BANDAI
NAMCO
Group

INTEGRATED REPORT2017

OUR MISSION STATEMENT

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

The BANDAI NAMCO Group develops entertainment-related products andservices in a wide range of fields, including toys, network content, home video
games, arcade games, amusement facilities, and visual and music content.
In accordance with our Mid-term Plan, which includes the vision of “NEXT
STAGE—Empower, Gain Momentum, Accelerate Evolution,” we are aiming
to be No. 1 with strong conviction. On that basis, we are committed to being“the Leading Innovator in Global Entertainment” and recording strong growth.

CONTENTS

0204

02 THE BANDAI NAMCO Group—
1 Year of Results (FY2017.3)
04 STRATEGIC BUSINESS UNITS (SBUs) —1 Year of Results (FY2017.3)
06 MAJOR IP IN GROUP PRODUCTS AND SERVICES
08 BOARD OF DIRECTORS AND AUDIT &SUPERVISORY BOARD MEMBERS

06

08

10

12

16

10 CHAIRMAN’S MESSAGE
19

12 PRESIDENT’S MESSAGEOUROURVISIONVISIONThe Leading
Innovator
in Global
Entertainment
As an entertainment leader across the ages,
BANDAI NAMCO is constantly exploring new areasand heights in entertainment.
We aim to be loved by people who have fun andwill earn their trust as “the Leading Innovatorin Global Entertainment.”

16 MESSAGES FROM THE PRESIDENTS OF
SBU CORE COMPANIES19 SPECIAL FEATURE: The IP Axis Strategy —The Driving Force Behind the Group’s Growth

34

38

45

34 DISCUSSION AMONG OUTSIDE DIRECTORS
38 CORPORATE GOVERNANCE

49

45 CSR INITIATIVES
48 HUMAN RESOURCES INITIATIVES
49 FINANCIAL SECTION
87 CORPORATE DATA88 OVERVIEW OF MAIN GROUP COMPANIESAbout Integrated Report 2017
In editing this report, we made reference to the International Integrated
Reporting Framework of the International Integrated Reporting Council(IIRC).
Forward-Looking Statements
The forward-looking statements in this report are based on the information available to management as of August 2017 and include various risks
and uncertainties. Accordingly, actual results may differ materially fromthese projections for a variety of reasons. Major factors that could
influence actual results include changes in the BANDAI NAMCO Group’s
operating environment, market trends, and exchange rate fluctuations.
Notes:
1. All figures in this report are rounded to the nearest unit.
2. FY2017.3 and the year under review represent the one-year period
ended March 31, 2017.
3. Figures in this report are as of August 2017.

CSR
IR

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

01THE BANDAI NAMCO GroupFY2017.3

1 Year of Results
BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31

Operating Profit

Net Sales

620.1 billion

63.2 billion

¥

27.4%

YOY

63.2

620.1
565.5 575.5
487.2

56.3

507.7

48.6

Net Sales

Operating
Profit22.4(¥ billion)

To strengthen the IP axis strategy, theCompany advanced initiatives in a number ofareas, such as creating and nurturing new IP,
extending target markets, and expanding new
businesses. Overseas, we worked to expand
IP lineups, business fields, and areas, includingin Asia and in Europe and the Americas.
On the business front, the Company
recorded year-on-year increases in the
Network Entertainment Business, which
performed well, mainly in network content
and overseas home video games, and in
the Visual and Music Production Business,
which delivered a strong performance,
primarily in its key IP.
As a result, in FY2017.3 the BANDAI
NAMCO Group achieved record high sales andoperating profit on a consolidated net basis.

¥

7.7%

YOY

Overview of Results

18.1 17.3 16.7

10.0(¥ billion)

20.6

49.6
44.7

8.8

10.0

10.2

8.6

Operating
ProfitMarginOverseas
Sales
Proportion

(%)

(%)
2013

2014

2015

2016

2017

2013

2014

2015

2017

2016

Segment Sales Ratio

Segment Profit Ratio

Visual andMusic
Production

Visual andMusic
Production

8.6%

Other

4.1%

Other

19.4%

Toys and Hobby

1.0%

Toys and Hobby

15.8%

29.4%
Network
Entertainment

Network
Entertainment

57.9%

63.8%

Note: Percentage figures are calculated based on sales before elimination of internal transactions.

Contributions to Net Sales byGeographic Region
Asia, excluding Japan
Europe6.1%

6.6%

Return on Equity (ROE)

13.3%

303.5

02

248.8

Total Net
AssetsJapan(¥ billion)

79.3%

ROE

Note: Percentage figures are calculated based on
external sales. Figures are estimates based on
management accounting.

13.5%

488.0

348.8

Americas8.0%

Return on Assets (ROA)

441.8 448.3

317.3
374.2

268.0

14.1

13.2

13.3

11.2

Total
Assets

405.1

14.0

14.0
12.2

11.4

ROA

9.7

13.5

(¥ billion)

(%)

(%)

2013

2014

2015

2016

2017

2013

2014

2015

2016

2017

Free Cash Flows*

44.2 billion

YOY
44.2

(¥ billion)
37.6
32.4

71.3%

¥

27.7%

YOY

Shareholders’ Equity Ratio

51.1 billion¥

THE BANDAI NAMCO Group — 1 Year of Results (FY2017.3)

Profit Attributable to Owners of Parent

47.7%

357.6

51.1

(¥ billion)

325.1

71.3

304.1
274.3

259.0

34.6
34.6

25.1

26.9

68.6

Total
Shareholders’
66.0
Equity

30.6

21.6

70.6

66.0

(¥ billion)

Shareholders’Equity Ratio
(%)
2013

2014

2015

2016

2017

2013

2014

2015

2017

2016

2013

2014

2015

2017

2016

* Free cash flows = Net cash provided by operating activities +Net cash used in investing activities

Debt / Equity Ratio*

Cash Dividends per Share

0.00 times

¥

82
YOY

Basic Earnings per Share

201.03

¥

30

YOY

¥

13.3

InterestBearing Debt

82*2

9.2

4.4
1.9

0.03

(Times)
2013

2014

0.01

0.01

2015

2016

0.9

Consolidated
Dividend
Payout Ratio

0.00

(%)

2017

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

114.05

40.8

35

(Yen)

0.05

30.5

30.7

2013

2014

36.2 33.0

2015

2016

2017

DRAGON BALL
seriesONE PIECE¥78.6 billion

61.1 billion¥

30.4 billion

2017

¥

2016

¥23.3 billion

2017
2016

22.3 billion¥¥

21.0 billion* IP: Characters and other intellectual property

59.0

43.2

Game Content
R&D Investment
23.5(¥ billion)
18.5¥18.6 billion¥19.1 billion

55.8 54.6

51.8¥34.9 billion

2016

Power Rangers
series2017

2016

74.3 billion

2017

2016

2015

¥

2016

2017

2014

Game Content R&D Investment andCapital Investment

2017

KAMEN RIDER
series2013*1 FY2015.3 includes a special dividend of ¥10.
*2 FY2017.3 includes a special dividend of ¥20.

Sales of Major IPs* (Group total)

Mobile Suit Gundam
series

171.10157.43147.4052

Cash Dividends
45
per Share

Debt / Equity
Ratio*

201.03

(Yen)

62*1

(¥ billion)

43.60

¥

22.3

21.3

19.6

CapitalInvestment(¥ billion)

2013

2014

2015

2016

2017

03

STRATEGIC BUSINESS UNITS (SBUs) —1 Year of Results

FY2017.3

BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31
From FY2018.3, BANPRESTO CO., LTD., BANPRESTO SALES CO., LTD., and BANPRESTO (H.K.) LTD.,
have been transferred from the Network Entertainment SBU to the Toys and Hobby SBU.

Toys and Hobby
Net Sales

Operating Profit(¥ billion)(¥ billion)

230.9
206.4

17.0

215.0

Overview of Results

16.6
15.0

193.2
11.0

2015
ActualResult2016
ActualResult2017
ActualResult2015
ActualResult

2018
Plan

2016
ActualResult2017
ActualResultIn Japan, there were favorable results forlong-established IP products, and theCompany implemented measures tostrengthen the IP axis strategy, such as
taking steps to expand its target markets
for adults and to enhance its IP lineup.
Overseas, in the Asian region, products in
the Mobile Suit Gundam series and products
for adult customers recorded increased
popularity. In Europe and the Americas,
products in the Power Rangers series
gained in popularity, and we implemented
measures to strengthen our IP lineup.

2018
Plan

Network Entertainment
Net Sales

Operating Profit(¥ billion)(¥ billion)

Overview of Results

380.3 370.0
296.4

44.3

320.9

36.0
29.3
23.9

2015
ActualResult2016
ActualResult2017
ActualResult2015
ActualResult

2018
Plan

2016
ActualResult2017
ActualResultIn home video games, in Europe and theAmericas favorable results were achievedby new titles, such as DARK SOULS III. In
network content, major titles were popularin Japan and overseas. In amusement
facilities, existing facilities in Japan madefavorable progress, and we implemented
a range of initiatives, including steps tostrengthen new format facilities. In arcade
games, results were generated by measures to improve profitability by strengthening the business foundation.

2018
Plan

Visual and Music Production
Net Sales

Operating Profit(¥ billion)(¥ billion)

52.0

56.3

13.4
50.0

43.8

2015
ActualResult04

Overview of Results

12.0

11.7
10.1

2016
ActualResult2017
ActualResult

2018
Plan

2015
ActualResult2016
ActualResult2017
ActualResult2018
Plan

In the Visual and Music Production
Business, the Love Live! series, which is IP
for which visual content was developed inconjunction with music content and live
events, remained popular. In addition, the
GIRLS und PANZER series gained popularity,especially for products themed arounda movie, and sales of visual and music
packaged products, as well as related
products, were favorable. Moreover, in
the Mobile Suit Gundam series, products
such as visual packaged products of the
MOBILE SUIT GUNDAM: THE ORIGIN series
sold favorably.

26.4 billion¥

Network content sales

158.6 billion¥

Worldwide downloads of
DRAGON BALL Z DOKKAN
BATTLE game app

CUMULATIVE TOTAL

150 million

Sales Ratio

Domestic product sales in
KAMEN RIDER series

Unit sales in the
DATA CARDDASS series

20.4 billion

232 million¥

STRATEGIC BUSINESS UNITS (SBUs) — 1 Year of Results (FY2017.3)

Domestic product sales in
Mobile Suit Gundam series

Worldwide unit sales of home video gamepackaged products

25.52 million
Worldwide unit sales of
DARK SOULS III

4.8 million

Worldwide unit sales of
DRAGON BALL XENOVERSE 2

2.0 million

Sales of packaged
products

19.1 billion
34.0%¥

Unit sales of Mobile Suit Gundam series
visual packaged products

Unit sales of GIRLS und PANZER der Filmvisual packaged products

430 thousand

265 thousand

56.3

¥

billion

Manufacturing of animation,
licensing operations, distribution
and events, and others

37.1 billion
66.0%
¥

05

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 the
major IP for which the Group is rolling out products and services.

SBUs Implementing IP Business Development Initiatives
Toys and Hobby

06

Network Entertainment

Visual and Music Production

THE IDOLM@STER

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

This is an original animationthat was first rolled out in 2012.
The BANDAI NAMCO Group is
widely involved in IP development initiatives, including
visual production, visual andmusic packaged products, live
events, and commercializationof related 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 andservices, such as toys andvisual packaged products.

Since its launch in 1979,
Mobile Suit Gundam products
have earned support amonga wide range of age groups.
Centered on visual products,
these include plastic models,
home video games, and network
content. The popularity of Mobile
Suit Gundam is currently increasing, not only in Japan but alsoin Asia and other regions.

KAMEN RIDER Series

Super Sentai (Power Rangers) 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 popularamong boys for more than 40
years in Japan. It has also
earned strong support overseas as Power Rangers. The
BANDAI NAMCO Group provides a wide range of Super
Sentai (Power Rangers) products and services, such as
toys and home video games.

PRETTY CURE! Series

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

The PRETTY CURE! series has
been popular among girls formore than 10 years. The
BANDAI NAMCO Group provides a wide range of PRETTY
CURE! products and services,such as toys and home video
games.

Tamagotchi Series

Yo-kai Watch

This original IP has been
supported for 20 years since
it was created as a mobile
character development game.
Through a variety of products
and services, this has become
an established IP that is popular with two generations,parents and their children.

Created from LEVEL-5 Inc.'s
home video game, Yo-kai
Watch is popular among awide range of age groups. The
BANDAI NAMCO Group offers
Yo-kai Watch products in Japanand Asia, centered on toys.

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 a wide rangeof DRAGON BALL products andservices, such as 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 packaged visual andmusic products, live events
are also highly popular.

PAC-MANONE PIECE

In 2005, PAC-MAN was recognized by Guinness World
Records as the most successful coin-operated arcade
game. Today, this BANDAI
NAMCO Group original IP is
still popular around the world.

ONE PIECE comics and animations have been popular for
many years in Japan andoverseas. The BANDAI NAMCO
Group provides a wide rangeof ONE PIECE products andservices, such as home video
games, network content,
and figures.

MAJOR IP IN GROUP PRODUCTS AND SERVICES

Anpanman07

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS
As of June 19, 2017

We will continue to aim for the“NEXT STAGE — Empower,
Gain Momentum, Accelerate Evolution.”

Masaru Kawaguchi

Kazumi Kawashiro
Shukuo Ishikawa

08

Satoshi Oshita

Mitsuaki Taguchi

BOARD OF DIRECTORS
Chairman and
Representative Director

Shukuo Ishikawa
President andRepresentative Director

Mitsuaki Taguchi

AUDIT & SUPERVISORY BOARD MEMBERS
Director (Part-time)

Director (Outside)

Masaru Kawaguchi

Yuzuru Matsuda

President and Representative
Director of BANDAI CO., LTD.

Director (Outside)

Director (Part-time)

Satoshi Oshita

Director

Director (Part-time)

Yuji Asako

Director (Outside)

Mikiharu Noma

Audit & Supervisory
Board Member(Outside)Kazuo Asami

Osamu Sudoh

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

Audit & Supervisory
Board Member(Outside)

Katsuhiko Kohtari

Katsuhiko Kamijo

Kazumi Kawashiro
President and Representative
Director of BANDAI VISUAL CO., LTD.

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS

Shuji Ohtsu

President and Representative
Director of BANDAI NAMCOEntertainment Inc.

Director

Satoko Kuwabara

Audit & Supervisory
Board Member(Full-time)

Yuji Asako
Shuji Ohtsu

Satoko Kuwabara

Mikiharu Noma
Yuzuru Matsuda

09

CHAIRMAN’S MESSAGE

We will take on the challenge of theNEXT STAGE with boundless curiosity.

Shukuo Ishikawa
Chairman and Representative Director
BANDAI NAMCO Holdings Inc.

10

Continually innovating as
One BANDAI NAMCO

Human resources, which are the greatest asset of the
BANDAI NAMCO Group, are the key to continual innovation.
BANDAI NAMCO is a collection of individuals, and if these
individuals do not gain strength we will not be able togenerate growth. The key asset of our IP axis strategy also
depends on the human resources who implement it. In
achieving innovation, I think it is important for managers
to maintain a continual focus on making the most of thecapabilities of each individual in the Group.
To fully leverage individual capabilities, we have implemented many initiatives that transcend various company
and organizational boundaries, such as cross-divisional
projects as well as product idea and IP recruitment frameworks. I believe it is my mission to cultivate an environment
in which the business front lines can continue to take onchallenges. I also consider frameworks to support employees
in taking on challenges so that each individual’s concepts
and ideas can be fully leveraged.
I have continued to emphasize the phrase “a group centered on human resource management, particularly on
entertainment and imagination.” This phrase is based on
the idea that BANDAI NAMCO is a collection of unique
individuals who have pride and a sense of responsibility inhaving “fun” as our job and continue to take on challenges
with a spirit of autonomy and independence. Our particularstrengths in “entertainment and imagination” entail enjoying
our own work, developing interesting concepts, taking onchallenges, and delivering products and services to people
around the world. Our employees are dedicated to entertaining people, and BANDAI NAMCO has distinctive strengths as
an entertainment group. I believe that if we combine thisdedication and these strengths and focus on fun first, thenwe will be able to succeed in intensely competitive markets.
Moving forward, the BANDAI NAMCO Group will continue
to take on challenges with boundless curiosity so that we
continue to be truly necessary for people around the world.
Without taking on challenges, it is not possible to gain
momentum or accelerate evolution. If each individual takes
on challenges without fearing failure, then the entire Groupwill take on challenges, fostering momentum and evolution.
Targeting the NEXT STAGE, I would like to ask for yourcontinued support and understanding of the BANDAI
NAMCO Group, which will continue to “Empower, Gain
Momentum, Accelerate Evolution” in the years ahead.

CHAIRMAN’S MESSAGE

The mission of the BANDAI NAMCO Group is to provide“Dreams, Fun and Inspiration” to people around the world
through our products and services, and our vision is tobecome “the Leading Innovator in Global Entertainment.”
In accordance with this mission and vision, we have focusedon customers, worked with a sense of speed to address thechanges of the times, and continued to take on challenges.
However, after the management integration in 2005, wewere not able to respond rapidly to changes in our markets
and customers, and in 2009 the Group recorded a substantial decline in performance. To overcome this crisis, in2010 we launched the Restart Plan. We took strong steps
in the the areas of autonomy and independence, soundcompetition, and clarification of authority and responsibility. We consistently emphasized the independence of thebusiness front lines and shifted to a system that bettersupported the work of employees. In these ways, we created an environment in which we can manage with speed.
In addition, on the business front the IP axis strategy was
the driving force behind the recovery of our results. The IP
axis strategy, which aims to maximize IP value by providing
products and services in the optimal business field at the
optimal time, is now the Group’s core strategy. The IP axis
strategy has become our greatest strength and the driving
force behind the Group’s growth.
FY2018.3 will be the final year of the Mid-term Plan that
we launched in April 2015, with a mid-term vision of “NEXT
STAGE — Empower, Gain Momentum, Accelerate Evolution.”
It has been more than 10 years since the management
integration, and our results have recovered following
the implementation of the Restart Plan. I believe that,at this point, we have built the foundation to compete as
One BANDAI NAMCO.
Nonetheless, we are certainly not satisfied with thestatus quo. In April 2018, we will launch the next Mid-term
Plan. In formulating a new plan, it is necessary to think
about where we want to be 10 years or 50 years in the
future and, on that basis, to determine what we need to doover the next three years. The pace of change in the operating environment is accelerating. Entirely new IP outlets,
such as new platforms and businesses, are being created,and borders are being removed in markets around theworld. We will need to maintain a sense of urgency about
the ongoing changes in our operating environment, andwe will need to pursue sustained innovation so that we cancontinue to leverage the strength of the IP axis strategy
in the years ahead.

The Group’s approach to challenges is basedon the momentum and evolution resulting
from the efforts of individual employees

August 201711

PRESIDENT’S MESSAGE

As we approach the future that lies beyond change,
we will take on the challenge of global customer
creation and aim for the NEXT STAGE.

12

EVALUATION OF RESULTS

MID-TERM PLAN (FY2016.3 – FY2018.3)

Record-high net sales and operating profit;
Fifth consecutive year of a new record fornet sales

Achieving numerical targets a year ahead ofschedule through comprehensive strengths
based on a diverse portfolio

In FY2017.3, the strong efforts of everyone on thebusiness front lines paid off with a performance thatexceeded our expectations. We achieved record-highresults for both sales and profit, with net sales of ¥620.1
billion and operating profit of ¥63.2 billion. This marked
the fifth consecutive year of a new record for net sales.
By business, the Network Entertainment Business andthe Visual and Music Production Business both achieved
record-setting performances.
In the Toys and Hobby Business, core established IP
products generated favorable results in each region. In
Japan, products related to such IP as Mobile Suit Gundam
and KAMEN RIDER were popular, and we made progresswith initiatives for adult customers and with measures toenhance our IP lineups. Overseas, in Asia Gundam plastic
models and products for adult customers continued torecord favorable results, and in Europe and the Americas
products in the Power Rangers series gained in popularity.
In the Network Entertainment Business, network content
and home video games made a significant contribution. In
network content, major titles garnered high levels of popularity in Japan and overseas, and the overseas sales ratio
also increased steadily. Furthermore, in home video games,
favorable results were achieved by DARK SOULS III andDRAGON BALL XENOVERSE 2, centered in Europe and theAmericas. In amusement facilities, existing facilities inJapan made favorable progress, and we took steps tostrengthen new format facilities. In arcade games, which
faced challenging conditions in FY2016.3, we implemented
measures to bolster the earnings platform, and as a result
we succeeded in returning to profitability.
In the Visual and Music Production Business, continued
popularity was enjoyed by the Love Live! series, for which
we are conducting coordinated initiatives encompassing
visual content, music content, and live events. In addition,
GIRLS und PANZER enjoyed strong popularity, centered ona theatrical film, and visual and music packaged products
and related products registered favorable results. THE
ORIGIN series provided stable support for the establishedGundam IP.

In FY2017.3, the second year of the Mid-term Plan, we
achieved the numerical targets for the final year of the plan
— net sales of ¥600.0 billion and operating profit of ¥60.0
billion — one year ahead of schedule. This performance inthe past year provided another demonstration of the latent
strengths of the BANDAI NAMCO Group, and I believe wehave the potential to accomplish more new things as aGroup in the years ahead.
One of the Group’s greatest strengths is our diverse
portfolio, which extends across three axes — IP, businesses,
and regions. In addition to leveraging synergies throughcollaboration among different businesses, we strive tofoster mutual, complementary initiatives. This approachfacilitates the generation of a high level of performance
as a Group in a comprehensive manner. I believe that thedistinctive strengths of our portfolio, which creates synergies
and provides overall coverage, have produced results.
In business strategies, we are generating results with
our efforts to bolster established IP and to cultivate new IP
outlets. While each operating company continues to exercise
its independence as it moves forward, we established the IP
Strategy Division in April 2016. This division is advancing
Groupwide initiatives that will strengthen the IP axis strategy
from a longer-term viewpoint of overall optimization. The
division considers the initiatives of each operating company
and establishes priorities and directions. I believe that thisfunction of serving as a “hub” for the entire Group will
become even more important in the years ahead.

INITIATIVES IN THE FINAL YEAR OF THE
MID-TERM PLAN
Focusing on innovation in established IP inoverseas markets
Our objective for the three years of the Mid-term Plan is tobecome a group that can generate, in a stable manner, net salesof ¥500.0 billion and operating profit of ¥50.0 billion, without
regard to whether or not we have hit products at that time.
On that basis, we will open up our vision for the NEXT STAGE.

strengthen established IP, expand targets, and strengthen
new outlets, we have also implemented strategic investmentof approximately ¥10.0 billion over the past two years in orderto further accelerate our strategies. In FY2018.3, we willcontinue to implement aggressive strategic investment,
and continue to actively implement initiatives. This year, ourpolicy is to focus our efforts on the pursuit of opportunities forestablished IP in overseas markets, specifically, Mobile Suit
Gundam and DRAGON BALL. For example, with DRAGON
BALL, in Europe and the Americas the generation of consumers that grew up watching animation programs has now
become a base of fans that enjoy home video games andnetwork content. In this area, we will further leverage theappeal of IP through products for a wide range of customer
target groups, thereby providing products for two groups ofcustomers, adults and children.
Under “gain momentum in global markets,” a region
strategy, I believe that it will be necessary to take a strategic approach that transcends businesses and regions.
However, it will also be important to implement localizationin line with regional preferences so that IP is accepted byconsumers. In general, that process is best handled by thepeople who live in each region. Our future vision for theGroup calls for the establishment of “regional independence”
with roots in each markets, so that each area independently
formulates its own IP axis strategies and opens up markets
while Japan provides support for those initiatives. This will
also advance the IP axis strategy.

PRESIDENT’S MESSAGE

In the entertainment industry, where the pace of change is
rapid, it is not possible to formulate plans that are based on theassumption that current hit products will be able to sustain
their levels of results. What is important is to strengthen our
foundation while addressing change in our markets, thereby
realizing sustained growth. For FY2018.3, the final year of theplan, based on our product lineups and investment plans asof August 2017 we are forecasting net sales of ¥620.0 billion
and operating profit of ¥57.0 billion.
In regard to the business strategy of “accelerate evolution
in the IP axis strategy,” in addition to advancing initiatives to

Mitsuaki Taguchi
President and Representative Director
BANDAI NAMCO Holdings Inc.

13

PRESIDENT’S MESSAGE

SHAREHOLDER RETURN
Implementing a special dividend in consideration of record-high results and early achievement of Mid-term Plan numerical targets
The Company’s fundamental policy for dividends is to aim
for a base level of stable annual per share dividend paymentsof ¥24 and a consolidated dividend payout ratio of 30%.
On the other hand, a certain level of funding is necessary tocontinue to quickly implement initiatives in our rapidly changing operating environment. After appropriation of dividends
from the consolidated periodical profit attributable to ownersof parent, we will consider allocating a portion of the remaining balance to the acquisition of our own shares, with comprehensive consideration of such factors as the level of cash
held, performance trends, recent share price trends, andplans for investment projects.
For FY2017.3, in consideration of our record-high net sales
and operating profit and our achievement of the Mid-term Plan’snumerical targets ahead of schedule, and to express our gratitude for our shareholders, we decided to implement a special
dividend. Consequently, for our annual dividend for FY2017.3,
we added a performance-based dividend of ¥38 per shareand a special dividend of ¥20 per share to the stable dividend
portion of ¥24 per share, resulting in an annual dividend of ¥82
per share and a consolidated dividend payout ratio of 40.8%.
The dividend for FY2018.3 will be considered in accordance with our fundamental policy for dividends.

CORPORATE GOVERNANCE
Introducing outside viewpoints andimplementing sustained initiatives tomaximize corporate value
The Company is strengthening corporate governance tosupport sustained efforts to maximize corporate value. Our
fundamental policy is set out in the Basic Philosophy on
Corporate Governance. Furthermore, we will rigorously
observe Japan’s Corporate Governance Code and disclose
the status of initiatives related to each principle.
Three of 10 directors and three of four Audit & Supervisory
Board members are outside officers (independent directors
and Audit & Supervisory Board members), and six of theseofficers make up the Independent Directors and Audit &Supervisory Board Members Committee. In this way, we havesecured a more effective management supervision function.

Mid-Term Vision

Focus Strategies
Under the Mid-term Plan, we promote three Focus Strategies.

BUSINESS STRATEGIESREGION STRATEGIES

Accelerate evolution in the IP axis strategy
In order to further solidify the IP axis strategy, the BANDAI NAMCO Group’s
strength, we will reinforce our functions for creating, cultivating, anddeploying IP.

Through the IP axis strategy, gain momentum inglobal markets
The BANDAI NAMCO Group will expand the IP axis strategy worldwide andaim to gain momentum in global markets.

Cultivate Original Group IP

Expand Target Markets

Expand in Asia and Japan

Enlarge New IP Businesses

Collaborate across SBUs

Renew in Americas and Europe

Create and foster new IP business
Deepen the current IP businesses

IP fostering / creation/ acquisition
Strengthen collaboration among
businesses and regions

Build a foundation for IP
axis strategy

FUNCTION STRATEGIES

Empower and innovate business model through BANDAI NAMCO market advantages
We will take on the challenge of creating and fostering new IP business. At the same time, we will build a foundation for IP axis strategy on the global markets.

Deepen the current business model

14

Create and foster the new IP business

Implement IP axis strategy in global market

Results under Current Mid-term Plan(¥ billion)

Net Sales

530.0

IN CLOSING
Achieving global growth by pursuing change
and enhancing diversity
The greatest assets of the BANDAI NAMCO Group include
our track record and experience in rolling out products andservices that leverage the world views of IP that we havecultivated over many years. These assets also include thefront-line capabilities of our employees that support thatexperience. The majority of our employees have memoriesof playing with the Company’s products when they werechildren. They are devoted to our products and services,and their ability to turn the dreams and inspiration that they
enjoyed as a children into inspiration for others fosters
self-realization. I believe that an awareness of this type ofself-realization motivates each individual employee andalso functions as the centripetal force of the Company.
Japan’s IP is loved around the world, and now, as the Group
accelerates its overseas initiatives, our workforce is becoming increasingly international. In fact, what surprises me
when I talk to front-line staff is that they have entirely different methods of adopting IP that is familiar and establishedin Japan. Encounters with this type of diversity become thedriving force behind the realization of progress with the IP
axis strategy. I have once again directly experienced how theirflexibility enables them to enjoy these methods of adopting
the IP. The process of looking at established IP in a different
light makes it possible to draw out new appeal.
Through our products and services, I believe that we havethe mission of building a foundation that brightens theappeal of IP and enables children and adults around theworld to communicate through IP.
Our business is not realized through simple addition. Rather
than just responding to change in the world around us, we willchange ourselves and amplify the effects of that change. This
will become the source of our earnings. To realize steady
growth in this business, we must implement a variety of
initiatives with IP as an axis and effectively reap the results.

575.5
560.0

600.0

63.2

60.0

57.0*

49.6 50.0
45.0

Initial Plan as ofApril 2015

Results
2016

2017

2018

2016

2017

2018

For the Fiscal Years Ended March 31* Figures are forecasts as of August 2017.

Per Share Dividends and Dividend Payout Ratio(Yen /%)

82*2

PRESIDENT’S MESSAGE

In addition, from FY2016.3 we periodically implement
evaluations of the effectiveness of the Board of Directors.
At meetings of the Board of Directors, dynamic discussions
are conducted, with outside directors offering frank opinions andquestions. Each has specialized knowledge, and the outside
viewpoints that are introduced into these free and open-mindeddiscussions are a valuable asset that will enhance the objectivity and comprehensiveness of the Company’s management.
In addition to directors and Audit & Supervisory Board
members, executives responsible for overseas regions also
attend SBU quarterly report meetings. In this way, we sharethe latest information about the situation in Japan andoverseas. Furthermore, we are advancing the delegationof authority to overseas subsidiaries. We recently took
steps to reorganize our organization in Europe, including
the establishment of a pure holding company.

Operating Profit
620.1 620.0*

62*1
52
35
Per Share
Dividends
Consolidated
Dividend Payout Ratio

36.2
33.0

30.7

2014

40.8

2015

2016

2017

For the Fiscal Years Ended March 31*1 FY2015.3 includes a special dividend of ¥10.
*2 FY2017.3 includes a special dividend of ¥20.

Through innovation in established IP and new IP creation,
we will work to expand the IP “entrances” while diversifying
the “exits.” This involves the theme of “customer creation.”
To meet new customers, we must not be satisfied with thestatus quo; rather, we must continue to change.
Our future lies beyond change. Accordingly, we will continually take on challenges in new fields with a forwardlooking sense of urgency. The BANDAI NAMCO Group willcontinue to provide “Dreams, Fun and Inspiration” as wemove toward the NEXT STAGE, and I would like to ask ourshareholders, investors, and other stakeholders for theircontinued support and encouragement of the Group in theyears ahead.
August 2017

Mitsuaki Taguchi
President and Representative Director
BANDAI NAMCO Holdings Inc.

15

MESSAGES FROM THE PRESIDENTS OF SBU CORE COMPANIES

Toys and Hobby
MID-TERM VISION

Globalization, Asia No. 1, Europe and the Americas Challenge
FOCUS STRATEGIESFY2017.3 RESULTS AND RELATED DATA

Strengthen the IP-based business model

Sales of Major IPs (Toys and Hobby Business in Japan)

No. 1 in all Asia and in each business ineach country
Europe and the Americas challenge(¥ billion)

Strengthen the global foundation

26.4

Mobile Suit Gundam series

20.4

KAMEN RIDER series
Anpanman

10.6

DRAGON BALL series

10.3

Yo-kai Watch

9.3

Power Rangers series

8.8
7.5

PRETTY CURE! series

3.1

Ultraman series

2.6

Aikatsu!
Pokemon

Masaru Kawaguchi
Director (Part-time)
President and Representative Director of
BANDAI CO., LTD.

16

0.6

In FY2017.3, the key, long-established IP of the Toys and Hobby SBU
recorded solid performances in Japan, Europe and the Americas, and Asia.
Nonetheless, the SBU’s overall results were down from FY2016.3.
In FY2018.3, the final year of the Mid-term Plan, we are maximizing thevalue of our established IP and also taking on new challenges.
In Japan, we are working to bolster our initiatives with the aim of maximizing the value of established IP. For example, for Mobile Suit Gundam,in addition to product roll outs we have opened a comprehensive Gundam
plastic model facility and will install a life-sized Unicorn Gundam statue.
Through these measures, we will foster interest among fans in Japan andoverseas and provide them with information. In this way, in line with thechanges of the times, we will continue to innovate with established IP,
thereby working to maximize IP value. Furthermore, products for adultcustomers are recording favorable results, and in this field, with the additionof BANPRESTO CO., LTD., we will work with an enhanced sense of speed as
we accelerate growth.
Overseas, in Europe and the Americas we are bolstering initiatives forthe established IP, Power Rangers. In addition, we will work on productinitiatives for DRAGON BALL, which has demonstrated a high level of popularity in home video games and game apps. We will pursue a wide range ofcustomer target groups through product initiatives in a variety of categories
and price ranges, such as toys and cards. We will also take steps to bolster
products for adults, such as holding events in countries around the worldand expanding our IP lineup, including local IP.
In Asia, we will implement measures centered on Gundam plastic models
and products for adult customers. For example, in accordance with thestrategy of simultaneously conducting business activities in Japan and Asia,
we will expand our IP and areas. In mainland China, we will implementbusiness development measures over the medium to long term.
In addition to innovation with established IP, the Toys and Hobby SBU will
also strengthen its collaboration and cooperation with other companies in the
BANDAI NAMCO Group. In these ways, we aim to implement effective businessdevelopment initiatives on a worldwide basis and to maximize IP value.

Network Entertainment
MID-TERM VISION

Evolution to Network Entertainment
Breakthrough to the Next Stage, Network x Entertainment x Global

Implement new business development in
the real and digital fields
Take steps to expand business in the
network field
Advance regional expansion (China)
Reinforce local models for products andservices originating in current markets(Europe and the Americas)
Develop original classic IP and usergenerated content
Take on the challenge of creating new IP

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

FY2017.3 RESULTS AND RELATED DATA
Sales by Major Category

Game apps

Network content

Overseas sales ratio¥

18%

158.6 billion

Home video games

86.6 billion¥

Arcade games

62.2 billion¥

Home video games
Unit sales of home video games

25.52 million
Amusement facilities

Amusement facilities

Sales at existing facilities in Japan¥

YOY

60.9 billion

105.9%MESSAGES FROM THE PRESIDENTS OF SBU CORE COMPANIESFOCUS STRATEGIESIn FY2017.3, the Network Entertainment SBU recorded higher sales andprofit due to favorable results with network content in Japan and overseas
and with home video games in Europe and the Americas. Over the past two
years of the Mid-term Plan, we have worked with a sense of speed tostrengthen overseas initiatives and to implement new initiatives, such as
leveraging virtual reality (VR). These efforts are on course to generate
results in the future.
In FY2018.3, in network content, we will offer online distribution ofmultiple strategic titles in the domestic market, such as THE IDOLM@STERMILLION LIVE! THEATER DAYS. In addition, for DRAGON BALL Z DOKKAN
BATTLE, which had recorded more than 200 million downloads worldwide
as of July 2017, we will take steps to strengthen overseas initiatives andfurther increase the overseas sales ratio. These will include the implementation of simultaneous worldwide events. Moreover, we will also implement
initiatives with IP originating from game apps and with the creation of newforms of entertainment leveraging networks.
In home video games, we will implement worldwide roll outs of major
in-house IP titles, such as TEKKEN 7 and ACE COMBAT 7. In addition, we will
also launch more titles for new platforms.
In the amusement business, VR ZONE SHINJUKU, a large-scale VR facility
that opened in July 2017, will be the Group’s flagship as we implement
aggressive initiatives to take on challenges that leverage our technical andoperational capabilities. Moving forward, we aim to open VR facilities in
20 locations in Japan and overseas. In addition, we will expand new businessoverseas through joint development of gaming machines with a leading
developer of gaming products.
There is no future in simply maintaining the status quo. Moving forward, we
will maintain an awareness of problems and a sense of crisis as we increase
the speed with which we take on challenges. By nurturing seedlings, we will
strive to build a solid foundation for the next Mid-term Plan, and will aim to
make further progress as we empower and accelerate evolution.

17

MESSAGES FROM THE PRESIDENTS OF SBU CORE COMPANIESVisual and Music Production
MID-TERM VISION

No. 1 Group in Animation, Visual, and Music Products
FOCUS STRATEGIES
Cultivate original Group IP assets
Strengthen IP production capabilities
Pursue overall optimization

FY2017.3 RESULTS AND RELATED DATA
Visual and Music Production SBU:
Number of copyrighted products(As of 2017.3)

Number of copyrighted products /Total number of hours
BANDAI VISUAL CO., LTD.

783 products / 2,748 hours

Sunrise Inc. and BANDAI NAMCO Pictures Inc.

305 products / 2,540 hours
Number of musical works

Number of live events held
Number of live tours*1

55

Number of performances*2735*1 Number of live tours implemented by Lantis
Co., Ltd.
*2 Number of performances held by BANDAI
NAMCO Live Creative Inc. and Grand-SlamLtd. (excluding duplicates for performancessponsored by both companies)

Lantis Co., Ltd.
Number of works with master license recordings

Approx.

37,500

Number of works published Approx.

Kazumi Kawashiro
Director (Part-time)
President and Representative Director of
BANDAI VISUAL CO., LTD.

18

21,500In FY2017.3, the Visual and Music Production SBU registered favorable
results with core IP products and recorded gains in sales and profit.
The Visual and Music Production SBU was established in April 2015, andin FY2018.3 the SBU will continue to work with three focus strategies—
cultivate original Group IP assets, strengthen IP production capabilities,
and pursue overall optimization. On that basis, we will step up our initiatives
addressing new challenges and work to contribute to the Group.
In cultivating original Group IP assets, we will work aggressively to create
and nurture IP. To that end, in addition to strengthening IP that contributed in
FY2017.3, such as Mobile Suit Gundam, Love Live Sunshine!, and GIRLS und
PANZER, we will also pursue innovation with popular IP and work to createhigh-quality products. In advancing IP production capabilities, we will bolster
our initiatives with new ways of enjoying IP, including live events, fan club
websites, e-commerce websites, and online distribution. With live events, wewill move ahead with measures to build a foundation for future growth overseas. We will also devote resources to public performances and live viewings
in overseas markets. Also, as one initiative to strengthen our foundation
overseas, we will move forward with measures to communicate the appealof IP and animation songs to fans in Japan and overseas through collaboration with partner companies.
To succeed in our rapidly changing market environment, we will need todeliver value that exceeds the expectations of customers around the world.
To that end, we will identify the trends of the times and provide products
and services that leverage the distinctive strengths of the BANDAI NAMCO
Group. The greatest mission of the Visual and Music Production SBU is“creating IP and maximizing its value.” Accordingly, the SBU will work in a
unified manner, collaborate with other members of the Group, and coordinate
our efforts to nurture IP. In this way, we will create value that exceeds expectations.

The Driving Force Behind the Group’s Growth

The IP
Axis Strategy

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

SPECIAL FEATURE

Since the introduction of the Restart Plan in 2010, the BANDAI NAMCO
Group has worked to shift to the IP axis strategy, which has been positioned as the Group’s greatest strength. In doing so, we achieved a recovery
in our results. The IP axis strategy is now the foundation of the Group,
and it is indispensable as the driving force toward the NEXT STAGE.
This section describes initiatives targeting further progress with the
IP axis strategy, which is our strength. In addition, this section introduces a variety of people who take on the challenge of maximizing IP
value through their work on the business front lines.

19

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

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 knowhow in the field of entertainment.
It is the IP axis strategy that makes it possible for us to leverage theworlds of IP, coordinate with rights holders and media initiatives, andprovide products and services in the optimal business field at the optimal
time. The advancement of this strategy is made possible by the know-howthat the BANDAI NAMCO Group has accumulated over many years.

Generating Growth from New IP

on a Foundation of Established IP

Technology

Since the introduction of the Restart Plan, the IP axis strategy has been
adopted throughout the Group, leading to a significant recovery in
results. The IP axis strategy has become the Group’s greatest strength.

For the Fiscal Years
Ended March 31

Net Sales

Human
Resources

POWERFUL
IP (CONTENT)

Planning
andDevelopment

Management
integration

450.8

459.1

460.5
426.4

(¥ billion)

RESTART!

378.5

394.2

42.2

Operating Profit

35.7

33.4

(¥ billion)

22.3

16.3

1.9
2006

2007

2008

2009

Reduction in speed
Unresponsive to operating
environment and trends

2007.3–2009.3 Mid-term Plan

20

2010

2011

Introduction of
Restart Plan
2010.3–2012.3 Mid-term PlanLIVE
ENTERTAINMENTVIDEO ON
DEMAND (VOD)
CONTENTMAXIMIZINGTHE VALUE OF
POWERFUL IPNETWORKCONTENT

Responding Quickly toAddress Needs

Rapid Uptake andExpansion throughMultifaceted
Initiatives

CAPSULE
TOYS

CARDS

NEW DEVICES

PLASTICMODELSAPPARELVISUAL PACKAGESOFTWARE

AMUSEMENT
BUSINESS
TOYS

620.1
575.5
565.5

63.2
507.7
56.3

487.2
454.2

49.6
48.6

TAGE

NEXT S

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

HOME
VIDEO GAMESMOVIES

44.7

34.6

2012

2013

Transformation
into a speedy Group2014

Organizational changes
Delegation of authority
Personnel exchanges

2013.3–2015.3 Mid-term Plan

2015

2016

2017

Adoption of IP
axis strategy
by the Group2016.3–2018.3 Mid-term Plan

21

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

One Example of Implementation of the IP Axis Strategy

Mobile Suit Gundam Series
The Mobile Suit Gundam series is a representative example of the Group’s nurturing of IP over the long term.
The series is an established IP that has maintained strong popularity over the 38 years since the start of its
TV broadcasts in 1979. Through close cooperation within the Group, we conduct integrated operations from the creationof Mobile Suit Gundam IP to the roll out of products and services.

Meeting the Needs of the Era
with Integrated, Simultaneous
Roll Outs of Visual Products andOther Products and Services
on a Groupwide Basis
Over 38 years, more than 40 visual products havebeen launched in the Mobile Suit Gundam series.
These products have been delivered in forms thatmeet the needs of each era and each customer
age group, such as TV, films, packaged media, andInternet distribution, and they have been earning
the strong support of fans. For each product, wehave simultaneously conducted rapid businessdevelopment initiatives for the optimal outlet for
the Group’s wide range of products and services.
In this way, we have expanded our business fields
in each era.

Expanding Customers to Include
a Wide Range of Age Groups
The reason why the Mobile Suit Gundam
series is popular with a wide range of age
groups is that we have continually developed
visual products over a span of many years.
As an IP that can be enjoyed by two generations, Mobile Suit Gundam has steadily
expanded the range of its customer groups,
centered on men aged 30 to 60 but also
including fans aged 10 to 30 as well as
younger children.

Mobile Suit Gundam Series
FY2017.3 Groupwide
Net Sales (¥ billion)

74.3 billion¥

Share of Consolidated
Net Sales

12.0%

80.2
76.7

78.6
74.3

VISUAL PRODUCTS
65.2

Mobile Suit Gundam series

50.9

44.7

42.8
38.2
34.6

IP creation
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

For the Fiscal Years Ended March 31

22

CARD GAMESLIVE EVENTSNETWORK CONTENT

ARCADE GAMESVIDEO ON DEMAND(VOD) CONTENT

Rolling Out Products andServices on a Groupwide Basis

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

VISUAL PRODUCTS

HOME VIDEO GAMESFACILITIESPLASTIC MODELS

High-Quality Monozukuri (Manufacturing) with Dedication to “MADE IN JAPAN”
Like the visual products, the Gundam plastic models in the Mobile Suit Gundam series are
long-selling products that were launched 37 years ago. These plastic models, which arebeing rolled out in close coordination with visual products, exemplify the IP axis strategy.
Currently, these models are highly popular in Asia, and the customer base is growing.
These Gundam plastic models are being manufactured by the BANDAI Hobby
Center in Shizuoka Prefecture. The Center has world-class production capacity andtechnical capabilities, and conducts planning and development, developmental design,
mold making, and manufacturing. To increase production efficiency and product quality,
the Center continually introduces leading-edge technologies and strives to makefurther progress. In addition, the Center is dedicated to “MADE IN JAPAN” monozukuri(manufacturing) activities.

BANDAI Hobby Center

23

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

Framework for Strongly Advancing Collaboration Within the Group

Gundam Project

In rolling out the Mobile Suit Gundam series, the Groupwide Gundam Project framework brings together the entire
Group and, with IP as an axis, makes speedy roll outs possible. The aim of the project is to share a variety of information throughout the Group and to implement effective roll outs through the coordination of initiatives for visual
products as well as products and services. BANDAI’s Yoshitaka Tao, who became Chief Gundam Officer (CGO) in
April 2017, is the leader of the Gundam Project and has general responsibility for IP strategy as well as responsibility
for the entire Group.

Aiming to Maximize IP Value, With a Focus 5 Years or 10 Years into the Future
I think the CGO has two major roles. First, to maximize the IP value of the Mobile Suit Gundam
series, the CGO demonstrates the principal direction of the Group. In this way, the CGO is in
the position of a control tower, working to help each Group company to advance their operations in the same direction, with IP as an axis, and to support the optimization of each company’s plan within the overall flow of activities.
Second, the CGO has the role of leading future-oriented strategic advances. The Mobile
Suit Gundam series has the mission of taking on the challenge of creating value for both longterm core fans and new groups of consumers. To maintain and expand IP value, with a focus 5
years or 10 years into the future, we will need to continue to take on the challenge of new value creation in addition to existing
initiatives. I also think that the CGO has the important duty of demonstrating the future vision from a longer-term viewpoint.
Furthermore, the BANDAI NAMCO Group’s Gundam Project, which is a horizontal framework for fostering collaboration within
the Group, meets multiple times per year. As CGO, I am the leader of this project. The Gundam Project brings together all of thepeople associated with Mobile Suit Gundam from positions throughout the Group, from visual production that starts with the IP to theroll outs of products and services. We confirm our directions and share information. Moreover, we confirm visual production schedules
from a long-term viewpoint, and discuss what needs to be done now for the future roll outs of products and services by each company.
These information-sharing activities and discussions from long-term viewpoints are extremely important, and we are working
together to maximize the value of the IP based on strong relationships of trust among participating members.

First, Expanding Our Focus from Asia to the WorldThe BANDAI NAMCO Group has worked for 38 years to maximize
the IP value of the Mobile Suit Gundam series. In addition to Japan,
we are advancing global initiatives, with a particular focus on Asia,
which has a high degree of affinity with Japan. To further increase
IP recognition, we will first strive to make the Mobile Suit Gundam
series the No. 1 IP in Asia. We will then link this to business development initiatives, with consideration for markets around the world.
This is one of my missions. Moving forward, we will strive to communicate the appeal of the Mobile Suit Gundam series on a global scale.

Yoshitaka Tao
Managing Director, Chief Gundam Officer (CGO)
BANDAI CO., LTD.

24

Osamu Taniguchi
Producer
MOBILE SUIT GUNDAM: THE ORIGIN
Sunrise Inc.

MOBILE SUIT GUNDAM: THE ORIGIN
The MOBILE SUIT GUNDAM: THE ORIGIN series is an original video animation (OVA) planned and produced by Sunrise
Inc. In 2015, the first stage was rolled out in a simultaneous worldwide release, and the release of the new fifth
stage will take place in September 2017. The producer, Osamu Taniguchi from Sunrise, is creating high-quality
products on the front lines of visual production.

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s GrowthHigh-Quality Visual Products Originating from the Creation of IP

Pursuing Realism that Earns the Support of Fans
The Mobile Suit Gundam series IP continues to take on the challenge of meeting the expectations of
the large numbers of existing fans as well as acquiring new fans. We were keenly aware of this as
we worked to create MOBILE SUIT GUNDAM: THE ORIGIN. In visual expression, we have changed themethod of creating the mobile suit, switching from the previous hand-drawing to computer graphics(CG). Younger generations are very familiar with CG, but the new expression has also received highevaluations from existing fans.
Moreover, with the cooperation of the Japan Ground Self-Defense Force, we are implementing
visual expression with an emphasis on accuracy and reality. Also, in story construction we arefocused on detailed facts, and the science fiction background research is being implemented by
specialists. This dedication to the details is another important factor in earning the support of fans.
The pursuit of reality gives depth to the story’s appeal. Mobile Suit Gundam has the foundation of aninteresting story, and as a result our new initiatives in visual expression are accepted by fans. Thishas given me a redoubled sense of the breadth and depth of the Mobile Suit Gundam series.

Working On a Groupwide Basis to Maximize IP ValueFor the Mobile Suit Gundam series, we are utilizing collaboration among Group companies, with close meetings held from the initialstages of visual production. The BANDAI NAMCO Group has a variety of content outlets for goods and services, and accordingly
collaboration from the early stages makes it possible to leverage the media mix effects with the product as well as goods and services, thereby creating a major surge of interest. Moving forward, by actively implementing collaboration on a Groupwide basis, wewill strive to maximize IP value.

Developing Human Resources as well as Products
I believe that in the development of new IP it is also essential to develop human resources. Sunrise actively hires new animators,
who polish their skills by working with highly experienced animators. In this way, we continue to create high-quality products witha sense of stability. In addition, from April 2018 we will revive the Sunrise Sakuga Academy (please refer to page 31) and work to develop
the star animators of the future. I believe that the ongoing implementation of these types of initiatives will lead to the activation of theentire company and to increases in the motivation of each individual employee participating in the creation of products.

25

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

Accelerating Initiatives for a Wide Range of Customers inJapan and Overseas

DRAGON BALL Series
DRAGON BALL, which includes a manga serialized in a youth manga magazine
from SHUEISHA Inc. as well as an animation based on the manga, is an IP thathas been supported by a wide range of customers for more than 30 years. Dueto media initiatives and other measures, DRAGON BALL has continued to be thefocus of attention. As a result, DRAGON BALL has continued to secure new fans,
not only in Japan but also overseas.

Worldwide Initiatives Leveraging
an Appealing World
that Earn Global Support

61.1 billion

9.9%

34.9

19.4
15.8
11.8

2008

2009

2010

2011

11.4
8.9

8.3

2012

2013

2014

2015

2016

2017

For the Fiscal Years Ended March 31

26

Coordination

BANDAI NAMCO Group

Share of Consolidated
Net Sales

12.5

Merchandisingpermission

61.1

¥

17.8

DRAGON BALL series

Rolling out products and services fora wide range of customers

DRAGON BALL Series
FY2017.3 Groupwide
Net Sales (¥ billion)

RIGHTS HOLDERSMedia initiatives(TV broadcasts, online distribution, film, etc.)

The BANDAI NAMCO Group provides a wide rangeof DRAGON BALL products and services, such as
network content, home video games, cards, andfigures. Through close collaboration with media,
we are expanding the base of fans for products
and services in Japan. In addition, against a background of global popularity for DRAGON BALL, we
are accelerating product initiatives, centered on
Europe and the Americas. Moreover, the IP
Strategy Division, which was established in 2016,
is working on a Groupwide basis to strategically
implement measures focused on opportunities toexpand overseas initiatives.

Accelerating Roll Outs of Products and Services in Europe and the Americas
In Europe and the Americas, favorable results are being recorded by DRAGON BALL
series home video games as well as by figures for adult customers. In particular,centered on Europe and the Americas, the DRAGON BALL XENOVERSE home video
game has become a major hit since its launch in 2015, with cumulative sales of morethan 4 million units. On the foundation of this result, from a long-term viewpoint wewill work to further increase IP recognition in Europe and the Americas throughproducts and services. At the same time, to maximize IP value through products andservices, we will bolster Groupwide collaboration, centered on the IP Strategy
Division, and accelerate initiatives in Europe and the Americas.
First, we will work to see that children who become DRAGON BALL fans when
Event in North America
they are around 10 years old will remain fans and still enjoy products and services for
adult customers 10 years later. Specifically, we will strengthen the provision of toys, home video games, network content, andother products for a wide range of age groups. In addition, we will allocate roles among Group companies from a medium-tolong-term viewpoint and move forward with a variety of projects, including consideration for the creation of new categories.

ADULTSHOME VIDEO GAMESSMARTPHONE GAME APPS

FIGURESSPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

Rolling Out Products and Services Globally

CARD GAMESTOYSCHILDREN

27

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

A Game Enjoying Popularity Around the WorldDRAGON BALL Z DOKKAN BATTLEDRAGON BALL Z DOKKAN BATTLE is a popular smartphone game app that is distributed in approximately 50 countries
and regions around the world. BANDAI NAMCO Entertainment’s Keigo Ikeda and Toshitaka Tachibana, who are theproducers of the game app, are communicating the new appeal of the DRAGON BALL series in global markets.

Securing the Support of Customers through Detailed Initiatives to Adapt
Products to Local Cultures
The distinctive features of the DRAGON BALL Z DOKKAN BATTLE smartphone game app include
powerful expression that makes it seem almost as if the screen is going to break, speedy fight scenes
based on the high-speed fighting of DRAGON BALL, and the ability for anyone to readily experienceexhilarating battle simply by touching the screen.
A global roll out was under consideration from the initial development stage, and following its
launch in Japan in January 2015, overseas distribution was commenced in July 2015, centered on
Europe, the Americas, and Australia. Distribution in Asia has been expanded to include Taiwan, Hong
Kong, and South Korea, and DRAGON BALL Z DOKKAN BATTLE is now available in approximately 50
markets around the world. In July 2017, it had the No. 1 store sales ranking in
16 countries and regions. In addition, it exceeded 200 million downloads worldwide.
With the worldwide roll out, we worked hard to obtain feedback from customers, while at thesame time collecting various customer data from the game. In this way, we are able to thoroughly analyze what customers respondto and what they enjoy. Based on these results, we are working to reflect the characteristic of each country and region and taking
steps to improve the game and to conduct events.

Implementing Ongoing Initiatives to Acquire
Customer Feedback and Taking Steps toMeet Expectations
In the smartphone game app market, which continues tochange at a rapid pace, DRAGON BALL Z DOKKAN BATTLE
has received the support of customers for three years.
On the other hand, this is a growth market, and accordingly it is expected to continue to undergo a variety ofchanges. To maintain favorable results in this setting,it will be necessary to rapidly address changes and tocontinually track what customers want. Moving forward,
we will continue to do our utmost to obtain customer
feedback and enhance services so that we can leveragegames in order to fully communicate the appeal of
DRAGON BALL, an IP that is popular around the world.

Keigo Ikeda
Comprehensive Producer
DRAGON BALL Z DOKKAN BATTLEBANDAI NAMCO Entertainment Inc.

28

Toshitaka Tachibana
Overseas Version Producer
DRAGON BALL Z DOKKAN BATTLEBANDAI NAMCO Entertainment Inc.

Tomoko KakimotoCollectors Toy Department
BANDAI CO., LTD.

DRAGON BALL Figures for Adults
Figures for adults, which offer faithful reproduction of the worlds of IP, are proving to be highly popular around theworld. Tomoko Kakimoto, from BANDAI CO., LTD.'s Collectors Toy Department, is working to inform consumers
around the world about the Company’s uncompromising approach to DRAGON BALL and other IP figures, which arehighly popular not only in Japan but also overseas.

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

Uncompromising Reproduction of the Spirit (Tamashii) of IP

Accelerating Growth with a Focus on Global Business Initiatives
In 2008, BANDAI established the Collectors Toy Department in order to bolster products for adultcustomers. Since its establishment, the department has recorded substantial growth in the scaleof its operations, and overseas sales have been favorable in recent years. This is due to the successof our efforts to bolster operations over the past several years, in addition to our ongoing businessdevelopment initiatives focused on global markets.
The Collectors Toy Department utilizes Tamashii Nations as an integrated brand for all of its
products. An extensive lineup of high-quality products, centered on figures and robots, has been
simultaneously rolled out in markets around the world and has expanded the range of fans. In productinitiatives, we give consideration to such factors as regional preferences and cultures as well as theTV broadcast environment. In North America, movable action figures that enable customers to enjoy
freely posing the figures are popular, while in Europe solid demand is enjoyed by fixed-position statue
figures with dioramas that can be used in a decorative manner. On the other hand, in Japan andthe rest of Asia, both movable action figures and statue-type figures are popular. In this setting,the DRAGON BALL series figures enjoy global popularity, centered on North America and Europe, andare available in many countries in which the Collectors Toy Department is conducting operations.

Aiming to Deliver Products with Spirit (Tamashii) to Large Numbers of Customers
With figures, which are products for adults, consumers want highly accurate reproduction of the visual expression. In particular,
with the rapid adoption of SNS in recent years, figures now have the important mission of enabling consumers to reproduce
a variety of poses and settings and then to share photographs of their figures. To address those needs, we have continued to move
forward with DRAGON BALL series figures. These figures reflect our dedication to a wide range of features, including not only
movability that enables more-realistic poses but also a focus on 3D features and colors achieved with the proven prototyping
technologies that we have cultivated.
In the future, we will continue to actively implement events and other initiatives around the world. In this way, customers who
have not yet encountered DRAGON BALL series figures will be introduced to the appeal of figures that incorporate the spirit (tamashii)of IP, and we will continue working to provide products to large numbers of customers around the world.

29

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

Original IP that Showcases the Dedication of Employees

GIRLS und PANZER
GIRLS und PANZER is an original TV animation that was produced by BANDAIVISUAL CO., LTD., and broadcast on television from October 2012 to March
2013. The theatrical film, which debuted in November 2015, surpassed ¥2.5
billion in box office revenues and has been seen by more than 1.45 million
people. BANDAI VISUAL’s Kiyoshi Sugiyama, the producer of GIRLS und PANZER,
creates popular IP with dedication to entertaining fans.

Unwavering Dedication that Generates Large Numbers of Fans
The concept for the creation of GIRLS und PANZER was a product that would relax andentertain tired people who have returned home from work. To that end, we completely
eliminated depictions of violence. In the visual expression, by leveraging 3D CG for the
portrayal of items that are difficult to represent in writing, such as the caterpillar tracksof the tanks, we were able to achieve realistic expression that surprised even experts.
We also rigorously focused on sound expression, such as the sounds of shelling.
We worked to achieve powerful sound, especially in the theatrical film. For example,
when the film was shown at movie theaters with advanced sound facilities, the sounddirector personally visited theaters to make adjustments. Consequently, the film
received a strong response. For example, word of mouth from fans who had seen thefilm made it a topic of conversation, and it had an unusually long run in theaters ofmore than one year.

Above All Else, Aiming to Make a Product that Entertains Fans
In creating new IP, what I could do as producer was simply to be straightforward andcommitted and work earnestly with the IP so that we could create an appealing
product that would please fans.
We had good luck in meeting many local people from Oarai Town, Ibaraki
Prefecture, which is the setting for GIRLS und PANZER. Strong ties developed
between the product and Oarai Town. For example, the local people had
a playful spirit and supported GIRLS und PANZER, and many fans visitedthe town. I believe that the success of GIRLS und PANZER is due in part toa combination of a variety of strengths, including fans who supported the
product and the generous spirit of the town of Oarai.
The first stage of GIRLS und PANZER: The Final Chapter will open in
December 2017. In addition to the visual production, we will leverage the
BANDAI NAMCO Group’s various content outlets and continue to provide
products and services that reflect a rigorous commitment to the IP
world-settings.
More than anything else, it is important that our customers
have fun, and we will do our utmost to entertain them.

30

Kiyoshi Sugiyama
Producer
GIRLS und PANZERBANDAI VISUAL CO., LTD.

Topics in the Visual andMusic Production Business

TOPICS

Multidimensional Initiatives with IP as an Axis

We have implemented full-scale roll outs of live events andlive viewings, centered on Asia, for Love Live! Sunshine!!,which continues to be popular in Japan.

Bolstering the Animation Song BusinessIn the live event business, we are taking steps to increaseanimation song fans as one means of building a foundation
for future expansion of overseas initiatives.
Lantis Co., Ltd., is aggressively implementing animation
song live events overseas. Targeting the European market,
where there is a high level of interest in Japanese animation
songs, Lantis joined with AMUSE INC., a comprehensive
entertainment company, to establish joint venture company
AmuseLantis Europe S.A.S. in France as a base for the provision of content, centered on animations and animation songs.
In this way, we aim to aggressively provide information in thelocal market, to expand the base of fans for Japanese animations and animation songs, and to expand our business in theEuropean market.
Moreover, in cooperation with related companies that
handle animation songs, we established ANiUTa Co., Ltd.,
which has commenced the world’s first flat-rate streaming
service for animation songs under the name ANiUTA. By
creating services specialized in animation songs, we areaiming to open up a new market that is distinct from comprehensive music streaming services. In addition, against abackground of growth in demand for such products as animations and animation songs, we will also take on the challenge
of a worldwide roll out of a Japan-originated streaming
service by the end of FY2018.3.

A stage version of Kuroko’s
Basketball opened in 2016, and it
has been highly popular. There
was a live viewing on the final day,and the second installment of theseries was staged in 2017.

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

The BANDAI NAMCO Group is strengthening
multidimensional initiatives that use IP as
an axis, such as initiatives that coordinate
animations, music, and live events.
Moving forward, from our starting point
in Japan we will accelerate our approach ofrolling out multidimensional initiatives foranimation and IP fans around the world.

Discovering and Nurturing New Talent in Visual Production
With the objective of further increasing the quality of animations, Sunrise Inc. will revive the Sunrise Sakuga Academy in April
2018 in order to nurture highly skilled animators. Japanese animations have heightened their presence as an essential formof entertainment in people’s lives. For example, many animation products released as theatrical films have high rankings interms of box office revenues. On the other hand, there are concerns about a shortage of animators, who play an importantrole on the front lines of animation production. By taking an active role in nurturing animators and discovering and securing
human resources, we will continue to steadily produce high-quality products and deliver dreams and inspiration to large
numbers of people.

31

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

Expanding Our Target Markets

Taking On the Challenge of
Initiatives for Adult WomenWith support from the IP Strategy Division, we are taking steps acrossthe Group to bolster initiatives targeting adult women customers(women in their 20s and older). Naomi Tobita, who is a Director of
BANDAI and the lead member of the Adult Women Customer Acquisition
Project, is working to lead the expansion of targeted customer groups
through Groupwide initiatives.

Accelerating the Speed of Initiatives through Market Analysis

In meetings related to products and services for adult women,

members share information about market trends and link
The market for adult women customers is showing favorable growth, and we arethat information to initiatives.
working to address demand in this market by strengthening collaborative Groupinitiatives. The Adult Women Customer Acquisition Project, which was launched in 2016, started with detailed market analysis.
We categorized user groups on the basis of our own original standards, and shared those categories as common terminology for theentire project. The establishment of this common terminology unified the approach of the project members and made it possible toincrease our sense of speed and to draw on the distinctive strengths of each Group company to roll out a wide range of products
and services. Moreover, we are continually sharing information among team members about products and services in development
as well as about user trends, and are leveraging this information in the development of new products. By advancing the Adult
Women Customer Acquisition Project, we have accelerated the speed of development initiatives involving the entire Group and haveestablished a foundation on which we can leverage our strengths. In the next stage, we will cultivate know-how and generate
results by taking on numerous challenges.

Naomi Tobita
Director
Lifestyle Business Strategy
BANDAI CO., LTD.

32

Targeting Adult Women Customers Around the World
While Simultaneously Creating New IP
The BANDAI NAMCO Group has a wide range of customer contact
points that includes not only products themselves but also
amusement facilities and stores. The ability to effectively use
these contact points in our initiatives will be a major source ofstrength. In 2016, we opened Otona Joshi Biyory, a directly operated store targeting adult women customers that is located in anunderground shopping mall at Tokyo Station. The major objectiveof this venture was to collect information directly from customers. The inbound demand from tourists visiting Japan, which we
can observe at this store, has provided a strong indication of thepotential of this business overseas. We are already seeing resultsin Asia, centered on cosmetics, and in Europe we have received
an extremely positive response to event-based sales. Accordingly,
we would like to move forward aggressively with global businessdevelopment initiatives. Furthermore, we will take on the challenge of creating new IP originating with the Adult Women
Customer Acquisition Project, and will strive to achieve theworldwide roll out of products and services based on that IP.

Yukiharu Tamiya
AM Business Unit
BANDAI NAMCO Entertainment Inc.

Taking On the Challenge of
New Markets that Utilize VR

SPECIAL FEATURE: The IP Axis Strategy — The Driving Force Behind the Group’s Growth

Creating Entertainment that Leverages Leading-Edge Technologies

The progress of technology has led to the creation of a variety of products and services using VR. Yukiharu Tamiya,from BANDAI NAMCO Entertainment, is taking on the challenge of creating leading-edge entertainment using
devices and technologies that are improving on a daily basis.

Achieving a More-Realistic Experience by Combining VR Technologies and Sensory Feedback Machines
With a focus on providing consumers with realistic experiences, for more than 20 years the BANDAI NAMCO Group has worked todevelop arcade games that function as sensory feedback machines appealing to the five senses. Due to the progress of VR technology,
we have made further advances with these sensory feedback machines. At the VR ZONE Project i Can, a VR entertainment researchfacility that was open from April to October 2016, visitors were able to experience a total of nine VR activities. BANDAI NAMCOEntertainment and BANDAI NAMCO Studio handled development of the content and sensory feedback machines, while NAMCO was
responsible for the operation of the facility. This initiative concentrated the strengths of the Network Entertainment SBU, and thenumber of visitors who were surprised and entertained reached approximately 37,000, despite the fact that the facility was only open
for six months.

Targeting the Establishment of a VR Entertainment Market
To accelerate initiatives for the establishment of VR as a business in the years ahead, we areverifying the results of VR ZONE Project i Can and taking on the challenge of commercialization. For example, in July 2017 we opened VR ZONE SHINJUKU, an entertainment facility
utilizing VR and other advanced technologies. At this facility, we fully utilize the extensive
knowledge that we have cultivated to date in order to create a sense of realism by leveraging
the distinctive capabilities of VR. In addition, we are providing advanced VR activities thatmake the most of our content development capabilities, which draw out the appeal of IP.
By combining the sensory feedback machines that we have developed over many
years with advanced technologies, we are taking on the challenge of creating a new market in VR entertainment. We are considering the potential for opening multiple facilities in Japan and overseas. Moving forward, we will strive to create entirely new forms ofentertainment by delivering new types of fun and surprise to even more customers.

33

DISCUSSION AMONG OUTSIDE DIRECTORS

Satoko Kuwabara

Yuzuru Matsuda

Mikiharu Noma

Supporting the Group’s Sustained Growth from an Independent, Outside Viewpoint
The BANDAI NAMCO Group is accelerating its initiatives to strengthen corporate governance. These include the establishment of the Independent Directors and Audit & Supervisory Board Members Committee in FY2016.3, which comprises
three outside directors and three outside Audit & Supervisory Board members, as well as the introduction of evaluationsof the effectiveness of the Board of Directors. Three outside directors met for an open discussion on such topics as theunique characteristics of the Company’s corporate governance, challenges regarding sustained growth in the years ahead,
and the mission that outside officers need to achieve.

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 ofInternational Corporate Strategy (ICS)
Hitotsubashi University

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

Attendance at meetings of the Board of Directors:
14 / 14 meetings*

Attendance at meetings of the Board of Directors:
14 / 14 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
not been involved in corporate management, the Company
anticipates, given her many years of experience as an
attorney-at-law, 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, 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

Katsuhiko Kohtari

Osamu Sudoh

Katsuhiko Kamijo(Full-time)

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

Professor at Faculty of Law of Teikyo University

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: Mr. Kohtari was appointed
due to the Company’s expectation, based on his career
over many years as a certified public accountant, that
he would utilize in the Company’s auditing systems his
extensive knowledge and experience in areas related tofinance and accounting.

Attendance at meetings of the Board of Directors:
17 / 18 meetings
Attendance at meetings of the Audit & Supervisory
Board: 14 / 14 meetings

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: Mr. Kamijo was appointed dueto the Company’s expectation, based on his thoroughknowledge of tax affairs, gained over many years, andhis certification as a licensed tax accountant, that hewould utilize in the Company’s auditing systems his
extensive knowledge and experience in taxation.

Reasons for Appointment: Mr. Sudoh was appointed dueto the Company’s expectation, based on his career overmany years as an attorney-at-law, that he would utilize
his extensive knowledge and experience in legal mattersto strengthen the Company’s legal systems.
* Ms. Kuwabara and Mr. Noma were elected at the 11th Ordinary General Meeting of Shareholders held on June 20, 2016, and thus, the number of Board of
Directors’ meetings differs from that of other outside directors.

34

Characteristics of the Company’s
Board of Directors
It has been three years since I became an outside director. My understanding of the Group has
deepened, and the responses of those in executive roles
have become more rapid and detailed. Meetings of theCompany’s Board of Directors have been venues for open
communications on any topic. However, I think that recently
communication has improved further.
In general, at all companies, it is typical for inside officers to participate once in the process of preparing agenda
items for presentation to the Board of Directors. However,with this process there is cause for concern that the meetings of the Board of Directors will repeat the same typeof discussions that have been conducted internally, andwill become mere formalities. In that regard, I think theCompany’s Board of Directors is excellent, with careful
explanations from executives.
MatsudaDISCUSSION AMONG OUTSIDE DIRECTORSThis is my first experience working as an outside
director, and I think that there is a bright andopen atmosphere. When items are explained in advanceof meetings of the Board of Directors, there are some companies at which the process ends with advance coordinationof opinions. However, at BANDAI NAMCO the statement of
opinions is made on the day of the meetings, and it is truly
possible to hold frank discussions.
Also, having received advice from Mr. Matsuda, I am
attending not only meetings of the Board of Directors but
also other meetings, such as presentations of policies for
the Group and for each SBU as well as SBU quarterly reportmeetings. I have attended almost all of these meetings.
In addition, I think we will discuss this later, but being able
to participate in off-site meetings of all officers, and toshare the status of Group management and visions for the
future, has been extremely useful in regard to the checking
function of outside officers.

academic areas, while I have experience of a different kind.
Rather than being composed entirely of people with experience in business management, or of people from the legal
profession, or of researchers, the composition of theCompany’s Board of Directors is diverse and well-balanced.

Kuwabara

As you both have mentioned, I also think that theCompany has made it easy to speak out at meetings of the Board of Directors. I have worked to listen not only
to the officers with whom I am in regular contact but also topeople from the operating companies. By working to create
opportunities to obtain information as often as possible, I
have been able to understand the background to discussions
at meetings of the Board of Directors. It has been a very
meaningful year.
Noma

In entertainment as well as other industries, thethoughts and sensibilities of young people, suchas Ms. Kuwabara and Mr. Noma, are important. I believethat it is crucial to change members at periodic intervals.
The two of you have abundant knowledge in legal andMatsudaEstablishment of Independent Directors andAudit & Supervisory Board Members Committee
To evaluate the effectiveness of the Company’s
Board of Directors, a questionnaire with ratings
and free comments is implemented for all inside andoutside officers. The results are tallied by a third-party
specialist organization, and the issues that are identified
are discussed at the Independent Directors and Audit &Supervisory Board Members Committee. I report specificsuggestions to the Board of Directors. Executives discussthese issues within the Company, and then specific proposals
are returned. At the subsequent Board of Directors’ meeting,the executives’ proposals are considered by all members,
and we decide what needs to be done. Then, we check to
see that there is no gap between the actions based on thedecisions and the suggestions. This is not just a simple
questionnaire. Rather, through a process of back and forth
between inside and outside officers, it has become a meansof implementing the plan–do–check–act (PDCA) cycle. Thisis a very organized approach.
MatsudaIn evaluating the Board of Directors there is atendency to focus on whether the score went up or
down. For example, Mr. Noma and I joined as new officers in
FY2017.3. When the member composition changes in thisway, then a simple year-on-year comparison of the scoredoes not have much meaning. Rather, we are working to track
more-substantial problem areas. When there is a difference
between internal and external scores, we ask if this indicatesa difference in the two group’s ways of looking at things.
Kuwabara

35

DISCUSSION AMONG OUTSIDE DIRECTORSIn the case of Japan, it is my impression that
BANDAI NAMCO is doing an excellent job inaddressing the Corporate Governance Code in terms of“evaluation.” I think there are probably many companies forwhich the process ends with just the implementation of aquestionnaire and the identification of issues. With BANDAI
NAMCO, in addition to being organized, the process involves
addressing issues that have been identified and rapidly
providing highly effective feedback. I think that in Japan andin the U.S. the best format for corporate governance has
not yet been determined, and in this context the Company’s
initiatives are a very positive example.
Noma

Evaluations of Effectiveness of the Board of Directors
To heighten the effectiveness of the Board of Directors
and increase corporate value, the Company periodicallyconducts evaluations of the effectiveness of the Boardof Directors. Specifically, questionnaires regarding
the effectiveness of the Board are implemented, andresponses 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 Board of Directors.
Based on these opinions, the Board shares the results ofthe evaluation of present circumstances as well as issues
and holds constructive discussions regarding future actionplans. An overview of the results of the evaluation aredisclosed on the Company’s website.

Feedback about the Suggestions from the
Independent Directors and Audit &Supervisory Board Members Committee
We also get feedback from executives. Whenthe Independent Directors and Audit &Supervisory Board Members Committee raises issues
related to overseas business risk monitoring, we are now
able to talk directly with the representative directors ofregional headquarters companies at the SBU quarterly
report meetings. This is an example of the Company
responding rapidly to a suggestion from the Independent
Directors and Audit & Supervisory Board Members
Committee. In regard to the monitoring of overseas business, there are other issues that we need to think about,but I believe we are making progress one step at a time.
Kuwabara

I think the same
applies to theoff-site meeting that was
mentioned a moment ago.
There are not many opportunities to discuss themedium-to-long-term
Matsuda36

Off-site meeting

vision, and the suggestion was made that this should beshared. In response, the Company implemented a two-day,
one-night off-site meeting in 2016.
This initiative was very well-received within the Company,
and it was also implemented in 2017. I think this was
extremely important. The agenda items presented at themeeting also included some that had not been sufficiently
refined and were still in the planning stage. However, thismeeting was different from those in which discussions arestarted after advance consensus building and explanation, andI think it worked out for the best.
At the off-site meeting, we reviewed results
trends and the current Mid-term Plan, and thenwe had a lengthy period for free discussion. Without focusing on obtaining a specific result, we were able to engage
in wide-ranging discussions. Inside officers also freely
participated in the discussions. This ability to share was ahighly valuable experience, and I believe we were able todeepen our understanding of the significance and positioning of the next Mid-term Plan, which is scheduled to be
formulated in FY2018.3.
Kuwabara

Characteristics of governance at Japanese companies include a large number of meetings of theBoard of Directors, with each meeting taking a short period oftime. This is because, rather than being a venue for mediumto-long-term discussions, these meetings are a place forconsidering resolutions. Conversely, in the U.S. there arefewer meetings, with each meeting taking a longer time, andmanagement challenges are discussed. At the off-site meeting,
we were able to engage in discussions with a 10-year timeframe, which is longer than the time span of the Mid-term
Plan. We need to continue these meetings as an extremely
important test, as they could possibly become a best practicein the corporate governance of Japanese companies.
NomaRole of Outside Officers
The current results are excellent, and I havea high evaluation of everyone’s hard work andability to meet numerical targets. However, I think thatwhen you are too positive about the current state ofbusiness affairs, then growth stops. How can we develop
global brand strength that can create value for BANDAI
NAMCO in a way that transcends individual SBUs? As
outside officers, I think that we should consider thisissue from a third-party perspective and incorporate
it into the next Mid-term Plan.
MatsudaSustained Growth for the GroupThe Company has two core competencies. One ofthem is the IP axis strategy. Of course, there areother entertainment companies that hold and develop IP
and content. However, it is clear that what is different at
BANDAI NAMCO is the business model for monetizing
those assets and the organizational execution skills to
implement that model.
The second core competency is the favorable relationshipwith stakeholders. First of all, the Company has many
long-term established fans and customers. Next, employees
really enjoy their work. And finally, shareholders are enthusiastic. I think the Company has a unique strength in theoverlap between long-term shareholders and customers.
Noma

In the entertainment industry, an increase in fans
is also effective as a means of securing humanresources. If there are many fans, those who are deeply
attached and enthusiastic have growing opportunities toparticipate in the business. In any industry, the key to successin overseas business is securing capable human resourcesin local markets. To succeed with the IP axis strategy on a
global basis, it will be necessary to integrate into local markets and work steadily to create a substantial base of fans.
MatsudaDISCUSSION AMONG OUTSIDE DIRECTORS

I have worked as an attorney in the field of corporate law, and when the Board of Directors
makes an important decision we need to objectively look atwhether we are fulfilling our fiduciary duties and whether
appropriate corporate governance is being put into practice. On the other hand, from the viewpoint of independent,
outside officers, we should work to achieve a good balance
between “offense” and “defense” while supporting aggressive initiatives targeting growth for the Group.
Kuwabara

Due to the volatility that characterizes the entertainment industry as well as changes in thesocio-economic environment, I think it will become
increasingly difficult for a specific company to achievesustained competitiveness. The Company’s results arestable, and the in-house atmosphere is positive, but thatmeans we must maintain a sound sense of crisis.
In regard to the vision of being “the Leading Innovatorin Global Entertainment,” are all of the officers, employees,
and stakeholders working together? Have we solidly established a mechanism for the spiraling achievement of targets in three time frames — short, medium, and long term?
I think that my mission is to contribute to the cultivation ofa sound sense of crisis while monitoring these two issues.
NomaMoving forward, as the overseas sales ratio
increases, we will enter a stage in which
overseas staff are engaged in the management of
the globalized holding company. We should probably
actively aim to move in that direction. One question is
how to develop overseas human resources so that they
can support management as well as operations. This is
a problem that is commonly faced by Japanese companies that are expanding into global markets, and wehave reached the stage at which BANDAI NAMCO mustalso consider this issue.
Kuwabara

37

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.

http://www.bandainamco.co.jp/en/ir/governance.html

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

3 / 10
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 oversight function.

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

Board of Directors

10 directors(of whom 3 are outside directors)

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

Auditing

Appointment /Dismissal

Account Auditing /Reports on
Results

Independent Auditors
Dismissal

Independent Directors andAudit & Supervisory Board
Members Committee

Appointment /Dismissal /Supervision
Auditing

Personnel Committee

Representative Directors
Reports
Directions
Directions

Reports

Reports

Cooperation

Internal Auditing Division

Group CSR Committee
Group Risk Compliance Committee

SBU Quarterly Report MeetingGroup Management Meeting
Content Business
Strategy Meeting
Policy Directions

Committees

Support

Auditing

Group Information Security Committee
Internal Control Committee

Policy Directions

Reports

BANDAI NAMCO Group Companies
As of June 19, 201738

Board of Directors
The Company is a pure holding company, and most of the representative directors of the major subsidiaries concurrently serve
as directors of the Company. Therefore, directors are able todeliberate 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,

and 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
Chairman and Representative Director Shukuo Ishikawa.
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.

Audit & Supervisory Board
status of business execution by the directors. In addition, Audit &Supervisory Board members work together with Audit &Supervisory Board members of Group companies, and in this way
the effectiveness of audits for the Group 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 theGroup’s business operations is monitored, issues are identified
and understood, and recommendations for resolving thoseissues 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 conformancewith 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, and in accordancewith audit plans determined by the Audit & Supervisory Board, theAudit & Supervisory Board members conduct audits regarding the

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

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 thenecessary 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, and decisions 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 Company also has a basic policy of electing 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, andattorneys-at-law and other individuals who have thorough knowledge regarding compliance and other aspects of internal control.

Chairman and Representative Director

President and Representative Director

Shukuo Ishikawa

Mitsuaki Taguchi

Number of Company shares owned: 53,300 shares
Attendance at meetings of the Board of Directors: 18 / 18 meetings

Number of Company shares owned: 62,600 shares
Attendance at meetings of the Board of Directors: 18 / 18 meetings

Reasons for Appointment: Mr. Ishikawa has worked as a representative director of theCompany since 2009 and possesses extensive experience, achievements, and knowledge asa business manager. He was nominated for director as the Company considers him capableof promoting Group management and strengthening corporate governance.

Reasons for Appointment: Mr. Taguchi has exhibited leadership skills based on his extensive
experience and broad knowledge gained through roles at BANDAI CO., LTD., which is the corecompany of the Group’s Toys and Hobby Business and where he was responsible for media
policy and new business policy. He is supervising the business appropriately after his appointment as President and Representative Director of the Company in 2015. He was nominated for
director as the Company considers him capable of achieving the Mid-term Plan and ensuringthat the Group continues to grow.

As of June 19, 201739

CORPORATE GOVERNANCE

Directors

Shuji Ohtsu

Yuji Asako

Masaru Kawaguchi

Division General Manager of the Group Administrative
Headquarters

Division General Manager of the Corporate Planning
Division

Director in charge of the Toys and Hobby SBU

Number of Company shares owned: 27,200 shares
Attendance at meetings of the Board of Directors:
18 / 18 meetings

Number of Company shares owned: 28,100 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 Manager of the Group Administrative
Headquarters of the Company. He was proposed as a
candidate for director as the Company considers him
capable of strengthening Group management structuresand ensuring highly transparent management.

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 asacandidate for director as the Company considers him
capable of implementing the Group’s management strategies and seeking a sustained increase in corporate value.

Satoshi Oshita

Kazumi Kawashiro

Director in charge of the Network Entertainment SBU

Director in charge of the Visual and Music Production
SBU

Number of Company shares owned: 47,500 shares
Attendance at meetings of the Board of Directors:
17 / 18 meetings
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.

Number of Company shares owned: 33,500 shares
Attendance at meetings of the Board of Directors:
14 / 14 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.

Number of Company shares owned: 16,600 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 VISUAL CO., LTD., 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.

* Mr. Kawaguchi was elected at the 11th Ordinary
General Meeting of Shareholders held on June 20,
2016, and thus, the number of Board of Directors’
meetings differs from that of other directors.
Note: Number of shares held is as of the end of
March 2017.

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

SBU Quarterly Report
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, SBU reports, other items to
be reported

Group Management
Meeting
Content Business
Strategy Meeting

6 times a year

Group CSR Committee

Semiannually

Waigaya Meeting

WeeklyQuarterly

Deliberations regarding issues extending across SBUs, otherGroup management issues, strategic deliberations
Sharing of information about SBU initiatives related to theGroup’s important IP

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
SBU and affiliated business company
Weekly reports regarding the departments for which directors are responsible

Directors, Audit & Supervisory Board
members, representative directors ofoverseas regional headquarters
companies, other designated employees
Directors (excluding outside directors),
other designated employees
Directors with related responsibilities,
directors from major subsidiaries withrelated responsibilities, other designatedemployees
Directors (excluding outside directors),
other designated employees

Directors (excluding outside directors),
other designated employees

Outside Directors and Outside Audit & Supervisory Board Members
Of the Company’s 10 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 for40

outside Audit & Supervisory Board members. They work together
and monitor the Company’s internal control situation on a daily
basis. As described on page 44, the Company has established"standards for the Independence of Outside Directors and outside
Audit & Supervisory Board Members," and outside directors andAudit & Supervisory Board members. In addition, all membersof 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 SBU Quarterly 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 three core companiesof the Group’s SBUs: BANDAI CO., LTD., BANDAI NAMCOEntertainment Inc., and BANDAI VISUAL 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
are aggregated and analyzed by an external specialist organization, setting objective benchmarks in light of the scales of theCompany’s business operations and other factors, and comprehensively taking into consideration the proportion of medium- andlong-term performance-based remuneration within annual total
remuneration and the level of difficulty of achieving businessperformance targets. Where the standard performance for theperiod of the Mid-term Plan has been achieved, the ratio of fixed

remuneration to variable remuneration within annual total remuneration shall be about 50:50, and the ratio of share-type remuneration shall be a little over 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.

Officer category

Directors

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

Number of
eligible
officers(People)

742

267

127*

347

7

Audit &
Supervisory
Board
members

24

24

—

—

1

Outside officers

80

80

—

—

7

(excluding outside
directors)

CORPORATE GOVERNANCE

outside Audit & Supervisory Board members are appointed inaccordance with those standards. In the Company’s judgment,
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(excluding outside
Audit & Supervisory
Board members)* Performance-based stock compensation for FY2017.3 is the amount that is
expected to have arisen as of the end of FY2018.3.

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

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

41

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 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 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
submit written oaths pledging strict compliance with the charter.

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 study and develop a systemof takeover defenses in anticipation of situations in which an

inappropriate entity or person might emerge to have decisionmaking power over the Company’s financial and business policies.
In concrete terms, in the event an inappropriate bidder
emerges, the management team will not take steps to guard theirpersonal interests against the takeover offer by the bidder, but will
construct a system that enables the Company to judge from theperspective of improving corporate value first. The Company willcontinue to study takeover defenses by utilizing stock subscription
rights, etc., with a close eye on legal and social trends.

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 “CSR Initiatives” section on the Company's website. We also hold meetings of the Group CSR
Committee (chairperson: president) and the Group CSR Subcommittee, which is a subcommittee of the Group CSR Committee. In theseways, we are implementing initiatives to strengthen CSR on a Groupwide basis. Also, to report on 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 SBU core companies andthroughout the Group.

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.

Results of Major IR Activities in FY2017.3
Results presentations for investors and analysts 2 (168 people)
Results telephone conferences for investors
and analysts

42

2 (148 people)

Overseas IR

2 (2 regions)

Separate meetings for investors and analysts

308 people

Presentations for individual investors in Japan

5 locations(730 people)

In presentations for investors and analysts, explanations are provided directly
by presidents of majorGroup 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 strategic business units (SBUs)
categorized by business segment, and appoint a Director and lead company incharge of each SBU in order to improve efficiency of business operations based on
the division of duties, chain of command 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 SBU, 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 SBU Quarterly Report
Meeting and the Group Management Meeting, and put in place a system forreporting inside the Group and decision-making.

b. The Company and its subsidiaries shall endeavour to improve and standardize
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.

43

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
the Company; the same applies hereinafter)
2. Any Executive Director, Executive Officer, Manager, or other employee of a company that purports to bea major 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.”

44

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 SBU 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
MissionCSR INITIATIVES“Dreams, Fun and Inspiration”

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

45

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 at the meeting of the Group CSR Committee in
FY2010.3. With consideration for the influence that companies have on society in addressing the various social issues
that surround the Group, we implemented multifaceted
initiatives to identify and evaluate themes that require special initiatives. In this way, we formulated the BANDAI

NAMCO Group’s Important CSR Themes. As a company thatprovides “Dreams, Fun and Inspiration” to customers aroundthe world, we will advance initiatives in line with theseimportant themes. This will reaffirm our understandingof the most important factor — that Dreams, Fun andInspiration facilitate mutual trust and sharing among various
people — and will lead toward the resolution of social issues
through the steady efforts of each individual employee.

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
CSR Initiatives

Important Viewpoints for the Formulation of the Themes

BANDAI NAMCO Group Environmental Policy

BANDAI NAMCO Group guidelines related to CSR
2 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 Vision

1

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

Important CSR Themes—Establishment and Process Steps1

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

STEP

2

Implemented every three years

3

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

Evaluate the importance of the specificitems related to CSR
activities

STEP

Establishment of
the Group’s
Important CSR
Themes4

Individual SBUs
decide major initiative themes based on
the important themes

STEP

5

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

BANDAI NAMCO Group’s CSR Promotion System
The Group CSR Committee comprises the presidents and people in charge of CSR at BANDAI NAMCO Holdings as well as
the SBU core companies. In this way, the Group is making decisions rapidly and advancing CSR activities in a manner thatis integrated with operations.
Deliberating / Reporting on Matters Related to CSR
Board of Directors (CSR matters reported as needed)
Appointment / Dismissal / Supervision

Representative Directors
Reports

Group CSR Committee (Semiannually)
Group CSR Subcommittee (Quarterly)Group Risk Compliance Committee (as needed)46

SBU CSR Projects

CSR TOPICSCSRTO PI CS

Initiatives to Reduce CO2 Emissions and Conserve Energy

BANDAI NAMCO Group CO2 Emissions

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 field.
Consequently, Groupwide emissions in FY2017.3 were down 27% from FY2012.3,
to 59,043 tons of CO2.
In addition, we are implementing a variety of energy-saving measures. These
include more-efficient utilization of plants in the Toys and Hobby SBU, aggressive
utilization of LED lighting in the Network Entertainment SBU and the Visual andMusic Production SBU, and the implementation of eco-driving in the AffiliatedBusiness Companies, which handle logistics.

(t-CO2)80,79974,566 73,996
64,254 61,795

2012

2013

2014

2015

59,04320162017

For the Fiscal Years Ended March 31

Examples of CSR Initiatives
Manufacture of safe,
reliable products

Universal design initiatives

Certified product BIGBANG SMASH

Example of a packaged product for people with visual /hearing impairments

Eco-Label

CSR INITIATIVES

Dropping products to test quality

Initiatives in the field of
eco-amusement featuring
environmentally friendly design

In all our business fields, we follow all legal
and industry quality and safety standards. We
have also established our own more rigorous
in-house standards, and we pay carefulattention to safety.

We have formulated environmentally friendly
design guidelines for arcade games sold inJapan. Products that clear specific standards
established under the guidelines are certified
as “Eco-Amusement” products. In addition,
certified products display the “Eco-Label.”

We are implementing initiatives such as voice
guide recordings (audio descriptions) andsubtitles that explain who is speaking andenvironmental sounds, so that the visualcontent can be enjoyed by people with visualor hearing impairments.

Initiatives implemented together
with suppliers to strictly observe
laws and regulations and tomaintain and improve quality

Social contribution activities"Children’s Eco Club” initiatives

Supplier conference

Workshop in disaster-stricken area

Participating in outdoor experience activities(rice planting)

We are implementing independent audits andinspections of suppliers’ plants, including“BANDAI Factory Audits” and “BNE Supplier
Audits.” In addition, we are providing andsharing information through supplier conferences and websites exclusively for suppliers.
In these ways, we are working together with
suppliers to strictly observe laws and regulations and to maintain and improve quality.

In cooperation with Save the Children Japan,
the BANDAI NAMCO Group is implementing
workshop activities and support activities forchildren in areas affected by the Great East
Japan Earthquake. In addition, we continue to
implement support activities in conjunction
with shareholders who have chosen to contribute their shareholder benefits.

To help children develop a better understanding of environmental activities, we are apartner in the Japan Environment
Association’s Children’s Eco Club. In this way,
we are supporting the activities of children,
and Group employees are participating in
outdoor experience activities.

For further information about the initiatives of each SBU,
please visit the Company's website.

http://www.bandainamco.co.jp/en/social/index.html

47

HUMAN RESOURCES INITIATIVESThe BANDAI NAMCO Group believes that its employees (human resources) are its greatest engine supporting sustained growth and are its most important asset. Accordingly, the Group is working to establish an environment inwhich employees can work energetically and with peace of mind while enjoying their work. We provide a variety of
support for the achievement of work-life balance. In addition, human resources are hired and placed without regard
to such factors as gender, work experience, nationality, or cultural background in an effort to ensure diversity. Also,
to continue to strongly advance the IP axis strategy—the Group’s greatest strength—in an operating environmentthat is undergoing dramatic change, we aim to nurture human resources who can address change.

Working-Style Reform Initiatives
We are implementing a variety of initiatives so that employees
can work energetically while remaining healthy in body andmind. As one facet of those initiatives, we have taken anumber of steps from the viewpoint of countermeasures tolong work hours. For example, we have instituted a rule
that, in principle, prohibits overtime work after 10 p.m., andwe have established special days to promote the use of paid
leave. Also, we have established departments with responsibility for countermeasures to long work hours.

In addition, we are implementing initiatives to establish a
workplace environment in which employees can raise theirchildren with peace of mind, and to that end we are operatinga variety of systems. For example, we have instituted flexible
working arrangements using flextime systems and shorter
working hours, introduced a childbirth allowance benefit
system to support childbirth and child care, and provided
facilities to day care centers certified by Tokyo Prefecture.

Establishing Frameworks to Cultivate the Spirit of Taking On Challenges
Principal companies in the BANDAI NAMCO Group haveintroduced performance-linked remuneration frameworks
that link a company’s operating profit with profit sharing. In
addition, we have established a variety of systems for the

proposal of ideas, such as the Groupwide IP recruitment
system. We have established frameworks that transcendboundaries between companies and organizational units
and facilitate the participation of employees in proposals.

Personnel Exchange Systems
We are implementing Groupwide training and personnel
exchanges for a wide range of positions, from new employees to managers. In this way, we are promoting humanresources development through the accumulation of varied
experiences for the purpose of working energetically whileremaining healthy in body and mind, as well as broadening
viewpoints and networks.

Training for managers(People)48

FY2017.3

Full-time employees

2,043

2,113

Junior employees

149

151

Contract employees

6764

Temporary employees

131

76

Total

2,390

Personnel exchanges among young employees (personnel
rotations among SBUs)
Overseas–domestic personnel exchanges (personnel rotations among overseas companies and domestic companies)
Next-generation managers development training, etc.

Training to promote active careers for women

Number of Employees by Type of Employment(Total for 3 SBU core companies)
FY2016.3

Groupwide training to promote active careers for women

2,404

Number of Female Managers

81

FY2016.3

93

FY2017.3

Percentage of Female Employees
among New Hires

42%
FY2016.3

44%
FY2017.3

Ratio of Female Managers
to All Managers

13%
FY2016.3

15%
FY2017.3

Employment Ratio for People with
Disabilities (Group total)

2.00%
FY2016.3

Note: Total for 3 SBU core companies(excluding employment ratio for people with disabilities)

2.04%
FY2017.3

FINANCIAL SECTIONFINANCIAL SECTIONCONTENTS

50

CONSOLIDATED SIX-YEAR FINANCIAL SUMMARY

51

FINANCIAL REVIEW54

CONSOLIDATED BALANCE SHEETS

56
57

CONSOLIDATED STATEMENTS OF INCOME ANDCONSOLIDATED STATEMENTS OF COMPREHENSIVEINCOMECONSOLIDATED STATEMENTS OF CHANGES IN
NET ASSETS

58

CONSOLIDATED STATEMENTS OF CASH FLOWS

59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

86

INDEPENDENT AUDITOR’S REPORT

49

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

2012

2013

2014

2015

2016

2017

Net sales¥454,211¥487,241¥507,679¥565,486¥575,505¥620,062

Gross profit

167,503

183,079

190,829

213,112

202,601

223,759

Selling, general and administrative expenses

132,896

134,436

146,156

156,791

152,960

160,520

Operating profit

34,607

48,64344,67356,32149,641

63,239Recurring profit

34,96049,97347,45759,38450,77563,291

Profit attributable to owners of parent

19,30432,38325,05537,58934,584

44,160Comprehensive income

21,551

41,50532,63343,357

27,377

43,105

Capital expenditures

23,75823,83628,97927,761

26,98725,016

Depreciation and amortization

18,142

20,416

21,72623,712

21,626

21,854

Cash flows from operating activities

39,112

36,411

41,291

50,10358,05064,137

Total assets¥342,172¥374,203¥405,093¥441,764¥448,336¥488,033

Total current assets

240,920

264,804

284,398

317,516

322,177

357,783

Total current liabilities

107,946

108,391

120,135

123,136

114,334

126,111

Total net assets

213,126

248,770

267,951

303,513317,304

348,784

Basic earnings per share¥85.62¥147.40¥114.05¥171.10¥157.43¥201.03

Cash dividends

26.00

45.00

35.00

62.00

52.00

82.00

Return on equity (ROE)*2 (%)

9.1

14.1

9.7

13.2

11.2

13.3

Return on assets (ROA)*3 (%)

10.7

14.0

12.2

14.0

11.4

13.5

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

29.3

27.6

28.8

27.7

26.6

25.9

Operating profit margin (%)

7.6

10.0

8.8

10.0

8.6

10.2

Profit attributable to owners of parent margin (%)

4.3

6.6

4.9

6.6

6.0

7.1

Shareholders’ equity ratio (%)

61.8

66.0

66.0

68.6

70.6

71.3

Debt/equity ratio (times)

0.09

0.05

0.03

0.01

0.01

0.00

For the Year:*1

At Year-End:Per Share Data (Yen):

Main Financial Indicators:

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

50

FINANCIAL REVIEWOverview of Performance in the
Fiscal Year Ended March 31, 2017

SG&A Expenses

During the fiscal year under review, the Japanese economy continued

million (year-on-year increase of 4.9%), and the ratio of SG&A

to moderately recover, supported mainly by a recovery in personal

expenses to net sales declined to 25.9%, from 26.6% in the previous

consumption and improved corporate profitability. However, the outlook

fiscal year. Principal items included advertising expenses of ¥39,356

for the overall economy remained uncertain. Overseas, personal

million, directors’ remuneration and employees’ wages of ¥41,534

consumption was steady, but impacted in some regions by uncertainty

million, employees’ retirement and severance benefits of ¥2,908

due to political instability and other factors.

million, provision for directors’ bonuses of ¥1,771 million, andSelling, general and administrative (SG&A) expenses were ¥160,520

research and development expenses of ¥17,762 million.

In this environment, the BANDAI NAMCO Group (“the Group”) istargeting medium- and long-term growth under the Vision of “NEXT
STAGE: Empower, Gain Momentum and Accelerate Evolution” in the

Operating Profit

three-year Mid-term Plan that started in April 2015. The Group has

Operating profit was ¥63,239 million (year-on-year increase of

focused on creating and cultivating new IP (Intellectual Property:

27.4%), and the operating profit margin increased to 10.2%, frommeaning characters and other intellectual property), expanding target

8.6% in the previous fiscal year.

markets, and growing new businesses as part of efforts to strengthen

Other Income (Loss)

provision of the best products and services at the best possible times.

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

The Group also worked to expand its IP lineup, business fields andto ¥1,307 million, from ¥2,553 million in the previous fiscal year.

areas in overseas including Asia, North America and Europe. On the

However, gain (loss) on sales and disposal of fixed assets, net was

business front, the Company recorded year-on-year increases in the¥334 million, and other loss was ¥1,367 million. As a result, there

Network Entertainment Business, which performed well, mainly in

was a net other loss of ¥2,378 million.

network content and overseas home video games, and in the Visual andMusic Production Business, which delivered a strong performance,

Profit Attributable to Owners of Parent

primarily in its key IP products.

The Group recorded profit attributable to owners of parent of¥44,160 million (year-on-year increase of 27.7%). The profit attributable

Net Sales

to owners of parent margin was 7.1%, and basic earnings per share

On a consolidated basis, the Group’s net sales were ¥620,062 million

increased to ¥201.03, from ¥157.43 in the previous fiscal year.

FINANCIAL SECTION

the “IP Axis Strategy” that aims to maximize IP value through the(year-on-year increase of 7.7%)

Cost of Sales
Cost of sales was ¥396,303 million, and the ratio of cost of sales to
net sales decreased to 63.9%, from 64.8% in the previous fiscal year.
As a result, gross profit was ¥223,759 million, and the gross profit
margin increased to 36.1%, from 35.2% in the previous fiscal year.

Results by Segment

Millions of yen

Millions of yen

Net sales

Segment profit

2017

2016

Year on year

2017

2016

Year on year

Toys and Hobby¥193,229¥206,425¥(13,196)¥10,992¥16,639¥(5,647)

Network Entertainment

380,275

320,941

59,33444,29823,932

20,366Visual and Music Production

56,29051,9684,322

13,437

11,665

1,772

Other

26,79727,456

(659)

702

1,123

(421)

Toys and Hobby BusinessAs a result, net sales in the Toys and Hobby Business were

In the Toys and Hobby Business, earnings declined from the previous¥193,229 million (year-on-year decrease of 6.4%), and segment

fiscal year, in which highly profitable products grew in popularity inprofit was ¥10,992 million (year-on-year decrease of 33.9%).

Japan and Asia. However, the Group’s key long-established IP
products sold favorably in each region. In Japan, there were favorable

Network Entertainment Businesssales for long-established IP products, such as the Mobile Suit

For home video games in the Network Entertainment Business,

Gundam series, KAMEN RIDER series, Super Sentai series, andsales were favorable for the new titles DARK SOULS III and DRAGONPRETTY CURE ! series. In addition, the Group implemented measures

BALL XENOVERSE 2 in North America and Europe. In network

to strengthen the IP axis strategy by taking steps to expand its target

content such as game applications for smartphones, key titles

markets for adults and IP lineup and the like. Overseas, in the Asian

released worldwide, such as DRAGON BALL Z DOKKAN BATTLE andregion, products in the Mobile Suit Gundam series and collectable toys

ONE PIECE Treasure Cruise, gained in popularity, while key titles infor adults became popular. In North America and Europe, products inJapan, such as The iDOLM@STER Cinderella Girls: Starlight Stage,

the Power Rangers series gained in popularity, and the Group worked

retained popularity. In amusement facilities, the Group’s existing

to strengthen its IP lineup by commercializing locally developed IP

facilities in Japan performed favorably due to targeting resources

and the like.

on key facilities and other measures, and the Group also took51

measures to strengthen stores in new business formats. In arcadewith 216.3%; and the interest coverage ratio*3 was 1,733.4 times,

game machines, various measures to strengthen foundations andcompared with 1,116.3 times.

thereby improve profitability have generated effects. In addition, in

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

home video games and arcade game machines, the Group worked
proactively to develop products and services incorporating newtechnologies, such as virtual reality (VR).
As a result, net sales in the Network Entertainment Business

Cash Flows

were ¥380,275 million (year-on-year increase of 18.5%), and segment

As of the end of the fiscal year, cash and cash equivalents

profit was ¥44,298 million (year-on-year increase of 85.1%).

(“net cash”) had increased by ¥36,125 million from the end of theprevious fiscal year, to ¥205,668 million. Below is an analysis

Visual and Music Production Businessof cash flows by activities.

In the Visual and Music Production Business, the Love Live ! series,
which is IP for which visual content was developed in conjunction with

Cash Flows from Operating Activities

music content and live events, remained popular. In addition, the GIRLS

The amount of net cash provided by operating activities totaled

und PANZER series gained popularity, especially for products themed¥64,137 million (year-on-year increase of 10.5%).

around a movie release, and sales of visual and music package

Net cash used mainly included income taxes paid of ¥10,462

software, as well as related products, were favorable. Moreover, in the

million (compared with ¥18,902 million in the previous fiscal year).

Mobile Suit Gundam series, products such as visual package software of

However, overall, there was a net increase in net cash due to profit

the MOBILE SUIT GUNDAM: THE ORIGIN series sold favorably.

(loss) before income taxes of ¥60,861 million (compared with

As a result, net sales in the Visual and Music Production Business¥48,489 million in the previous fiscal year) and adjustment for

were ¥56,290 million (year-on-year increase of 8.3%), and segment

depreciation and amortization of ¥21,854 million (compared withprofit was ¥13,437 million (year-on-year increase of 15.2%).

¥21,626 million in the previous fiscal year).

Other Businesses

Cash Flows from Investing Activities

Other Businesses consist of companies that conduct businesses

The amount of net cash used in investing activities totaled

such as logistics support, printing, and other kinds of administration¥13,017 million (year-on-year decrease of 44.4%).

and operational support for each of the Group’s strategic business

The main item of net cash used was purchases of property, plant

units: Toys and Hobby SBU, Network Entertainment SBU, and Visualand equipment and intangible assets totaling ¥14,822 million

and Music Production SBU. We are making efforts to manage such(compared with ¥19,207 million in the previous fiscal year).

operations related to group support in an efficient manner.
As a result, net sales in the Other Businesses were ¥26,797

Cash Flows from Financing Activities

million (year-on-year decrease of 2.4%), and segment profit was

The amount of net cash used in financing activities totaled ¥13,172¥702 million (year-on-year decrease of 37.5%).

million (year-on-year decrease of 18.3%). The main factors for net
cash used were cash dividends paid of ¥11,430 million (compared

Financial Position

with ¥13,629 million in the previous fiscal year) and repayment of

As of March 31, 2017, total assets stood at ¥488,033 million, an

long-term borrowings of ¥1,316 million (compared with ¥2,262

increase of ¥39,697 million from the end of the previous fiscal year.

million in the previous fiscal year).

The main factors were increases of ¥30,759 million in cash and time
deposits, ¥3,218 million in work in process, and ¥4,684 million in

Basic Policy on the Distribution of Profits

investment securities.

The Company positions the return of profits to stockholders as one

Total liabilities amounted to ¥139,249 million, an increase ofof its highest management priorities. The fundamental policy is¥8,217 million from the end of the previous fiscal year. This increase

to maintain a stable dividend and increase corporate value while

was principally attributable to accrued income taxes of ¥5,910

becoming an even more competitive Group, and preserving a soundmillion to accrued expenses of ¥2,909 million, which are included infinancial position. The Company is maintaining the consolidated

other current liabilities; and to accrued employee bonuses of ¥2,485

dividend payout ratio at a level of 30%, based on stable annual

million, which are included in other current liabilities, despite a

dividend payments of ¥24 per share. For this fiscal year, the Company

decrease of ¥4,154 million in net defined benefit liability due to such

added a performance-based dividend of ¥38 per share and a special

factors as contribution to retirement benefits trust.

dividend of ¥20 per share to the stable annual dividend of ¥24 per

Total net assets stood at ¥348,784 million, an increase ofshare, resulting in an annual dividend of ¥82 per share. The Company¥31,480 million from the end of the previous fiscal year. The main

will implement the special dividend to express its appreciation forfactor was an increase of ¥32,753 million in retained earnings

shareholders in regard to the achievement of record high levels of

due to the recording of profit attributable to owners of parent of

net sales and profits and to the achievement one year ahead of¥44,160 million, despite ¥2,936 million in foreign currency translation

schedule of the numerical targets of ¥600,000 million in net sales

adjustments due to foreign exchange fluctuations and cashand ¥60,000 million in operating profit for the final year of thedividends paid of ¥11,430 million.

Mid-term Plan, which started in April 2015. An interim dividend of

As a result, the shareholders’ equity ratio increased to 71.3%,
from 70.6% at the end of the previous fiscal year.

¥12 per share was implemented on December 6, 2016, and theyear-end dividend has been set at ¥70 per share. For the fiscal year

The current ratio*1 was 283.7%, compared with 281.8% at the end

ending March 31, 2018, the Company plans to pay the stable dividendof the previous fiscal year; the quick ratio*2 was 222.8%, compared

portion of ¥24 per share, and this will be considered by the Company
in light of the consolidated operating results and other factors.

52

In addition, after appropriation of dividends from profit attributablepart of efforts to expand target markets, effective the fiscal year

to owners of parent for the period, the Company has resolved toending March 31, 2018, three companies belonging to the Network

attribute a portion of the remaining balance to the acquisition of its

Entertainment SBU will be reorganized as companies belonging theown shares, with comprehensive consideration of aspects such as

Toys and Hobby SBU in order to further deepen cooperation among

the level of cash held, operating performance, share price trend,

the businesses that develop products for adult customers.

and plan for large-scale investments.

In the fiscal years ended March 31, 2016 and 2017, the Groupmade progress with business strategies to “Accelerate Evolution in

Targets and Management Performance Indicators

the IP Axis Strategy.” Specifically, it created and developed new IP,

The Group has adopted return on equity (ROE) as its key management

extended its target markets to include adults and other groups, andperformance indicator.

expanded new businesses such as live events. In region strategies

Looking ahead, the Group will strive to continue to secure ROE

to “Gain Momentum in Global Markets,” the Group expanded theof 10% or more, by aiming to further expand profits through execution

Toys and Hobby Business in Asia, increased the popularity of homeof strategies under the Mid-term Plan, as well as by effectively

video games in North America and Europe, and expanded the devel-utilizing shareholders’ equity.

opment of network content for each overseas regional market.
In functional strategies to “Empower and Innovate Business Model,”the Group developed and provided products and services that

Looking ahead, although there are some bright signs in Japanese

integrate real and virtual elements and developed products andand overseas economic trends, the business environment isservices that incorporate new technologies, such as VR. Going

expected to remain beset by uncertainties, including the impact on

forward, the Group will continue to implement a range of measurespersonal consumption from uncertainty in the overall society andto respond rapidly and flexibly to the fast-changing entertainment

the overall economy, as well as political trends overseas. Suchmarket based on constant monitoring of conditions in the Group andfactors are also expected to have an impact on the entertainment

the operating environment, and develop solid business foundationsindustry, in which the Group is extensively involved, resulting inthat in order to continually achieve stable-earnings of ¥500,000

ongoing uncertainty in this business environment.

million for net sales and ¥50,000 million for operating profit in thisFacing these circumstances, the Group has been pushing ahead

industry that is characterized by rapid changes in operating climate

with a Mid-term Plan with the vision of “NEXT STAGE—Empower,

and user preferences. Furthermore, intending to move to the next

Gain Momentum, and Accelerate Evolution” since April 2015. In thestage as an entertainment corporate group, we will endeavor to link

Mid-term Plan, the Group will further strengthen the IP axis

the results of the current Mid-term Plan to the growth strategies ofstrategy to expand the value of its IPs through taking advantage ofthe next Mid-term Plan scheduled to begin from April 2018.

the world views and unique characteristics of its IPs and providing

In light of the above considerations, the consolidated projections

the best products and services at the best possible times. In addition,of the fiscal year ending March 31, 2018 are as follows: net sales ofaiming towards growing in the global market, the Group will further¥620,000 million (year-on-year decrease of 0.0%), operating profit ofstrengthen business development in overseas including Asia,¥57,000 million (year-on-year decrease of 9.9%), recurring profit ofNorth America and Europe.

¥58,000 million (year-on-year decrease of 8.4%), and profit attributable

For its main strategies in the Mid-term Plan, the Group will

FINANCIAL SECTION

Outlook for the Fiscal Year Ending March 31, 2018

to owners of parent of ¥40,000 million (year-on-year decrease of 9.4%).

implement business strategies to “Accelerate Evolution in the IP
Axis Strategy,” region strategies to “Gain Momentum in Global

Consolidated Plan for the Fiscal Year Ending March 31, 2018

Markets,” and functional strategies to “Empower and Innovate

Millions of yen

Business Model.” In its business strategies to “Accelerate Evolution

Segments

in the IP Axis Strategy,” the Group will not only cultivate original

Toys and Hobby

Group IP by such means as creating and obtaining IP but also

Network Entertainment

expand new IP business such as live events, expand its target
markets, and strengthen collaboration among its businesses. In its
region strategies to “Gain Momentum in Global Markets,” the Groupwill not only maintain its pursuit of becoming No. 1 in each of its
markets in Japan but also work to expand its IP lineup, businessfields and areas in Asia, North America, and Europe. Furthermore,

Net sales

Segment profit¥ 215,000¥15,000

370,000

36,000

Visual and Music Production

50,00012,000Other

30,0001,000

Adjustments(45,000)(7,000)Consolidated¥620,000¥57,000

in its function strategies to “Empower and Innovate Business

Forward-Looking Statements

Model,” the Group will create and cultivate new IP business for the

Forecasts for the next fiscal year and other future projections innext generation and push ahead with creating foundations for thethis report are based on information available to the Group at theimplementation of its IP axis strategy in global markets.

time they were made and are therefore subject to various risks andIn order to carry out these initiatives, the Groups is pushing

uncertainties. Actual results therefore may differ materially fromahead with each of its strategies with a focus on these threeprojections due to a variety of factors. Major factors that could

strategic business units (SBUs): the Toys and Hobby SBU, which will

influence results include changes in the Company and the Group’s

aim to strengthen the IP axis strategy and gain momentum in global

operating environment, market trends, and exchange rate fluctuations.

markets; the Network Entertainment SBU, which will aim to deploy
a new business that goes beyond the framework of the existing gamebusiness and fuses networks and entertainment; and the Visual andMusic Production SBU, which will create IP and strengthen theGroup’s business deployment as it looks toward new outlets. As one

53

CONSOLIDATED BALANCE SHEETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
As of March 31, 2016 and 2017

Millions of yen

Thousands of
U.S. dollars (note 3)

2016

2017

2017

¥ 174,758¥ 205,517$ 1,831,866

Trade receivables (notes 6 and 12)

72,53075,519673,135

Allowance for doubtful receivables

(607)

(453)

(4,038)Inventories (note 7)

46,242

46,688416,151

Deferred tax assets (note 13)

8,523

9,240

82,360

Other current assets (notes 4 and 5)

20,731

21,272

189,607322,177

357,783

3,189,081

34,51939,203

349,434

71

72

642

Deferred tax assets (note 13)

12,545

12,444110,919

Other investments and assets (notes 8 and 23)

16,88818,321

163,303

Allowance for doubtful receivables(1,016)(1,662)(14,814)63,007

68,378609,484

Buildings and structures (note 8)

32,82030,700273,643

Amusement facilities and machines (note 8)

57,25858,975525,671Land

11,026

11,15599,430

Other property, plant and equipment (note 8)

111,368

117,200

1,044,655

212,472

218,030

1,943,399(158,769)(165,845)(1,478,251)

53,70352,185465,148

9,449

9,687

86,345¥ 448,336¥ 488,033$ 4,350,058

AssetsCurrent assets:
Cash and time deposits (notes 4, 12 and 23)

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.

54

Millions of yen

Thousands of
U.S. dollars (note 3)

2016

2017

2017

Trade payables (notes 10 and 12)¥ 62,646¥ 64,173$ 572,003

Accrued income taxes (note 12)

2,747

8,658

77,173

Other current liabilities (notes 9 and 13)

48,94153,280474,908

114,334

126,111

1,124,084

9,920

5,766

51,395

Deferred tax liabilities (note 13)

978

1,223

10,901Other long-term liabilities (note 9)

5,800

6,149

54,809Total long-term liabilities

16,69813,138117,105

Total liabilities

131,032

139,249

1,241,189

10,00010,00089,135Additional paid-in capital

52,24752,065464,079

Retained earnings (note 17)

265,231

297,984

2,656,065(2,411)(2,423)(21,597)

325,067

357,626

3,187,682

Unrealized gains or losses on other securities, net of tax (notes 5 and 15)

6,907

7,885

70,282

Deferred gains or losses on hedges, net of tax (note 15)

(706)

210

1,872

Revaluation reserve for land, net of tax (notes 15 and 18)(5,671)(5,694)(50,753)

Foreign currency translation adjustments (note 15)(5,789)(8,725)(77,770)

Remeasurements of defined benefit plans, net of tax (notes 11 and 15)(3,145)(3,196)(28,487)(8,404)(9,520)(84,856)

Subscription rights to shares (note 20)

100

100

891

Non-controlling interests

541

578

5,152

Total net assets

317,304

348,784

3,108,869

Total liabilities and net assets¥448,336¥488,033$4,350,058

Liabilities and net assets
Current liabilities:

Total current liabilities

Long-term liabilities:
Net defined benefit liability (note 11)

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; 2,321,565 shares in 2016 and 2,334,580 shares in 2017 (note 19)
Subtotal
Accumulated other comprehensive income:Subtotal

55

CONSOLIDATED STATEMENTS OF INCOME ANDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2016 and 2017

Consolidated Statements of Income
Millions of yen

Thousands of
U.S. dollars (note 3)

2016

2017

2017

Net sales¥575,505¥ 620,062$5,526,892

Cost of sales

372,904

396,3033,532,427

202,601

223,759

1,994,465

152,960

160,5201,430,787

49,641

63,239563,678

Interest and dividend income

568

594

5,295

Interest expense

(50)

(36)

(321)

Gain (loss) on sales of investment securities, net

1

72

642

Loss on valuation of investment securities

(1)

(0)

(0)

805

(334)

(2,975)(2,553)(1,307)(11,650)78(1,367)(12,187)(1,152)(2,378)(21,196)

Profit (loss) before income taxes

48,48960,861

542,482

Income taxes (note 13)

13,933

16,663

148,525

Profit34,55644,198393,957

(28)

38

339

¥ 34,584¥ 44,160$ 393,618

Yen

U.S. dollars (note 3)

2016

2017

2017

¥1,441.49¥1,584.71$14.13

Basic

157.43201.03

1.79

Diluted157.39200.97

1.79

52.00

82.00

0.73

Millions of yen

Thousands of
U.S. dollars (note 3)

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

Gain (loss) on sales and disposal of fixed assets, net
Loss on impairment of fixed assets (note 8)
OtherProfit (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

Profit

2016

2017

2017

¥34,556¥ 44,198$ 393,957

171(1,982)

891

7,942

907

8,084

24
(4,222)——(2,936)(26,170)(1,100)

(51)

(455)

Other comprehensive income (note 15):
Unrealized gains or losses on other securities, net of tax (note 5)
Deferred gains or losses on hedges, net of tax
Revaluation reserve for land, net of tax (note 18)
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

(70)

96

856

(7,179)(1,093)(9,743)¥27,377¥ 43,105$ 384,214¥27,405(28)¥ 43,067$ 383,875

38

339

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

56

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2016 and 2017

Year ended March 31, 2016
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)¥244,276(13,629)

Accumulated other comprehensive income

Treasurystock(note 19)¥(2,404)

34,584
(5)
0

0

0

(2)

¥52,247¥265,231¥(2,411)

Total
shareholders’equity¥304,119(13,629)

Unrealized
gains orDeferred
losses on
gains orother
losses on
securities,
hedges,net of tax
net of tax(notes 5 and 15) (note 15)¥6,757¥ 1,300

Revaluation
Foreign
Total
reserve forcurrency Remeasurements accumulated
land,
translation of defined benefit
other
net of tax
adjustments plans, net of tax comprehen(notes 15 and 18)(notes 11 and 15) sive income(note 15)¥(5,695)¥(1,542)¥(2,045)¥(1,225)

Subscription
rights toNonshares
controlling(note 20)interests

¥ 44

¥575

Total net
assets atend of year

¥303,513(13,629)

34,584(5)
0

34,584
(5)
0

0

0

(2)

(2)

—

—

¥325,067

150¥6,907(2,006)¥ (706)24¥(5,671)(4,247)¥(5,789)(1,100)¥(3,145)(7,179)¥(8,404)

56
¥100

(34)
¥541

(7,157)¥317,304

Millions of yen
Shareholders’ equity

Common Additional
stock
paid-in(note 19)
capitalBalance at beginningof year¥10,000 ¥52,247
Cash dividends
Profit attributable toowners of parent
Purchase of treasury stock
Disposal of treasury stock
1
Changes in treasury stockof parent arising fromtransactions with noncontrolling shareholders(183)
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 ¥52,065

Accumulated other comprehensive income

Retainedearnings(note 17)

Treasurystock(note 19)

¥265,231(11,430)¥(2,411)

44,160
(4)
0

(8)
23

¥297,984

Total
shareholders’equity¥325,067(11,430)

Unrealized
gains orDeferred
losses on
gains orother
losses on
securities,
hedges,net of tax
net of tax(notes 5 and 15) (note 15)¥6,907¥(706)¥(5,671)¥(5,789)¥(3,145)¥(8,404)

Subscription
rights toNonshares
controlling(note 20)interests

¥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)

Revaluation
Foreign
Total
reserve forcurrency Remeasurements accumulated
land,
translation of defined benefit
other
net of tax
adjustments plans, net of tax comprehen(notes 15 and 18)(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)FINANCIAL SECTION

Year ended March 31, 2017

—
¥100

37
¥578

(1,056)¥348,784

Year ended March 31, 2017
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$89,135 $465,701 $2,364,123 $(21,490)
Cash dividends(101,881)
Profit attributable toowners of parent
393,618
Purchase of treasury stock(39)
Disposal of treasury stock
6
3
Changes in treasury stockof parent arising fromtransactions with noncontrolling shareholders(1,628)Changes in treasury stock
accompanying changes
to holdings in companies
to which the equity
method is applied(71)
Reversal of revaluation
reserve for land205
Net changes of items
other than shareholders'equityBalance at end of year
$89,135 $464,079 $2,656,065 $(21,597)

Accumulated other comprehensive income

Total
shareholders’equity$2,897,469(101,881)

Unrealized
gains orDeferred
losses on
gains orother
losses on
securities,
hedges,net of tax
net of tax(notes 5 and 15) (note 15)$61,565$(6,293)

Revaluation
Foreign
Total
reserve forcurrency Remeasurements accumulated
land,
translation of defined benefit
other
net of tax
adjustments plans, net of tax comprehen(notes 15 and 18)(notes 11 and 15) sive income(note 15)$(50,548)$(51,600)$(28,033)$(74,909)

Subscription
rights toNonshares
controlling(note 20)interests$891$4,822

Total net
assets atend of year

$2,828,273(101,881)

393,618(39)9393,618(39)
9(1,628)(1,628)

(71)

(71)

205

$3,187,682

(205)
8,717
$70,282

8,165$1,872—$(50,753)

—

(205)

(26,170)$(77,770)(454)$(28,487)(9,742)$(84,856)

—
$891

330
$5,152(9,412)$3,108,869

See accompanying Notes to Consolidated Financial Statements.

57

CONSOLIDATED STATEMENTS OF CASH FLOWSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2016 and 2017

Millions of yen

Thousands of
U.S. dollars (note 3)

2016

2017

2017

Profit (loss) before income taxes¥ 48,489¥ 60,861$ 542,482

Depreciation and amortization

21,626

21,854

194,795

Loss on impairment of fixed assets

2,553

1,307

11,650Loss (gain) on sales and disposal of fixed assets, net

(805)

334

2,975

Loss on disposal of amusement facilities and machines

468

576

5,134

Loss (gain) on sales of investment securities, net

(1)

(72)

(642)

Loss on valuation of investment securities

1

0

0

14,526(3,000)(26,740)

Cash flows from operating activities:

Decrease (increase) in trade receivables
Decrease (increase) in inventories(4,578)(1,048)(9,341)

Acquisition of amusement facilities and machines(3,533)(3,472)(30,947)

Increase (decrease) in trade payables

6,737

1,517

13,522

Other(9,042)(4,797)(42,757)

76,441

74,060660,131

Interest and dividends received

563

576

5,134

Interest paid

(52)

(37)

(330)

(18,902)(10,462)(93,253)

58,05064,137

571,682

Subtotal

Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Decrease (increase) in time deposits, net(4,284)

4,283

38,176

Purchases of property, plant and equipment(13,608)(9,452)(84,250)

Sales of property, plant and equipment

2,224

1,191

10,616

Purchases of intangible assets(5,599)(5,370)(47,865)(105)(2,946)(26,259)

34

178

1,587

(234)

(1,473)(13,130)

Purchases of investment securities
Sales of investment securities
Purchases of investments in subsidiaries and associates
Proceeds from sales of shares of subsidiaries and associates

—

35

312

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

—

(341)

(3,039)

—

955

8,512

(539)

(1,591)(14,181)

Collection of loans receivable

273

760

6,774

Payments of guarantee money deposited(2,080)(782)(6,970)

Collection of guarantee money deposited

701

1,587

14,146Other
Net cash used in investing activities

(209)

(51)

(455)

(23,426)(13,017)(116,026)(3,039)Cash flows from financing activities:
Increase (decrease) in short-term borrowings, net

(357)

(341)

Proceeds from long-term borrowings

200

200

1,783

Repayment of long-term borrowings(2,262)(1,316)(11,730)

Payments of lease obligations

(65)

(63)

(562)

Decrease (increase) in treasury stock, net

(4)

(4)

(36)

(13,629)(11,430)(101,881)

(6)

(218)

(1,943)

Cash dividends paid
Payments from changes in ownership interests in subsidiaries that
do not result in change in scope of consolidation
Cash dividends paid to non-controlling interests
Net cash used in financing activities——(13,172)(117,408)

Effect of exchange rate changes on cash and cash equivalents(2,723)(1,823)(16,249)

Net increase (decrease) in cash and cash equivalents

15,77836,125321,999

Cash and cash equivalents at beginning of year

153,765

169,543

1,511,213

Cash and cash equivalents at end of year (note 4)¥169,543¥ 205,668$ 1,833,212

See accompanying Notes to Consolidated Financial Statements.

58(0)(16,123)

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, 2017.

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 market

at cost. If the equity method had been applied to the investments invalue of undelivered elements specified by the vendor, recording ofthese companies, there would have been no material effect on the

any revenue attributable to video game software is deferred until all

accompanying consolidated financial statements.

the 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

Other securities with market value are principally carried at market

balance sheet date and the unrealized gains or losses are included invalue. The difference, net of tax, between the acquisition cost and the“Other income (loss)” in the consolidated statements of income.

carrying amount of other securities with market value is recognized

The assets and liabilities of foreign consolidated subsidiaries andin “Unrealized gains or losses on other securities, net of tax” in “Netaffiliates are translated into yen at the rates of exchange in effect at

assets” in the consolidated balance sheets until realized. Other

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

securities without market value are principally carried at cost. The

dated subsidiaries and affiliates are translated into yen at the average

cost of other securities sold is principally computed based on therates of exchange during the fiscal year. Gains and losses, resulting

moving-average method. Investments in investment limited partner-from the translation of foreign currency financial statements are

ships or similar associations (investments that are deemed to begenerally excluded from the consolidated statements of income andsecurities under the Financial Instruments and Exchange Act, Article

are included in “Foreign currency translation adjustments” in “Net2, Clause 2) are carried at the net amount proportionate to theassets” in the consolidated balance sheets.

Company’s ownership interests, based on the most recent financial
statements available in accordance with the financial reporting datespecified in the partnership agreement.

59

(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
option contracts, to reduce market risks arising from fluctuations(g) Inventories

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

Domestic Consolidated Subsidiaries

consolidated subsidiaries use these derivative instruments solely forInventories are stated at cost determined by the average-cost method.

the purpose of reducing the risks resulting from such fluctuations to

The value stated in the consolidated balance sheets is calculated bywhich they are exposed in the course of their ordinary business activi-

writing down the carrying amount based on declining profitability.

ties. Accordingly, the Company and its consolidated subsidiaries do
not use derivative instruments or other financial instruments for

Foreign Consolidated Subsidiaries
Inventories are stated at the lower of cost, determined principally by
the average-cost method, or net realizable value.

speculative purposes.
The Company and its consolidated subsidiaries’ counterparties forderivative instruments are all highly creditworthy financial institutions
and, therefore, the Company believes that it is exposed to almost no

Both domestic and foreign consolidated subsidiaries state gamecounterparty risk. Derivative transactions are conducted in accor-

software work in process by the specific-cost method. The value

dance with internal rules that specify transaction authority and trans-

stated in the consolidated balance sheets is calculated by writing

action amount limits.

down the carrying amount based on declining profitability.

As a general rule, derivative instruments are stated at market
value. For derivative instruments that meet the criteria for hedge(h) Income Taxes

accounting, recognition of unrealized gains or losses is deferred.

Current income taxes are accounted for based on income. Deferred

In cases where forward foreign exchange contracts meet certain

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

hedging criteria, the hedged receivables and payables are translated

Deferred tax assets and liabilities are recognized for future tax conse-at the corresponding forward foreign exchange contract rate (thequences attributable to differences between the financial statement“Allocation Method”).

carrying amounts of existing assets and liabilities and their respective

The Company and its consolidated subsidiaries assess the effec-

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

tiveness of hedging transactions from the start of the transaction toassets and liabilities are measured using enacted tax rates expected tothe point at which effectiveness is assessed by comparing theapply to taxable income in the years in which those temporary differ-cumulative changes in the market value or the cumulative changes inences are expected to be recovered or settled. The effect on deferred

the cash flows of the hedged item with the cumulative changes in the

tax assets and liabilities of a change in the tax rate is recognized inmarket value or the cumulative changes in the cash flows of theincome in the period that includes the date enacted by the Diet.

hedging instrument. In the event that critical terms are the same for

The Company and some of its domestic consolidated subsidiaries
have been applying the consolidated taxation system.

the hedging instrument and the hedged assets, liabilities, or scheduled transaction, it is assumed that the hedge is 100% effective, so
the assessment of effectiveness is not performed.

(i) Property, Plant and Equipment

In the event that a hedge becomes ineffective, hedge accounting is

The Company and Its Domestic Consolidated Subsidiaries:

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

Depreciation of property, plant and equipment is principally computed

hedge transaction is no longer deferred.

by the declining-balance method based on estimated useful lives.
The straight-line method is used for buildings (except for building(m) Retirement and Severance Benefits

fixtures) acquired since April 1, 1998. The estimated useful lives for

The Company and certain domestic consolidated subsidiaries have

Buildings and structures and Amusement facilities and machines are

established a defined benefit corporate pension plan, a defined

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

benefit retirement lump-sum benefit system plan, and a defined
contribution pension plan. Retirement benefits trusts have been

Foreign Consolidated Subsidiaries:

established for certain defined benefit corporate pension plans.

Depreciation of property, plant and equipment is principally computed

Other domestic consolidated subsidiaries (excluding domestic

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

consolidated subsidiaries with no retirement benefit system) haveestimated useful lives for Buildings and structures and Amusement

established a defined benefit corporate pension plan, a defined

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

benefit retirement lump-sum benefit system, and defined benefit
comprehensive employee pension funds. Certain consolidated(j) Intangible Assets

subsidiaries have established a defined contribution pension plan

Amortization of intangible assets is computed by the straight-line

and a defined contribution smaller corporate retirement allowancemethod based on estimated useful lives. Software for internal use ismutual aid system. Certain foreign consolidated subsidiaries haveamortized over 1–5 years.

established defined benefit pension plans, retirement lump-sum

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

benefit systems, and defined contribution pension plans. Moreover,additional benefits may be paid at retirement.

60

In calculating the retirement benefit obligations, the benefit
formula basis is principally used to attribute expected benefit

In September 2017, BANDAI NAMCO Holdings France S.A.S.
(“BNHFR”) (name to be changed from Current BSAS) will transfer its

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

Toys and Hobby Business to BANDAI S.A.S. (“New BSAS”) (name toyear. Prior service costs are amortized from the time they are incurred

be changed from BToy) and transition to a pure holding company.

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

1. Objective

or losses are amortized from the consolidated fiscal year following

Currently, in Europe, Current BSAS, a subsidiary of the Company based

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

in France under the regional headquarters in the U.K., has two

method for a certain number of years (9–19 years) not longer thanfunctions—a Toys and Hobby Business company and a holding company.

employees’ average remaining years of service. The Company andCurrent BSAS is a business holding company responsible for thecertain consolidated subsidiaries use a simplified method in calcu-

Company’s operations in Continental Europe. The Company has decided

lating net defined benefit asset, net defined benefit liability, andto reorganize Current BSAS in order to promote greater cooperation

periodic pension cost under which retirement benefit obligations

within the Group and expand operations by clearly separating theare principally based on accrued benefits at the end of the year.

business company and holding company functions of Current BSAS
and strengthening the governance function in Continental Europe.

(n) Appropriation of Retained Earnings
Retained earnings with respect to a given financial period are appro-

2. Transactions conducted by commonly controlled entities

priated by resolution of the shareholders at a general meeting to be(1) Overview of transaction

held subsequent to the close of such financial period. The accounts
for that period do not, therefore, reflect such appropriations.

(i) Name and nature of combined business
Toys and Hobby Business in France of BNHFR(o) Per share data
In computing basic earnings per share, the average number of shares

September 2017 (scheduled)(iii) Legal form of business combination

outstanding during each year has been used. Diluted earnings per

A method corresponding to a Japanese absorption-type

share assumes the dilution that could occur if securities or othercompany split will be used. (BNHFR will transfer the assets

contracts to issue common stock were exercised or converted intoand liabilities related to the Toys and Hobby Business at bookcommon stock, or resulted in issuance of common stock.

value, and New BSAS will issue shares to BNHFR as consider-

Cash dividends per common share are computed based on
dividends declared with respect to the income for the year.

FINANCIAL SECTION(ii) Date of business combination

ation for the transaction.)(2) Overview of accounting process
The accounting process will be carried out as transactions(p) Changes in Presentation

conducted by commonly controlled entities, in accordance with theConsolidated Balance Sheets

Accounting Standard for Business Combinations (ASBJ Statement“Accrued income taxes,” which had been included in “other current

No. 21, September 13, 2013), the Accounting Standard for

liabilities” under “current liabilities” in the previous fiscal year, isBusiness Divestitures (ASBJ Statement No. 7, September 13,

presented separately due to an increase in significance. To reflect this2013), and Guidance on the Accounting Standard for Businesschange in presentation, the consolidated financial statements for the

Combinations and the Accounting Standard for Businessprevious fiscal year have been reclassified.

Divestitures (ASBJ Guidance No. 10, September 13, 2013).

As a result, in the consolidated balance sheet for the previous
fiscal year, ¥51,688 million that had been included in “other current
liabilities” under “current liabilities” has been reclassified as “accrued
income taxes” of ¥2,747 million and “other current liabilities” of¥48,941 million.
(q) Additional Information
Application of ASBJ Implementation Guidance on Recoverability ofDeferred Tax Assets
Effective from this fiscal year, the Company has applied the
Implementation Guidance on Recoverability of Deferred Tax Assets(ASBJ Guidance No. 26, March 28, 2016).
Organizational Restructuring in Europe
The Company established BANDAI Toy S.A.S. (“BToy”) as a subsidiaryof BANDAI S.A.S. (“Current BSAS”), a subsidiary of the Company, on
February 28, 2017 based on the resolutions of the Board of Directors’
meeting held on December 16, 2016.

61

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, 2017 have been translated into U.S. dollars at the rate of ¥112.19=U.S.$1, the approximate
exchange rate on the Tokyo Foreign Exchange Market on March 31, 2017.
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, 2016 and 2017 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

2016

2017

2017

¥174,758¥205,517$1,831,866

704

1,641

14,627

Marketable securities included in other current assets under current assets(5,919)(1,490)(13,281)¥169,543¥205,668$1,833,212

Time deposits with maturities in excess of three months
Cash and cash equivalents

Thousands of
U.S. dollars

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, 2016
None
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( $6,641 thousand)Fixed assets¥15 million( $134 thousand)

Goodwill¥567 million( $5,054 thousand)Current liabilities–¥450 million(–$4,011 thousand)Long-term liabilities–¥38 million(–$339 thousand)Non-controlling interests–¥35 million(–$313 thousand)Acquisition cost of the shares of WiZ Co., Ltd.

¥804 million( $7,166 thousand)

WiZ Co., Ltd.’s cash and cash equivalents–¥463 million(–$4,127 thousand)Net expenditures for the acquisition of WiZ Co., Ltd.

¥341 million( $3,039 thousand)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 ( $28,728 thousand)Fixed assets¥97 million

Current liabilities–¥1,023 million (–$9,119 thousand)Long-term liabilities–¥7 million

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

62( $865 thousand)(–$62 thousand)(–$7,630 thousand)Acquisition cost of the shares of Anime Consortium Japan Inc.

¥1,434 million ( $12,782 thousand)Anime Consortium Japan Inc.’s cash and cash equivalents–¥2,389 million (–$21,294 thousand)Net proceeds from acquisition of Anime Consortium Japan Inc.

–¥955 million(–$8,512 thousand)5 Marketable Securities and Investment Securities
Marketable securities and investment securities as of March 31, 2016 and 2017 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2016

2017

2017

¥17,423¥22,219$198,048

Other securities without market value

2,511

2,737

24,396

Investments in non-consolidated subsidiaries and affiliated companies

137,098

Other securities with market value

14,687

15,381

Convertible bond-type bonds with subscription rights to shares

—

50

446

Contributions to investment partnerships

602

457

4,073

¥35,223¥40,844$364,061

Total of marketable securities and investment securities

The original cost, carrying amount (market value), and gross unrealized gain (loss) for other securities with market value as of March 31, 2016
and 2017 are summarized as follows:
Millions of yen

2016
Gross unrealized Gross unrealized Carrying amount
Original cost
gain
loss
(market value)

Other securities with market value:
Other
Total

¥7,653¥9,066¥(0)¥16,719

704

—

—

704

¥8,357¥9,066¥(0)¥17,423

Millions of yen

FINANCIAL SECTION

Equity securities

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

Other securities with market value:
Equity securities
Other
Total

¥10,241¥10,341

¥(4)

1,641

—

—

1,641

¥11,882¥10,341¥(4)¥22,219¥20,578

63

Thousands of U.S. dollars

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

Other securities with market value:
Equity securities
Other
Total

$ 91,283$92,174$(36)

14,627——

14,627$105,910$92,174$(36)$198,048$183,421

The following is a summary of the carrying amount of other securities without market value as of March 31, 2016 and 2017:
Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

Carrying amount

Carrying amount

Carrying amount¥2,511¥2,737$24,396¥2,511¥2,737$24,396

Other securities without market value:
Unlisted securities
Total

Proceeds and gross realized gains and losses from the sales of other securities in the fiscal years ended March 31, 2016 and 2017 are as follows:
Millions of yen

Equity securities

Thousands of
U.S. dollars

2016

2017

2017

¥ 7

¥146

$1,301

Other

28

32

285

Proceeds from the sales of other securities

¥35

¥178

$1,586Gross realized gains from the sales of other securities

1

72

643

Gross realized losses from the sales of other securities

—

0

1

Millions of yen

Thousands of
U.S. dollars

6 Trade Receivables
Trade receivables as of March 31, 2016 and 2017 are summarized as follows:

2016

2017

2017

Notes receivable¥ 6,143¥ 4,515$ 40,244

Accounts receivable–trade66,38371,004

632,8914——¥72,530¥75,519$673,135

Millions of yen

Thousands of
U.S. dollars

Lease receivables and investment assets
Total

7 Inventories
Inventories as of March 31, 2016 and 2017 are summarized as follows:

2016

2017

2017

Finished goods and merchandise¥16,744¥14,467$128,951

Work in process

25,60528,823

256,912Raw materials and supplies

3,893

3,398

30,288¥46,242¥46,688$416,151

Total

64

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 leased assets. 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, 2016 and 2017 are as follows:
Millions of yen

Thousands
ofU.S. dollars

2017

2016

2017

Strategic business unit

Location

Items

Classification

Toys and Hobby

Shenzhen, China and others(note 1)Seoul, Korea (note 1)
Chiyoda-ku, Tokyo (note 3)

Business assets

Other property, plant and equipment¥ 332

Business assets
Assets scheduled for
disposalAmusement facilities

Intangible assets
Buildings and structures

1,524
2

—
—

—
—

Amusement facilities and machines

227

—

—

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

5
5
3
277
4
25

—
—
—
—
—
—

—
—
—
—
—
—

Other investments and assets
Buildings and structures

2
26

—
—

—
—

Other property, plant and equipment
Buildings and structures

85
1

—
—

—
—

Other property, plant and equipment
Buildings and structures

5
2

—
—

—
—

Other property, plant and equipment
Buildings and structures

1
14

—
—

—
—

Other property, plant and equipment
Other property, plant and equipment

1
9

—
—

—
—

Intangible assets
Other property, plant and equipment

3
—

—
550

—
4,900

Buildings and structures

—

16

143

Network
Entertainment

Koto-ku, Tokyo and others(note 1)

Minato-ku, Tokyo (note 2)

OthersShinagawa-ku, Tokyo andothers (note 4)

Assets scheduled for
disposal

Yokosuka City, Kanagawa andothers (note 1)

Business assets

Ibaraki City, Osaka (note 3)

Assets scheduled for
disposal

Shinagawa-ku, Tokyo (note 4)

Assets scheduled for
disposal
Operational facilities
Operational facilities

—

$

—

Corporate(Common)Suita City, Osaka (note 3)
Shinagawa-ku, Tokyo andothers (note 4)

Toys and Hobby

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

—
—

45

Assets scheduled for
disposalBusiness assets

Other property, plant and equipment
Intangible assets

5

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

436

Other property, plant and equipment

—

65

579

Amusement facilities
Business assets
Amusement facilities

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

—
—
—

49
62
42

437
553
374

Other investments and assets
Other property, plant and equipment

—
—

1
1

9
9

Amusement facilities and machines
Intangible assets
Buildings and structures

—
—
—

422
19
15

3,761
169
134

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

—
—
—

51

455

¥2,553

Network
Entertainment

Minato-ku, Tokyo (note 2)
Nagoya City, Aichi and others(note 3)Illinois, USA (note 4)
Illinois, USA (note 5)
OthersCorporate(Common)Total

Shizuoka City, Shizuoka andothers (note 1)

Urasoe City, Okinawa (note 4)

Assets scheduled for
disposalAssets scheduled for
disposalAmusement facilities
Business assets

Assets scheduled for
disposal

0

1

5

45

¥1,307$11,650FINANCIAL SECTION

Shinjuku-ku, Tokyo and others(note 3)Business assets
Amusement facilities
Amusement facilities¥

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 to have no market value.
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 to have no market value.
4. Impairment loss was recorded on these fixed assets for which no future use is anticipated. In addition, these assets were determined to have no market value.
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.

65

9 Borrowings and Lease Obligations
Borrowings and lease obligations as of March 31, 2016 and 2017 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2017

2017

Carrying
amountWeighted averageinterest rate (%)

Carrying
amountWeighted averageinterest rate (%)

Carrying
amountShort-term borrowings

¥ 402

0.38

¥400

0.28

$3,565Long-term borrowings due within one year

1,296

0.62

155

0.40

1,382

Lease obligations due within one year

38

11.32

49

14.38

437

Long-term borrowings (Less current portion)

154

0.49

179

0.37

1,596

40

6.12

76

6.04

677

¥1,930—¥859—$7,657

2016

Lease obligations (Less current portion)
Total

The aggregate annual maturities of long-term borrowings and lease obligations outstanding as of March 31, 2017 are as follows:
Millions of yen

Thousands of
U.S. dollars

2018

¥204

$1,819

2019

174

1,551

2020

76

677

2021

4

36

2022

1

9

¥459

$4,092Millions of yen

Thousands of
U.S. dollars

Years ending March 31

Total

10 Trade Payables
Trade payables as of March 31, 2016 and 2017 are summarized as follows:

Notes payable
Accounts payable–trade
Total

66

2016

2017

2017

¥14,416¥12,287$109,520

48,23051,886462,483¥62,646¥64,173$572,003

11 Retirement and Severance Benefits
1. Defined benefit plans(a) For the fiscal years ended March 31, 2016 and 2017, 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

2016

2017

2017

¥17,934¥20,227$180,292

1,162

1,299

11,579

169

85

758

Actuarial gains or losses incurred

1,490

371

3,307

Retirement benefits paid

(528)

(630)

(5,616)

—

(38)

(339)

Interest cost

Prior service costs incurred
Increase resulting from changes from the simplified method to theprinciple method
Ending balance of retirement benefit obligations

—

1,085

9,671

¥20,227¥22,399$199,652(b) For the fiscal years ended March 31, 2016 and 2017, the reconciliation of the beginning and ending balances of plan assets is as follows

Millions of yen

Beginning balance of plan assets

Thousands of
U.S. dollars

2016

2017

2017

¥11,024¥11,486$102,380

Expected rate of return on assets

238

247

2,202

Actuarial gains or losses incurred

(399)

(272)

(2,424)Contributions to plan from employer

1,119

1,126

10,037Retirement benefits paid

(496)

(598)

(5,332)—

5,350

47,687

Contribution to retirement benefit trust
Increase resulting from changes from the simplified method to theprinciple method
Ending balance of plan assets

—

558

4,974

¥11,486¥17,897$159,524

FINANCIAL SECTION(excluding plans for which the simplified method is applied):(c) For the fiscal years ended March 31, 2016 and 2017, 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

2016

2017

2017

¥ 946

¥1,108$ 9,877

Retirement benefit expenses

454

401

3,574

Retirement benefits paid

(75)

(52)

(463)

Contributions to plan from employer
Decrease resulting from changes from the simplified method to theprinciple method

(199)

(210)

(1,872)

—

(84)

(749)

Other

(18)

29

258

¥1,108¥1,192$10,625

Beginning balance of net defined benefit liability and net defined benefit asset, net

Ending balance of net defined benefit liability and net defined benefit asset, net

67

(d) As of March 31, 2016 and 2017, 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

2016

2017

2017

Retirement benefit obligations of funded plans¥ 21,882¥ 23,657$ 210,866

Plan assets(13,276)(19,310)(172,119)

8,606

4,347

38,747Retirement benefit obligations of non-funded plans

1,243

1,347

12,006

Net amount of liabilities and assets recorded on consolidated balance sheet

9,849

5,694

50,753Net defined benefit liability

9,920

5,766

51,395Net defined benefit asset

(71)

(72)

(642)

¥ 9,849¥ 5,694$ 50,753

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

Service cost

¥1,162¥1,299$11,579

Interest cost

169

85

758

Expected rate of return on assets

(238)

(247)

(2,202)

Amortization of actuarial gains or losses

414

568

5,063

Net amount of liabilities and assets recorded on consolidated balance sheet(e) For the fiscal years ended March 31, 2016 and 2017, the breakdown of retirement benefit expenses is as follows:

Amortization of prior service costs

(29)

(33)

(294)

Retirement benefit expenses calculated using the simplified method

454

401

3,574

—

443

3,948

1,932

2,516

22,426

686

517

4,608

¥2,618¥3,033$27,034

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

Note: In the fiscal year ended March 31, 2016, the following extra retirement payments were recorded: ¥398 million in “Selling, general and administrative expenses” and ¥288 million in “Other
income (loss).” In the fiscal year ended March 31, 2017, the following extra retirement payments were recorded: ¥492 million ($4,385 thousand) in “Selling, general and administrative
expenses” and ¥25 million ($223 thousand) in “Other income (loss).”(f) For the fiscal years ended March 31, 2016 and 2017, the breakdown of items recorded in remeasurements of defined benefit plans (before tax
effect) is as follows:
Millions of yen

Prior service costs
Actuarial gains or losses
Total

¥

Thousands of
U.S. dollars

2016

2017

2017

(29)

¥ 5

$ 45

(1,474)

(76)

(678)

¥(1,503)¥(71)$(633)(g) As of March 31, 2016 and 2017, the breakdown of items recorded in cumulative remeasurements of defined benefit plans (before tax effect)
is as follows:
Millions of yen

Unrecognized prior service costs
Unrecognized actuarial gains or losses
Total

68

2016

2017

¥ (115)¥ (110)Thousands of
U.S. dollars

2017

$

(980)

(4,375)(4,450)(39,665)¥(4,490)¥(4,560)$(40,645)

(h) As of March 31, 2016 and 2017, the major categories of plan assets as a percentage of total plan assets are as follows:

Bonds

2016

2017

29%

24%

Equities

22

18Life insurance general account33

22

Cash and cash equivalents

4

25

Other

12

11

100%

100%

Total

Note: The total of plan assets includes 30% of the assets contributed to a retirement benefit trust for the corporate pension plan for the fiscal year ended March 31, 2017.

(i) For the fiscal years ended March 31, 2016 and 2017, the principal actuarial assumptions are as follows:
2017

2016

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%

2.14%~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
on the various assets that make up plan assets.

2.61%~5.12%

1.91%~5.74%

2. Defined contribution plans
For the fiscal years ended March 31, 2016 and 2017, the required contributions to defined contributions plans for the Company and its consolidated

FINANCIAL SECTION

Salary increase rate

subsidiaries was as follows:
Millions of yen

Required contributions to defined contribution plans

Thousands of
U.S. dollars

2016

2017

2017

¥525

¥526

$4,688

3. Multi-employer plans
For the fiscal years ended March 31, 2016 and 2017, 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

2016

2017

2017

¥3

¥1

$6

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.

69

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

and revision of monthly funding plans for the Company and its
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, 2016 and 2017, designated large customers werecounterparties for 13.6% and 24.6% of trade receivables, respectively.

financial instruments

Receivables denominated in foreign currencies arising as a result of

The market 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 fluctu-

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

ation risk. The Company and its consolidated subsidiaries manage

certain variables are used for these calculations, the result of suchbalances by counterparty and currency, and in addition the Company

calculations may vary if different assumptions are used.

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,

70(3) Supplementary explanation on the market value of

The contract amounts of derivative transactions in Note “22Foreign Exchange Risk Management and Interest Rate Risk
Management” should not be considered indicative of the market risk
associated with the derivative financial instruments.

2. Market value of financial instruments
The carrying amounts of financial instruments as stated in the consolidated balance sheets, their market values as of March 31, 2016 and 2017,
and the differences between carrying amounts and market values are as stated below. This table does not include assets for which it was judged
extremely difficult to assess the market value (Note 2 below).
Millions of yen

Carrying
amount Market value(1) Cash and time
depositsThousands of U.S. dollars

2017

2016
Carrying
amount Market value

Difference

2017
Carrying
amount Market value

Difference¥174,758¥174,758—¥205,517¥205,517—$1,831,866$1,831,866(2) Trade receivables(3) Marketable securities
and investment
securities

72,53072,530—75,51975,519—673,135

673,135—

28,162

32,481

4,319

34,87041,1486,278

310,811366,770

55,959$55,959¥¥

Difference$—

Total assets¥275,450¥279,769¥4,319¥315,906¥322,184¥6,278$2,815,812$2,871,771(1) Trade payables

62,646

62,646—64,17364,173—572,003

572,003—(2) Accrued income taxes

2,747

2,747

—

8,658

8,658

—

77,173

77,173—¥ 65,393¥ 65,393¥—¥ 72,831¥ 72,831¥—$ 649,176$ 649,176$—¥ (1,588)¥ (1,588)

¥

—

¥

¥

¥

—

$

$

$

—

Total liabilities
Derivative financial
instruments*

447

447

3,984

3,984

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 market 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 market 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 market value is almost identical with the book value, and thus these arestated at the book value. For trade receivables that are settled after a long period of time, the market values are measured based on the present values calculated by discounting
receivable amounts 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 market value is almost identical with the book value; and is stated at the book value. Stocks and others arestated at 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
by holding 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 market value is almost identical with the book value; and thus these are stated at the book value.
Derivative financial instruments
Please refer to Note “22 Foreign Exchange Risk Management and Interest Rate Risk Management.”
2. Financial instruments for which market value is extremely difficult to determine
Millions of yen

Thousands of U.S. dollars

2016

2017

2017

Carrying amount

Carrying amount

Carrying amountUnlisted stocks¥2,511¥2,737$24,396

Stocks of affiliated companies (unlisted stocks)

3,949

2,731

24,343

Convertible bond-type bonds with subscription rights to shares

—

50

446

Contributions to investment partnerships

602

457

4,073

As these instruments do not have readily available market values, and their market 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

Withinone year

Cash and time
deposits
Trade receivables
Total¥172,893

More than
one year,withinfive years¥—

More than
five years,
withinten years

More thanten years¥—¥—

Thousands of U.S. dollars

2017

2016

2017

Withinone yearMore than
one year,withinfive years

More than
five years,
withinten years

More thanten years

Withinone year¥203,509

¥ —

¥—

¥—

$1,813,967

More than
one year,withinfive years$—

More than
five years,
withinten years

More thanten years$—$—

71,219

1,311

—

—

74,812707——

666,833

6,302

—

—

¥244,112¥1,311¥—¥—¥278,321

¥707

¥—

¥—

$2,480,800$6,302$—$—71

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 33.1% for the fiscal year ended March 31, 2016 and 30.9% for the fiscal year ended March 31, 2017.
Income tax expenses reflected in the accompanying consolidated statements of income for the fiscal years ended March 31, 2016 and 2017consist of the following:
Millions of yen

Income taxes–current
Income taxes–deferred
Total

Thousands of
U.S. dollars

2016

2017

2017

¥13,747¥17,344$154,595

186

(681)

(6,070)¥13,933¥16,663$148,525

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,
2016 and 2017 is as follows:

72

2016

2017

Normal tax rate

33.1%

30.9%

Entertainment expenses not deductible for tax purposes

0.6

0.9

Corporate inhabitant tax on per capita basis

0.5

0.4

Directors’ bonuses

0.9

0.7

Change in valuation allowance for deferred tax assets

(2.0)

2.3

Differences of tax rates of foreign consolidated subsidiaries

(0.9)

(0.1)

Tax credit for research and development expenses

(5.3)

(8.0)

Amortization of goodwill

0.1

0.4

Effect of changes in tax rates on net deferred tax assets

1.7

0.0

Other

0.0

(0.1)

Effective tax rate

28.7%

27.4%

Significant components of deferred tax assets and liabilities as of March 31, 2016 and 2017 are as follows:
Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

Deferred tax assets:¥ 16,563¥17,838$159,000

Excess depreciation of fixed assets

9,630

9,747

86,879Accrued employee bonuses

2,746

3,554

31,678Inventory valuation losses

2,821

2,245

20,011

Net defined benefit liability

2,990

3,348

29,842

Loss on valuation of advance payments

1,348

1,335

11,899Loss on impairment of fixed assets

879

944

8,414

Accrued enterprise taxes and others

584

966

8,610

Research and development expenses

354

361

3,218

Allowance for doubtful receivables

260

199

1,774

Revaluation reserve for land

2,043

2,043

18,210

Other

7,508

7,628

67,992Losses carried forward

50,208447,527(24,098)(25,490)(227,204)

Total deferred tax assets

23,62824,718220,323

(69)

(66)

(588)

Total gross deferred tax assets

Deferred tax liabilities:
Reserve for advanced depreciation of fixed assets

(387)

(429)

(3,824)(2,257)(2,788)(24,852)

Revaluation reserve for land

(444)

(434)

(3,868)

Other

(393)

(549)

(4,893)(3,550)(4,266)(38,025)¥ 20,078¥20,452$182,298

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

Current assets–Deferred tax assets¥ 8,523¥ 9,240$ 82,360

Investments and other assets–Deferred tax assets

12,545

12,444110,919

Current liabilities–Other (deferred tax liabilities)

(12)

(9)

(80)

Long-term liabilities–Deferred tax liabilities(978)(1,223)(10,901)¥20,078¥20,452$182,298

Retained earnings of foreign consolidated subsidiaries
Unrealized gains or losses on other securities

Total deferred tax liabilities
Net deferred tax assets

FINANCIAL SECTION

47,726

Valuation allowance

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

Total

On November 18, 2016, the Diet enacted the “Act for Partial

There is no change to the normal effective statutory tax rate used

Revision to the Partial Revision, etc. of Consumption Tax Act for thefor the calculation of deferred tax assets and deferred tax liabilities.

Drastic Reform of the Taxation System for Ensuring Stable Financial

There has been a reclassification of tax rates between national andResources, etc. for Social Security” (Act No. 85 of 2016) and the “Actlocal taxes. However, for this consolidated fiscal year, the influence offor Partial Revision to the Partial Revision, etc. of Local Tax Act andthis change on the consolidated financial statements is immaterial.

Local Allocation Tax Act for the Drastic Reform of the Taxation System
for Ensuring Stable Financial Resources, etc. for Social Security” (ActNo. 86 of 2016), and the time of the increase of the consumption tax
rate to 10% was postponed from April 1, 2017 to October 1, 2019.
Accompanying this change, the timing of the implementation of theabolishment of the special local corporation tax and the accompanying
restoration of business tax rates, the revision of the local corporation
tax rate, and the revision of the corporation inhabitants tax corporation
levy rate has been postponed from consolidated fiscal years beginning on or after April 1, 2017 to consolidated fiscal years beginning on
or after October 1, 2019.

73

14 Selling, General and Administrative Expenses
Significant components of selling, general and administrative expenses for the fiscal years ended March 31, 2016 and 2017 are as follows:
Thousands of
U.S. dollars

Millions of yen

2016

2017

2017

¥ 37,734¥ 39,356$ 350,798

Directors’ remuneration and employees’ wages

39,62041,534370,211

Employees’ retirement and severance benefits

2,268

2,908

25,920

Provision for directors’ bonuses

1,403

1,771

15,786

Research and development expenses

18,195

17,762

158,321

17

(45)

(401)

Advertising expenses

Provision of allowance for doubtful accounts
Other
Total

53,72357,234510,152¥152,960¥160,520$1,430,787

15 Other Comprehensive Income
The components of “Other comprehensive income” for the fiscal years ended March 31, 2016 and 2017 are as follows:
Millions of yen

2016
Amounts Reclassification
arising
adjustments

Beforetax effectTax effect

Net oftax effect229¥ (58)¥(376)(2,625)643(1,982)

—

—

—

24

24

(4,248)26(4,222)—(4,222)(1,888)385(1,503)403(1,100)

(35)

(35)

(70)

—

(70)

0

¥(8,191)¥1,012¥(7,179)

Unrealized gains orlosses on othersecurities, net of tax¥

229¥ (0) ¥

Deferred gains or losses onhedges, net of tax(2,249)

Revaluation reserve
for land, net of tax
Foreign currencytranslation adjustments
Remeasurements ofdefined benefit plans,
net of tax
Share of othercomprehensive incomeof associates accounted
for using equity method
Total

¥

¥(8,191)

171

Millions of yen

Thousands of U.S. dollars

2017
Amounts Reclassification
arising
adjustments

Unrealized gains orlosses on othersecurities, net of tax

¥

(0)

2017

Tax effect

Net oftax effectAmounts Reclassification
arising
adjustments¥1,194¥(303)¥ 891$ 10,643$

Beforetax effectTax effect

Net oftax effect(0) $10,643$(2,701)$ 7,942

Deferred gains or losses onhedges, net of tax

86

1,091

1,177

(270)

907

766

9,725

10,491(2,407)

8,084

Revaluation reserve forland, net of tax

—

—

—

—

—

—

—

—

—

—

(2,936)—(2,936)—(2,936)(26,170)—(26,170)—(26,170)

(606)

535

(71)

20

(51)

(5,402)

4,769

(633)

178

(455)

(9)

856

—

856

$14,485 $ (4,813)$(4,930)$(9,743)

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

74

¥ 1,194

Beforetax effect

97

(1)

96

—

96

865

¥(2,165)¥1,625¥ (540)¥(553)¥(1,093)$(19,298)

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, 2016 and 2017 is as follows:
Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

Profit attributable to owners of parent¥34,584¥44,160$393,618

Profit attributable to owners of parent available to common stockholders

34,584

44,160393,618

Profit attributable to owners of parent for diluted EPS calculation

34,584

44,160393,618

Average number of common shares outstanding

219,679

Thousands of shares

219,672

Effect of dilutive securities:
57

63

219,736

219,735

Stock options
Average number of common shares for diluted EPS calculation

Yen

U.S. dollars

Earnings per share:¥157.43¥201.03$1.79

Diluted157.39200.97

1.79

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 ($14,663 thousand) at March 31, 2016 and2017, 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, 2017 were cash dividends

record recurring losses for two consecutive fiscal years.

of ¥15,386 million ($137,142 thousand). In addition, a mid-year* Recurring profit and loss is a Japanese accounting term denoting profit before
extraordinary items.

dividend may be paid based on approval by the Board of Directors,

FINANCIAL SECTION

Basicwhich is subject to limitations. The mid-year dividend for the fiscal
year ended March 31, 2017 was ¥2,638 million ($23,514 thousand).

75

18 Revaluation Reserve for Land
In accordance with the Law Concerning Land Revaluation (Law No.

the foundation for calculating taxable value for land value tax

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

adjustments are made to the official notice prices.
Unrealized losses for land of ¥903 million ($8,049 thousand) werethat are calculated by the method assessed and published by therecognized 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 market

assesses and publishes the method to calculate land value that forms

value of the land as of March 31, 2017.

19 Common Stock and Treasury Stock
The changes in the number of common stock and treasury stock for the fiscal years ended March 31, 2016 and 2017 are as follows:
SharesCommon stock (number of shares)
Number of shares at beginning of year
Number of shares at end of year

2016

2017

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

2016

2017

2,316,797
4,768
2,321,565

2,321,565
13,0152,334,580

20 Stock Option Plan
The Company had been utilizing a stock compensation-type stock option plan (former plan) as performance-based remuneration for directors of
the company and subsidiaries. However, at the Ordinary General Meeting of Shareholders held on June 19, 2017, the transition to a new performance-based stock compensation plan was approved. Accordingly, stock compensation-type stock options will no longer be granted under theformer plan. As of March 31, 2017, the details of the stock options granted under the former plan were as follows:
Resolution date of the meeting of the Company’s Board of Directors
Position (number of beneficiaries)
Class (number of shares) (note 1)
Amount to be paid upon exercise of stock acquisition rights
Grant date
Vesting conditions for stock acquisition rights
Required service
Exercise period for the stock acquisition rights (note 2)
Fair value of each stock option (yen)May 21, 2013
Directors of the Company (5)Directors of subsidiaries (6)Common stock (36,100)¥1 per share
June 5, 2013
None
Not specified
From June 5, 2013 to June 4, 2033
¥1,219.63

Notes: 1. With respect to the method used to estimate the number of stock options vested, the number of stock options granted is used as the number of stock options vested because there areno vesting conditions.
2. At the Ordinary General Meeting of Shareholders held on June 19, 2017, the exercise period was changed to June 5, 2013 ~ June 19, 2018.

Resolution date of the meeting of the Company’s Board of Directors
Position (number of beneficiaries)
Class (number of shares) (note 1)
Amount to be paid upon exercise of stock acquisition rights
Grant date
Vesting conditions for stock acquisition rights
Required service
Exercise period for the stock acquisition rights (note 2)
Fair value of each stock option (yen)May 21, 2015
Directors of the Company (5)Directors of subsidiaries (7)Common stock (27,100)¥1 per share
June 5, 2015
None
Not specified
From June 5, 2015 to June 4, 2035
¥2,049.78

Notes: 1. With respect to the method used to estimate the number of stock options vested, the number of stock options granted is used as the number of stock options vested because there areno vesting conditions.
2. At the Ordinary General Meeting of Shareholders held on June 19, 2017, the exercise period was changed to June 5, 2015 ~ June 19, 2018.

76

21 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, 2016 and 2017 are as follows:
Thousands of
U.S. dollars

Millions of yen

Within one year

2016

2017

2017

¥1,696¥1,764$15,723

Over one year

6,932

6,309

56,235

Total¥8,628¥8,073$71,958

22 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.

financial instruments.
(1) Derivative transactions not qualifying for hedge accounting
Millions of yen

FINANCIAL SECTION

Contract amounts, market values, and gains or losses from valuation of forward foreign exchange contracts outstanding as of March 31, 2016
and 2017 are as follows. The contract amounts in themselves should not be considered indicative of the market risk associated with the derivativeThousands of U.S. dollars

2016

2017

2017

Contract
Estimated Unrealized
amount market value gain (loss)

Contract
Estimated Unrealized
amount market value gain (loss)

Contract
Estimated Unrealized
amount market value gain (loss)¥ 8,113¥(611)¥(611)¥ 2,524

¥106

¥106

$ 22,498

$ 945

$ 945

1,180

55

55

8,151

21

21

72,654

187

187

395

14

14

212

3

3

1,890

27

27

U.S. dollars

1,037

(7)

(7)

1,980

56

56

17,649499

499

H.K. dollars

86

2

2

90

(4)

(4)

802

(36)

(36)

Chinese yuan

79

(1)

(1)

—

—

—

—

—

—

U.S. dollars

2,072

(112)

(112)

1,022

11

11

9,110

98

98

H.K. dollars

115

(7)

(7)

76

(0)

(0)

677

(3)

(3)

¥13,077¥(667)¥(667)¥14,055

¥193

¥193

$125,280$1,717$1,717

Forward foreign exchange contracts
Sold:
Yen
U.S. dollars
Euro
Purchased:

Currency option contracts
Sold/Purchased:

Total

Notes: 1. Method of calculating market 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.

77

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

Hedge accounting
methodHedging method

Hedged items

Thousands of U.S. dollars

2016

2017

2017

Contract
Estimatedamount market value

Contract
Estimatedamount market value

Contract
Estimatedamount market value¥

Forward foreign exchange contracts
Sold:
Yen

Accounts receivable–trade—¥ —¥ 2,412¥ 68$ 21,499$ 606

U.S. dollars

Accounts receivable–trade

508

3

283

3

2,523

27

U.S. dollars

Accounts payable–trade16,398(833)

10,383

185

92,548

1,649

Yen

Accounts payable–trade

24

(0)

93

(0)

829

(2)

H.K. dollars
Currency option
contracts
Sold put option:

Accounts payable–trade

316

(13)

88

(1)

784

(9)

U.S. dollars
Purchased call
option:U.S. dollars

Accounts payable–trade

1,398

(81)

—

—

—

—

Accounts payable–trade

1,398

3

—

—

—

—

453

(note 3)645

(note 3)

5,749

(note 3)

¥20,495¥(921)¥13,904¥255$123,932$2,271

Purchased:

Deferred

Forward foreign exchange contracts

Foreign exchange
Purchased:
allocation method
U.S. dollars

Accounts payable–trade

Total

Notes: 1. Method of calculating market value
Calculated based on prices provided by counterparty financial institutions.
2. Currency option contracts are zero cost options, and option premiums are not paid or received.
3. 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 market values of those contracts are included in the market values of the accounts payable–trade.

23 Commitments and Contingent Liabilities
1. Pledged assets
As of March 31, 2016 and 2017, the detail of pledged assets is as follows:
Millions of yen

Cash and time deposits

Thousands of
U.S. dollars

2016

2017

2017

¥96

¥79

$704

As of March 31, 2017, there were no obligations corresponding to pledged assets.
In addition to the above, the assets deposited as a security deposit for issuance under the Payment Services Act are ¥433 million in “Other
investments and assets” and ¥738 million ($6,578 thousand) in “Other investments and assets” at March 31, 2016 and 2017, respectively.

2. Commitments
Commitments as of March 31, 2016 and 2017 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

78

Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥210

¥237

$2,112Millions of yen

Thousands of
U.S. dollars

2016

2017

2017

¥60

¥42

$374

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 methods for accounting for reportable segments are the same as those described in Note “2 Summary of Significant Accounting Policies.”
Segment profit in the segment information below is based on operating profit, and segment assets are based on total assets. Amounts of intersegment transactions are based on the prevailing market prices.
Millions of yen

2016
Reportable Segment
Network
Entertainment

Visual andMusic
Production¥199,410¥317,995¥48,268¥565,673¥ 9,832¥575,505

7,015

2,946

3,700

13,661

17,624

Subtotal Other (note 1)

Total

Adjustments Consolidated(note 2) total (note 3)

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

¥

—

¥575,505

31,285(31,285)—¥206,425¥320,941¥51,968¥579,334¥27,456¥606,790¥(31,285)¥575,505

Segment profit

16,63923,932

11,66552,236

1,123

53,359(3,718)49,641

Segment assets

99,462

166,245

38,687304,394

27,040331,434

116,902448,336¥

FINANCIAL SECTION

Toys and
Hobby

Other items:
Depreciation and amortization

593¥ 20,340

439¥ 20,779

847¥ 21,626

83

17

68

168

—

168

—

168

Loss on impairment of fixed
assets

1,857

659

—

2,516

24

2,540

13

2,553

Investments in associates
accounted for using equity
method

756

—

—

756

12,051

12,807—

12,807

11,142

11,614653

23,409497

23,906

3,081

26,987

Amortization of goodwill

Increase in property, plant andequipment and intangible assets¥ 11,782

¥

7,965

¥

¥

79

Millions of yen

2017
Reportable Segment
Toys and
Hobby

Network
Entertainment

Visual andMusic
Production¥185,702¥372,000¥52,896¥610,598¥ 9,464¥620,062

7,527

8,275

3,394

19,196

17,333

Subtotal Other (note 1)

Total

Adjustments Consolidated(note 2) total (note 3)

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

¥

—

¥620,062

36,529(36,529)—¥193,229¥380,275¥56,290¥629,794¥26,797¥656,591¥(36,529)¥620,062

Segment profit

10,992

44,29813,43768,727702

69,429(6,190)63,239Segment assets

104,294

181,428

44,032

329,754

31,319361,073

126,960

488,033¥ 12,576¥¥

Other items:
Depreciation and amortization

615¥ 20,496

438¥ 20,934

920¥ 21,854

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—13,38914,202

7,993

836

23,031

545

23,576

1,440

25,016

Increase in property, plant andequipment and intangible assets

7,305

¥

¥

Thousands of U.S. dollars

2017
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$1,655,245 $3,315,804
67,092$471,486 $5,442,535

73,759$1,722,337 $3,389,563

30,252$ 84,357 $5,526,892 $

171,103$501,738 $5,613,638

154,496

325,599—$5,526,892(325,599)—$238,853 $5,852,491 $ (325,599) $5,526,892

Segment profit

97,977394,848

119,770

612,595

6,257

618,852(55,174)

563,678

Segment assets

929,619

1,617,150

392,477

2,939,246

279,160

3,218,406

1,131,652

4,350,058$ 112,095 $65,1138,201$ 194,795

Other items:
Depreciation and amortization$

5,482 $ 182,690$

3,904 $ 186,594 $Amortization of goodwill

5,785

232

588

6,605

—

6,605

—

6,605

Loss on impairment of fixed
assets

5,116

5,892

—

11,008597

11,60545

11,650Investments in associates
accounted for using equity
method

7,933

—

—

7,933

111,409

119,342—

119,342

126,589

71,245

7,452

205,286

4,858

210,144

12,835

222,979

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 -¥3,718 million for the fiscal year ended March 31, 2016 includes elimination of inter-segment transactions of ¥292 million and corporate
expenses not allocated to reportable segments of -¥4,010 million. The adjustment to segment profit of -¥6,190 million (-$55,174 thousand) for the fiscal year ended March 31, 2017
includes elimination of inter-segment transactions of -¥182 million (-$1,622 thousand) and corporate expenses not allocated to reportable segments of -¥6,008 million (-$53,552
thousand). Principal corporate expenses are expenses related to administrative divisions not belonging to reportable segments.
(2) The adjustment to segment assets of ¥116,902 million as of March 31, 2016 includes elimination of inter-segment transactions of -¥17,654 million and corporate assets notallocated to reportable segments of ¥134,556 million. The adjustment to segment assets of ¥126,960 million ($1,131,652 thousand) as of March 31, 2017 includes elimination ofinter-segment transactions of -¥20,439 million (-$182,182 thousand) and corporate assets not allocated to reportable segments of ¥147,399 million ($1,313,834 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 ¥847 million for the fiscal year ended March 31, 2016 includes elimination of inter-segment transactions of -¥320
million and depreciation and amortization expense not allocated to reportable segments of ¥1,167 million. The adjustment to depreciation and amortization expense of ¥920 million($8,201 thousand) for the fiscal year ended March 31, 2017 includes elimination of inter-segment transactions of -¥736 million (-$6,560 thousand) and depreciation andamortization expense not allocated to reportable segments of ¥1,656 million ($14,761 thousand).
(4) The adjustment to loss on impairment of fixed assets of ¥13 million and ¥5 million ($45 thousand) for the fiscal years ended March 31, 2016 and 2017, respectively, is related tocorporate assets not allocated to reportable segments.
(5) The adjustment to increase in property, plant and equipment and intangible assets of ¥3,081 million and ¥1,440 million ($12,835 thousand) as of March 31, 2016 and 2017,
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.

80Additional segment information as of and for the fiscal years ended March 31, 2016 and 2017 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

2016

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥430,369¥51,642¥47,286¥46,208¥575,505

41,200

2,878

4,305

5,320

53,703

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

Thousands of U.S. dollars

2017
Americas

EuropeAsia, excluding Japan

Total$4,052,331$579,900$402,130$492,531$5,526,892

364,168

21,01835,07444,888465,148

Property, plant and equipment
3. Information by major customer
Fiscal year ended March 31, 2016

Net sales(Millions of yen)

Name

FINANCIAL SECTION

Net salesJapan

Related segment

Toys and Hobby Business,
Happinet Corporation¥62,096

Network Entertainment Business,
Visual and Music Production Business

Fiscal year ended March 31, 2017

Net sales(Millions of yen)

Name

Apple Inc.

Net sales(Thousands of U.S. dollars)¥68,579$611,276

Related segment

Network Entertainment Business,
Visual and Music Production Business
Toys and Hobby Business,

Google Inc.

¥62,539$557,438

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, 2016 and 2017,
and the unamortized balance of goodwill as of March 31, 2016 and 2017, is as follows:
Millions of yen

2016
Other

Corporate andeliminations

Amortization of goodwill

¥ 83

¥17

¥ 68

¥—

¥—

¥168

Unamortized balance of goodwill

247

55

152

—

—

454

Toys and Hobby

Network Visual and MusicEntertainment
Production

Total

81

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

Thousands of U.S. dollars

2017
Other

Corporate andeliminations

Amortization of goodwill$5,785

$232

$588

$—

$—

$6,605

Unamortized balance of goodwill

1,471

775

767

—

—

3,013

Toys and Hobby

Network Visual and MusicEntertainment
Production

Total

25 Related-Party Disclosures
Transactions with Related Parties
Fiscal year ended March 31, 2016
Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type

Company

Affiliatedcompany

Happinet
Corporation

Address
Taito-ku,
Tokyo

Capital orcontribution
to capital¥2,751 million

Content of business

Relationship
Ratio of voting rights with related
ownership
party

Content

Wholesaler of toys,
video games, andamusement products

Holding
directly 26.0%
indirectly 0.3%

Sales of products,
and others¥62,096 million(note 2)

Sales agency

Transaction
amountAccount items
Accounts
receivable–
trade

Balance asof March 31,
2016¥9,878 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, 2017
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

Relationship
Ratio of voting rights with related
ownership
party

Content¥2,751 million($24,521
thousand)

Wholesaler of toys,
video games, andamusement products

Holding
directly 27.2%
indirectly 0.3%

Sales of products, ¥55,622 million
and others($495,784(note 2)
thousand)

Sales agency

Transaction
amountAccount items

Balance asof March 31,
2017

Accounts
receivable–
trade¥10,378 million($92,504
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.

26 Business Combinations
Business Combination through Acquisition

between BANDAI, which has strengths in the planning and(WiZ Co., Ltd.)

design of established toys for boys and girls, and WiZ, which

1. Overview of business combination

has strengths in the planning and development of digital toys,(1) Name and nature of business of the acquired company
Nature of businessplanning capability of the Group as a whole, including WiZ,

Planning/development, production, andand with this planning capability as a pillar, to leverage thesales of toys, sundries, and animations

strengths of both companies in the planning, development, and(2) Main reasons for business combinationroll out of new products.

With the objective of strengthening toy planning and develop-

In addition, the Company considers WiZ, with which it jointly

ment capabilities, the Company implemented tender offers toowns and develops original IP, such as Tamagotchi, Primopuel,acquire shares of WiZ Co., Ltd. (WiZ), which was listed on

and Digimon, to be a valued business partner. WiZ, throughJASDAQ (Standard), in order to make WiZ a wholly owned

collaboration with the Company, will strengthen its out-licensing

subsidiary of the Company.

of this original IP, thereby facilitating the establishment of a

The Company believes that this would make it possible toachieve further business growth with powerful IP, one of the82

the Company believes that it would be able to increase the

WiZ Co., Ltd.

Name of the acquired company

stable earnings platform.
Also, to realize the types of synergies outlined above, theGroup’s strengths, and to incorporate into the Group theCompany determined that it would be necessary to acquire all ofstrengths of WiZ in digital toy planning and development

the shares of WiZ and to establish a management system thatcapabilities and know-how, thereby strengthening the IP/

conducts rapid, flexible decision-making based on medium toproduct planning and development function, which is a source

long term strategic judgments. Moreover, it was determined thatof the Company’s growth. In particular, by deepening collaboration

WiZ becoming a wholly owned subsidiary of the Company andboth companies conducting unified business development as a(Anime Consortium Japan Inc.)

Group would contribute to increasing the corporate value of WiZ.

1. Overview of business combination

WiZ implemented a share consolidation on September 30,(1) Name and nature of business of the acquired company

2016, and the Company made an additional acquisition of WiZ

Name of the acquired company

shares on November 15, 2016. As a result, WiZ became a wholly

Nature of businessowned subsidiary of the Company.

Anime Consortium Japan Inc.

Animation distribution, media, rights
businesses(3) Date of business combination(2) Main reasons for business combination

May 31, 2016

Anime Consortium Japan Inc., which was an equity-method(4) Legal form of business combination

affiliate, was established through a joint investment by multiple

Acquisition of shares in exchange for cash(5) Name of company after combination
No change

companies in November 2014 with the objective of implementing
overseas video distribution of Japanese animation content ande-commerce sites handling animation-related products and of(6) Ratio of voting rights acquired

offering animation content overseas through an all-Japan(1) Ratio of voting rights owned immediately before businesscombination: 0.0%

system. Currently, in business operations, due to the entry andstrengthened business development initiatives of multiple large,(2) Ratio of voting rights acquired on the day of the businesscombination: 87.4%

overseas companies, Anime Consortium Japan is facing dramaticchanges in the external environment, such as intensification of(3) Ratio of voting rights after acquisition: 87.4%(7) Identification of the acquiring company

competition to acquire rights for video distribution worldwide.
In this setting, to respond more flexibly and rapidly tochanges in the environment and market trends, the Company

shares in exchange for cash

reached the determination that it was necessary to change the2. Period of business results of acquired company included in the
consolidated financial statements

system in order to rebuild operations, and the Company madeAnime Consortium Japan a wholly owned subsidiary throughFrom June 1, 2016 to March 31, 2017an additional acquisition of shares held by other shareholders.

3. Breakdown of the acquisition cost of the acquired company by typeof consideration(3) Date of business combination
March 31, 2017

Consideration for acquisition

FINANCIAL SECTION

The Company was identified as the acquire since it acquired the(4) Legal form of business combination

Cash and deposits:¥804 million ($7,166 thousand)Acquisition cost:¥804 million ($7,166 thousand)4. Details and amounts of major acquisition-related expenses
Compensation/commissions for advisors:¥91 million ($811 thousand)
5. Amount, cause, amortization method, and amortization period of
goodwill arising on the acquisition(1) Amount of goodwill

Acquisition of shares in exchange for cash(5) Name of company after combination
No change(6) Ratio of voting rights acquired(1) Ratio of voting rights owned immediately before businesscombination: 37.4%(2) Ratio of voting rights acquired additionally on the day of thebusiness combination: 62.6%¥567 million ($5,054 thousand)(2) Cause(3) Ratio of voting rights after acquisition: 100.0%(7) Identification of the acquiring company

The acquisition cost exceeded the net amount of assets
acquired and liabilities assumed, and accordingly the excess
was recorded as goodwill.
(3) Amortization method and amortization period

The Company was identified as the acquire since it acquired theshares in exchange for cash
2. Period of business results of acquired company included inconsolidated financial statements

Straight-line method over five years

The acquired company is an equity-method affiliate, and accord-

In regard to this goodwill, at the end of this consolidated fiscal

ingly the business results from April 1, 2016 to March 31, 2017 are

year, the net asset value of shares of affiliated companies

recorded as share of (profit) loss of entities accounted for using

declined, and accordingly the entire amount of the unamortizedbalance of ¥482 million ($4,296 thousand) was written off.
6. Amounts and breakdown of assets acquired and liabilities

equity method.
3. Breakdown of the acquisition cost of the acquired company by typeof consideration

assumed on the date of the business combination

Market value at time of business combination of shares owned

Current assets¥745 million ($6,641 thousand)

immediately before business combination:

Fixed assets¥15 million ($134 thousand)Total assets¥760 million ($6,775 thousand)Market value of shares acquired additionally on the day of theCurrent liabilities¥450 million ($4,011 thousand)business combination:¥1,434 million ($12,782 thousand)Long-term liabilities¥38 million ($339 thousand)Acquisition cost:¥2,290 million ($20,412 thousand)Total liabilities¥488 million ($4,350 thousand)7. Estimated amounts and calculation method regarding the impact¥856 million ($7,630 thousand)4. Details and amounts of major acquisition-related expenses
Compensation/commissions for advisors:on the consolidated statement of income for the current consolidated
fiscal year, assuming the business combination was completed on¥1 million ($9 thousand)
5. Difference between the acquisition cost of the acquired company

the starting date of the current consolidated fiscal year

and the total amount of the acquisition costs of the individual

Omitted because the estimated amounts are insignificant.

transactions that led to the acquisition of control
There is no difference.

838. Estimated amounts and calculation method regarding the impact

6. Amount, cause, amortization method, and amortization period of
goodwill arising on the acquisitionon the consolidated statement of income for the current consolidated

The combination did not result in goodwill or negative goodwill.

fiscal year, assuming the business combination was completed on
the starting date of the current consolidated fiscal year

7. Amounts and breakdown of assets acquired and liabilities
assumed on the date of the business combination

Net sales¥654 million ($5,829 thousand)Current assets¥3,223 million ($28,728 thousand)Operating loss-¥1,316 million (-$11,730 thousand)Fixed assets¥97 million ($865 thousand)

Recurring loss-¥1,244 million (-$11,088 thousand)Total assets¥3,320 million ($29,593 thousand)Loss before income taxes-¥1,396 million (-$12,443 thousand)Current liabilities¥1,023 million ($9,119 thousand)Loss attributable to owners of parent

Long-term liabilities¥7 million ($62 thousand)Total liabilities¥1,030 million ($9,181 thousand)-¥1,276 million (-$11,374 thousand)Basic loss per share-¥5.81 (-$0.05)(Calculation Method for Estimated Amounts)
The estimated amounts of the impact are based on the net sales
and earnings information calculated as if the businesscombination had been completed on the starting date of thecurrent consolidated fiscal year.
This note has not been audited by the independent auditor.

27 Significant Subsequent Events(Change in Reportable Segments)
From April 2017, the Company has changed its organizational structure to further strengthen, in Japan and overseas, business related to highlycollectable products for adults, centered on figures.
Planning, development, production, and sales of such products as prizes for amusement facilities and lottery-related products for convenience
stores had been included in the Network Entertainment Business, but accompanying a change in the organizational structure, the Company
decided to transfer these operations to the Toys and Hobby Business from the next consolidated fiscal year.
Information regarding the amounts of sales, profits/losses, assets, liabilities, and other items for each reportable segment for this consolidated
fiscal year under the system of reportable segments after the change is as follows:
Millions of yen

2017
Reportable Segment
Toys and
Hobby

Network
Entertainment

Visual andMusic
Production¥208,812¥348,890¥52,896

Subtotal Other (note 1)

Total

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers
Total¥610,598¥ 9,464¥620,062¥—¥620,062

9,287

6,696

3,394

19,377

17,33336,710(36,710)—¥218,099¥355,586¥56,290¥629,975¥26,797¥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¥¥

Other items:
Depreciation and amortization

615¥ 20,496

438¥ 20,934

920¥ 21,854

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

84

7,145

¥

¥

Thousands of U.S. dollars

2017
Reportable Segment
Network
Entertainment

Toys and
Hobby

Visual andMusic
Production

Subtotal Other (note 1)

Total

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers$1,861,235 $3,109,814

Inter-segment sales
and transfers
Total

82,779$471,486 $5,442,535

59,684$1,944,014 $3,169,498

30,252$ 84,357 $5,526,892 $

172,715$501,738 $5,615,250

154,496327,211—$5,526,892(327,211)—$238,853 $5,854,103 $ (327,211) $5,526,892

Segment profit

118,825

374,677

119,770

613,272

6,257

619,529(55,851)

563,678

Segment assets

1,052,750

1,496,310

392,477

2,941,537

279,160

3,220,697

1,129,361

4,350,058

Other items:
Depreciation and amortization

63,6868,201$ 194,795

5,785

232

588

6,605

—

6,605

—

6,605

Loss on impairment of fixed
assets

5,116

5,892

—

11,008597

11,60545

11,650Investments in associates
accounted for using equity
method

7,933

—

—

7,933

111,409

119,342—

119,342

127,498

70,336

7,452

205,286

4,858

210,144

12,835

222,979

Increase in property, plant andequipment and intangible assets$

5,482 $ 182,690$

3,904 $ 186,594 $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 (-$55,851 thousand) includes elimination of inter-segment transactions of -¥257 million (-$2,290 thousand) and corporate
expenses not allocated to reportable segments of -¥6,009 million (-$53,561 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 ($1,129,361 thousand) includes elimination of inter-segment transactions of -¥20,696 million (-$184,473 thousand) andcorporate assets not allocated to reportable segments of ¥147,399 million ($1,313,834 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 ¥920 million ($8,201 thousand) includes elimination of inter-segment transactions of -¥736 million (-$6,560 thousand)and depreciation and amortization expense not allocated to reportable segments of ¥1,656 million ($14,761 thousand).
(4) The adjustment to loss on impairment of fixed assets of ¥5 million ($45 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 ¥1,440 million ($12,835 thousand) is related to corporate assets not allocated to reportable segments.
3. Segment profit is reconciled to operating profit in the consolidated statements of income.

FINANCIAL SECTION$ 113,522 $Amortization of goodwill(Disposal of Treasury Stock as Stock Compensation)
Based on a resolution at a Board of Directors’ meeting held on June 19, 2017, a disposal of treasury stock as stock compensation has been
implemented, as follows:
1. Overview of disposal(1) Date of disposal

July 7, 2017(2) Class and number of shares to be disposed

35,800 shares of the Company’s common stock(3) Disposal value¥3,855 per share(4) Total disposal value¥138 million(5) Method of offering or disposal

Stock compensation allotment method (third-party allotment)(6) People eligible for allotment, number of eligible people, number of shares to be allotted
Directors of the Company (excluding outside directors)

7 people

17,900 shares

Directors of subsidiaries (excluding outside directors)

15 people

17,900 shares(7) Other

The taking effect of the securities registration statement filed in accordance with the Financial
Instruments and Exchange Act is a condition for this disposal of treasury stock.

2. Objective of and reasons for the disposal
As performance-based remuneration related to this consolidated fiscal year, monetary compensation receivables are granted to the directors of
the Company and subsidiaries (excluding outside directors in both cases; hereinafter “eligible directors”) .

85

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, 2017 and 2016, 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 judgment, 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 theentity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in
the circumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness ofthe entity’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, 2017 and 2016, 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, 2017 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, 2017
Tokyo, Japan86

CORPORATE DATA
As of March 31, 2017

Corporate Name:
Head Office:

BANDAI NAMCO Holdings Inc.
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:

34,359Number of shares per trading unit:

Shareholders:

100 shares

Number of shares(Thousand)% of total

The Master Trust Bank of Japan, Ltd. (Trust account)

12,092

5.50

Japan Trustee Services Bank, Ltd. (Trust account)

10,467

4.76

Kyoko Nakamura

6,403

2.91

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)

4,052

1.84

Nintendo Co., Ltd.

3,845

1.75

NORTHERN TRUST CO. (AVFC) RE U.S. TAX EXEMPTED PENSION
FUNDS

3,740

1.70

Japan Trustee Services Bank, Ltd. (Trust account 9)

3,479

1.58

Number of shares(Thousand)% of total——

Financial institutions

61,998

27.93

Brokerage

3,567

1.61

Other corporate entities

26,357

11.87

Foreign corporate entities and others

100,982

45.49

Individuals, etc.

26,887

12.11

Treasury stocks

2,206

0.99

Name

Note: The shareholding ratio is calculated after reduction of the number of treasury stocks.

Ownership Breakdown:

Public entities© 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 ©2016 石森プロ・テレビ朝日・ADK・東映 ©2017 石森プロ・テレビ朝日・ADK・東映 © バードスタジオ／集英社・東映アニメーション © バードスタジオ／集英社・フジテレビ・東映アニメーション ©BANDAI © バードスタジオ／集英社・フジテレビ・東映アニメーション！ ©2017 プロジェクトラブライブ！サンシャイン !! ©GIRLS und PANZER Finale Projekt ©GIRLS und PANZER Film Projekt © 窪岡俊之 ©BANDAI NAMCO Entertainment Inc.
©BANDAI NAMCO Entertainment Inc. ©BANDAI NAMCO Entertainment Inc. ©2011–2016 FromSoftware Inc. ©2016 プロジェクトラブライブ！サンシャイン！
© 円谷プロ © ウルトラマンジード製作委員会・テレビ東京 ©2017 石森プロ・テレビ朝日・ADK・東映 ©2017 テレビ朝日・東映 AG・東映 © やなせたかし／フレーベル館・TMS・NTV ©BANDAI, WiZ ©BANDAI NAMCO Entertainment Inc. ©ABC-A・東映アニメーション ©L5/YWP・TX © 尾田栄一郎／集英社・フジテレビ・東映アニメーション© 藤巻忠俊／集英社・舞台「黒子のバスケ」製作委員会 © 武内直子・PNP・東映アニメーション ©2014–2015 杉浦日向子・MS.HS ／ 「百日紅」製作委員会

87

OVERVIEW OF MAIN GROUP COMPANIESAs of August 31, 2017

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 implementationof strategies by operating companies in the Americas

BANDAI NAMCO Holdings UK LTD.

Regional headquarters in Europe, providing support for the implementation ofstrategies by operating companies in Europe

BANDAI NAMCO Holdings ASIA CO., LTD.

Regional headquarters in Asia, providing support for the implementation ofstrategies by operating companies in Asia

Toys and Hobby Strategic Business Unit
BANDAI CO., LTD.
BANPRESTO CO., LTD.
BANPRESTO SALES CO., LTD.
MegaHouse Corporation
CCP Co., Ltd.
Sun-Star Stationery Co., Ltd.
Plex Co., Ltd.
WiZ Co., Ltd.
Seeds Co., Ltd.

People Co., Ltd.*TSUBURAYA PRODUCTION CO., LTD.*BANDAI AMERICA INC.
BANDAI S.A.S.
BANDAI UK LTD.
BANDAI ESPAÑA S.A.
BANDAI NAMCO ASIA CO., LTD.
BANDAI NAMCO KOREA CO., LTD.
BANDAI NAMCO (THAILAND) CO., LTD.
BANDAI (SHENZHEN) CO., LTD.

BANDAI NAMCO PHILIPPINES INC.
BANPRESTO (H.K.) LTD.

Planning, manufacturing, and marketing of toys, plastic models, capsule toys,
cards, confectionery and foods, apparel, sundries, and other products
Planning, development, and sales of prizes, etc., for amusement facilities,
convenience stores, etc.
Sales of prizes, etc., for amusement facilities
Planning, development, production, and sales of toys, candy toys, figures,
communications equipment, peripheral equipment, etc.
Planning, development, production, and sales of RC toys, toys, consumer
electronics, and sundries
Planning, development, production, and sales of character stationery, fancy stationery,schoolchildren’s stationery, creative stationery, premium stationery, and other sundries
Planning, design, development, and sales of character-based products
Planning, design, development, and manufacturing of toys and character-based
products
Planning, development, and manufacturing of toys, pachinko and pachislot
machines, medical equipment, electronic-related equipment, etc.; contract
operations for various types of inspecting and testing; ISO 17025-accredited
testing organization
Planning, development, and sales through outsourced contract production for toys,
playground equipment, bicycles, and furniture
Planning, production, and distribution of visual products, etc.
Oversight responsibilities for Toys and Hobby Business in the U.S. and Europe;sales company for toy-related products in the U.S.
Holding company in continental Europe; sales company for toys and other products
in France
Sales of toy-related products in the U.K.
Sales of toy-related products in Spain
Procurement, sales, importing, and exporting of toy-related products in Asia–Pacific(excluding Japan)
Planning and sales of toy-related products; planning, development, andservices of online games
Production of Power Rangers series robot toys, molds, etc.
Quality assurance and quality control operations; contracting for production
management, plant audits, etc., for cooperating manufacturers; planning and salesof toy-related products in China
Manufacturing of toys (principally capsule toys, figures, and lower-priced toys)
Manufacturing and production management of prizes for amusement facilities,
convenience stores, etc.

Network Entertainment Strategic Business Unit
BANDAI NAMCO Entertainment Inc.
BANDAI NAMCO Studios Inc.
BANDAI NAMCO Online Inc.

88

Planning, development, and distribution of network content; planning, development,
and sales of home video games and arcade games
Planning and development of network content, home video games, and arcade
games, etc.
Planning, development, and operation of Internet-based online games, othersoftware, and services

NAMCO LIMITED
Pleasure Cast Co., Ltd.
Hanayashiki Co., Ltd.
D3 PUBLISHER INC.
B.B.STUDIO Co., Ltd.
VIBE Inc.
BANDAI NAMCO Technica Inc.
BXD Inc.
BANDAI NAMCO Entertainment America Inc.
BANDAI NAMCO Entertainment Europe
S.A.S.
BANDAI NAMCO Amusement America Inc.
BANDAI NAMCO Amusement Europe Ltd.
BANDAI NAMCO (SHANGHAI) CO., LTD.
BANDAI NAMCO Studios Singapore Pte. Ltd.
NAMCO USA INC.
NAMCO UK LTD.
NAMCO ENTERPRISES ASIA LTD.
D3Publisher of America, Inc.

Planning and operation of amusement facilities
Planning and operation of amusement facilities
Planning and operation of Asakusa Hanayashiki amusement park
Planning, development, and sales of home video games; planning, development,
and distribution of network content
Planning and development of home video games, network content, and arcade games
Provision of content and products using various interactive media options,advertising, and promotion
After-sales service operations related to arcade game machines; stocking and salesof pre-owned arcade game machines and products from other companies
Development and operation of online games and distribution platforms utilizing
technologies centered on HTML5
Planning, development, and sales of home video games; planning, development,
and distribution of network content
Planning, development, and sales of home video games; planning, development, anddistribution of network content; holding company; shared services company
Sales of arcade games
Sales of arcade games
Planning, operation, and production of network content
Planning and development of home video games, arcade games, etc.
Planning and operation of amusement facilities
Planning and operation of amusement facilities
Planning and operation of amusement facilities
Planning, development, and distribution of network content

Visual and Music Production Strategic Business Unit
BANDAI VISUAL CO., LTD.
Lantis Co., Ltd.
Sunrise Inc.
SUNRISE MUSIC Publishing Co., Ltd.
BANDAI NAMCO Pictures Inc.
BANDAI NAMCO Rights Marketing Inc.
BANDAI NAMCO Live Creative Inc.

Grand-Slam Ltd.
Highway Star Inc.

Planning, production, and sales of visual content and visual packaged products
Planning, production, sales, and management, etc., of music masters andmusical works
Planning and production of animation; management; and administrationof copyrights
Production of music and planning and use of music and masters related toanimation of Sunrise and BANDAI NAMCO Pictures
Planning and production of animation; management and administration of
copyrights and other rights
On-demand delivery of content, such as animation
Planning and production of live performances and events; production of visual
products related to live performances and events; planning, production, and salesof goods, ticket sales, etc.
Production of live performances and events
Management of affiliated artists, production of music, and operation of fan clubs;
audio engineering operations

Affiliated Business Companies
BANDAI LOGIPAL INC.
LOGIPAL EXPRESS INC.
BANDAI NAMCO Business Arc Inc.
Artpresto Co., Ltd.
Anime Consortium Japan Inc.
Happinet Corporation*
Sotsu Co., Ltd.*
Italian Tomato Ltd.*International distribution, customs brokerage, amusement-related business,
product inspection, product manufacturing support, etc.
Truck freight, industrial waste collection and transportation, logistics management,
warehouse operations, vehicle maintenance, etc.
Work related to the BANDAI NAMCO Group’s general affairs, personnel, finance andaccounting, information systems, operational support, and visual product production
Planning, design, and printing (packages, catalogs, posters, cards); website production,
event planning, and administration
Distribution of animation, media business, and copyright businessDistribution of toys, visual and music products, video games,
and amusement products (Tokyo Stock Exchange, First Section)
Planning, production, and copyright business for TV animation programs; production
and agency operations in the sports entertainment area (JASDAQ)Management of restaurants; franchise operations; production, sales, and provisionof production guidance for pastries* Companies accounted for by the equity method

89

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