAI CO., LTD., which is the core company of the Group’s
Toys and Hobby Business, since 2015. He was proposed asa candidate for director as the Company considers him
capable of building closer ties between the Toys and Hobby
Business and Group management.

Reasons for Appointment: Mr. Oshita possesses extensive
experience, achievements, and knowledge from his
wide-ranging involvement in the Group’s Toys and Hobby,
Network Entertainment, and Visual and Music Production
businesses. He has driven the business forward as the
President and Representative Director of BANDAI NAMCOEntertainment Inc., which is the core company of the Group’s
Network Entertainment Business, since 2012. He wasproposed as a candidate for director as the Company
considers him capable of building closer ties between the
Network Entertainment Business and Group management.

Hitoshi Hagiwara

Kazumi Kawashiro

Yasuo Miyakawa

Director in charge of the Real Entertainment Unit

Director in charge of the Visual and Music Production
Unit

Director in charge of the IP Creation Unit

Number of Company shares owned: 34,300 shares
Attendance at meetings of the Board of Directors:
18 / 18 meetings
Reasons for Appointment: Mr. Asako possesses extensive
experience, achievements, and knowledge relating tomanagement and administration, including businessplanning and accounting, and also has experience in roles
where he was responsible for internal and external communications, such as IR, PR, and SR. He was proposed asa candidate for director as the Company considers him
capable of implementing the Group’s management strategies and seeking a sustained increase in corporate value.

Number of Company shares owned: 16,000 shares
Attendance at meetings of the Board of Directors: —*Reasons for Appointment: Mr. Hagiwara possesses
extensive experience, achievements, and knowledge in theReal Entertainment Business. He has driven the businessforward as the President and Representative Director of
BANDAI NAMCO Amusement Inc., which is the corecompany of amusement facility operations in the Group,
since 2014. He was proposed as a candidate for director as
the Company considers him capable of building closer ties
between the Real Entertainment Business and Groupmanagement.

Number of Company shares owned: 21,100 shares
Attendance at meetings of the Board of Directors:
18 / 18 meetings
Reasons for Appointment: Mr. Kawashiro possesses
extensive experience, achievements, and knowledge in the
Visual and Music Production Business. He has driven thebusiness forward as the President and Representative
Director of BANDAI NAMCO Arts Inc., which is the corecompany of the Group’s Visual and Music Production
Business, since 2012. He was proposed as a candidate fordirector as the Company considers him capable of building
closer ties between the Visual and Music Production
Business and Group management.

Number of Company shares owned: 11,950 shares
Attendance at meetings of the Board of Directors: —*Reasons for Appointment: Mr. Miyakawa possesses extensive
experience, achievements, and knowledge in the IP Creation
Business. He has driven the business forward as the
President and Representative Director of SUNRISE INC.,
which is the core company of the IP Creation Business in theGroup, since 2014. He was proposed as a candidate fordirector as the Company considers him capable of building
closer ties between the IP Creation Business and Groupmanagement.

* Mr. Hagiwara and Mr. Miyakawa were elected at the 13th Ordinary General Meeting of Shareholders held on June 18, 2018,
and thus did not attend meetings of the Board of Directors in FY2018.3.
Note: Number of shares held is as of the end of March 2018.

Main Top Management Meetings

As shown in the table below, the Company holds a variety of top management meetings and has established a system that facilitates
rapidly tracking and responding to Group management information.
Meeting Name

Schedule

Agenda / Purpose

Participants

Board of Directors

Monthly andotherwise asneededDirectors, Audit & Supervisory Board
members, other designated employees

Group Business Report
Meeting
Group Management
Meeting

Quarterly

Decisions / reports on matters stipulated by law, items to beresolved in accordance with authority standards, reports on
the status of operational execution, reports regarding CSR,
crisis management, and compliance
Consolidated numerical reports, Unit reports, other items to
be reported
Deliberations regarding issues extending across Units, otherGroup management issues, strategic deliberations

10 times a year

Directors, Audit & Supervisory Board
members, other designated employees
Directors (excluding outside directors),
other designated employees(including off-site meetings)

Content Business
Strategy Meeting

Quarterly

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

IP Strategy Division
Meeting
Group CSR Committee

Quarterly

Waigaya Meeting

WeeklyDiscussions for the purpose of formulating / advancing theGroup’s IP axis strategy over the medium-to-long-term
Deliberations and information sharing regarding the Group’s
important CSR strategies, consideration of resolutions, items
to be reported, and deliberations at meetings of the Board of
Directors, overall supervision of Group CSR subcommittees,
overall supervision of progress of important items for each
Unit and affiliated business company
Weekly reports regarding the departments for which directors are responsible

Semiannually

Outside Directors and Outside Audit & Supervisory Board Members
Of the Company’s 11 directors, three 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 foroutside Audit & Supervisory Board members. They work together

46

Directors with related responsibilities,
directors from major subsidiaries withrelated responsibilities, other designatedemployees
Directors with related responsibilities,
other designated employees
Directors (excluding outside directors),
other designated employees

Directors (excluding outside directors),
other designated employees

and monitor the Company’s internal control situation on a daily
basis. As described on page 50, 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 inaccordance with those standards. In the Company’s judgment,

of the Audit & Supervisory Board, including outside Audit &Supervisory Board members, receive explanations from theindependent auditors of the status of account audits on aquarterly basis. In this way, they track the status of these audits andmaintain cooperative relationships with the independent auditors.
Furthermore, through matters brought to the Board of Directors,
outside directors and outside Audit & Supervisory Board members
track the status of internal control departments (all of the Company’s
departments). In addition, they attend the Group Business Report
Meeting, where reports on the status of the Group’s operations are
made; strengthen supervisory and other functions; and provide
advice as needed.
Moreover, as an information access support system, the Corporate
Planning Division supports outside directors and outside Audit &Supervisory Board members. In regard to the communication of
information from the Corporate Planning Department, principally,materials are sent prior to meetings of the Board of Directors andexplanations are provided as needed.

Policy Regarding Compensation of Directors and Audit & Supervisory Board Members
The basic policy of the remuneration system for the Company’s
directors, excluding outside directors, is to create a remuneration
framework that promotes the Company’s continuous growth andimproves the Company’s corporate value over the medium-to-longterm by promoting the sharing of values with shareholders,
ensuring objectivity and transparency so that the Company canadequately fulfill its accountability obligations, and fostering ahealthy sense of entrepreneurship in the directors while taking
into account the level of remuneration that will enable theCompany to secure and retain top-grade personnel. The same
basic policy applies to the directors of the five core companiesof the Group’s Units: BANDAI CO., LTD., BANDAI NAMCOEntertainment Inc., BANDAI NAMCO Amusement Inc., BANDAI
NAMCO Arts Inc., and SUNRISE INC., as well as to the directorsof BANDAI SPIRITS CO., LTD.
From the viewpoint of promoting the sharing of values withshareholders, steadily improving results each fiscal year, andsupporting an appropriate level of risk-taking to enhance theCompany’s corporate value over the medium-to-long-term, thespecific remuneration framework comprises fixed remunerationconsisting of base remuneration and variable remunerationconsisting of performance-based bonuses and performancebased stock compensation.
Each director contributes a fixed proportion of the base remuneration to the shareholding association for directors and officers
to purchase the Company’s shares. During his or her term of office,each director continues to hold such shares, as well as sharesacquired through performance-based stock compensation.
Remuneration standards are determined by utilizing a management
remuneration database with which data on remunerations areaggregated and analyzed by an external specialist organization,
setting objective benchmarks in light of the scales of the Company’sbusiness operations and other factors, and comprehensively taking
into consideration the proportion of medium- and long-term performance-based remuneration within annual total remuneration andthe level of difficulty of achieving business performance targets.
Where the standard performance for the period of the Mid-term
Plan has been achieved, the ratio of fixed remuneration to variable
remuneration within annual total remuneration shall be about

Compliance and Risk Management

The BANDAI NAMCO Group has formulated standards for compliance and instituted a system that appropriately ensures the strict

50:50. Also, each Director contributes a fixed proportion of the baseremuneration to the shareholding association for directors andofficers, and the ratio of share-type remuneration which is theadded amount of this contribution and the performance-based
stock compensation shall be slightly more than 20%.
The policy for remuneration, the remuneration framework, andthe 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, inorder to elicit outside directors’ adequate participation and appropriate
advice. In the course of deliberations by this committee, sufficient
information is provided to the outside directors so that they are able
to perform their analysis, including for instance by asking for advice
from external specialist organizations where necessary.
Remuneration for outside directors comprises base remuneration only, to ensure their independence from the Company, andthe amount of remuneration for each outside director is determined by Board of Directors’ meetings.
Remuneration for Audit & Supervisory Board members comprises base remuneration only, with the amount 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 remuneration for each Audit & Supervisory Board
member is determined by Audit & Supervisory Board meetings.

FY2018.3

Officer category

Directors

Total amount of compensation, etc., by type
Total amount(Millions of yen)of compensation, etc.,
Performanceby typeBasicbased stock(Millions of yen) compensation compensation*
Bonus

Number of
eligible
officers(People)

675

248

78

347

7

Audit &
Supervisory
Board members

24

24

—

—

1

Outside officers

82

82

—

—

6

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

CORPORATE GOVERNANCE

the outside directors and outside Audit & Supervisory Board
members meet those standards, there is no concern that they
will have a conflict of interest with general shareholders, andthey possess high levels of independence. Accordingly, theCompany has notified the Tokyo Stock Exchange (TSE) that they
are all independent directors or independent Audit & Supervisory
Board members in accordance with TSE regulations. The statusof audits by internal auditors, audits by the Audit & Supervisory
Board members, and audits by the independent auditors arereported to the Board of Directors. By attending meetings of theBoard of Directors, the outside directors track the status of theseaudits and work to maintain close ties. In addition to tracking thestatus of internal audits reported at meetings of the Board of
Directors, outside Audit & Supervisory Board members track thestatus 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* Difference between the amount of performance-based stock compensation for
FY2018.3 that is expected to have arisen as of the end of FY2019.3 and the amountfor FY2017.3 that is expected to have arisen, and the actual payment amount(monetary compensation receivables and monetary payment amounts).

observance of laws and regulations, ethical standards, and internal regulations on a Groupwide basis. Under the Group’s

47

CORPORATE GOVERNANCE

compliance system, the director in charge of compliance has
overall responsibility for compliance throughout the Group andleads the Group Risk Compliance Committee. This committee,
which is the top compliance entity, promptly considers and determines what action to take when there is a compliance violation or
the possibility of a compliance violation in the Group. The Group
Risk Compliance Committee works to prevent the occurrence ofa wide range of risk events, strives to ensure prompt responses
if a risk event does occur, and audits and supervises importantmatters regarding compliance for the entire Group.
In addition, the Company has formulated the BANDAI NAMCO
Group Compliance Charter and has published the BANDAI NAMCO
Group Compliance Handbook to ensure thorough knowledge of compliance throughout the Group. The Group also implements training
activities, such as through an education system utilizing the Group’s
intranet. Furthermore, the presidents of Group operating companies

Takeover Defenses

At present, the Company has taken no specific measures as
takeover defenses. The Group regards implementing its management and business strategies in accordance with the measures
to increase the corporate value of the Group and aiming toincrease 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 and develop asystem 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 have decision-making powerover the Company’s financial and business policies.

submit written oaths pledging strict compliance with the charter.
In risk management, the Group works to prevent the occurrence of risk events and to rapidly identify the causes of risk
events. In the event of the occurrence of a risk event, the Groupestablishes an emergency contact network, and in the event of
the emergence of risk event information, including information
about violations of laws or regulations, such information isimmediately reported to the president. The Group is working tominimize any influence on operations through the implementation of rapid and accurate responses.
In particular, positing the occurrence of a situation that could cause
drastic damage to the management of the Group through a majordisaster or the like, the Group has defined the basic policy for a
Business Continuity Plan (BCP) for the Group, and is drawing up a
BCP for the Group and organizing a Business Continuity Management(BCM) system to achieve rapid recovery and restart of operations.
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, but will
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 theirreview from objective viewpoints, to enable the Company to makea judgment from the perspective of improving corporate value
first. The Company will also work to collect sufficient informationand secure necessary time, so as to be conducive to appropriate
judgment by the shareholders.

Initiatives Related to Respect for the Viewpoints of Stakeholders
Rules related to respect for the viewpoints of stakeholders through internal regulations
To meet the expectations of the Company’s various stakeholders and maximize corporate value, we have formulated the BANDAI NAMCO
Group Compliance Charter, which stipulates that the Company will respect the viewpoints of stakeholders.
Implementation of environmental conservation activities and CSR activities
In regard to CSR, we have established the “Important CSR Themes” section on the Company’s website. We also hold meetings of theGroup CSR Committee (chairperson: president) and the Group CSR Subcommittee, which is a subcommittee of the Group CSR Committee.
In these ways, we are implementing initiatives to strengthen CSR on a Groupwide basis. Also, in regard to the details of these initiatives
we issue a CSR activity publication and disclose initiatives on the Company’s website.
Formulation of policies related to the provision of information to stakeholders
We have formulated an IR policy that is available on the Company’s website. This policy covers such matters as benchmarks for disclosureof information and the strengthening of IR opportunities.

IR Activities

Aiming to enhance corporate value, BANDAI NAMCO Holdings
is implementing a variety of investor relations (IR) activities inaccordance with the IR policy. In addition, the status of IR activities and the reactions of investors and analysts are continuallycommunicated as feedback to the Unit core companies andthroughout the Group.

Results of Major IR Activities in FY 2018.3
Results presentations and Mid-term Plan
presentation for investors and analysts
Results telephone conferences for investors
and analysts

48

As well, BANDAI NAMCO aims to be a highly transparent
company that clearly communicates management strategies andbusiness policies to shareholders and investors. Accordingly,
the Company works to enhance opportunities for executives
to speak directly to individual investors, institutional investors,
and securities analysts, such as corporate presentations andresults presentations.

3 (268 people)
1 (80 people)

Overseas IR

3 (3 regions)

Separate meetings for investors and analysts

289 people

Presentations for individual investors in Japan

3 times (791 people)

In presentations forinvestors and analysts,
explanations are provided
directly by presidents ofmajor Group companies
who are directors of
BANDAI NAMCO Holdings.

Internal Control System
1. Internal Control System: Basic Approach(i)(ii) Systems for Preserving and Managing Information Related to Directors’ Executionof Their Duties
a. The Company shall establish regulations concerning document management
and ensure (i) the centralized collection and management of minutes of several
kinds of meetings, contracts, and other documents, and (ii) appropriate safekeeping and management of important documents including documents
circulated for approval in each department. The Company shall have a system toensure that Directors and Audit & Supervisory Board Members may peruse those
documents at any time.
b. The Company shall establish regulations concerning information security as apart of Group management. These regulations will provide for a system to ensure
appropriate safekeeping and preservation of information.
(iii) Regulations Concerning Management for Risk of Loss of the Company and Its
Subsidiaries and Other Systems
a. 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.
b. 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.
c. Anticipating the occurrence of situations that could cause drastic damage to the
management of the Group through a major disaster or the like, the Group shalldefine the basic policy for a Business Continuity Plan (BCP) for the Group, andformulate a BCP for the Group and organize a Business Continuity Management(BCM) system to achieve rapid recovery and restart of operations. Directors andemployees of the Company and its subsidiaries shall be made aware of this.
(iv) Systems to Ensure that Directors, etc., of the Company and Its Subsidiaries
Execute Their Duties Efficiently
a. The Company shall assign each subsidiary into units categorized by businesssegment, and appoint a Director and lead company in charge of each unit in orderto improve efficiency of business operations based on the division of duties, chain ofcommand structure, authorities and competencies, decision-making frameworks
and other regulations regarding structure within the Group.
b. 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.
(v) Systems Concerning Reporting Matters Regarding Execution of Duties of
Directors, etc., of Subsidiaries to the Company
a. 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.

business processes considering the importance of effectiveness and efficiency inbusiness operations, and shall evaluate and operate internal controls on financial
reporting based on related laws and regulations, etc.
(vii) Matters Regarding Employees Required by Audit & Supervisory Board Members toAssist Their Duties, and Matters Regarding the Independence of such Employees
from the Board of Directors
a. 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.
b. The Company shall provide an opportunity for Directors and Audit & Supervisory
Board Members to consult in advance regarding personnel matters relating tosuch employees, so as to ensure independence from the Board of Directors.
(viii) Matters Concerning Ensuring the Effectiveness of Instructions to Employees who
Assist the Audit & Supervisory Board Members
a. The Company shall keep Directors and employees thoroughly informed that
employees who assist the Audit & Supervisory Board Members in their duties areunder the command of the Audit & Supervisory Board Members.
(ix) System for Directors, etc., and Employees of the Company and Its Subsidiaries toReport to the Company’s Audit & Supervisory Board Members
a. Directors, etc., and employees of the Company and its subsidiaries shall report to
the Audit & Supervisory Board promptly with regard to matters prescribed bylaws 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.
b. Directors, etc., and employees of the Company and its subsidiaries shall report
promptly and appropriately when requested to do so by an Audit & Supervisory
Board Member of the Company regarding the performance of their duties.
c. 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.

CORPORATE GOVERNANCE

Systems to Ensure that the Execution of the Duties by Directors, etc., andEmployees of the Company and Its Subsidiaries Is in Compliance with the Laws
and Regulations and the Articles of Incorporationa. The Company shall set in place the Group’s Corporate Philosophy and the
BANDAI NAMCO Group Compliance Charter, ensure that Directors and employees of the Company and its subsidiaries are familiar with them, and always pay
due attention to ensure they carry out their duties lawfully and fairly.
b. Directors of the Company shall report periodically to the Board of Directors on
the structure and operating status of internal control systems.
c. 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.
d. Should violations of compliance or suspicions thereof occur within the Group, theCompany shall immediately convene the Group Risk Compliance Committee with
the Company’s President and Representative Director as its chair to discuss anddecide how the issue should be handled.
e. Overseas, an overseas regional headquarters shall be determined for eachregion to manage risk and support compliance.
f. 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.
g. The Internal Auditing Division shall be established independently of the executive
sections in the Company and its major subsidiaries to work towards maintaining
the properness of execution of operations through internal audits.

(x) System for Ensuring that Persons Making Reports to Audit & Supervisory Board
Members shall not be Treated Disadvantageously
a. The Company shall prohibit the disadvantageous treatment of persons who havereported or consulted with Audit & Supervisory Board Members, and shall statethat clearly in the Group Risk Compliance Regulations and make it thoroughly
known to Directors, etc., and employees of the Company and its subsidiaries.
(xi) Matters Regarding Policies Pertaining to Procedures for Advance Payments or
Reimbursement of Expenses Arising in the Performance of Duties by Audit &Supervisory Board Members and Other Payment of Expenses and Liabilities
Arisingin the Performance of Said Duties
a. 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.
(xii) Other Systems to Ensure the Effectiveness of Audits Conducted by the Audit &Supervisory Board Members
a. Directors of the Company shall formulate a system whereby Audit & Supervisory
Board Members can attend important meetings, and ensure that a system exists
whereby they can meet periodically or on an ad hoc basis with Directors andemployees, and cooperate with the Internal Auditing Division and Accounting
Auditors.
b. Subsidiaries of the Company shall install an appropriate number of Audit &Supervisory Board Members according to their scale, business category, etc., andensure that there are systems in place wherein Audit & Supervisory Board
Members of subsidiaries report periodically to the Audit & Supervisory Board
Members of the Company.

2. Elimination of Anti-Society Groups: Basic Approach and Status of
Implementation
To meet the expectations of the Company’s various stakeholders and maximize corporate value, we have formulated the BANDAI NAMCO Group Compliance Charter, which
provides standards for the Group’s activities.
In regard to the rejection of anti-society groups, our approach is as follows: “We will
maintain no ties with and will firmly reject any and all forces and groups that threaten
the safety and order of society.”(vi) Other Systems to Ensure Proper Business Behavior by the Company and Its
Subsidiaries
a. 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.
b. The Company and its subsidiaries shall endeavour to improve and standardize

49

CORPORATE GOVERNANCE

Standards for the Independence of Outside Directors andOutside Audit & Supervisory Board Members

In order for the Outside Directors and Outside Audit & Supervisory Board Members of the Company to be judged
as being independent, such Outside Directors and Outside Audit & Supervisory Board Members must not fallunder any of the following items.
1. Any person who purports to be a major business partner of the Company (including group companies of theCompany; the same applies hereinafter)
2. Any Executive Director, Executive Officer, Manager, or other employee of a company that purports to be amajor business partner of the Company
3. Any person who is a major business partner of the Company
4. Any Executive Director, Executive Officer, Manager, or other employee of a company that is a major business
partner of the Company
5. Any attorney-at-law, certified public accountant, certified public tax accountant, consultant, or other expert
who receives monies or other economic benefits above a certain amount from the Company, in addition to his
or her remuneration as a Director or Audit & Supervisory Board Member
6. Any person belonging to a company, association, or other organization such as a law firm, auditing firm, tax
accountant corporation, and consultancy which receives monies or other economic benefits above a certain
amount from the Company
7. Any person receiving donations or subsidies from the Company above a certain amount
8. Any person who is a Board member or other Executive Officer in a company, association, or other organization
which receives donations or subsidies from the Company above a certain amount
9. If an Executive Director or full-time Audit & Supervisory Board Member for the Company concurrently holds
a position as an Outside Director or Outside Audit & Supervisory Board Member at another company, any
person who is an Executive Director, Executive Officer, Manager, or other employee of that company
10. Any person who has come under one of the categories listed in items 1 through 9 above in the past 5 years
11. If a person coming under one of the categories listed in items 1 through 9 above is an important person, that
person’s spouse or relative within the second degree of kinship
12. The spouse or relative within the second degree of kinship of any person who is a Director, Executive Officer,
Manager, or other important employee of the Company or its subsidiaries

Notes: 1. In items 1 and 2, where it reads “any person who purports to be a major business partner of the Company,” this means “any person (orcompany) who has received a payment from the Company of 2% or more of its annual consolidated net sales for the most recent business year.”
2. In items 3 and 4, where it reads “any person who is a major business partner of the Company,” this means “any person (or company) who has
paid to the Company an amount of 2% or more of the Company’s annual consolidated net sales for the most recent business year, or any
person (or company) who has provided the Company with a loan of an amount of 2% or greater of the value of the Company’s consolidated
total assets as of the end of the most recent business year.”
3. In items 5, 7, and 8, where it reads “a certain amount,” this means “¥10 million a year.”
4. In item 6, where it reads “a certain amount,” this means “2% or more of the total net sales for that company, association, or organization forthe most recent business year, or ¥100 million; whichever is greater.”

50

CSR INITIATIVES

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!”

BANDAI NAMCO Group CSR Management 
Themes that require special initiatives have been identified as the BANDAI NAMCO Group’s Important CSR Themes. In addition,
each Unit formulates its own CSR Major Initiative Themes and leverages the special characteristics of its operations to implement
activities in accordance with those themes.

BANDAI NAMCO Group’s CSR Policy “Dreams, Fun and Inspiration”

CSR INITIATIVES

MissionCSR Action Concept“Fun For the Future!”
The Group’s CSR Initiatives
1 Environmental and Social Responsibilities
2 Economic Responsibilities
3 Legal and Ethical Responsibilities

Compliance Charter
Rules related to appropriate products and services / fairdealings, respect for all employees, information disclosure,respect for and usage of intellectual property, protection of
information and resources, rejection of anti-society groups,
harmony with the environment, and harmony with society

BANDAI NAMCO Group’s Important CSR Themes
1

Safety and Cleanliness of Products
and Services

The Group is giving priority to its efforts to further
enhance the safety and cleanliness of its products
and services, which is the foundation of the provision of “Dreams, Fun and Inspiration.”3

Policies Regarding Influence on Societyof the Group’s Content and Products

To provide “Dreams, Fun and Inspiration” topeople around the world, we value freedom of
expression, and are working to appropriately
provide customers with a wide range of content
and products.

2

Environmental Consideration

To ensure ongoing “Dreams, Fun and Inspiration” forthe next generation, the Group will work to show
consideration for the environment, to reduce energy
consumption in its operating activities, and to reduce
the use of resources in its products and services.

4

Supply Chain Management

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

Each Unit and affiliated business company sets up priority initiatives andworks through its businesses to implement activities in line with the Group’s Important CSR Themes.

51

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 periodically reviewed.
With consideration for the influence that companies have onsociety in addressing the various social issues that surroundthe Group, we implemented multifaceted initiatives to identify
and evaluate themes that require special initiatives. In thisway, we formulated the BANDAI NAMCO Group’s Important
CSR Themes. As a company that provides “Dreams, Fun andInspiration” to customers around the world, we will work
toward the resolution of social issues.

Important CSR Theme Formulation Process

In formulating the BANDAI NAMCO Group’s Important CSR
Themes, we advanced through a process of reconfirming
which CSR themes are the most important from the perspective of the BANDAI NAMCO Group and its stakeholders.
First, we interviewed four outside experts to identify theneeds of society surrounding the Group. Next, based on avariety of information, such as reports on investigations
conducted by external organizations, we then compiled 68
specific items related to CSR activities. We evaluated these
items from the perspectives of the Mid-term Plan, guidelines, and the other sources listed below, and subsequently
organized and classified them. Through this process, weestablished the four Important CSR Themes.

Opinions and Approaches that We Referenced for the
Formulation of the Themes
Opinions of Stakeholders
Interviews with outside experts
Third-party opinions in CSR reports
Reports on investigations conducted by external organizations (Sustainable Brand Survey, Global NGO Survey(E-Square Inc.), etc.)

The BANDAI NAMCO Group’s Policies
BANDAI NAMCO Group Corporate Philosophy
BANDAI NAMCO Group Compliance Charter

Important Viewpoints for the Formulation of the Themes

CSR Initiatives

1

BANDAI NAMCO Group guidelines related to CSR
BANDAI NAMCO Group Mid-term Plan
3 Standards such as the GRI Guidelines, ISO 26000(Japanese translation), and the Ministry of theEnvironment’s Environmental Report Guidelines
4 Initiatives of corporations with innovative CSR activities
5 Opinions of outside experts

BANDAI NAMCO Group Environmental Policy

2

BANDAI NAMCO Group Environmental Vision
BANDAI NAMCO Group Basic Policy on Social
Contribution
BANDAI NAMCO Group Mid-term Plan

Important CSR Themes—Establishment and Process Steps
STEP

1

STEP

Gain understanding ofsociety’s expectations
through interviews
with outside experts,
etc. (Selection of
specific items related
to CSR activities)2

Evaluate the importance of the specificitems related to CSR
activities

STEP

Implemented every three years

3

STEP

Organize and classify
high-importancespecific items related
to CSR activities andconsolidate themwithin the four
important themes

Establishmentof the Group’s
Important CSR
Themes4

STEP

Individual Units decidemajor initiative themes
based on the important
themes5

Promote initiatives
based on major
initiative themes inaccordance with the
CSR concept

BANDAI NAMCO Group’s CSR Promotion System

The Group CSR Committee mainly comprises the presidents of BANDAI NAMCO Holdings and the Unit core companies.
In this way, the Group is making decisions rapidly and advancing CSR activities in a manner that is integrated with operations.
Deliberating / Reporting on Matters Related to CSR
Board of Directors (CSR matters reported as needed)
Appointment / Dismissal / Supervision

Representative Director
Reports

Group CSR Committee (Semiannually)
Group CSR Subcommittee (Quarterly)Group Risk Compliance Committee (as needed)

52

Unit CSR Projects

Examples of Initiatives Addressing Important CSR Themes

1

Safety and Cleanliness of Products and Services

Pursuing toy designs and materials with consideration for safety2

In addition to acquiring certification from third-party
inspection institutions, we also conduct internal analysis
and inspection to confirm that the products do not include
poisonous heavy metals or regulated chemical substancesthat have the potential to harm the human body.

Using gas chromatography–massspectrometry equipment, inspections
are conducted to determine thepresence or absence of regulated
chemical substances that have thepotential to harm the human body.

CSR INITIATIVESFor each product, BANDAI CO., LTD., 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, we conduct necessary tests inaccordance with such factors as product characteristics,
selecting from among testing standards (approximately 350
items) to confirm product safety, strength, durability, etc.
For example, with the Super Sentai series combination robot,
we implement rigorous testing, inspection, and confirmationof more than 200 items, and we confirm product quality
from a variety of perspectives. In addition, standards related
to the safety of materials include more than 20 items.

Environmental Consideration

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 business segment. Consequently,
Groupwide emissions in FY2018.3 were down approximately
20% from FY2013.3, to 59,550 tons of CO2. From FY2019.3,
in addition to total emissions management, we are also
working to control CO2 emissions through the introductionof management based on emissions intensity for each Unit.
In addition, as one part of our initiatives to conserve
energy, in amusement machines and store lighting at
amusement facilities we are converting from halogen lamps
and fluorescent lighting to LED lamps. The Group is also
implementing a range of other initiatives, such as increasing operational efficiency at plants, aggressively utilizing
LEDs at live events, recycling materials, and promoting
eco-driving.

BANDAI NAMCO Group CO2 Emissions(t-CO2)
74,56673,99664,254

2013

2014

2015

61,795

2016

59,04359,55020172018

For the Fiscal Years Ended March 31

Electricity use reduction for amusement
facility amusement machines (FY2018.3)

1,080Lighting foramusement machinesconverted to LEDs46

% reduction inelectricity use in comparison
with fluorescent lights

Green procurement (chemical substance management) initiatives
In response to stricter environmental laws and regulations
around the world, in 2005 BANDAI NAMCO Entertainment
Inc. issued Version 1.0 of the Green Procurement Standards
Manual, the first in the amusement industry. The manual
has subsequently been repeatedly revised, and productionof products in Japan and overseas is now being conductedin accordance with the laws and regulations of each country, based on Version 4.01 of the Green Procurement
Standards Manual, which prohibits the inclusion of 29 substances. To strictly observe regulations, we investigate

information regarding the chemical substances in parts
received from suppliers, and we conduct analysis andinspection in the principal manufacturing countries —Japan and China — to confirm that specified chemical
substances are within regulatory limits. In addition, we
implement supplier audits to confirm that chemical substance management systems have been established andare being operated effectively, such as at the manufacturing
plants of suppliers in Japan and overseas.

53

CSR INITIATIVES

3

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

Implementing timely training and collecting and sharing information regarding ethical expression
Each business segment implements a variety of employee
training related to ethical expression in order to facilitate
the provision of products and services in accordance withappropriate expression. In addition, we are taking steps
to advance the sharing of information related to ethicalexpression, such as holding study sessions based on thelatest information and past examples and distributing mailmagazines to employees.

Study session related to
ethical expression

IP Protection Initiatives
The BANDAI NAMCO Group is working closely with relatedcompanies to protect the image of its IP and to ensure thatits customers can enjoy worry-free use of safe products.
We are moving forward with measures targeting counterfeit
goods in Japan and overseas.
In Japan, we monitor the domestic market, including theonline market, and ask customs authorities to prohibit theimport of counterfeit products. In these ways, we are working to promptly detect counterfeit products, to prevent theirappearance on the market, and to secure their prompt
removal if found. In addition, we are also advancing monitoring and countermeasures in overseas markets, including
online sales. Moreover, we are sponsoring a lecture atuniversities in Shanghai in order to foster understanding

4

related to IP protection. We are implementing activities tohelp eradicate pirated versions. Furthermore, as a memberof the International Intellectual Property Protection Forum(IIPPF), we are cooperating and exchanging opinions withthe related administrative agencies and organizations to
implement effective measures.

Lecture related to IP protection
at a university in Shanghai

Supply Chain Management

Implementing a variety of audits
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.
As well, BANDAI CO., LTD., implements BANDAI Factory
Audits (BFAs), which combine new plant audits and Code of
Conduct (COC) audits, at overseas final packaging plantsthat make BANDAI products (174 plants in FY2018.3). The
basic policy for BFAs is the BANDAI Code of Conduct, whichcalls for strict observance of eight COC standards regarding
such issues as forced labor. Audits are conducted in accordance with our original BFA manual.
In addition, when it starts to do business with a supplier,
BANDAI NAMCO Entertainment Inc. implements a CSR
Procurement Questionnaire related to seven major items— overall CSR; human rights (prevention of forced labor,
discrimination, harassment, etc.); safety (work

CSR

54

environment, 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 Entertainment
Inc. only conducts business with suppliers that do not haveissues with illegal activity (166 companies in FY2018.3).
Also, at manufacturing plants for children’s products(one company in FY2018.3), audits are conducted in regard
to the production management system for the plant line.

Audit at plant in China

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

FINANCIAL SECTION
56

CONSOLIDATED SIX-YEAR FINANCIAL SUMMARY57

FINANCIAL REVIEW60

CONSOLIDATED BALANCE SHEETS

62

CONSOLIDATED STATEMENTS OF INCOME AND

FINANCIAL SECTIONCONTENTSCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
63

CONSOLIDATED STATEMENTS OF CHANGES IN
NET ASSETS

64

CONSOLIDATED STATEMENTS OF CASH FLOWS

65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

94

INDEPENDENT AUDITOR’S REPORT55

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

2013

2014

2015

2016

2017

2018

Net sales¥487,241¥507,679¥565,486¥575,505¥620,062¥678,312

Gross profit

183,079

190,829

213,112

202,601

223,759

241,582

Selling, general and administrative expenses

134,436

146,156

156,791

152,960

160,520

166,557

Operating profit

48,64344,67356,32149,641

63,23975,025Recurring profit

49,97347,45759,38450,77563,291

75,380

Profit attributable to owners of parent

32,38325,05537,58934,584

44,16054,110Comprehensive income

41,50532,63343,357

27,377

43,10556,025

Capital expenditures

23,83628,97927,761

26,98725,01660,502

Depreciation and amortization

20,416

21,72623,712

21,626

21,85423,545

Cash flows from operating activities

36,411

41,291

50,10358,05064,13755,138

Total assets¥374,203¥405,093¥441,764¥448,336¥488,033¥540,491

Total current assets

264,804

284,398

317,516

322,177

357,783

359,614

Total current liabilities

108,391

120,135

123,136

114,334

126,111

136,273

Total net assets

248,770

267,951

303,513317,304

348,784

387,355¥147.40¥114.05¥171.10¥157.43¥201.03¥246.29

45.00

35.00

62.00

52.00

82.00

123.00Return on equity (ROE)*2 (%)

14.1

9.7

13.2

11.2

13.3

14.7

Return on assets (ROA)*3 (%)

14.0

12.2

14.0

11.4

13.5

14.7

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

27.6

28.8

27.7

26.6

25.9

24.6

Operating profit margin (%)

10.0

8.8

10.0

8.6

10.2

11.1

Profit attributable to owners of parent margin (%)

6.6

4.9

6.6

6.0

7.1

8.0

Shareholders’ equity ratio (%)

66.0

66.0

68.6

70.6

71.3

71.5

Debt/equity ratio (times)

0.05

0.03

0.01

0.01

0.00

0.00

For the Year:*1

At Year-End:Per Share Data (Yen):
Basic earnings per share
Cash dividends

Main Financial Indicators:

Notes:*1 Recurring profit is a Japanese accounting term denoting profit 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

56

FINANCIAL REVIEWOverview of Performance in the
Fiscal Year Ended March 31, 2018

net sales increased to 64.4%, an increase of 0.5 percentage points

During the fiscal year ended March 31, 2018, the Japanese economy

million, and the gross profit margin was 35.6%, a decrease of 0.5

continued to moderately recover, supported mainly by a recovery in personal

percentage points from the previous fiscal year.

from the previous fiscal year. As a result, gross profit was ¥241,582

consumption and improved corporate profitability. However, the outlook forthe overall economy remained uncertain. Overseas, personal consump-

SG&A Expenses

tion was impacted by uncertainty in social conditions and other factors.

Selling, general and administrative (SG&A) expenses were ¥166,557

In this environment, the BANDAI NAMCO Group (“the Group”) has

million (year-on-year increase of 3.8%), and the ratio of SG&A

pushed ahead with the three-year Mid-term Plan that started in April

expenses to net sales declined to 24.6%, from 25.9% in the previous

2015. Under the Vision of “NEXT STAGE: Empower, Gain Momentum

fiscal year. Principal items included advertising expenses ofand Accelerate Evolution,” the Group is targeting medium- and long-¥39,720 million, directors’ remuneration and employees’ wages ofterm growth and has focused on creating and cultivating new IP¥43,996 million, employees’ retirement and severance benefits(Intellectual Property: meaning characters and other intellectualof ¥2,607 million, provision for directors’ bonuses of ¥1,743 million,

property), expanding target markets, and growing new businesses as

and research and development expenses of ¥19,399 million.

part of efforts to strengthen the “IP axis strategy” that aims to maximize
IP value through the provision of the best products and services at the

Operating Profit

best possible times. The Group also worked to expand its IP lineup,

Operating profit was ¥75,025 million (year-on-year increase ofbusiness fields, and areas in overseas markets.

18.6%), and the operating profit margin increased to 11.1%, from

During this fiscal year, we pushed ahead with key measures of the

10.2% in the previous fiscal year.

smartphones and home video games performed well in Japan andOther Income (Loss)overseas. In addition, key IP products and services in each businessIn other income (loss), loss on impairment of fixed assets wassegment also performed favorably. The Group achieved record-high¥1,463 million, and gain (loss) on sales and disposal of fixed assets,

results for both net sales and operating profit.

net was ¥734 million. As a result, there was a net other loss

FINANCIAL SECTION

Mid-term Plan, where network content such as game applications forof ¥2,527 million.

Net Sales
On a consolidated basis, the Group’s net sales were ¥678,312 million

Profit Attributable to Owners of Parent(year-on-year increase of 9.4%)

The Group recorded profit attributable to owners of parent of¥54,110 million (year-on-year increase of 22.5%). The profit attribut-

Cost of Sales

able to owners of parent margin was 8.0%, and basic earnings per

Cost of sales was ¥436,730 million, and the ratio of cost of sales toshare increased to ¥246.29, from ¥201.03 in the previous fiscal year.

Results by Segment

Millions of yen

Millions of yen

Net sales

Segment profit

2018

2017

Year on year

2018

2017

Year on year

Toys and Hobby¥222,417¥218,099¥ 4,318¥14,476¥13,331¥ 1,145

Network Entertainment

405,986

355,586

50,40052,37542,035

10,340

Visual and Music Production

56,05956,290(231)

12,50913,437

(928)

Other

27,641

26,797

844

767

702

65

Toys and Hobby Businessworldwide such as DRAGON BALL Z DOKKAN BATTLE and ONE PIECE

As for Toys and Hobby Business, in Japan, long-established

Treasure Cruise, and, in Japan, key titles such as The iDOLM@STER

IP products such as the KAMEN RIDER series, the PRETTY CURE!

series continued to perform well and contributed significantly toseries, and the Dragon Ball series continued to perform well, while

earnings. In home video games, the new titles TEKKEN 7 andproducts of the Mobile Suit Gundam series performed steadily, mainly

DRAGONBALL FighterZ became popular mainly in the Americas andin plastic models. In addition, the Group enhanced efforts to expand

Europe, and repeat sales of existing titles were favorable. In theits target markets for mature fans and implemented measures toamusement business, the Group’s existing amusement facilities instrengthen the IP axis strategy by taking steps to expand IP lineup

Japan performed favorably, and the Group proactively developed

and the like. Overseas, in the Asian region, products of the Mobile Suitmachines and opened new facilities utilizing virtual reality (VR) as a

Gundam series and collectable toys for mature fans continued gaining

fresh initiative combining new technologies.

in popularity. In Americas and Europe, we continued with the roll-out
of card products and the like for the mature fan base.
As a result, net sales in the Toys and Hobby Business wereAs a result, net sales in the Network Entertainment Businesswere ¥405,986 million (year-on-year increase of 14.2%), and segment
profit was ¥52,375 million (year-on-year increase of 24.6%).

¥222,417 million (year-on-year increase of 2.0%), and segment profit
was ¥14,476 million (year-on-year increase of 8.6%).

Visual and Music Production BusinessIn the Visual and Music Production Business, the Company rolled

Network Entertainment Businessout videos and products linked to new and existing key IP products,

As for the Network Entertainment Business, in network content

such as the Mobile Suit Gundam series, the LoveLive! series, and thesuch as game applications for smartphones, key titles being distributed

GIRLS und PANZER series, and these became popular. Although57earnings also made a contribution from license revenue related

was a net increase in funds due to profit before income taxes ofto products such as the LoveLive! series, differences mainly in the¥72,498 million (compared with ¥60,861 million in the previous fiscal

launch timing for key products resulted in a year-on-year declineyear) and depreciation and amortization of ¥23,545 million

in earnings for the business overall.

(compared with ¥21,854 million in the previous fiscal year).

As a result, net sales in the Visual and Music Production
Business were ¥56,059 million (year-on-year decrease of 0.4%), andCash Flows from Investing Activities

segment profit was ¥12,509 million (year-on-year decrease of 6.9%).

The amount of funds used in investing activities totaled ¥63,339
million (year-on-year increase of 386.6%). The main breakdown of

Other Businesses

funds used was purchases of property, plant and equipment andOther Businesses consist of companies that conduct businesses

intangible assets totaling ¥48,243 million (compared with ¥14,822

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

million in the previous fiscal year) and purchases of investment

and operational support for each of the Group’s strategic businesssecurities of ¥11,461 million (compared with ¥2,946 million in theunits: Toys and Hobby SBU, Network Entertainment SBU, andprevious fiscal year).

Visual and Music Production SBU. We made efforts to manage suchoperations related to group support in an efficient manner.

Cash Flows from Financing Activities

As a result, net sales in the Other Businesses were ¥27,641

The amount of funds used in financing activities totaled ¥17,086

million (year-on-year increase of 3.1%), and segment profit was

million (year-on-year increase of 29.7%). The main breakdown of¥767 million (year-on-year increase of 9.3%).

funds used was cash dividends paid of ¥18,023 million (compared

Financial Position

with ¥11,430 million in the previous fiscal year).

As of March 31, 2018, total assets stood at ¥540,491 million, an

Basic Policy on the Distribution of Profits

increase of ¥52,458 million from the end of the previous fiscal year.

The Company ranks the return of profits to shareholders as one

Cash and time deposits declined ¥20,000 million due to the acquisitionof its highest priorities in its management. The fundamental policyof land, the payment of dividends, purchases of investment securities,

is to further strengthen the Group’s competitiveness and, whileand other factors. However, the Company recorded increases ofmaintaining a sound financial status, to achieve regular distribu-¥12,542 million in trade receivables, ¥8,862 million in work in process,tions of dividends and improvement in the Company’s corporate¥33,919 million in property, plant and equipment mainly due to thevalue. As part of starting the new Mid-term Plan in April 2018, andacquisition of land, and ¥17,293 million in investment securities.

in light of the Group’s strategy and the environment surrounding its

Total liabilities amounted to ¥153,136 million, an increase ofbusiness, the basic policy for providing returns to shareholders was¥13,887 million from the end of the previous fiscal year. This

examined from various angles. As a result, the Company changed

increase was principally attributable to increases of ¥5,382 million

over to a basic policy of providing a return to shareholders thatin trade payables and of ¥4,840 million in other current liabilities,

targets a total return ratio of 50% or more based on stable dividend

which resulted from increases in accrued expenses, etc.

payments of 2% of DOE (dividends on equity). Under this policy, theTotal net assets stood at ¥387,355 million, an increase of ¥38,571

Company strives to maintain long-term and stable dividend levels

million from the end of the previous fiscal year. The main factors

and be more aware of capital cost. At a Board of Directors meetingwere an increase of ¥36,280 million in retained earnings due to theheld on February 9, 2018, it was decided that the application of thisrecording of profit attributable to owners of parent of ¥54,110 million,

new basic policy would be moved forward, and that it would be

and an increase of ¥3,811 million in valuation difference on available-

applied starting with the year-end dividend for the fiscal year ended

for-sale securities, net of tax, despite ¥18,023 million in cash

March 31, 2018.

dividends paid.
As a result, the shareholders’ equity ratio was 71.5%, compared withIn regard to annual dividends per share for the fiscal year ended
March 31, 2018, the Company paid an annual dividend of ¥123 per share,

71.3% at the end of the previous fiscal year. The current ratio*1 waswhich consists of base dividends of ¥32 per share, a performance-

263.9%, compared with 283.7% at the end of the previous fiscal year;

based dividend of ¥66 per share, and an additional special dividend

the quick ratio*2 was 200.8%, compared with 222.8%; and the interestof ¥25 per share that expresses the Company’s appreciation forcoverage ratio*3 was 1,468.2 times, compared with 1,718.0 times.

shareholders in regard to the record-high levels of net sales and profits.

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

Cash Flows
As of the end of the fiscal year, cash and cash equivalents (“funds”)
remaining on hand had decreased by ¥24,836 million from the end of
the previous fiscal year to ¥180,832 million.
Below is the breakdown of cash flows by activities.

The Company paid an interim dividend of ¥12 per share on December 7,
2017, and accordingly the year-end dividend was ¥111 per share.
For the fiscal year ending March 31, 2019, in accordance with thebasic policy on the distribution of profits, the Company plans to pay
the base dividend of ¥36 per share, and the year-end dividend will
be considered separately by the Company in accordance with thebasic policy on the distribution of profits.

Targets and Management Performance Indicators
The Group aims to increase profitability and capital efficiency and

Cash Flows from Operating Activities
The amount of funds provided by operating activities totaled ¥55,138
million (year-on-year decrease of 14.0%). As a breakdown of funds
used, income taxes paid was ¥19,710 million (compared with
¥10,462 million in the previous fiscal year). However, overall, there

58

emphasizes return on equity (ROE) as a management performanceindicator. Under the new three-year Mid-term Plan that started from
April 2018, the Company will continue working to achieve revenue
growth and higher capital efficiency by advancing its main strategies.
In this way, the Company will aim to achieve the numerical targets forthe final year of the Mid-term Plan—net sales of ¥750,000 million,

develops business in fields such as network content and home video

operating profit of ¥75,000 million, an operating margin of 10% or more,games, and the Real Entertainment Unit, which provides content for

and ROE of 10% or more in the fiscal year ending March 31, 2021.

real-world based facilities, services, equipment, and so forth,

Outlook for the Fiscal Year Ending March 31, 2019
Looking ahead, although there are bright signs in Japanese andoverseas economic trends, the business environment is expected tounique to the Group. Moreover, the IP Creation Unit has been established as a spin-off from the Visual and Music Production SBU tofocus on creating new IP.
In the fiscal year ending March 31, 2019, the first year of the newremain beset by uncertainties, including the impact on personal

Mid-term Plan, the Group will work to push forward implementation

consumption from uncertainties in the overall society and theof main strategies in each Unit. As part of the initiatives to be imple-

overall economy, as well as overseas political trends. Such factors

mented across the Units, we will strengthen new IP creation andare also expected to have an impact on the entertainment industry,

cultivation capability in various ways including product or service-in which the Group is extensively involved, resulting in ongoingoriginated IP, visual product-originated IP, utilization of an internal

uncertainty in this business environment, and also, even severe

idea posting system, collaboration with partner companies andchanges in the market environment and user preferences.

strategic investments. The Group also plans to push ahead withstrengthening foundations across the Units in preparation for a

Mid-term Plan in April 2018, under the Mid-term Vision of “CHANGE

full-blown entry into the Chinese market. In the Toys and Hobby

for the NEXT: Empower, Gain Momentum, and Accelerate Evolution”

Unit, we will maintain and expand our domestic market share while

which reflects our aspiration to achieve changes in all aspects tostrengthening the business in products for mature fan base in Japan

progress to a next stage rather than being bound by previous

and overseas. In the Network Entertainment Unit, we will further

business models and established ideas. In the new Mid-term Plan,

accelerate the worldwide roll-out of network content and home

the Group will aim to evolve “IP Axis Strategy” further to maximize

video games, and also push ahead with activities for creating new

IP value through taking advantage of the worldview and uniqueentertainment including a new platform. In the Real Entertainment

characteristics of its IPs and providing the best products andUnit, we will strengthen our capability of providing venues, services

services at the best possible times, thereby achieving penetrationand content leveraging unique strength of the Group. In the Visualand expansion in global markets. At the same time, we will also

and Music Production Unit, we will promote the IP expansion withstrengthen development in regions and businesses with high growthvisuals, music and live performance integrated. In the IP Creation

potential. Furthermore, we will drive creation of new IP and regionally

Unit, we will strengthen new IP creation through collaboration

oriented strategies by unifying the efforts in each region across theamong Units over respective products and services.

Group under the ALL BANDAI NAMCO concept.
We will implement the following four strategies as the main
strategies in the new Mid-term Plan:
1. IP axis strategy “Accelerate evolution in IP axis strategy”

We will strengthen the foundation for growth under the Mid-term
Plan by implementing these initiatives. In light of the above considerations, the consolidated projections of the fiscal year ending
March 31, 2019 are as follows: net sales of ¥650,000 million

Boost capability to create IP (structural changes) / Invest(year-on-year decrease of 4.2%), operating profit of ¥60,000 million

aggressively in IP creation(year-on-year decrease of 20.0%), recurring profit of ¥61,000 million

2. Business strategy “Empower push into new entertainment”
Establish and enhance business infrastructure / Expand and

FINANCIAL SECTION

Facing these circumstances, the Group started a three-year new(year-on-year decrease of 19.1%), and profit attributable to owners ofparent of ¥43,000 million (year-on-year decrease of 20.5%).

strengthen business fields / Promote incubation
3. Region strategy “Gain momentum with ALL BANDAI NAMCO”

Consolidated Plan for the Fiscal Year Ending March 31, 2019

Make full-blown entry into Chinese market / Establish system
for ALL BANDAI NAMCO
4. Personnel strategy “Make personnel the core of the Group”
Establish environment to optimize employees’ performance bytapping their individual strengths, and to empower new ventures
By implementing these main strategies, we aim to further
strengthen the Group’s business foundation and achieve growth inglobal markets. Our numerical targets for the fiscal year ending

Millions of yen

Segments

Net sales

Segment profit

Toys and Hobby¥230,000¥15,000

Network Entertainment

300,000

35,000Real Entertainment

100,000

3,500

Visual and Music Production

40,0006,000

IP Creation

15,0004,500

March 31, 2021, the final year of the new Mid-term Plan, are net sales

Other

30,0001,000

of ¥750,000 million and operating profit of ¥75,000 million. We are

Adjustments(65,000)(5,000)also targeting operating margin at 10% or more and ROE (profit

Consolidated¥650,000¥60,000

attributable to owners of parent / net assets) at 10% or more.
Starting April 2018, the Group has changed its organizational

Forward-Looking Statements

structure to promote the advancement of each of the strategies ofForecasts for the next fiscal year and other future projections in thisthe new Mid-term Plan. The name of the units of aggregatedreport are based on information available to the Group at the time theybusiness companies that are to execute the respective businesswere made and are therefore subject to various risks and uncertainties.

strategies has been changed from “SBUs” (Strategic Business

Actual results therefore may differ materially from projections due toUnits) to “Units.” In addition, to enable swifter advancement of thea variety of factors. Major factors that could influence results include

main strategies for each mission stated in the Mid-term Plan, thechanges in the Company and the Group’s operating environment,Group has shifted from its previous three-SBU structure to a five-market trends, and exchange rate fluctuations.

Unit structure. Specifically, the Network Entertainment SBU has
been reorganized into the Network Entertainment Unit, which

59

CONSOLIDATED BALANCE SHEETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
As of March 31, 2017 and 2018

Millions of yen

Thousands of
U.S. dollars (note 3)

2017

2018

2018

¥ 205,517¥ 185,517$ 1,746,207

Trade receivables (notes 6 and 12)75,51988,061

828,887

Allowance for doubtful receivables(453)(1,172)(11,032)

Inventories (note 7)

46,68855,682

524,115

Deferred tax assets (note 13)

9,240

8,995

84,667

Other current assets (notes 4 and 5)

21,272

22,531

212,077

357,783

359,6143,384,921

39,20356,496

531,777

72

117

1,101

Deferred tax assets (note 13)

12,444

13,252

124,736

Other investments and assets (notes 8 and 22)

18,321

16,827

158,388

Allowance for doubtful receivables(1,662)(1,395)(13,131)

68,37885,297

802,871

Buildings and structures (note 8)30,70030,122

283,528

Amusement facilities and machines (note 8)

58,97563,008593,072

Land (note 8)

11,15543,420408,697

Other property, plant and equipment (note 8)

117,200

118,869

1,118,873

218,030

255,419

2,404,170(165,845)(169,315)(1,593,703)

52,185

86,104810,467

9,687

9,476

89,194¥ 488,033¥ 540,491$ 5,087,453

AssetsCurrent assets:
Cash and time deposits (notes 4, 12 and 22)

Total current assets

Investments and other assets:
Investment securities (notes 5 and 12)
Net defined benefit asset (note 11)

Total investments and other assets

Property, plant and equipment:

Total
Less accumulated depreciation
Net property, plant and equipment

Intangible assets:
Total intangible assets (note 8)
Total assets
See accompanying Notes to Consolidated Financial Statements.

60

Millions of yen

Thousands of
U.S. dollars (note 3)

2017

2018

2018

Trade payables (notes 10 and 12)¥ 64,173¥ 69,555$ 654,697

Accrued income taxes (note 12)

8,658

8,598

80,930

Other current liabilities (notes 9 and 13)

53,28058,120547,063

126,111

136,273

1,282,690

Net defined benefit liability (note 11)

5,766

8,486

79,876

Deferred tax liabilities (note 13)

1,223

1,578

14,853

Other long-term liabilities (note 9)

6,149

6,799

63,995

Total long-term liabilities

13,13816,863

158,724

Total liabilities

139,249

153,136

1,441,414

10,00010,00094,127

Additional paid-in capital

52,06552,196491,303

Retained earnings (note 17)297,984

334,264

3,146,310(2,423)(2,326)(21,894)

357,626

394,134

3,709,846

7,885

11,696

110,090

210

(300)

(2,823)

Revaluation reserve for land, net of tax (note 18)(5,694)(5,887)(55,412)

Foreign currency translation adjustments (note 15)(8,725)(8,330)(78,407)

Remeasurements of defined benefit plans, net of tax (notes 11 and 15)(3,196)(4,756)(44,766)(9,520)(7,577)(71,318)

Share acquisition rights

100

—

—

Non-controlling interests

578

798

7,511

Total net assets

348,784

387,355

3,646,039

Total liabilities and net assets¥488,033¥540,491$5,087,453

Liabilities and net assets
Current liabilities:

Total current liabilities

Long-term liabilities:

FINANCIAL SECTION

Net assets:
Shareholders’ equity:
Common stock (note 19)
Authorized: 1,000,000,000 shares
Issued: 222,000,000 shares

Treasury stock, at cost; 2,334,579 shares in 2017 and 2,239,901 shares in 2018 (note 19)
Subtotal
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities, net of tax (notes 5 and 15)
Deferred gains or losses on hedges, net of tax (note 15)

Subtotal

61

CONSOLIDATED STATEMENTS OF INCOME ANDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

Consolidated Statements of Income
Millions of yen

Thousands of
U.S. dollars (note 3)

2017

2018

2018

Net sales¥620,062¥678,312$6,384,714

Cost of sales

396,303436,730

4,110,787

223,759

241,582

2,273,927

160,520

166,557

1,567,743

63,23975,025706,184

Interest and dividend income

594

604

5,685

Interest expense

(36)

(37)

(348)

Gain (loss) on sales of investment securities, net

72

1

9

Loss on valuation of investment securities

(0)

(52)

(489)

Gross profit
Selling, general and administrative expenses (note 14)
Operating profit
Other income (loss):

Gain (loss) on sales and disposal of fixed assets, net

(334)

(734)

(6,909)Loss on impairment of fixed assets (note 8)(1,307)(1,463)(13,771)

Other(1,367)(846)(7,963)(2,378)(2,527)(23,786)

Profit (loss) before income taxes

60,861

72,498682,398

Income taxes (note 13)

16,66318,609175,160

Profit44,19853,889507,23838(221)(2,081)¥ 44,160¥ 54,110$ 509,319

Yen

U.S. dollars (note 3)

2017

2018

2018

¥1,584.71¥1,758.99$16.56

Basic

201.03

246.292.32

Diluted200.97246.23

2.32

82.00

123.00

1.16

Millions of yen

Thousands of
U.S. dollars (note 3)

Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

Per share data (note 16):
Net assets at March 31
Earnings per share:

Cash dividends applicable to period (note 17)
See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income
2017

2018

2018

¥44,198¥53,889$507,238

Valuation difference on available-for-sale securities, net of tax (note 5)

891

3,612

33,998Deferred gains or losses on hedges, net of tax

907

(510)

(4,800)(2,936)

395

3,718

(51)

(1,560)(14,683)

96

199

1,873

ProfitOther comprehensive income (note 15):

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(1,093)

2,136

20,106¥43,105¥56,025$527,344¥43,067¥56,246$529,425

38

(221)

(2,081)

Comprehensive income attributable to:
Owners of parent
Non-controlling interests
See accompanying Notes to Consolidated Financial Statements.

62

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018Year ended March 31, 2017
Millions of yen
Shareholders’ equity

Common Additional
stock
paid-in(note 19)
capitalBalance at beginningof year¥10,000
Cash dividends
Profit attributable toowners of parent
Purchase of treasury stock
Disposal of treasury stock
Changes in treasury stockof parent arising fromtransactions with noncontrolling shareholders
Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is applied
Reversal of revaluation
reserve for land
Net changes of items
other than shareholders'equityBalance at end of year
¥10,000¥52,247

Retainedearnings(note 17)¥265,231(11,430)

Accumulated other comprehensive income

Treasurystock(note 19)

Total
shareholders’equity¥(2,411)

44,160
(4)
0

1

(183)

(8)
23

¥52,065¥297,984¥325,067(11,430)

Valuationdifference on
availablefor-salesecurities,
net of tax(notes 5
and 15)

Deferred
gains orlosses onhedges,net of tax(note 15)

Revaluation
reserve forland,
net of tax(note 18)

¥6,907¥(706)¥(5,671)¥(5,789)¥(3,145)¥(8,404)

Share
Nonacquisition controllingrightsinterests

¥100

¥541

Total net
assets atend of year

¥317,304(11,430)

44,160(4)
144,160
(4)
1

(183)

(183)

(8)

(8)

23

¥(2,423)

ForeignTotal
currency Remeasurements accumulatedtranslation of defined benefit
otheradjustments plans, net of tax comprehen(notes 11 and 15) sive income(note 15)¥357,626(23)
978¥7,885916¥210—¥(5,694)—(23)(2,936)¥(8,725)(51)¥(3,196)(1,093)¥(9,520)

—
¥100

37
¥578

(1,056)¥348,784

Millions of yen
Shareholders’ equity

Common Additional
stock
paid-in(note 19)
capitalBalance at beginningof year¥10,000 ¥52,065
Cash dividends
Profit attributable toowners of parent
Change of scope of
consolidation
Change of scope of
consolidation - foreign
currency translation
adjustment
Purchase of treasury stock
Disposal of treasury stock
131
Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is applied
Reversal of revaluation
reserve for land
Net changes of items
other than shareholders’equityBalance at end of year
¥10,000 ¥52,196

Accumulated other comprehensive income

Retainedearnings(note 17)

Treasurystock(note 19)

Total
shareholders’equity¥297,984(18,023)¥(2,423)¥357,626(18,023)

Valuationdifference on
availablefor-salesecurities,
net of tax(notes 5
and 15)

Deferred
gains orlosses onhedges,net of tax(note 15)

Revaluation
reserve forland,
net of tax(note 18)

¥ 7,885¥ 210¥(5,694)

ForeignTotal
currency Remeasurements accumulatedtranslation of defined benefit
otheradjustments plans, net of tax comprehen(notes 11 and 15) sive income(note 15)¥(8,725)¥(3,196)¥(9,520)

Share
Nonacquisition controllingrightsinterests

¥ 100

¥578

Total net
assets atend of year

¥348,784(18,023)

54,11054,11054,110

(0)

(0)

(0)

(4)
101

0
193

¥334,264

(8)

(4)
232

(8)
(4)
232

(193)

—

0

193

¥(2,326)(8)

0¥394,134

FINANCIAL SECTION

Year ended March 31, 2018

(193)
3,811
¥11,696(510)¥(300)—¥(5,887)403¥(8,330)(1,560)¥(4,756)

2,144¥(7,577)

(100)
—

220
¥798

2,264
¥387,355

Year ended March 31, 2018
Thousands of U.S. dollars (note 3)
Shareholders’ equity

Common Additional
stock
paid-in(note 19)
capitalRetainedearnings(note 17)

Treasurystock(note 19)

Balance at beginningof year$94,127 $490,070 $2,804,819 $(22,807)
Cash dividends(169,644)
Profit attributable toowners of parent
509,319
Change of scope of
consolidation(0)
Change of scope of
consolidation - foreign
currency translation
adjustment
Purchase of treasury stock(40)
Disposal of treasury stock
1,233
952
Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is applied
1
Reversal of revaluation
reserve for land
1,816
Net changes of items
other than shareholders’equityBalance at end of year
$94,127 $491,303 $3,146,310 $(21,894)

Accumulated other comprehensive income

Total
shareholders’equity$3,366,209(169,644)

Valuationdifference on
availablefor-salesecurities,
net of tax(notes 5
and 15)

Deferred
gains orlosses onhedges,net of tax(note 15)

Revaluation
reserve forland,
net of tax(note 18)

$ 74,219$ 1,977$(53,596)

ForeignTotal
currency Remeasurements accumulatedtranslation of defined benefit
otheradjustments plans, net of tax comprehen(notes 11 and 15) sive income(note 15)$(82,125)$(30,083)$(89,608)

Share
Nonacquisition controllingrightsinterests$ 941$5,441

Total net
assets atend of year

$3,282,983(169,644)

509,319509,319

(0)

(0)

(75)

(40)
2,185

(75)

(75)
(40)
2,185

(1,816)

—

1

1

1,816

$3,709,846(1,816)35,871$110,090(4,800)$(2,823)—$(55,412)

3,793$(78,407)(14,683)$(44,766)

20,181$(71,318)

(941)
—

2,070
$7,511

21,310$3,646,039

See accompanying Notes to Consolidated Financial Statements.

63

CONSOLIDATED STATEMENTS OF CASH FLOWSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2017 and 2018

Millions of yen

Thousands of
U.S. dollars (note 3)

2017

2018

2018

Profit (loss) before income taxes¥ 60,861¥ 72,498$ 682,398

Depreciation and amortization

21,85423,545

221,621

Loss on impairment of fixed assets

1,307

1,463

13,771

Loss (gain) on sales and disposal of fixed assets, net

334

734

6,909

Loss on disposal of amusement facilities and machines

576

533

5,017

Loss (gain) on sales of investment securities, net

(72)

(1)

(9)

Decrease (increase) in trade receivables(3,000)(13,048)(122,816)

Decrease (increase) in inventories(1,048)(9,008)(84,789)

Acquisition of amusement facilities and machines(3,472)(7,350)(69,183)

Increase (decrease) in trade payables

1,517

5,412

50,941

Cash flows from operating activities:

Other(4,797)(502)(4,726)

74,06074,276699,134

Interest and dividends received

576

610

5,742

Interest paid

(37)

(38)

(358)

(10,462)(19,710)(185,523)

64,13755,138518,995

Decrease (increase) in time deposits, net

4,283(3,941)(37,095)

Purchases of property, plant and equipment(9,452)(42,850)(403,332)

Sales of property, plant and equipment

1,191

602

5,666

Purchases of intangible assets(5,370)(5,393)(50,762)

Purchases of investment securities(2,946)(11,461)(107,878)

178

53

499

(1,473)

(80)

(753)

Subtotal

Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:

Sales of investment securities
Purchases of investments in subsidiaries and associates
Proceeds from sales of shares of subsidiaries and associates
Purchases of shares of subsidiaries resulting in change in scope of consolidation (note 4)
Proceeds from purchases of shares of subsidiaries resulting in change
in scope of consolidation (note 4)
Payments of loans receivable

35

—

—

(341)

—

—

955

385

3,624
(21,404)(1,591)(2,274)

Collection of loans receivable

760

2,727

25,668

Payments of guarantee money deposited(782)(1,704)(16,039)

Collection of guarantee money deposited

1,587

633

5,958

(51)

(36)

(340)

(13,017)(63,339)(596,188)

Other
Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable

(341)

6

56

Proceeds from long-term loans payable

200

790

7,436

Repayments of long-term loans payable(1,316)(218)(2,052)

(63)

(78)

(734)

Repayments of lease obligations
Decrease (increase) in treasury stock, net

(4)

(4)

(38)

Proceeds from share issuance to non-controlling shareholders

—

441

4,151

(11,430)(18,023)(169,644)

(218)

—

—
(160,825)

Cash dividends paid
Payments from changes in ownership interests in subsidiaries that
do not result in change in scope of consolidation
Net cash used in financing activities(13,172)(17,086)

Effect of exchange rate changes on cash and cash equivalents(1,823)

352

3,313

Net increase (decrease) in cash and cash equivalents

36,125(24,935)(234,705)

Cash and cash equivalents at beginning of year

169,543

205,668

1,935,881

—

99

932

¥ 205,668¥180,832$1,702,108

Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at end of year (note 4)
See accompanying Notes to Consolidated Financial Statements.

64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries

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, 2018.

2 Summary of Significant Accounting Policies(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-

Consolidated subsidiaries operating in the United States recognize

tion of the remaining subsidiaries would have had no material effect onrevenue in accordance with “Software Revenue Recognition” of

the accompanying consolidated financial statements. Investments in

Financial Accounting Standards Board (FASB) Accounting Standards

significant affiliates are accounted for using the equity method.

Codification No. 985-605, treating video game software with online

Investments in unconsolidated subsidiaries and certain affiliates

functions as software products with multiple-element arrangements.

other than those accounted for using the equity method are statedUnless the vendor can objectively and reasonably identify the fair value

at cost. If the equity method had been applied to the investments inof undelivered elements specified by the vendor, recording of any

these companies, there would have been no material effect on therevenue attributable to video game software is deferred until all theaccompanying consolidated financial statements.

elements are delivered.

FINANCIAL SECTION(a) Principles of Consolidation

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(b) Cash and Cash Equivalents

through which the software is highly integrated with content that

In reporting cash flows, the Company considers cash on hand,cannot be separated into identifiable components.

demand deposits, and all highly liquid investments with original
maturities of three months or less to be cash and cash equivalents.

The content is considered to be an important component of each
video game title, which includes the game content and visual/music
data. Once management makes a decision to go forward in distrib-(c) Foreign Currency Translation

uting a title, the Company records the software and content develop-

Foreign currency transactions are translated into yen at rates in effectment costs as inventories.

at the dates they are transacted, and the gains or losses arising fromthe settlement of the related receivables or payables are included in

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

“Other income (loss)” in the consolidated statements of income.
Receivables and payables denominated in foreign currencies at(e) Marketable Securities and Investment Securities

the balance sheet date are translated at the rates in effect as of the

Available-for-sale securities with market quotations are principallybalance sheet date and the unrealized gains or losses are included

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

in “Other income (loss)” in the consolidated statements of income.

cost and the carrying amount of available-for-sale securities with

The assets and liabilities of foreign consolidated subsidiaries andmarket quotations is recognized in “Valuation difference on available-

affiliates are translated into yen at the rates of exchange in effect atfor-sale securities, net of tax” in “Net assets” in the consolidated

the balance sheet date. Revenue and expenses of foreign consoli-balance sheets until realized. Available-for-sale securities without

dated subsidiaries and affiliates are translated into yen at the average

market quotations are principally carried at cost. The cost of available-

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

for-sale securities sold is principally computed based on the moving-from the translation of foreign currency financial statements areaverage method. Investments in investment limited partnerships or

generally excluded from the consolidated statements of income andsimilar associations (investments that are deemed to be securities

are included in “Foreign currency translation adjustments” in “Net

under the Financial Instruments and Exchange Act, Article 2, Clauseassets” in the consolidated balance sheets.

2) are carried at the net amount proportionate to the Company’sownership interests, based on the most recent financial statements
available in accordance with the financial reporting date specified
in the partnership agreement.

65

(f) Allowance for Doubtful Receivables(k) Leased Assets

The allowance for doubtful receivables is provided for possible losses

Depreciation of leased assets is computed by the straight-line

on unrecoverable receivables. For ordinary receivables, the amount ofmethod over the period of the lease with a residual value of zero.

the allowance is based on the historical rate of loss. For receivablesfrom debtors at risk of bankruptcy and receivables from debtors in(l) Derivatives and Hedging Activities

bankruptcy or under reorganization, the amount of the allowance is

The Company and its consolidated subsidiaries use derivative instru-

based on individually estimated unrecoverable amounts.

ments, such as forward foreign exchange contracts and currency(g) Inventories

in foreign exchange rates and interest rates. The Company and its

Domestic Consolidated Subsidiaries

consolidated subsidiaries use these derivative instruments solely for

Generally, inventories are stated at cost determined by the average-

the purpose of reducing the risks resulting from such fluctuations tocost method. The value stated in the consolidated balance sheets

which they are exposed in the course of their ordinary business activi-

is calculated by writing down the carrying amount based on

ties. Accordingly, the Company and its consolidated subsidiaries do

declining profitability.

not use derivative instruments or other financial instruments for

option contracts, to reduce market risks arising from fluctuations

speculative purposes.
Foreign Consolidated Subsidiaries

The Company and its consolidated subsidiaries’ counterparties for

Generally, inventories are stated at the lower of cost, determined

derivative instruments are all highly creditworthy financial institutions

principally by the average-cost method, or net realizable value.

and, therefore, the Company believes that it is exposed to almost no
counterparty risk. Derivative transactions are conducted in accor-

Both domestic and foreign consolidated subsidiaries state gamesoftware work in process by the specific-cost method. The value
stated in the consolidated balance sheets is calculated by writing
down the carrying amount based on declining profitability.

dance with internal rules that specify transaction authority and transaction amount limits.
As a general rule, derivative instruments are stated at fair value.
For derivative instruments that meet the criteria for hedge
accounting, recognition of unrealized gains or losses is deferred.

(h) Income Taxes

In cases where forward foreign exchange contracts meet certain

Current income taxes are accounted for based on income. Deferredhedging criteria, the hedged receivables and payables are translated

income taxes are accounted for under the asset and liability method.

at the corresponding forward foreign exchange contract rate (theDeferred tax assets and liabilities are recognized for future tax conse-“Allocation Method”).

quences attributable to differences between the financial statement

The Company and its consolidated subsidiaries assess the effec-

carrying amounts of existing assets and liabilities and their respective

tiveness of hedging transactions from the start of the transaction

tax bases and operating loss and tax credit carryforwards. Deferred tax

to the point at which effectiveness is assessed by comparing theassets and liabilities are measured using enacted tax rates expected tocumulative changes in the fair value or the cumulative changes in theapply to taxable income in the years in which those temporary differ-

cash flows of the hedged item with the cumulative changes in theences are expected to be recovered or settled. The effect on deferredfair value or the cumulative changes in the cash flows of the hedging

tax assets and liabilities of a change in the tax rate is recognized in

instrument. In the event that critical terms are the same for theincome in the period that includes the date enacted by the Diet.

hedging instrument and the hedged assets, liabilities, or scheduled

The Company and some of its domestic consolidated subsidiaries

transaction, it is assumed that the hedge is 100% effective, so thehave been applying the consolidated taxation system.

assessment of effectiveness is not performed.

(i) Property, Plant and Equipment

is no longer applied and the recognition of the gains or losses on the

The Company and Its Domestic Consolidated Subsidiaries:

hedge transaction is no longer deferred.

In the event that a hedge becomes ineffective, hedge accounting

Depreciation of property, plant and equipment is principally computedby the declining-balance method based on estimated useful lives.

(m) Retirement and Severance Benefits

The straight-line method is used for buildings (except for building

The Company and certain domestic consolidated subsidiaries havefixtures) acquired since April 1, 1998. The estimated useful lives forestablished a defined benefit corporate pension plan, a defined

Buildings and structures and Amusement facilities and machines are

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

3–50 years and 3–15 years, respectively.

contribution pension plan. Retirement benefits trusts have been
established for certain defined benefit corporate pension plans.

Foreign Consolidated Subsidiaries:

Other domestic consolidated subsidiaries (excluding domestic

Depreciation of property, plant and equipment is principally computed

consolidated subsidiaries with no retirement benefit system) haveby the straight-line method based on estimated useful lives. The

established a defined benefit corporate pension plan, a defined

estimated useful lives for Buildings and structures and Amusement

benefit retirement lump-sum benefit system, and defined benefit

facilities and machines are 5–50 years and 3–7 years, respectively.

comprehensive employee pension funds. Certain consolidated
subsidiaries have established a defined contribution pension plan(j) Intangible Assets

and a defined contribution smaller corporate retirement allowance

Amortization of intangible assets is computed by the straight-line

mutual aid system. Certain foreign consolidated subsidiaries havemethod based on estimated useful lives. Software for internal use isestablished defined benefit pension plans, retirement lump-sum

amortized over 1–5 years.

benefit systems, and defined contribution pension plans. Moreover,

Goodwill is amortized over 5 years using the straight-line method.

66

additional benefits may be paid at retirement.

In calculating the retirement benefit obligations, the benefit
formula basis is principally used to attribute expected benefit• “Accounting Standard for Revenue Recognition” (ASBJ Statement
No. 29; March 30, 2018; Accounting Standards Board of Japan)

payments to the period extending up to the end of the current fiscal• “Implementation Guidance on Accounting Standard for Revenue

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

Recognition” (ASBJ Guidance No. 30; March 30, 2018; Accounting

by the straight-line method for a certain number of years (10 years)
within employees’ average remaining years of service. Actuarial gains

Standards Board of Japan)(1) Overview

or losses are amortized from the consolidated fiscal year following

The International Accounting Standards Board (IASB) and the U.S.

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

Financial Accounting Standards Board (FASB) jointly developed

method for a certain number of years (9–19 years) not longer thancomprehensive accounting standards related to revenue recogni-

employees’ average remaining years of service. The Company andtion. In May 2014, “Revenue from Contracts with Customers” (IASB

certain consolidated subsidiaries use a simplified method in calcu-

IFRS 15 and FASB Topic 606) were published. IFRS 15 is to belating net defined benefit asset, net defined benefit liability, andapplied from fiscal years starting on or after January 1, 2018, andperiodic pension cost under which retirement benefit obligations

Topic 606 is to be applied from fiscal years starting after

are principally based on accrued benefits at the end of the year.

December 15, 2017. Accordingly, the Accounting Standards Boardof Japan has developed comprehensive accounting standards(n) Appropriation of Retained Earnings

related to revenue recognition, which have been published in

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

conjunction with implementation guidance.
From the viewpoint of comparability among financial statements,

held subsequent to the close of such financial period. The accounts

which is one of the benefits of ensuring consistency with IFRS 15,

for that period do not, therefore, reflect such appropriations.

the basic policy of the Accounting Standards Board of Japan inregard to the development of accounting standards related to(o) Per Share Datarevenue recognition is to determine the accounting standards by

In computing basic earnings per share, the average number of shares

starting with the incorporation of the basic principles of IFRS 15.

outstanding during each year has been used. Diluted earnings per

Furthermore, if there are items that should be taken into accountshare assumes the dilution that could occur if securities or otherregarding practices, etc., that has been implemented to date incontracts to issue common stock were exercised or converted into

Japan, then alternative accounting treatments are added, given

common stock, or resulted in issuance of common stock.
Cash dividends per common share are computed based on
dividends declared with respect to the income for the year.

FINANCIAL SECTION

priated by resolution of the shareholders at a general meeting to bethat this addition will not cause a loss of comparability.
(2) Planned date of application
Application will start from the fiscal year ending March 31, 2022.
(3) Impact of the application of the guidance(p) New Accounting Standards Not Yet Applied

The impact on the consolidated financial statements resulting

The Company and Its Domestic Consolidated Subsidiaries:

from the application of the “Implementation Guidance on• Implementation Guidance on Tax Effect Accounting (ASBJ Guidance

Accounting Standard for Revenue Recognition,” etc., it is currently

No. 28, revision on February 16, 2018; Accounting Standards Board

under evaluation.

of Japan)• Implementation Guidance on Recoverability of Deferred Tax Assets(ASBJ Guidance No. 26; final revision on February 16, 2018;
Accounting Standards Board of Japan)(1) Overview

Overseas consolidated subsidiaries• IFRS 15 “Revenue from Contracts with Customers” andASU 2014-09 “Revenue from Contracts with Customers”(1) Overview

In regard to the “Implementation Guidance on Tax Effect

Under these accounting standards, at the point when a company

Accounting,” etc., when the Practical Guidelines on Accounting

transfers promised goods or services to the customer, theStandards for Tax Effect Accounting of the Japanese Institute ofcompany should recognize revenue in an amount that reflects theCertified Public Accountants were transferred to the Accounting

consideration to which the company is entitled in exchange for theStandards Board of Japan, while fundamentally observing thecontent of those guidelines, the following revisions, which weregoods or services.
(2) Planned date of applicationconsidered to be necessary, were implemented.

IFRS 15 will be applied from the fiscal year ending March 31, 2019,

Major revised accounting treatments

and ASU 2014-09 will be applied from the fiscal year ending• In non-consolidated financial statements, the accounting treatment of taxable temporary differences related to subsidiaries’
shares, etc.
• For companies that come under Category 1, accounting treatment related to the recoverability of deferred tax assets

March 31, 2020.
(3) Impact of the application of the guidance
The impact of the application of these accounting standards, etc.,
on the consolidated financial statements, it is expected to beimmaterial.

(2) Planned date of application
Application will start from the fiscal year ending March 31, 2019.
(3) Impact of the application of the guidance
No impact is expected on the consolidated financial statements
resulting from the application of the “Implementation Guidance on
Tax Effect Accounting,” etc.

67

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, 2018 have been translated into U.S. dollars at the rate of ¥106.24=U.S.$1, the approximate
exchange rate on the Tokyo Foreign Exchange Market on March 31, 2018.
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, 2017 and 2018 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

2017

2018

2018

¥205,517¥185,517$1,746,207

1,641

773

7,276

Marketable securities included in other current assets under current assets
Time deposits with maturities in excess of three months
Cash and cash equivalents

Thousands of
U.S. dollars(1,490)(5,458)(51,375)¥205,668¥180,832$1,702,108

The breakdowns of major assets and liabilities of companies that newly became consolidated subsidiaries due to the acquisition of sharesare as follows:
Fiscal year ended March 31, 2017
As of the start of consolidation of WiZ Co., Ltd., due to the acquisition of shares, the breakdown of major assets and liabilities and the relationshipbetween the acquisition cost of the shares of WiZ Co., Ltd., and the expenditures (net) for the acquisition, were as follows:
Current assets¥745 million

Fixed assets¥15 million

Goodwill¥567 million

Current liabilities–¥450 million

Long-term liabilities–¥38 million

Non-controlling interests–¥35 million

Acquisition cost of the shares of WiZ Co., Ltd.

¥804 million

WiZ Co., Ltd.’s cash and cash equivalents–¥463 million

Net expenditures for the acquisition of WiZ Co., Ltd.

¥341 million

As of the start of consolidation of Anime Consortium Japan Inc. due to the acquisition of shares, the breakdown of major assets and liabilities
and the relationship between the acquisition cost of the shares of Anime Consortium Japan Inc. and the net proceeds from the acquisition,
were as follows:
Current assets¥3,223 million

Fixed assets¥97 million

Current liabilities–¥1,023 million

Long-term liabilities–¥7 million

Investment value under the equity method up to the time of acquisition of control –¥856 million

68

Acquisition cost of the shares of Anime Consortium Japan Inc.

¥1,434 million

Anime Consortium Japan Inc.’s cash and cash equivalents–¥2,389 million

Net proceeds from acquisition of Anime Consortium Japan Inc.

–¥955 million

Fiscal year ended March 31, 2018
As of the start of consolidation of Actas Inc. due to the acquisition of shares, the breakdown of major assets and liabilities and the relationshipbetween the acquisition cost of the shares of Actas Inc. and the net proceeds from the acquisition, were as follows:
Current assets¥562 million( $5,290 thousand)Fixed assets¥31 million( $292 thousand)

Goodwill¥76 million( $715 thousand)Current liabilities–¥599 million(–$5,638 thousand)Long-term liabilities–¥40 million(–$377 thousand)Acquisition cost of the shares of Actas Inc.

¥30 million( $282 thousand)Actas Inc.’s cash and cash equivalents–¥415 million(–$3,906 thousand)Net proceeds from acquisition of Actas Inc.

–¥385 million(–$3,624 thousand)

5 Marketable Securities and Investment Securities
Marketable securities and investment securities as of March 31, 2017 and 2018 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Securities with market quotations

2017

2018

2018

¥22,219¥38,249$360,024

2,737

2,830

26,638Investments in non-consolidated subsidiaries and affiliated companies

15,381

15,792

148,645

50——

Convertible bond-type bonds with subscription rights to shares
Contributions to investment partnerships
Total

457

398

3,746

¥40,844¥57,269$539,053

FINANCIAL SECTION

Securities without market quotations

The original cost, carrying amount (fair value), and gross unrealized gain (loss) for securities with market quotations as of March 31, 2017 and2018 are summarized as follows:
Millions of yen

2017
Gross unrealized Gross unrealized Carrying amount
Original cost
gain
loss
(fair value)

Securities with market quotations:
Equity securities
Other
Total

¥10,241¥10,341

¥(4)

1,641

—

—

1,641

¥11,882¥10,341¥(4)¥22,219¥20,578

Millions of yen

2018
Gross unrealized Gross unrealized Carrying amount
Original cost
gain
loss
(fair value)

Securities with market quotations:
Equity securities
Other
Total

¥21,573¥16,622¥(719)¥37,476

773

—

—

773

¥22,346¥16,622¥(719)¥38,249

Thousands of U.S. dollars

2018
Gross unrealized Gross unrealized Carrying amount
Original cost
gain
loss
(fair value)

Securities with market quotations:
Equity securities
Other
Total

$203,059$156,457$(6,768)$352,748

7,276

—

—

7,276

$210,335$156,457$(6,768)$360,024

69

The following is a summary of the carrying amount of securities without market quotations as of March 31, 2017 and 2018:
Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

Carrying amount

Carrying amount

Carrying amount¥2,737¥2,830$26,638¥2,737¥2,830$26,638

Securities without market quotations:
Unlisted securities
Total

Proceeds and gross realized gains and losses from the sales of securities in the fiscal years ended March 31, 2017 and 2018 are as follows:
Millions of yen

Equity securities
Other
Proceeds from the sales of securities

Thousands of
U.S. dollars

2017

2018

2018

¥146

¥34

$320

32

19

179

¥178

¥53

$499

Gross realized gains from the sales of securities

72

1

9

Gross realized losses from the sales of securities

0

—

—

Millions of yen

Thousands of
U.S. dollars

6 Trade Receivables
Trade receivables as of March 31, 2017 and 2018 are summarized as follows:

Notes receivable
Accounts receivable–trade
Total

2017

2018

2018

¥ 4,515¥ 3,324$ 31,287

71,00484,737

797,600¥75,519¥88,061$828,887

Millions of yen

Thousands of
U.S. dollars

7 Inventories
Inventories as of March 31, 2017 and 2018 are summarized as follows:

2017

2018

2018

Finished goods and merchandise¥14,467¥14,781$139,128

Work in process

28,82337,685354,716

Raw materials and supplies

3,398

3,216

30,271¥46,688¥55,682$524,115

Total

70

8 Loss on Impairment of Fixed Assets
Evaluation of fixed asset impairment is performed by grouping assets according to management accounting classifications based on strategic
business units, excluding significant idle assets, assets scheduled for disposal, and assets for lease. In the amusement facility operations of the
Network Entertainment Business, the individual facility is the smallest unit used in management accounting and is the basic unit for evaluating
impairment.
The carrying amounts of the following assets, which exclude reusable assets, were reduced to the recoverable amount. The amounts of reduction
recorded as an impairment loss in “Other income (loss)” for the fiscal years ended March 31, 2017 and 2018 are as follows:
Millions of yen

Thousands
ofU.S. dollars

2018

2017

2018

Strategic business unit

Location

Items

Classification

Toys and Hobby

Zhongshan, China and others(note 1)
Shibuya-ku, Tokyo and others(note 3)Business assets

Other property, plant and equipment

Assets scheduled for
disposal

Buildings and structures

16

—

—

Other property, plant and equipment
Intangible assets

5

4

—
—

—
—

Other property, plant and equipment

65

—

—

Amusement facilities and machines
Other property, plant and equipment
Amusement facilities and machines

49
62
42

—
—
—

—
—
—

Other investments and assets
Other property, plant and equipment

1
1

—
—

—
—

Amusement facilities and machines
Intangible assets
Buildings and structures

422
19
15

—
—
—

—
—
—

Other property, plant and equipment
Intangible assets
Other property, plant and equipment

51

0
5

—
—
—

—
—
—

Buildings and structures

—

56

527

Other property, plant and equipment
Intangible assets
Intangible assets

—
—
—

282
26
50

2,654
245
471

Buildings and structures

—

81

762

Other property, plant and equipment
Intangible assets
Buildings and structures

—
—
—

7
0
62

66
0
584

—
—
—

0
251
465

0
2,363
4,377

Network
Entertainment

Taito-ku,Tokyo and others(note 4)
Okinawa City, Okinawa andothers (note 1)

Illinois, USA (note 4)
Illinois, USA (note 5)
OthersCorporate(Common)Toys and Hobby

Shizuoka City, Shizuoka andothers (note 1)

Urasoe City, Okinawa (note 4)
Zhongshan, China andothers (note 1)

Taito-ku, Tokyo (note 3)
Sumida-ku, Tokyo (note 4)

Network
Entertainment

Corporate(Common)
Total

Amusement facilities
Business assets
Amusement facilities
Assets scheduled for
disposalAmusement facilities
Business assets

Assets scheduled for
disposalBusiness assets

Assets scheduled for
disposalAssets scheduled for
disposal

¥

—

$

—

Shimotsuga-gun,Tochigi (note 6)

Assets scheduled for
disposal

Toshima-ku, Tokyo andothers (note 1)

Amusement facilities

Other property, plant and equipment
Land
Amusement facilities and machines

Minato-ku, Tokyo (note 2)
Nishinomiya City, Hyogo andothers (note 3)

Business assets
Amusement facilities

Intangible assets
Other investments and assets
Other property, plant and equipment
Amusement facilities and machines

—
—
—
—

5
15
15
98

47
141
141
923

Koto-ku, Tokyo (note 4)

Assets scheduled for
disposalAssets scheduled for
disposal

Other investments and assets
Other property, plant and equipment

—
—

1
40

9
377

Other property, plant and equipment

—

8

75

—

1
¥1,463

9$13,771

Yokohama City, Kanagawa(note 4)

Intangible assets¥1,307

FINANCIAL SECTION

Minato-ku, Tokyo (note 2)
Nagoya City, Aichi and others(note 3)

Assets scheduled for
disposalBusiness assets¥ 550

Notes: 1. Impairment loss was recorded because it was forecast that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability. In addition,these assets were determined that the value in use is considered to be zero.
2. Impairment loss was recorded because it was forecast that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability. The recoverable
amount was measured as the estimated value in use based on forecasted future cash flows, but these cash flows were not discounted because the expected period of use was short.
3. Impairment loss was recorded because it was judged that the recoverable amount of these fixed assets had decreased substantially due to the decision to close the facility. In addition,these assets were determined that the value in use is considered to be zero.
4. Impairment loss was recorded on these fixed assets for which no future use is anticipated. In addition, these assets were determined that the value in use is considered to be zero.
5. Impairment loss was recorded because it was forecast that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability.
The recoverable amount was measured based on the estimated net selling price.
6. Impairment loss was recorded on these fixed assets for which no future use is anticipated. The recoverable amount of land is calculated based on net sale value, and evaluation isbased on roadside land prices. Other assets were determined that the value in use is considered to be zero.

71

9 Loans Payable and Lease Obligations
Loans payable and lease obligations as of March 31, 2017 and 2018 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2018

2018

Carrying
amountWeighted averageinterest rate (%)

Carrying
amountWeighted averageinterest rate (%)

Carrying
amountShort-term loans payable

¥400

0.28

¥ 405

0.29

$ 3,812Current portion of long-term loans payable

155

0.40

232

0.34

2,184

Current portion of lease obligations

49

14.38

51

14.39

480

Long-term loans payable (Less current portion)

179

0.37

715

0.59

6,730

76

6.04

65

7.16

612

¥859

—

¥1,468—$13,818

2017

Lease obligations (Less current portion)
Total

The aggregate annual maturities of long-term loans payable and lease obligations outstanding as of March 31, 2018 are as follows:
Millions of yen

Thousands of
U.S. dollars

2019

¥ 283

$ 2,664

2020

189

1,779

2021

97

913

2022

493

4,641

2023

1

9

¥1,063$10,006

Millions of yen

Thousands of
U.S. dollars

Years ending March 31

Total

10 Trade Payables
Trade payables as of March 31, 2017 and 2018 are summarized as follows:

Notes payable
Accounts payable–trade
Total

72

2017

2018

2018

¥12,287¥12,403$116,745

51,88657,152537,952¥64,173¥69,555$654,697

11 Retirement and Severance Benefits
1. Defined benefit plans(a) For the fiscal years ended March 31, 2017 and 2018, the reconciliation of the beginning and ending balances of retirement benefit obligations is
as follows (excluding plans for which the simplified method is applied):
Millions of yen

Beginning balance of retirement benefit obligations
Service costThousands of
U.S. dollars

2017

2018

2018

¥20,227¥22,399$210,834

1,299

1,439

13,545Interest cost

85

96

904

Actuarial gains or losses incurred

371

3,092

29,103Retirement benefits paid

(630)

(554)

(5,215)

Prior service costs incurred
Increase resulting from changes from the simplified method to theprinciple method
Effect of business combinations

(38)

—

—

Ending balance of retirement benefit obligations

1,085

—

—

—

(260)

(2,447)¥22,399¥26,212$246,724(excluding plans for which the simplified method is applied):
Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥11,486¥17,897$168,458

Expected rate of return on assets

247

364

3,426

Actuarial gains or losses incurred

(272)

160

1,506

Contributions to plan from employer

1,126

1,488

14,006Retirement benefits paid

(598)

(553)

(5,205)Contribution to retirement benefit trust
Increase resulting from changes from the simplified method to theprinciple method

5,350

—

—

Beginning balance of plan assets

Effect of business combinations
Ending balance of plan assets

558

—

—

—

(212)

(1,995)¥17,897¥19,144$180,196

FINANCIAL SECTION(b) For the fiscal years ended March 31, 2017 and 2018, the reconciliation of the beginning and ending balances of plan assets is as follows(c) For the fiscal years ended March 31, 2017 and 2018, the reconciliation of the beginning and ending balances of net defined benefit liability andnet defined benefit asset for plans using the simplified method is as follows:
Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥1,108¥1,192$11,220

Retirement benefit expenses

401

250

2,353

Retirement benefits paid

(52)

(64)

(602)

Contributions to plan from employer

(210)

(139)

(1,308)Decrease resulting from changes from the simplified method to theprinciple method

(84)

—

—

Effect of business combinations

—

48

452

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

29

14

131

¥1,192¥1,301$12,24673

(d) As of March 31, 2017 and 2018, 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 in the consolidated balance sheets is as follows:
Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

Retirement benefit obligations of funded plans¥ 23,657¥ 24,405$ 229,716

Plan assets(19,310)(20,875)(196,489)

4,347

3,530

33,227Retirement benefit obligations of non-funded plans

1,347

4,839

45,548

Net amount of liabilities and assets recorded on consolidated balance sheet

5,694

8,369

78,775Net defined benefit liability

5,766

8,486

79,876

Net defined benefit asset

(72)

(117)

(1,101)¥ 5,694¥ 8,369$ 78,775

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

Service cost

¥1,299¥1,439$13,545

Interest cost

85

96

904

Expected rate of return on assets

(247)

(364)

(3,426)

Amortization of actuarial gains or losses

568

687

6,466

Net amount of liabilities and assets recorded on consolidated balance sheet(e) For the fiscal years ended March 31, 2017 and 2018, the breakdown of retirement benefit expenses is as follows:

Amortization of prior service costs

(33)

20

188

Retirement benefit expenses calculated using the simplified method

401

250

2,353

Amortization resulting from changes from the simplified method to the principle method
Retirement benefit expenses related to defined benefit plans
Other (note)
Total retirement benefit expenses

443

—

—

2,516

2,128

20,030

517

617

5,808

¥3,033¥2,745$25,838

Note: In the fiscal year ended March 31, 2017, the following extra retirement payments were recorded: ¥492 million in “Selling, general and administrative expenses” and ¥25 million in“Other income (loss).” In the fiscal year ended March 31, 2018, the following extra retirement payments were recorded: ¥555 million ($5,224 thousand) in “Selling, general andadministrative expenses” and ¥62 million ($584 thousand) in “Other income (loss).”(f) For the fiscal years ended March 31, 2017 and 2018, the breakdown of items recorded in remeasurements of defined benefit plans (before tax
effect) is as follows:
Millions of yen

Thousands of
U.S. dollars

2018

2017

¥

20

2018

$

188

Prior service costs¥ 5

Actuarial gains or losses(76)(2,244)(21,121)¥(71)¥(2,224)$(20,933)

Total(g) As of March 31, 2017 and 2018, the breakdown of items recorded in cumulative remeasurements of defined benefit plans (before tax effect)
is as follows:
Millions of yen

2018

2017

Unrecognized prior service costs
Unrecognized actuarial gains or losses
Total

74

¥ (110)Thousands of
U.S. dollars

¥

(90)

2018

$

(847)

(4,450)(6,695)(63,018)¥(4,560)¥(6,785)$(63,865)

(h) As of March 31, 2017 and 2018, the major categories of plan assets as a percentage of total plan assets are as follows:
Bonds

2017

2018

24%

36%

Equities

18

15Life insurance general account22

21

Cash and cash equivalents

25

21

Other

11

7

100%

100%

Total

Note: The total of plan assets includes 30% and 28% representing assets contributed to a retirement benefit trust for the corporate pension plan as of March 31, 2017 and 2018 respectively.

(i) For the fiscal years ended March 31, 2017 and 2018, the principal actuarial assumptions are as follows:
2018

2017

Discount rateLong-term expected rate of return on assets
Method of determining long-term expected rate of return on assets

0.10%~0.80%

0.10%~0.80%

2.14%~2.50%

2.04%~2.50%

To determine the long-term expected rate of returnon plan assets, reference was made to the current andexpected future allocations of plan assets and to thecurrent and expected future long-term rate of returns

Salary increase rate

FINANCIAL SECTION

on the various assets that make up plan assets.

1.86%~5.58%

1.91%~5.74%

2. Defined contribution plans
For the fiscal years ended March 31, 2017 and 2018, the required contributions to defined contributions plans for the Company and its consolidated
subsidiaries was as follows:
Millions of yen

Required contributions to defined contribution plans

Thousands of
U.S. dollars

2017

2018

2018

¥526

¥618

$5,817

3. Multi-employer plans
For the fiscal years ended March 31, 2017 and 2018, the required contributions of certain subsidiaries to multi-employer plans, for which theaccounting treatment is the same as defined contribution plans, are as follows:

Required contributions to multi-employer plans

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥1

¥—

$—

Note: The Fund in which certain subsidiaries participated was dissolved on September 28, 2016 with the approval of the Minister of Health, Labour and Welfare and is currently in the process ofliquidation. No additional liability resulting from the dissolution of the Fund is anticipated.

75

12 Financial Instruments
1. Financial instruments

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 are exposed to liquidity risk. The Company and its

through borrowing from banks and other methods, such as issuing

consolidated subsidiaries manage this risk through the formulation

corporate bonds.

and revision of monthly funding plans for the Company and its

The Company and its consolidated subsidiaries utilize derivatives
to hedge the risks noted below and do not engage in speculativetransactions.

consolidated subsidiaries.
Derivative transactions are used for hedging purposes. With
regards to hedging methods and hedged items, hedging policies, andmethods of assessing the effectiveness of hedging transactions, for(2) Types of financial instruments and related risks

which hedge accounting is applied, please refer to Note “2 Summary

With regard to credit risk posed by customers with respect to tradeof Significant Accounting Policies—(l) Derivatives and Hedging

receivables, the Company and its consolidated subsidiaries manage

Activities.”balance by counterparty and due date, and credit information on

Derivative transactions are executed and managed according tomajor customers is updated at least once a year to minimize suchinternal rules that determine trading authority and limits on amounts

credit risk. The Company and its consolidated subsidiaries have a

traded. Derivatives are used in ways that minimize credit risk,

system for immediately sharing within the Company and its consoli-

and thus transactions are carried out only with highly creditworthy

dated subsidiaries adverse credit and other information regarding

financial institutions.

counterparties in the event that such information is received.
As of March 31, 2017 and 2018, designated large customers werecounterparties for 24.6% and 23.5% of trade receivables, respectively.

financial instruments

Receivables denominated in foreign currencies arising as a result of

The fair value of financial instruments includes, in addition to

the fact that the Company and its consolidated subsidiaries conduct

the value determined based on market prices, valuations calculated

business on a global basis are subject to foreign exchange rate

on a reasonable basis if no market price is available. However, as

fluctuation risk. The Company and its consolidated subsidiaries

certain variables are used for these calculations, the result of suchmanage balances by counterparty and currency, and in addition thecalculations may vary if different assumptions are used.

Company and its consolidated subsidiaries track market trends and,as necessary, utilize forward foreign exchange contracts for hedging.
Marketable securities and investment securities are principally theshares of companies with which the Company has a business relationship. These investments are exposed to the risk of fluctuations inmarket prices. The market price is confirmed at least once perquarter, and the holdings are reevaluated once per year with consideration 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 thesame manner as receivables, the Company and its consolidated
subsidiaries manage balances by counterparty and currency,

76(3) Supplementary explanation on the fair value of

The contract amounts of derivative transactions in Note “21Foreign Exchange Risk Management and Interest Rate Risk
Management” should not be considered indicative of the market
risk associated with the derivative financial instruments.

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, 2017 and 2018,
and the differences between carrying amounts and fair values are as stated below. This table does not include assets for which it was judged
extremely difficult to assess the fair value (Note 2 below).
Millions of yen

Carrying
amountFair value¥205,517¥205,517(2) Trade receivables(3) Marketable securities
and investment
securities

75,51975,51934,87041,148(1) Cash and time
depositsThousands of U.S. dollars

2018

2017
Difference

Carrying
amountFair value

Difference¥—¥185,517¥185,517¥—

88,061

88,061

6,278

51,7772018
Carrying
amountFair value—$1,746,207$1,746,207—

828,887

828,887—

57,0785,301

487,359

537,255

49,896

Difference$—

Total assets¥315,906¥322,184¥6,278¥325,355¥330,656¥5,301$3,062,453$3,112,349$49,896(1) Trade payables

64,17364,173—69,55569,555—

654,697654,697—(2) Accrued income taxes

8,658

8,658

—

8,598

8,598

—

80,93080,930¥ 72,831¥ 72,831¥—¥ 78,153¥ 78,153¥—$ 735,627$ 735,627

$

—

¥

¥

¥

—

¥ (1,265)¥ (1,265)¥—$ (11,907) $ (11,907)$—

Total liabilities
Derivative financial
instruments*

447

447

—

FINANCIAL SECTION* 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
Since the Money Management Fund is readily convertible into cash, its fair value is almost identical with the book value; and is stated at the book value. Stocks and others are statedat the price on the stock exchange or the price as presented by counterparty financial institutions and others. With regard to marketable securities and investment securities byholding purpose, please refer to Note “5 Marketable Securities and Investment Securities.”
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.
Derivative financial instruments
Please refer to Note “21 Foreign Exchange Risk Management and Interest Rate Risk Management.”
2. Financial instruments for which fair value is extremely difficult to determine
Millions of yen

Thousands of U.S. dollars

2017

2018

2018

Carrying amount

Carrying amount

Carrying amountUnlisted stocks¥2,737¥2,830$26,638

Stocks of affiliated companies (unlisted stocks)

2,730

2,264

21,310Convertible bond-type bonds with subscription rights to shares

50

—

—

Contributions to investment partnerships

457

398

3,746

As these instruments do not have readily available market prices, 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

2017

Cash and time
deposits
Trade receivables
Total

Withinone yearMore than
one year,withinfive years

More than
five years,
withinten years

More thanten years

Withinone year¥203,509

¥ —

¥—

¥—

¥182,500

More than
one year,withinfive years¥—

Thousands of U.S. dollars

2018

More than
five years,
withinten years

More thanten years

Withinone year¥—¥—$1,717,809

More than
one year,withinfive years

$

—

2018

More than
five years,
withinten years

More thanten years$—$—

74,812707——

86,515

1,546

—

—

814,335

14,552——¥278,321

¥707

¥—

¥—

¥269,015¥1,546¥—¥—$2,532,144$14,552

$—

$—

77

13 Income Taxes
The Company and its domestic consolidated subsidiaries are subject to Japanese corporate, inhabitant, and enterprise taxes based on income which,in the aggregate, resulted in a normal tax rate of 30.9% for the years ended March 31, 2017 and 2018.
Income tax expenses reflected in the accompanying consolidated statements of income for the fiscal years ended March 31, 2017 and 2018consist of the following:
Millions of yen

Income taxes–current
Income taxes–deferred
Total

Thousands of
U.S. dollars

2017

2018

2018

¥17,344¥19,868$187,011(681)(1,259)(11,851)¥16,663¥18,609$175,160

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 31,2017 and 2018 is as follows:
2017

2018

Normal tax rate

30.9%

30.9%

Entertainment expenses not deductible for tax purposes

0.9

0.7

Corporate inhabitant tax on per capita basis

0.4

0.4

Directors’ bonuses

0.7

0.9

Change in valuation allowance for deferred tax assets

2.3

(2.4)

Differences of tax rates of foreign consolidated subsidiaries

(0.1)

(0.8)

Tax credits for research and development expenses

(8.0)

(4.2)

Tax credits for salary growth

—

(0.6)

Amortization of goodwill

0.4

0.1

Other

(0.1)

0.7

Effective tax rate

27.4%

25.7%

Change in Presentation“Effect of changes in tax rates on net deferred tax assets,” which had been presented separately in the previous fiscal year, is included in “other”
from the fiscal year ended March 31, 2018, due to a decrease in significance. To reflect this change in presentation, the notes for the previous fiscal
year have been reclassified.

78

Significant components of deferred tax assets and liabilities as of March 31, 2017 and 2018 are as follows:
Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

Deferred tax assets:¥17,838¥12,086$113,761

Excess depreciation of fixed assets

9,747

10,855102,174

Accrued employee bonuses

3,554

3,446

32,436Inventory valuation losses

2,245

1,677

15,785Net defined benefit liability

3,348

4,108

38,667

Loss on valuation of advance payments

1,335

1,325

12,472

Loss on impairment of fixed assets

944

661

6,222

Accrued enterprise taxes and others

966

869

8,180

Research and development expenses

361

596

5,610

Allowance for doubtful receivables

199

569

5,356

Revaluation reserve for land

2,043

2,043

19,230

Other

7,628

8,079

76,045Losses carried forward

46,314435,938(25,490)(19,844)(186,785)

Total deferred tax assets

24,71826,470249,153

(66)

(63)

(593)

Total gross deferred tax assets

Deferred tax liabilities:
Reserve for advanced depreciation of fixed assets
Retained earnings of foreign consolidated subsidiaries

(429)

(558)

(5,252)

Valuation difference on available-for-sale securities(2,788)(4,489)(42,253)

Revaluation reserve for land

(434)

(348)

(3,276)

Other

(549)

(413)

(3,888)(4,266)(5,871)(55,262)¥20,452¥20,599$193,891

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

Current assets–Deferred tax assets¥ 9,240¥ 8,995$ 84,667

Investments and other assets–Deferred tax assets

12,444

13,252

124,736

(9)

(70)

(659)

(1,223)(1,578)(14,853)¥20,452¥20,599$193,891

Total deferred tax liabilities
Net deferred tax assets

FINANCIAL SECTION

50,208Valuation allowance

Net deferred tax assets are included in the following line items in the consolidated balance sheets:

Current liabilities–Other (deferred tax liabilities)
Long-term liabilities–Deferred tax liabilities
Total

79

14 Selling, General and Administrative Expenses
Significant components of selling, general and administrative expenses for the fiscal years ended March 31, 2017 and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen

2017

2018

2018

¥ 39,356¥ 39,720$ 373,870

Directors’ remuneration and employees’ wages

41,53443,996414,119

Employees’ retirement and severance benefits

2,908

2,607

24,539Provision for directors’ bonuses

1,771

1,743

16,406

Research and development expenses

17,762

19,399182,596

(45)

110

1,035

Advertising expenses

Provision of allowance for doubtful accounts
Other
Total

57,23458,982555,178¥160,520¥166,557$1,567,743

15 Other Comprehensive Income
The components of “Other comprehensive income” for the fiscal years ended March 31, 2017 and 2018 are as follows:
Millions of yen

2017
Amounts Reclassification
arising
adjustments

Valuation difference on
available-for-salesecurities, net of tax
Deferred gains or losses onhedges, net of tax
Foreign currencytranslation adjustments
Remeasurements ofdefined benefit plans,
net of tax
Share of othercomprehensive incomeof associates accounted
for using equity method
Total

Beforetax effectTax effect

Net oftax effect(0)¥1,194¥(303)

¥ 891

86

1,091

1,177

(270)

907

(2,936)—(2,936)—(2,936)

(606)

535

(71)

20

(51)

¥ 1,194

¥

97

(1)

96

—

96

¥(2,165)¥1,625¥ (540)¥(553)¥(1,093)
Millions of yen

Thousands of U.S. dollars

2018
Amounts Reclassification
arising
adjustments

Valuation difference on
available-for-salesecurities, net of tax

¥

1

2018

Tax effect

Net oftax effectAmounts Reclassification
arising
adjustments¥5,522¥(1,910)¥ 3,612$ 51,967$

Beforetax effectTax effect

Net oftax effect

9 $51,976 $(17,978) $33,998

Deferred gains or losses onhedges, net of tax

(115)

(508)

(623)

113

(510)

(1,082)(4,782)(5,864)

1,064(4,800)Foreign currencytranslation adjustments

395

—

395

—

395

3,718

—

3,718

—

3,718

(2,932)708(2,224)664(1,560)(27,598)

6,665(20,933)

6,250(14,683)

(122)

1,873

—

1,873

$ 1,770 $30,770 $(10,664)$20,106

Remeasurements ofdefined benefit plans,
net of tax
Share of othercomprehensive incomeof associates accounted
for using equity method
Total

80

¥ 5,521

Beforetax effect

212

(13)

199

—

199

1,995

¥ 3,081¥ 188¥3,269¥(1,133)¥ 2,136$ 29,000

16 Reconciliation of Differences between Basic and Diluted Earnings per Share
The reconciliation of the differences between basic and diluted earnings per share for the fiscal years ended March 31, 2017 and 2018 is as follows:
Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

Profit attributable to owners of parent¥44,160¥54,110$509,319

Profit attributable to owners of parent available to common stockholders

44,16054,110509,319

Profit attributable to owners of parent for diluted EPS calculation

44,16054,110509,319

Average number of common shares outstanding

219,672

Thousands of shares

219,699

Effect of dilutive securities:
63

53

219,735

219,752

Stock options
Average number of common shares for diluted EPS calculation

Yen

U.S. dollars

Basic¥201.03¥246.29$2.32

Diluted200.97246.23

2.32

FINANCIAL SECTION

Earnings per share:

17 Retained Earnings and Dividends
In Japan, in the event a dividend distribution of surplus is made, theDividend limitation

lesser of an amount equal to 10% of the dividend or the excess, if any,

On March 23, 2016, the Company concluded global credit facilityof 25% of common stock over the total of additional paid-in capital

agreements with financial institutions. These agreements have theand legal earnings reserve must be set aside as a legal reserve until

following restrictive financial covenants:

the aggregate amount of capital surplus and the legal reserve equals(1) The Company shall maintain the amount of net assets in the

25% of stated capital.

consolidated balance sheet as of the closing dates of the second

Certain foreign consolidated subsidiaries are also required toquarter and the end of each fiscal year (the “Second Quarter orappropriate their earnings to legal reserves under the laws of the

End of Fiscal Year”) at 75% or above of whichever is greater:

respective countries.

(i) the amount of net assets in the consolidated balance sheet as

The Company’s retained earnings includes legal reserves of ¥1,645
million and ¥1,645 million ($15,484 thousand) at March 31, 2017 and2018, respectively. Proposed appropriations of retained earnings haveof the closing date of the immediately preceding Second Quarter
or End of Fiscal Year, or (ii) the amount of net assets in the
consolidated balance sheet as of March 31, 2015.

not been reflected in the consolidated financial statements at the end(2) With respect to the recurring profit and loss* in the consolidatedof the fiscal year. The Company’s approved appropriations of retained

statement of income for each fiscal year, the Company shall notearnings for the fiscal year ended March 31, 2018 were cash dividends

record recurring losses for two consecutive fiscal years.

of ¥24,408 million ($229,744 thousand). In addition, a mid-year* Recurring profit and loss is a Japanese accounting term denoting profit (loss) before
extraordinary items.

dividend may be paid based on approval by the Board of Directors,
which is subject to limitations. The mid-year dividend for the fiscal
year ended March 31, 2018 was ¥2,638 million ($24,831 thousand).

81

18 Revaluation Reserve for Land
In accordance with the Law Concerning Land Revaluation (Lawthe foundation for calculating taxable value for land value tax

No. 34, promulgated on March 31, 1998), the land used for businessprescribed in Article 16 of the Land Value Tax Law (Law No. 69,

purposes was revalued and “Revaluation reserve for land, net of tax”

promulgated on May 2, 1991), as stipulated in Article 2-4 of thewas reported in “Net assets” in the consolidated balance sheets.

Ordinance Implementing the Law Concerning Land Revaluation(Cabinet Order No. 119, promulgated on March 31, 1998). Reasonable

Revaluation method

adjustments are made to the official notice prices.

The fair value of land is determined based on official notice prices

Unrealized losses for land of ¥707 million ($6,655 thousand)that are calculated by the method assessed and published by thewere recognized based on the difference between the land carrying

Commissioner of the National Tax Agency. The Commissioner

amount, which was revalued as of March 31, 2002, and the fair value

assesses and publishes the method to calculate land value that formsof the land as of March 31, 2018.

19 Common Stock and Treasury Stock
The changes in the number of common stock and treasury stock for the fiscal years ended March 31, 2017 and 2018 are as follows:
SharesCommon stock (number of shares)
Number of shares at beginning of year
Number of shares at end of year

2017

2018

222,000,000
222,000,000

222,000,000
222,000,000
SharesTreasury stock (number of shares)
Number of shares at beginning of year
Purchases and other
Number of shares at end of year

2017

2018

2,321,565
13,014
2,334,579

2,334,579(94,678)
2,239,901

20 Leases
As lessee
The Company and its consolidated subsidiaries occupy offices and other facilities and use various assets under operating lease arrangements.
Operating leases
Future minimum payments required under operating leases as of March 31, 2017 and 2018 are as follows:
Millions of yen

Within one year

82

Thousands of
U.S. dollars

2017

2018

2018

¥1,764¥1,823$17,159Over one year

6,309

5,535

52,099Total¥8,073¥7,358$69,258

21 Foreign Exchange Risk Management and Interest Rate Risk Management
Derivative financial instruments are comprised principally of forward foreign exchange contracts and currency option contracts. These instruments
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 nonperformance by the counterparties to forward foreign exchange contracts and currency
option contracts, but the Company does not expect any instances of nonperformance 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, 2017 and2018 are as follows. The contract amounts in themselves should not be considered indicative of the market risk associated with the derivative
financial instruments.
(1) Derivative transactions not qualifying for hedge accounting
Millions of yen

Contract
amountHedging method

Estimated Unrealized
fair value gain (loss)

Thousands of U.S. dollars

2018

2017
Contract
amountEstimated Unrealized
fair value gain (loss)

2018
Contract
amountEstimated Unrealized
fair value gain (loss)

Forward foreign exchange contracts
Sold:

¥106

¥106

¥ 2,656¥(141)¥(141)$ 25,000$(1,327)$(1,327)

8,151

21

21

1,238

30

30

11,653

282

282

212

3

3

726

7

7

6,834

66

66

U.S. dollars

1,980

56

56

876

(48)

(48)

8,245

(452)

(452)

H.K. dollars

90

(4)

(4)

51

(1)

(1)

480

(9)

(9)

U.S. dollars

1,022

11

11

5,445

(719)

(719)

51,252(6,768)(6,768)

H.K. dollars

76

(0)

(0)

330

(24)

(24)

3,106

(226)

(226)

¥14,055

¥193

¥193

¥11,322¥(896)¥(896)$106,570$(8,434)$(8,434)

U.S. dollars
Euro
Purchased:

Currency option contracts

FINANCIAL SECTION¥ 2,524

Yen

Sold/Purchased:

Total

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 non-consolidated 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.
3. Currency option contracts are zero cost options, and option premiums are not paid or received. In addition, call options and put options are contained within a single integrated contract
and are therefore listed as a single amount.

(2) Derivative transactions qualifying for hedge accounting
Millions of yen

Hedge accounting
methodHedging method

Hedged items

Thousands of U.S. dollars

2018

2017

2018

Contract
amountEstimated
fair value

Contract
amountEstimated
fair value

Contract
amountEstimated
fair value

Forward foreign exchange contracts
Sold:

DeferredYen

Accounts receivable–trade¥ 2,412¥ 68¥3,187¥(158)$ 29,998$(1,487)

U.S. dollars

Accounts receivable–trade

283

3

468

1

4,405

9

U.S. dollars

Accounts payable–trade

10,383

184

7,845

(216)

73,843(2,033)

Yen

Accounts payable–trade

93

(0)

69

(3)

649

(28)

H.K. dollars

Accounts payable–trade

88

(1)

189

(6)

1,779

(56)

Chinese yuan

Other current liabilities

—

—

606

13

5,704

122

645

(note 2)403

(note 2)

3,793

(note 2)

¥13,904¥254¥12,767¥(369)$120,171$(3,473)

Purchased:

Forward foreign exchange contracts
Foreign exchange
Purchased:
allocation method
U.S. dollars
Accounts payable–trade
Total

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 designation 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.

83

22 Commitments and Contingent Liabilities
1. Pledged assets
As of March 31, 2017 and 2018, the detail of pledged assets is as follows:
Millions of yen

Cash and time deposits

Thousands of
U.S. dollars

2017

2018

2018

¥79

¥74

$697

As of March 31, 2018, 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 ¥738 million and¥1,175 million ($11,060 thousand) in “Other investments and assets” at March 31, 2017 and 2018, respectively.

2. Commitments
Commitments as of March 31, 2017 and 2018 are summarized as follows:

Guarantees for loans payable from financial institutions to companies other thanconsolidated subsidiaries

Guarantee of obligation resulting from rental contracts of unconsolidated subsidiary

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥237

¥67

$631

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥42

¥24

$226

23 Real Estate for Lease
The Company and certain consolidated subsidiaries own real estate for lease (including land) in Tokyo and other regions. Lease income or loss
associated with this real estate for lease in the previous fiscal year was ¥115 million (Lease revenues are recorded in non-operating income, andmajor lease expenses are recorded in SG&A expenses.) In this fiscal year, lease income or loss associated with this real estate for lease was¥227 million ($2,135 thousand) (lease revenues recorded in non-operating income; major lease expenses recorded in SG&A expenses);
impairment loss was ¥251 million ($2,359 thousand) (recorded in extraordinary loss); gain on sale was ¥14 million ($127 thousand) (recorded
in extraordinary income).
Also, the book value stated in the consolidated balance sheet, amount of increase during the fiscal period, and the amount of decrease during
the fiscal period are as follows.
Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥2,180¥ 2,141$ 20,152(39)

33,206

312,557

Balance at end of year

2,141

35,347332,709

Fair value at end of year

¥6,590¥39,714$373,814

Consolidated balance sheet
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 and accumulated impairment loss from acquisition cost.
2. Among the changes during the period, the principal decline in the previous fiscal year was depreciation ¥29 million. The principal increase in the current consolidated fiscal year was
acquisition of real estate ¥34,019 million ($320,207 thousand).
3. The fair value at the end of this fiscal year is the amount calculated by the Company primarily based on the Real Estate Appraisal Standards (including that adjusted using relevant
indices, etc.). For those newly acquired real estate for lease, etc. during this fiscal year, the fair value is the book value stated in the consolidated balance sheet because it is believedthat the change in the fair value of the real estate is negligible.

84

24 Segment Information
The reportable segments are components of the Group whose separate financial information is available and which are periodically evaluated by
the Board of Directors in deciding how to allocate management resources and in assessing performance.
The Group is made up of three strategic business units (“SBUs”), one for each business domain, namely the Toys and Hobby SBU, the Network
Entertainment SBU, and the Visual and Music Production SBU, and the affiliated business companies that mainly serve a supporting role for these
SBUs. The core company of each SBU leads the planning and promotion of the business strategies of the SBU for Japan and overseas.
Accordingly, the Group has the following three reportable segments: Toys and Hobby Business, Network Entertainment Business, and Visualand Music Production Business.
The Toys and Hobby Business conducts manufacturing and sales of toys, candy toys, and products for vending machines. The Network
Entertainment Business conducts planning, development and distribution services for network content, planning, development and sales of home
video games and arcade game machines, and planning and operation of amusement facilities. The Visual and Music Production Business conducts
production and sales of visual and music-related products and live entertainment operations.
The planning, development, production, and sales of such products as prizes for amusement facilities and lottery-related products forconvenience stores, etc., had previously been classified as part of the Network Entertainment Business, but from this fiscal year the classification
has been changed to the Toys and Hobby Business.
Segment information for the previous fiscal year has been prepared and presented in accordance with the reportable segment classification
after the change.
The methods for accounting for reportable segments are the same as those described in Note “2 Summary of Significant Accounting Policies.”

Millions of yen

2017
Reportable Segment
Toys and
Hobby

Network
Entertainment

Visual andMusic
Production¥208,812¥348,890¥52,896¥610,598¥ 9,464¥620,062

9,287

6,696

3,394

19,377

17,333¥218,099¥355,586¥56,290¥629,975¥26,797

Subtotal Other (note 1)

Total

FINANCIAL SECTION

Segment profit in the segment information below is based on operating profit, and segment assets are based on total assets. Amounts ofinter-segment transactions are based on the prevailing market prices.

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers
Total

¥

—

¥620,062

36,710(36,710)—¥656,772¥(36,710)¥620,062

Segment profit

13,33142,035

13,43768,803702

69,505(6,266)

63,239Segment assets

118,108

167,871

44,032330,01131,319361,330

126,703

488,033¥ 12,736¥

615¥ 20,496

438¥ 20,934¥

920¥ 21,854

Other items:
Depreciation and amortization

7,145

¥

¥

Amortization of goodwill

649

26

66

741

—

741

—

741

Loss on impairment of
fixed assets

574

661

—

1,235

67

1,302

5

1,307

Investments in associates
accounted for using equity
method

890

—

—

890

12,49913,389—13,38914,304

7,891

836

23,031

545

23,576

1,440

25,016

Increase in property, plant andequipment and intangible assets

85Millions of yen

2018
Reportable Segment
Toys and
Hobby

Network
Entertainment

Visual andMusic
Production¥213,296¥403,561¥52,060¥668,917¥ 9,395¥678,312

9,121

2,425

3,999

15,545

18,246

Subtotal Other (note 1)

Total

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers¥—¥678,312

33,791(33,791)—¥222,417¥405,986¥56,059¥684,462¥27,641¥712,103¥ (33,791)¥678,312

Segment profit

14,47652,375

12,50979,360767

80,127(5,102)75,025

Segment assets

127,924

196,571

49,134

373,629

29,205402,834

137,657

540,491¥ 12,717

¥

¥

Total

Other items:

647¥ 22,586

411¥ 22,997

548¥ 23,545

Amortization of goodwill

83

29

79

191

—

191

—

191

Loss on impairment of
fixed assets

816

638

—

1,454

—

1,454

9

1,463

Investments in associates
accounted for using equity
method

845

—

—

845

13,254

14,099—14,09911,116

14,374702

26,192507

26,69933,80360,502

Depreciation and amortization

Increase in property, plant andequipment and intangible assets

9,222

¥

¥

Thousands of U.S. dollars

2018
Reportable Segment
Toys and
Hobby

Network
Entertainment

Visual andMusic
Production

Subtotal Other (note 1)

Total

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers
Total$2,007,681 $3,798,578
85,853$490,023 $6,296,282

22,826$2,093,534 $3,821,404

37,641

146,320$527,664 $6,442,602$ 88,432 $6,384,714 $
171,743

318,063—$6,384,714(318,063)—$260,175 $6,702,777 $ (318,063) $6,384,714

Segment profit

136,258

492,987

117,743746,9887,219

754,207(48,023)

706,184

Segment assets

1,204,104

1,850,254

462,481

3,516,839

274,897

3,791,736

1,295,717

5,087,453$ 119,701 $

86,8035,158$ 221,621

Other items:
Depreciation and amortization$

6,090 $ 212,594$

3,869 $ 216,463 $Amortization of goodwill

781

273

744

1,798

—

1,798

—

1,798

Loss on impairment of
fixed assets

7,681

6,005

—

13,686—

13,68685

13,771

Investments in associates
accounted for using equity
method

7,954

—

—

7,954

124,755

132,709—132,709

104,631

135,297

6,608

246,536

4,772

251,308

318,176

569,484

Increase in property, plant andequipment and intangible assets

Notes: 1. The “Other” business segment is not a reportable segment and includes logistics services and printing services for the Group’s SBUs.
2. Details of Adjustments are as follows:(1) The adjustment to segment profit of -¥6,266 million for the fiscal year ended March 31, 2017 includes elimination of inter-segment transactions of -¥257 million and corporate
expenses not allocated to reportable segments of -¥6,009 million. The adjustment to segment profit of -¥5,102 million (-$48,023 thousand) for the fiscal year ended March 31, 2018
includes elimination of inter-segment transactions of ¥981 million ($9,234 thousand) and corporate expenses not allocated to reportable segments of -¥6,083 million (-$57,257
thousand). Principal corporate expenses are expenses related to administrative divisions not belonging to reportable segments.
(2) The adjustment to segment assets of ¥126,703 million as of March 31, 2017 includes elimination of inter-segment transactions of -¥20,696 million and corporate assets notallocated to reportable segments of ¥147,399 million. The adjustment to segment assets of ¥137,657 million ($1,295,717 thousand) as of March 31, 2018 includes eliminationof inter-segment transactions of -¥23,270 million (-$219,033 thousand) and corporate assets not allocated to reportable segments of ¥160,927 million ($1,514,750 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 ¥920 million for the fiscal year ended March 31, 2017 includes elimination of inter-segment transactions of -¥736 million
and depreciation and amortization expense not allocated to reportable segments of ¥1,656 million. The adjustment to depreciation and amortization expense of ¥548 million($5,158 thousand) for the fiscal year ended March 31, 2018 includes elimination of inter-segment transactions of -¥611 million (-$5,751 thousand) and depreciation andamortization expense not allocated to reportable segments of ¥1,159 million ($10,909 thousand).
(4) The adjustment to loss on impairment of fixed assets of ¥5 million and ¥9 million ($85 thousand) for the fiscal years ended March 31, 2017 and 2018, respectively, is related tocorporate assets not allocated to reportable segments..
(5) The adjustment to increase in property, plant and equipment and intangible assets of ¥1,440 million and ¥33,803 million ($318,176 thousand) as of March 31, 2017 and 2018,
respectively, is related to corporate assets not allocated to reportable segments.
3. Segment profit is reconciled to operating profit in the consolidated statements of income.

86Additional segment information as of and for the fiscal years ended March 31, 2017 and 2018 is as follows:
1. Information by product and service
This information is included in the segment information above.
2. Information by geographic region
Net sales and property, plant and equipment
Millions of yen

2017

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥454,631¥65,059¥45,115¥55,257¥620,062

40,856

2,358

3,935

5,036

52,185

Property, plant and equipment

Millions of yen

2018

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥478,281¥79,278¥60,054¥60,699¥678,312

74,613

2,155

4,428

4,908

86,104

Property, plant and equipment

Thousands of U.S. dollars

Net sales

Americas

EuropeAsia, excluding Japan

Total$4,501,892$746,216$565,267$571,339$6,384,714

702,306

20,284

41,67946,198810,467

Property, plant and equipment

FINANCIAL SECTION

2018
Japan

3. Information by major customer
Fiscal year ended March 31, 2017

Net sales(Millions of yen)

Name

Apple Inc.

¥68,579

Google Inc.

¥62,539

Related segment

Network Entertainment Business,
Visual and Music Production Business
Toys and Hobby Business,
Network Entertainment Business,
Visual and Music Production BusinessNotes: 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.

Fiscal year ended March 31, 2018

Net sales(Thousands of U.S.
dollars)

Net sales(Millions of yen)

Name

Apple Inc.

¥95,260$896,649

Google Inc.

¥82,370$775,320

Related segment

Network Entertainment Business,
Visual and Music Production Business
Toys and Hobby Business,
Network Entertainment Business,
Visual and Music Production BusinessNotes: 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.

4. By reportable segment, information regarding the amount of amortization of goodwill for the fiscal years ended March 31, 2017 and 2018,
and the unamortized balance of goodwill as of March 31, 2017 and 2018, is as follows:
Millions of yen

2017
Other

Corporate andeliminations

Amortization of goodwill

¥649

¥26

¥66

¥—

¥—

¥741

Unamortized balance of goodwill

165

87

86

—

—

338

Toys and Hobby

Network Visual and MusicEntertainment
Production

Total

87

Millions of yen

2018
Other

Corporate andeliminations

Amortization of goodwill

¥83

¥29

¥79

¥—

¥—

¥191

Unamortized balance of goodwill

83

58

82

—

—

223

Toys and Hobby

Network Visual and MusicEntertainment
Production

Total

Thousands of U.S. dollars

2018
Other

Corporate andeliminations

Amortization of goodwill

$781

$273

$744

$—

$—

$1,798

Unamortized balance of goodwill

781

546

772

—

—

2,099

Toys and Hobby

Network Visual and MusicEntertainment
Production

Total

25 Related-Party Disclosures
Transactions with Related Parties
Fiscal year ended March 31, 2017
Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type
Affiliatedcompany

Company
Happinet
Corporation

Address
Taito-ku,
Tokyo

Capital orcontribution
to capital¥2,751 million

Content of business
Wholesaler of toys,
video games, andamusement products

Ratio of voting rights
ownership
Holding
directly 27.2%
indirectly 0.3%

Relationshipwith related
party
Sales agency

Content

Transaction
amountSales of products,¥55,622 million
and others

Account items
Accounts
receivable–
trade

Balance asof March 31,
2017¥10,378 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.

Fiscal year ended March 31, 2018
(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($25,894
thousand)

Wholesaler of toys,
video games, andamusement products

Ratio of voting rights
ownership
Holding
directly 27.1%
indirectly 0.3%

Relationshipwith related
party
Sales agency

Content

Transaction
amount¥54,592 million
Sales of products,($513,855
and others
thousand)Account items

Balance asof March 31,
2018

Accounts
receivable–
trade¥11,112 million($104,593
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.

88(2) Transactions between the Company and related parties
Directors, Audit & Supervisory Board Members, major shareholders (limited to individuals), etc.

Type

Officer

Officer

Officer

Officer

Officer

ShukuoIshikawa

Mitsuaki
TaguchiShuji Ohtsu

Yuji Asako

MasaruKawaguchi

Satoshi
OshitaAddress

—

—

—

—

—

—

Capital orcontribution
to capital

—

—

—

—

—

—

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

Ratio of voting
rights ownership

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

—

—

—

—

—

—

Account items

Balance asof March 31,
2018

Disposal of treasury
stock accompanying¥17 million
exercise of stock ($160 thousand)options (note 1)——

Disposal of treasury
stock accompanying
contribution in kind
¥12 millionof the monetary ($113 thousand)compensation
claims (note 2)——

Disposal of treasury
stock accompanying
contribution in kind
¥12 millionof the monetary ($113 thousand)compensation
claims (note 2)——

Disposal of treasury
stock accompanying¥9 million
exercise of stock ($85 thousand)options (note 1)——

Disposal of treasury
stock accompanying
contribution in kind
¥6 millionof the monetary($56 thousand)compensation
claims (note 2)——

Disposal of treasury
stock accompanying¥7 million
exercise of stock ($66 thousand)options (note 1)——

Disposal of treasury
stock accompanying
contribution in kind
¥6 millionof the monetary($56 thousand)compensation
claims (note 2)——

Disposal of treasury
stock accompanying
contribution in kind
¥12 millionof the monetary ($113 thousand)compensation
claims (note 2)——

Disposal of treasury
stock accompanying¥16 million
exercise of stock ($151 thousand)options (note 1)——

Disposal of treasury
stock accompanying
contribution in kind
¥12 millionof the monetary ($113 thousand)compensation
claims (note 2)——Content

Transaction
amount

FINANCIAL SECTION

Officer

Name

Notes: 1. The disposal price of treasury stock is determined based on the stock options (share acquisition rights) exercise price set by the resolution at the seventh and eighth Ordinary General
Meetings of Shareholders of the Company.
2. 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 16, 2017 (the business day immediately preceding
the date of the resolution at the Board of Directors Meeting).

89

26 Business Combinations
Common Control Transactions, etc.

a business holding company responsible for the Company’s

Reorganization in Europe

operations in Continental Europe and had two functions—a Toys

1. Overview of business combinationand Hobby Business company and a holding company. The(1) Name and description of combined businessCompany decided to reorganize BNHFR in order to promote

Toys and Hobby business in France of BANDAI NAMCO Holdings

greater cooperation within the Group and expand operations by

France S.A.S. (hereinafter: BNHFR), a subsidiary of theclearly separating the business company and holding company

Company (former name: BANDAI S.A.S.)

functions of BNHFR and strengthening the governance functionin Continental Europe.

(2) Date of business combination
September 30, 2017

2. Overview of accounting process
In accordance with the Accounting Standard for Business(3) Legal form of business combination

Combinations (ASBJ Statement No. 21, September 13, 2013), theMethod corresponding to a Japanese absorption-type company

Accounting Standard for Business Divestitures (ASBJ Statement

split, BNHFR as the splitting company and BANDAI S.A.S.

No. 7, September 13, 2013), and Guidance on the Accounting(former name: BANDAI Toy S.A.S.) as the successor company.

Standard for Business Combinations and the Accounting Standard
for Business Divestitures (ASBJ Guidance No. 10, September 13,(4) Company name after combination
BANDAI S.A.S.

2013), the transaction was carried out as a transaction conductedby commonly controlled entities.

(5) Other matters related to overview of transaction
In Europe, BNHFR was a subsidiary of the Company based in
France under the regional headquarters in the U.K. BNHFR was

27 Significant Subsequent Events
Change to reportable segments
The Group has been executing business strategies centered on three units of aggregated businesses called strategic business units (“SBU”), one
for each business domain, namely the Toys and Hobby SBU, the Network Entertainment SBU, and the Visual and Music Production SBU. However,starting April 2018, the Group has changed its organizational structure to promote the advancement of each of the strategies of the new Mid-term
Plan. The name of the units of aggregated business companies that are to execute the respective business strategies has been changed from
“SBUs” to “Units.” In addition, to enable swifter advancement of the main strategies for each mission stated in the Mid-term Plan, the Group has
shifted from its previous three-SBU structure to a five-Unit structure.
Specifically, the Network Entertainment SBU has been reorganized into the Network Entertainment Unit, which develops business in fields suchas network content and home video games, and the Real Entertainment Unit, which provides content for real-world based facilities, services,
equipment, and so forth, unique to the Group. Moreover, the new IP Creation Unit has been established as a spin-off from the Visual and Music
Production SBU to focus on creating new IP.
In conjunction with this organizational restructure, the reporting segments are to be changed from the current Toys and Hobby Business,
Network Entertainment Business, and the Visual and Music Production Business. From the fiscal year ending March 31, 2019, the reporting
segments will be the Toys and Hobby Business, Network Entertainment Business, Real Entertainment Business, Visual and Music Production
Business, and IP Creation Business.
Information regarding the amounts of net sales, profit/loss, assets, liabilities and others by reportable segment for the current fiscal year,
assuming the classification of its reportable segments after the organizational change is as follows.

90Millions of yen

2018
Reportable Segment
Toys and
Hobby
Business

Network
Entertainment
Business

Real Entertainment
Business

Visual andMusic
Production
Business

IP Creation
Business

Subtotal

Other(note 1)

Total

¥213,296¥319,568¥89,877¥35,831¥10,345¥668,917¥ 9,395¥678,312

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers
Total

¥

—

¥678,312

9,121

6,970

672

4,860

6,625

28,24818,24646,494(46,494)—¥222,417¥326,538¥90,549¥40,691¥16,970¥697,165¥27,641¥724,806¥ (46,494)¥678,312

Segment profit

14,47650,151

3,169

6,619

5,264

79,679767

80,446(5,421)75,025

Segment assets

127,924

145,101

58,20328,391

18,190377,809

29,205407,014

133,477

540,491

2,830¥ 6,43149¥ 22,591

411¥ 23,002

543¥ 23,545

Other items:
Depreciation andamortization¥ 12,717

¥

¥

564

¥

¥

¥

83

0

29

79

—

191

—

191

—

191

816

—

638

—

—

1,454

—

1,454

9

1,463

Investments in associates
accounted for using
equity method

845

—

—

—

—

845

13,254

14,099—14,099

Increase in property,
plant and equipment
and intangible assets

11,116

2,806

11,611598

61

26,192507

26,69933,80360,502

FINANCIAL SECTION

Amortization of goodwill
Loss on impairment of
fixed assets

Thousands of U.S. dollars

2018
Reportable Segment
Toys and
Hobby
Business

Network
Entertainment
Business

Real Entertainment
Business

Visual andMusic
Production
Business

IP Creation
Business

Subtotal

Other(note 1)

Total

$2,007,681$3,007,973$845,981$337,267$ 97,380$6,296,282$ 88,432$6,384,714

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers
Total

85,85365,602

6,329

45,74762,354

265,885

171,743$2,093,534$3,073,575$852,310$383,014$159,734$6,562,167$260,175$

437,628—$6,384,714(437,628)—$6,822,342 $ (437,628) $6,384,714

Segment profit

136,258

472,057

29,82862,29849,551

749,992

7,219

757,211(51,027)

706,184

Segment assets

1,204,104

1,365,781

547,846

267,235

171,216

3,556,182

274,897

3,831,079

1,256,374

5,087,453$ 119,701 $

26,634$ 60,541

Other items:
Depreciation andamortization

$

5,307

$

460 $ 212,643$

3,869 $ 216,512$

5,109 $ 221,621

Amortization of goodwill

781

2

271

744

—

1,798

—

1,798

—

1,798

Loss on impairment of
fixed assets

7,681

—

6,005

—

—

13,686—

13,68685

13,771

Investments in associates
accounted for using
equity method

7,954

—

—

—

—

7,954

124,755

132,709—132,709

Increase in property,
plant and equipment
and intangible assets

104,631

26,409109,290

5,627

579

246,536

4,772

251,308

318,176

569,484

Notes: 1. The “Other” business segment is not a reportable segment and includes logistics services and printing services for the Group’s Units.
2. Details of Adjustments are as follows:(1) The adjustment to segment profit of -¥5,421 million (-$51,027 thousand) includes elimination of inter-segment transactions of ¥662 million ($6,233 thousand) and corporate
expenses not allocated to reportable segments of -¥6,083 million (-$57,260 thousand). Principal corporate expenses are expenses related to administrative divisions notbelonging to reportable segments.
(2) The adjustment to segment assets of ¥133,477 million ($1,256,374 thousand) includes elimination of inter-segment transactions of -¥27,450 million (-$258,377 thousand) andcorporate assets not allocated to reportable segments of ¥160,927 million ($1,514,751 thousand). Principal corporate assets are cash and deposits, investment securities, andassets related to administrative divisions not belonging to reportable segments.
(3) The adjustment to depreciation and amortization expense of ¥543 million ($5,109 thousand) includes elimination of inter-segment transactions of -¥616 million (-$5,800 thousand)and depreciation and amortization expense not allocated to reportable segments of ¥1,159 million ($10,909 thousand).
(4) The adjustment to loss on impairment of fixed assets of ¥9 million ($85 thousand) is related to corporate assets not allocated to reportable segments.
(5) The adjustment to increase in property, plant and equipment and intangible assets of ¥33,803 million ($318,176 thousand) is related to corporate assets not allocated toreportable segments.
3. Segment profit is reconciled to operating profit in the consolidated statements of income.

91

Reorganization of Subsidiaries
At the Board of Directors Meeting held on February 9, 2018, the(2) Transactions conducted by commonly controlled entities
1. Overview of transaction

Company passed a resolution to reorganize its subsidiaries anda. Name and description of business transferredcarried out the reorganization on April 1, 2018.

BANDAI NAMCO Entertainment Inc.’s planning, production,and sales of amusement machines

1. Absorption-type company split between subsidiaries(1) Purpose
In the Toys and Hobby Unit, a wholly-owned subsidiary of theCompany, BANDAI SPIRITS CO., LTD. was established on
February 15, 2018 as a split preparation company to strengthen
the business in products for mature fan base in Japan andoverseas. From the effective date of April 1, 2018, the businessdivisions of BANDAI CO., LTD. that deal with products for themature fan base such as figures and plastic models and thebusiness divisions that deal with prizes for convenience stores,
etc. within BANPRESTO CO., LTD. have been transferred in acompany split to BANDAI SPIRITS CO., LTD.
(2) Transactions conducted by commonly controlled entities
1. Overview of transaction
a. Name and description of business transferred
BANDAI CO., LTD.’s planning, development, manufacture andsales of figures and plastic models for the mature fan base
BANPRESTO CO., LTD.’s planning, development, and salesof prizes for convenience stores, etc.
b. Date of business combination
April 1, 2018c. Legal form of business combination
Absorption-type company split with BANDAI CO., LTD. andBANPRESTO CO., LTD. as the splitting companies and
BANDAI SPIRITS CO., LTD. as the successor company

b. Date of business combination
April 1, 2018c. Legal form of business combination
Absorption-type company split with BANDAI NAMCOEntertainment Inc. as the splitting company and NAMCO
LIMITED as the successor company
d. Company name after combination
BANDAI NAMCO Amusement Inc.
2. Overview of accounting process
The accounting process has been carried out as transactions
conducted by commonly controlled entities, in accordancewith the Accounting Standard for Business Combinations andGuidance on the Accounting Standard for Business Combinations
and the Accounting Standard for Business Divestitures.
3. Absorption-type merger between subsidiaries and change in tradename of subsidiary(1) Purpose
To enable more integrated development of visual products,
music, and live events, on the effective date of April 1, 2018, thevisual business operating company BANDAI VISUAL CO., LTD.
has merged as the surviving company with the music business
operating company Lantis Co., Ltd. Furthermore, on the effective
date, the trade name of BANDAI VISUAL CO., LTD. has beenchanged to BANDAI NAMCO Arts Inc.

d. Company name after combination
No change.

(2) Transactions conducted by commonly controlled entities
1. Overview of transaction

2. Overview of accounting process
The accounting process has been carried out as transactions

a. Name and description of business of the company involvedin combination

conducted by commonly controlled entities, in accordance

Merging company (surviving company)

with the Accounting Standard for Business Combinations andName: BANDAI VISUAL CO., LTD.

Guidance on the Accounting Standard for Business Combinations

Description of business: Planning, production, and sales ofand the Accounting Standard for Business Divestitures.

visual software
Merged company (disappearing company)

2. Absorption-type company split between subsidiaries and change in

Name: Lantis Co., Ltd.

trade name of subsidiary

Description of business: Planning, production, and sales of(1) Purposemusic software

To strengthen the Real Entertainment Business, which provides
content for real-world based facilities, services, and equipment,
etc., unique to the Group, on the effective date of April 1, 2018,the amusement machine business division of BANDAI NAMCOEntertainment Inc. was transferred in an absorption-typecompany split to NAMCO LIMITED, which conducts the planningand operation of amusement facilities. Furthermore, on theeffective date, the trade name of NAMCO LIMITED was changed
to BANDAI NAMCO Amusement Inc.

b. Date of business combination
April 1, 2018c. Legal form of business combination
Absorption-type merger with BANDAI VISUAL CO., LTD.
as the surviving company and Lantis Co., Ltd. as thedisappearing company
d. Company name after combination
BANDAI NAMCO Arts Inc.
2. Overview of accounting process
The accounting process has been carried out as transactions
conducted by commonly controlled entities, in accordancewith the Accounting Standard for Business Combinations andGuidance on the Accounting Standard for Business Combinations
and the Accounting Standard for Business Divestitures.

92

Disposal of Treasury Stock as Stock Compensation
Based on a resolution at a Board of Directors meeting held on
June 18, 2018, a disposal of treasury stock as stock compensation
has been implemented, as follows:
1. Overview of disposal(1) Date of disposal

July 6, 2018

(2) Class and number of shares to be disposed
31,500 shares of the Company’s common stock(3) Disposal value¥4,620 per share(4) Total disposal value¥145 million(5) Method of offering or disposal
Stock compensation allotment method(6) People eligible for allotment, number of eligible people,
Directors, etc. of the Company (note 1)
4 people

9,000 shares

Directors of subsidiaries of the Company (note 2)
17 people 22,500 shares

FINANCIAL SECTION

number of shares to be allotted(7) Other
The taking effect of the securities registration statement filed inaccordance with the Financial Instruments and Exchange Act isa condition for this disposal of treasury stock.
Notes:
1. Company Directors, (excluding those serving concurrently as President andRepresentative Director of BANDAI CO., LTD., BANDAI NAMCO Entertainment Inc., andBANDAI NAMCO Arts Inc., and Outside Directors) and Company Advisors who had been
Company Directors up to the conclusion of the Thirteenth Ordinary General Meetingsof Shareholders held on June 18, 2018
2. Directors of BANDAI CO., LTD., BANDAI NAMCO Entertainment Inc., andBANDAI NAMCO Arts Inc.

2. Objective of and reasons for the disposal
As performance-based remuneration related to this consolidated
fiscal year, monetary compensation claims from the Company andsubsidiaries are granted to the directors, etc. of the Company andsubsidiaries (hereinafter “eligible directors”). Eligible directors pay
in the monetary compensation claims as property contributed in
kind to receive delivery of the Company’s common stock.

93

INDEPENDENT AUDITOR’S REPORTTo the Board of Directors of BANDAI NAMCO Holdings Inc.:
We have audited the accompanying consolidated financial statements of BANDAI NAMCO Holdings Inc. and its consolidated subsidiaries,
which comprise the consolidated balance sheets as at March 31, 2018 and 2017, and the consolidated statements of income, statements ofcomprehensive income, statements of changes in net assets and statements of cash flows for the years then ended, and the notes toconsolidated financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in thecircumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of BANDAI NAMCO
Holdings Inc. and its consolidated subsidiaries as at March 31, 2018 and 2017, and their financial performance and cash flows for the years
then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2018 arepresented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 3 to the consolidated financial statements.

August 10, 2018
Tokyo, Japan

94

CORPORATE DATA
As of March 31, 2018

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- and long-term management strategies for the
BANDAI NAMCO Group;
provision of support for business strategy implementation by Group companies andmanagement of business activities

Stock Information:

Number of shares authorized:

1,000,000,000 shares

Number of shares issued:

222,000,000 shares

Number of shareholders:

36,449100 shares

Number of shares per trading unit:

Shareholders:Number of shares(Thousand)% of total

The Master Trust Bank of Japan, Ltd. (Trust account)

12,179

5.54

Japan Trustee Services Bank, Ltd. (Trust account)

12,126

5.51

Kyoko Nakamura

6,203

2.82

XIL, LTD.

6,000

2.73

The Nomura Trust and Banking Co., Ltd. (Retirement and severance
benefits trust; The Bank of Tokyo-Mitsubishi UFJ account)

4,586

2.09

MAL Ltd.

4,400

2.00

Japan Trustee Services Bank, Ltd. (Trust account 5)

3,951

1.80

Nintendo Co., Ltd.

3,845

1.75

STATE STREET BANK WEST CLIENT-TREATY 505234

3,800

1.73

GOVERNMENT OF NORWAY

3,451

1.57

Number of shares(Trading units)% of total——

Financial institutions

643,193

29.00

Brokerage

36,601

1.65

Other corporate entities

262,866

11.85

Foreign corporate entities and others

985,347

44.43

Individuals, etc.

268,659

12.12

Treasury stocks

21,1160.95

Name

Note: The shareholding ratio is calculated after reduction of the number of treasury stocks.

Ownership Breakdown:

Public entities©2018 テレビ朝日・東映 AG・東映 ©2017 石森プロ・テレビ朝日・ADK・東映 ©2018 石森プロ・テレビ朝日・ADK・東映 ©ABC-A・東映アニメーション ©BANDAI, WiZ ©BNP/BANDAI, NAS, TV TOKYO © バードスタジオ／集英社・フジテレビ・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 ©BANDAI ©創通・サンライズ©創通・サンライズ・MBS ©創通・サンライズ・テレビ東京 ©BANDAI NAMCO Entertainment Inc. ©尾田栄一郎／集英社・フジテレビ・東映アニメーション ©CAPCOM U.S.A., INC. ALL RIGHTS RESERVED. TEKKEN™ 7 ＆ ©BANDAI NAMCO Entertainment Inc. TEKKEN™7 FATED RETRIBUTION & ©BANDAI NAMCO Entertainment Inc.
©GIRLS und PANZER Finale Projekt ©2017 プロジェクトラブライブ！サンシャイン！！

©プロジェクトラブライブ！サンシャイン！！

©アイドリッシュセブン ©BNOI/アイナナ製作委員会 ©BNP/BANDAI, DENTSU, TV TOKYO ©SUNRISE ／ PROJECT L-GEASS Character Design ©2006-2017 CLAMP・ST©空知英秋／集英社・テレビ東京・電通・BNP・アニプレックス ©窪岡俊之 ©円谷プロ ©ウルトラマンR/B製作委員会・テレビ東京 ©やなせたかし／フレーベル館・TMS・NTV ©岸本斉史 スコット／集英社・テレビ東京・ぴえろ Ⓒ MARVEL ©ARMOR PROJECT/BIRD STUDIO/SQUARE ENIX All Rights Reserved.
©BANDAI NAMCO Amusement Inc. ©BIRD STUDIO ／ SHUEISHA, TOEI ANIMATION Dark Souls™: Remastered & ©BANDAI NAMCO Entertainment Inc. / ©2011-2018 FromSoftware, Inc. SOULCALIBURTM VI & ©BANDAI NAMCO Entertainment Inc. © ＆™ Lucasfilm Ltd. ©Legendary 2018. All Rights Reserved.
©SOTSU・SUNRISE ©SOTSU･SUNRISE・MBS ©2002 MASASHI KISHIMOTO / 2017 BORUTO All Rights Reserved. ©2017 BANDAI NAMCO Entertainment Inc.（順不同）
注：「PlayStation」および「PS4」は、株式会社ソニー・インタラクティブエンタテインメントの登録商標または商標です。

95

OVERVIEW OF MAIN GROUP COMPANIESAs of August 31, 2018

BANDAI NAMCO Holdings Inc.

Planning and execution of the BANDAI NAMCO Group’s medium- and long-term
management strategies; provision of 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 ofstrategies by operating companies, etc.

BANDAI NAMCO Holdings France S.A.S.

Regional holding company in Europe, providing support for the implementation of strategies
by operating companies in Europe

BANDAI NAMCO Holdings UK LTD.

Regional headquarters in Europe, providing support for the implementation of strategies by
operating companies in Europe

BANDAI NAMCO Holdings ASIA CO., LTD.

Regional headquarters in Asia, providing support for the implementation of strategies by
operating companies in Asia

BANDAI NAMCO Holdings CHINA CO., LTD.

Regional headquarters in China, providing support for the implementation of strategies by
operating companies, etc.

Toys and Hobby Unit
BANDAI CO., LTD.

Planning, development, manufacturing, and marketing of toys, plastic models, capsule toys,
cards, 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 for convenience stores, etc.

BANPRESTO CO., LTD.

Planning, development, and sales of prizes, etc., for amusement facilities

BANPRESTO SALES CO., LTD.

Sales of prizes, etc., for amusement facilities

MegaHouse Corporation

Planning, development, production, and sales of toys, candy toys, figures, communications
equipment, peripheral equipment, etc.

CCP Co., Ltd.

Planning, development, production, and sales of RC toys, toys, 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

Plex Co., Ltd.

Planning, design, development, and sales of character-based products

WiZ Co., Ltd.

Planning, design, development, and manufacturing of toys and character-based products

Seeds Co., Ltd.

Planning, development, and manufacturing of toys, pachinko and pachislot machines,
medical equipment, electronic-related equipment, etc.; contract operations for various typesof inspecting and testing (ISO17025-accredited testing organization)

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 AMERICA INC.

Oversight responsibilities for Toys and Hobby Business in the U.S. and Europe; sales of
toy-related products in the U.S.

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.

Manufacturing, sales, importing, and exporting of toys, etc., in Asia; responsible for
manufacturing and sales in the toy business in Asia (excluding Japan)

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 (SHENZHEN) CO., LTD.

Quality assurance and quality control operations; contracting for production management,
plant audits, etc., for cooperating manufacturers; planning and sales of toy-related products
in China

BANDAI NAMCO PHILIPPINES INC.

Manufacturing of toys (principally capsule toys, figures, and lower-priced toys)BANPRESTO (H.K.) LTD.

Manufacturing and production management of prizes for amusement facilities,
convenience stores

Network Entertainment Unit

96

BANDAI NAMCO Entertainment Inc.

Planning, development, and distribution of network content; planning, development, andsales of home video games; planning of live events; sales of goods, etc.

BANDAI NAMCO Studios Inc.

Planning and development of network content, home video games, and amusement
machines, 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, anddistribution of network content

B.B.STUDIO Co., Ltd.

Planning and development of home video games, network content, and amusement
machines

VIBE Inc.

Provision of content and products using various interactive media options, advertising,and promotion

BANDAI NAMCO Rights Marketing Inc.

Development, operation, and sales of online video distribution platform services;development, operation, and sales of various communications services and related tools

BXD Inc.

Development and operation of online games and distribution platforms utilizing technologies
centered on HTML5BANDAI NAMCO Entertainment America Inc.

Planning, development, and sales of home video games; planning, development, anddistribution of network content

BANDAI NAMCO Entertainment Europe S.A.S.

Planning, development, and sales of home video games; planning, development, anddistribution of network content; holding company; shared services company

BANDAI NAMCO Entertainment SHANGHAI CO., LTD. Planning, operation, and production of network content
BANDAI NAMCO Studios Singapore Pte. Ltd.

Planning and development of home video games, amusement machines, etc.

D3Publisher of America, Inc.

Planning, development, and distribution of network content

Real Entertainment Unit
BANDAI NAMCO Amusement Inc.

Planning, development, operation, and sales of facilities, machines, and services related toreal entertainment

Pleasure Cast Co., Ltd.

Planning and operation of amusement facilities

Hanayashiki Co., Ltd.

Planning and operation of Asakusa Hanayashiki amusement park

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

BANDAI NAMCO Amusement America Inc.

Sales of amusement machines

BANDAI NAMCO Amusement Europe Ltd.

Sales of amusement machines

NAMCO USA INC.

Planning and operation of amusement facilities

NAMCO UK LTD.

Planning and operation of amusement facilities

NAMCO ENTERPRISES ASIA LTD.

Planning and operation of amusement facilities

Visual and Music Production Unit
BANDAI NAMCO Arts Inc.

Comprehensive production-related activities for IP, including planning and development ofvisual and music content; planning, development, and sales of package software and goods;
and planning of live events

Actas Inc.

Planning and production of animation

Highway Star Inc.

Management of affiliated artists, production of music, and operation of fan clubs; audio
engineering operations

BANDAI NAMCO Live Creative Inc.

Planning and production of live performances and events; production of visual products
related to live performances and events; planning, production, and sales of goods, ticket
sales, etc.

IP Creation Unit
SUNRISE INC.

Planning and production of animation; management and administration of copyrights

BANDAI NAMCO Pictures Inc.

Planning and production of animation; management and administration of copyrights andother rights

SUNRISE MUSIC Publishing Co., Ltd.

Production of music and planning and use of music and masters related to animation of
SUNRISE and BANDAI NAMCO Pictures

Affiliated Business Companies
BANDAI LOGIPAL INC.

International distribution, customs brokerage, amusement-related business, productinspection, product manufacturing 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 andaccounting, information systems, operational support, and visual product production

ARTPRESTO CO., LTD.

Planning, design, and printing (packages, catalogs, posters, cards); website production,
event planning, and administration

HAPPINET CORPORATION*

Distribution of toys, visual and music products, video games, and amusement products(Tokyo Stock Exchange, First Section)

SOTSU CO., LTD.*

Planning, production, and copyright business for TV animation programs, production andagency operations in the sports entertainment area (JASDAQ)

Italian Tomato Ltd.*Management of restaurants; franchise operations; production, sales, and provision of
production guidance for pastries* Companies accounted for by the equity method97

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