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

The BANDAI NAMCO Group develops entertainment-related products and services
in a wide range of fields, including toys, network content, home video games,
amusement machines, amusement facilities, and visual and music content.

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.

OUR VISION

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

CONTENTS

02

OUR GROWTH TRACK

04

THE BANDAI NAMCO GROUP—1 YEAR OF RESULTS

06

MAJOR IP IN GROUP PRODUCTS AND SERVICES

08

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

10 HE BANDAI NAMCO GROUP—TOUR VALUE CREATION PROCESS

12

 OARD OF DIRECTORS AND AUDIT &BSUPERVISORY BOARD MEMBERS

14

PRESIDENT’S MESSAGE

18

 DDRESSING THE SPREAD OF THE
A
COVID-19 INFECTION

20MESSAGE FROM THE CFO

22

 ESSAGES FROM THE PRESIDENTS OF
M
UNIT CORE COMPANIES

32

MID-TERM PLAN PROGRESS AND RESULTS

39

 PECIAL FEATURE: MAXIMIZING THE VALUE OFS
LONG-TERM, ESTABLISHED IPs

50

ESG SECIONMESSAGE FROM THE DIRECTOR IN CHARGE OF ESG /ROUNDTABLE DISCUSSION AMONG OUTSIDE DIRECTORS /CORPORATE GOVERNANCE / OFFICER SYSTEM / PERSONNELSTRATEGY / CSR INITIATIVES

78

FINANCIAL SECTION

120

OVERVIEW OF MAIN GROUP COMPANIES122CORPORATE DATAGROUP ORGANIZATION

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

About Integrated Report 2020
IR

CSR

In editing this report, we made reference to the International Integrated Reporting
Framework of the International Integrated Reporting Council (IIRC).
Forward-Looking Statements
The forward-looking statements in this report are based on the information available tomanagement as of August 2020 and include various risks and uncertainties. Accordingly,
actual results may differ materially from these projections for a variety of reasons. Major
factors that could influence actual results include changes in the BANDAI NAMCO Group’s
operating environment, market trends, and exchange rate fluctuations.

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

Notes:
1. Figures in this report have been rounded down.
2. F
 Y2020.3 represents the one-year period ended March 31, 2020.
3. Unless otherwise noted, figures in this report are as of August 2020.

1

OUR GROWTH TRACK
The BANDAI NAMCO Group was created in September 2005 through the management integration of BANDAI CO., LTD.,
and NAMCO LIMITED. After the integration, the Group moved quickly to leverage synergy effects by implementing a
range of internal measures. However, we were not able to respond adequately to changes in our markets and customers.
Our operational speed declined, and we did not effectively utilize the strengths of each Group company. As a result,our performance was sluggish. In response, in April 2010 we launched the Restart Plan with the objective of transforming ourselves into a speedy Group under the IP axis strategy. The Group worked together to maximize the sharedvalue of IP. Our performance recovered, and we set new record highs for net sales and operating profit in FY2019.3.
In FY2020.3, despite the influence of the spread of COVID-19 in the fourth quarter, we achieved the annual plans for

Restart!

both net sales and operating profit.

Launched
Launched thethe Restart
Restart Plan
Plan andand announced
announced thethe IP
IP axisaxis
strategy
strategy inin orderorder toto transform
transform ourselves
ourselves into
into aa speedy
speedy Group,Group,
improve
improve ourour profitability,
profitability, andand strengthen
strengthen ourour financial
financial standing.
standing.

Management
Management
Integration
Integration

450.8
450.8

Net
Net
Sales
Sales

459.1
459.1

487.2

460.4
460.4
426.3
426.3

454.2
454.2

(¥
(¥billion)
billion)

378.5
378.5

394.1
394.1

48.6

42.2
42.2

35.6
OperatingOperating 35.6
ProfitProfit

34.6
34.6

33.4
33.4

(¥
(¥billion)
billion)

22.3
22.3
For
ForthetheFiscal
FiscalYears
Years
Ended
EndedMarch
March31
31

16.3
16.3

1.8
1.8
2006
2006

2007
2007

2008
2008
Reduction
Reduction inin speed
speed
Unresponsive
Unresponsive toto operating
operatingenvironment
environment andand trends
trends2007.3–2009.3
2007.3–2009.3 Mid-term
Mid-term Plan
Plan

2

2009
2009

2010
2010

2011
2011

2012
2012

2013

Introduction
IntroductionofofRestart
RestartPlan
Plan

Transformation
into a speedyGroup2010.3–2012.3
2010.3–2012.3 Mid-term
Mid-term Plan
Plan

2013.3–2015.3

OUR GROWTH TRACK

Achieved
Achieved record-highrecord-highoperatingoperating profit
profit forfor three
three
consecutive
consecutive years.
years.

TowardToward thethe NEXTNEXT STAGE
STAGE
Registered
Registered record-highrecord-highnet
net sales
sales forfor sevenseven
consecutive
consecutive years.
years.

723.9
723.9
732.3
732.3

678.3
678.3
84.0
84.0
620.0
620.0
575.5
575.5

78.7
78.7

75.0
75.0

565.4
565.4
507.6
507.6
63.2
63.2
Transitioned
Transitioned fromfrom aa systemsystemofof threethree businessbusiness segments
segments totoaa system
system ofof five
five Units,
Units,
includingincluding thethe newly
newly establishedestablished
Real
Real Entertainment
Entertainment Unit
Unit andandIP
IP Creation
Creation Unit.
Unit.

56.3
56.3
49.6
49.6

44.6
44.6

2014
2014
Organizational changes
Delegation of authority
Personnel exchanges

Mid-term Plan

Reorganized
Reorganized ourourbusinessbusiness segments.
segments.
EstablishedEstablished thethe Network
Network
Entertainment
Entertainment andand Visual
Visual and
and
Music
Music Production
Production Units.
Units.

2015
2015
Adoption
Adoption of
of IP
IP
axis
axis strategy
strategy
byby thethe Group
Group

2016
2016

2017
2017

2018
2018

2019
2019

2020
2020

IP
IP axisaxis strategy:
strategy:
From
From adoption
adoption toto acceleration
acceleration
2016.3–2018.3
2016.3–2018.3 Mid-term
Mid-term Plan
Plan

2019.3–2019.3–2021.32021.3 Mid-term
Mid-term Plan
Plan
3

1 YEAR OF RESULTS

FY2020.3

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

Net Sales

Operating Profit¥¥

723.9 billion

78.7 billion

–1.1%

YoY

575.5

620.0

678.3

–6.3%

YoY

732.3 723.9

84.0
75.0

Operating
Profit49.6(¥ billion)

8.6

Overseas
Sales
Proportion 2016
(%)

20.5

11.5
10.2 11.1

10.9

Operating
ProfitMargin

20.0

18.7

78.7

63.2

(¥ billion)

Net Sales

22.4 20.6

Targeting growth over the
medium to long term, theof Results
BANDAI NAMCO Group
implemented initiatives tofurther advance the IP axis
strategy, which aims to maximize IP value.
In addition, we took steps to strengthen
regional operations and businesses with highgrowth potential, and worked to leverage ourcomprehensive strengths in areas around theworld through the ALL BANDAI NAMCO
concept, under which all Group businesses
work together.
In FY2020.3, the Group was affected* by
the spread of the novel coronavirus infection(COVID-19) in the fourth quarter. However,in the Toys and Hobby business, products forthe mature fan base were popular and results
were favorable. In addition, mainstay IP
products and services recorded stable resultsin each business.
Overview

(%)
2017

2018

2019

2020

2016

2017

2018

2019

2020

*A
 mount of influence calculated by adding up the obvious
factors, such as the closure of amusement facilities andthe cancellation of events: Net sales, approximately¥14.0 billion; operating profit, approximately ¥4.0 billion

Segment Sales Ratio
IP Creation

Breakdown of Operating Profit (Loss) by Segment
Other

2.5%

4.6%

Visual and Music
Production

6.1%

Toys and Hobby

RealEntertainment

Network
Entertainment

32.7%

11.8%

42.3%

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

Contributions to Net Sales byGeographic Region
Europe6.1%

Asia, excluding Japan

6.5%

Operating
Profit (Loss)

Operating Profit
MarginToys and Hobby

26.7 billion

10.5%

Network Entertainment

43.8 billion

13.4%

Real Entertainment(1.5) billion—

Visual and Music Production

8.0 billion

17.1%

IP Creation

5.7 billion

29.2%

Others

1.8 billion

5.2%

Return on Assets (ROA)Return on Equity (ROE)

13.1%

Japan

429.6

80.0%

454.6

317.3

540.4

11.2

348.7
13.3

14.7

448.3

15.5

13.1

(¥ billion)

7.4%

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

4

612.9 619.8

387.3

Total Net
AssetsAmericas

12.9%
Total
Assets

11.4

488.0
13.5

14.7

15.1

12.9

(¥ billion)

ROE

ROA

(%)

(%)

2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

1 YEAR OF RESULTS

Shareholders’ Equity Ratio

72.5%

429.3

Cash Dividends per Share

Basic Earnings per Share

¥

¥

132

–13

YoY

453.0

¥

394.1
325.0

71.3 71.5

145

123*2

357.6

Total
70.6
Shareholders’Equity262.39–26.01

YoY
132¥

288.40

(Yen)

72.5

70.0

Cash Dividends 82*1
per Share
40.8
(Yen)

(¥ billion)

262.39246.29201.0349.9 50.3

157.43

50.3

52
33.0

Shareholders’Equity Ratio

Total Payout
Ratio

(%)
2016

2017

2018

2019

(%)

2020

2016

2017

2018

2019

2020

2016

2017

2018

2020

2019

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

Debt/Equity Ratio*

0.01 times

Number of Female Managers*

147 people
6.1

ESG
InterestBearing Debt*1(¥ billion)

Debt/
Equity Ratio*2(times)

1.9

1.4
0.8

0.01
2016

2018

2019

18.1%

Number of Independent
Directors or Independent Audit &Supervisory Board Members

0.9

0.00 0.00 0.00

2017

Ratio of Female Managers to
Total Managers*

7 people

0.01
2020

Sales of IP* Products and Services (Group Total)¥¥

29.3 billion

31.2

Industrial Waste

1,442 t
CO2 Emissions

58,169 t-co

2

Game Content R&D Investment andCapital Investment

Mobile Suit Gundam series

KAMEN RIDER series
2020

9,052 people* Figures are for the five Unit core companies in FY2020.3.

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

2019

Number of Consolidated
Employees

billion

2019

2020

¥

¥

79.3 billion

78.1

billion81.5 80.4
71.0

DRAGON BALL series
2019

129.0 billion¥

NARUTO
2019

2020

134.9

¥

billion13.0¥

billion

2019

2020

¥

¥

34.9

billion

59.0

54.8

Game Content
R&D
Investment(¥ billion)

ONE PIECE

30.4 billion

15.8 billion

¥

54.6

2020

22.0

21.3 19.5

27.3

CapitalInvestment(¥ billion)

2016

2017

2018

2019

2020

* IP: Characters and other intellectual property

5

MAJOR IP IN GROUPPRODUCTS AND SERVICES
Annual number of IP utilized

300
Approx.

6

The BANDAI NAMCO Group utilizes approximately 300 IP per year in order to roll out
products and services. This section introduces examples of those IP.

Units Developing IP Products and Services
Toys and Hobby

Network Entertainment

Real Entertainment

Visual and Music Production

THE IDOLM@STER Series

IDOLiSH7

This IP was introduced in 2005.
Centered on idol production
game content for smartphones
and home video games, it has
earned popularity among a wide
range of fans, including both
men and women. We are rollingout a variety of products andservices, such as music CDs,
live events, animations, comics,
Web radio, and merchandise.

Since the launch of a game app
for smartphones in 2015, IDOLiSH7
has achieved a high level of
popularity, especially among
women. The BANDAI NAMCO
Group is rolling out a wide rangeof products and services, including
animations, live events, music CDs,
and goods. IDOLiSH7 reached its
fifth anniversary in 2020, and
the Group is further expanding
IDOLiSH7 IP development initiatives.

Ultraman Series

Mobile Suit Gundam Series

Since its launch in 1996, Ultraman
has earned the support of awide range of age groups,
extending to two or even three
generations. The BANDAI NAMCO
Group provides Ultraman products and services, such as toysand visual packaged products.

Since its launch in 1979, Mobile
Suit Gundam products have earned
support among a wide range ofage groups. Centered on visual
products, these include plastic
models, home video games,
network content, and amusement machines. In addition to
Japan, Mobile Suit Gundam
initiatives are being rolled out
around the world, including
appearances in Hollywood films.

KAMEN RIDER Series

Super Sentai Series

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

Super Sentai has been popularamong boys for more than
40 years, and has also earned
strong support in Asia. The
BANDAI NAMCO Group provides
a wide range of Super Sentai
products and services, centered
on toys.

IP Creation

PAC-MAN

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

In 2005, PAC-MAN was recognized by Guinness World
Records as the most successful
coin-operated amusement
machine. Today, 40 years after
its launch, this BANDAI NAMCO
Group original IP is still populararound the world.

Tamagotchi Series

PRETTY CURE! SeriesThis original IP has been supported for more than 20 years
since it was created as a portable digital nursing game.
Through a variety of products
and services, this has become
an established IP that is popularwith two generations, parents
and their children.

The PRETTY CURE! series has
been popular among girls formore than 15 years. The BANDAI
NAMCO Group provides a wide
range of PRETTY CURE! products
and services, centered on toys.

DRAGON BALL Series

Love Live! Series

Launched in 1984, DRAGONBALL comics and animations
have earned the support ofcustomers around the world formany years. 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, which was created froma project linking magazines,
visual products, and music, wasintroduced in 2010. In addition
to magazine pages and visualand music packaged products,
live events are also highly popular.

BORUTO / NARUTOONE PIECE

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

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

MAJOR IP IN GROUP PRODUCTS AND SERVICES

Anpanman

7

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

Maximizing IP Value
The optimal

outletThe optimal

time

CONFECTIONERY
and FOODSTOYSNETWORKCONTENTHOME VIDEO
GAMES

CARDS

VIDEO ON
DEMAND(VOD)
CONTENT

PLASTICMODELS

MOVIES

VISUALand MUSIC
PACKAGENEW
DEVICESAMUSEMENT
MACHINES

Introducing products and services thatleverage the worldviews of IPs

mula

ted k

ent

m
vest
IP in

now

-how

Cultivation

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

8

regionLIVE ENTERTAINMENT

AMUSEMENTFACILITIESAccu

The optimal

Creation

Co-creation

FY2020.3 Results

Toys and Hobby Unit

Core Company: BANDAI CO., LTD.

Network Entertainment Unit

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

Real Entertainment Unit

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

Net Sales

Operating Profit¥¥

Net Sales

Operating Profit¥¥

Net Sales

Operating Loss

253.7 billion

328.0 billion

91.7 billion¥¥

26.7 billion

43.8 billion

THE IP AXIS STRATEGY

Planning, development, production, and sales of toys, capsule toys, cards,
confectionery and foods, apparel, sundries, plastic models, prizes,
stationery, and other products(1.5) billion

facilities, etc.

Visual and Music Production Unit
Core Company: BANDAI NAMCO Arts Inc.

Planning, production, and sales of visual and music content and visual andmusic packaged software; and conducting live entertainment operations

IP Creation Unit

Net Sales

46.9 billion¥

Net Sales

Core Company: SUNRISE INC.
Planning and production of animations; management and administration of
copyrights and other rights; production of music related to animations andplanning and use of music and masters related to animations

19.7 billion¥

Operating Profit

8.0 billion¥

Operating Profit

5.7 billion¥

Examples of IP Creation Initiatives

IP Strategy
Division

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

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

Internal andExternal
Idea Proposal
Systems• Employee-Participation Idea Submission Systems
At the Unit and company levels, we have established employee-participation idea submission systems
related to products, services, business models, etc.
• BANDAI NAMCO Accelerator
The BANDAI NAMCO Accelerator supports the operations of start-up companies, integrates Group
resources, and rolls out innovative businesses and IP.
• DREAM SUPPORT PROJECTThe DREAM SUPPORT PROJECT supports the dreams of next-generation creators. In addition to funding, theproject provides educational support through workshops and a system for mentoring by Group employees.

9THE BANDAI NAMCO GROUP —OUR VALUE CREATION PROCESSTHE BANDAI NAMCO GROUP’SOPERATING ENVIRONMENT AND
ISSUES FACING THE GROUP

Our Vision

The Leading Innovator in Global Entertainme

Changes in customer lifestyles andpreferences

INPUT

BUSINESS MODEL (IP axis strategy)(Key management resources)

Intensifying
competition in
global markets

Diverse humanresources

Number of consolidated
employees:

9,052 people(FY2020.3)

Maximizing IP Value

Strategic investment
for IP creation:

Changes intechnology, such as
network adoption

Corporate
culture of taking ¥25.0 billion
over three years
on challenges(FY2019.3 to FY2021.3)

Planning anddevelopment
capabilities
Platform
diversification
Technical
capabilities

Annual number ofIP utilized:

Approx. 300

Introducing products
and services thatleverage theworldviews of IPs

Game content R&D
investment:¥80.4 billion(FY2020.3)

Trend toward fewer
children in Japan

Sales andmarketingcapabilities

Advertising expenses:¥44.3 billion(FY2020.3)

Open partnerships
Securing humanresources

Addressing
climate change andenvironmental
changeCOMPLIANCE

CSR MANAGEMENTCORPORATE GOVERNANCE

Threats such as
disasters,
epidemics, andterrorism

10

Our Mission Statement

Dreams, Fun and Inspiration

In response to the issues that we face, the BANDAI NAMCO Group is combining original management
resources to implement the global roll out of the IP axis strategy, which is the Group's greatest strengthand business model, and to provide products and services that leverage the appeal of IP. Moreover,through those products and services, we are striving to contribute to a sustainable society and aiming torealize sustained growth over the medium to long term. In these ways, the BANDAI NAMCO Group is

OUR VALUE CREATION PROCESS

ent

Leveraging IP to Foster Communication among People around the World

working to meet the expectations of its stakeholders. Through these initiatives, we will contribute to thecreation of a world in which all IP fans can communicate in a manner that transcends national borders andlanguages, and will increase our corporate value.

OUTCOMEVALUE CREATION

Contributing toa sustainable society
For further
information, please
see the ESG section
starting on page 50.

Sustained growthover the medium tolong term
Strengthening
the IP axis
strategy

Local communities

Customers
Increasing the
Corporate Value of the
BANDAI NAMCO Group

Creating a world in which all
IP fans can communicate inways that transcend thebarriers of national borders
and languages

Employees
Expandingbusiness on a
global basis

Shareholders

Partners

Creating newentertainment

Utilizing
diverse humanresources11

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS
As of June 22, 2020

President andExecutive

Representative
Director

Vice President andDirector

Mitsuaki Taguchi

Masaru Kawaguchi
President andRepresentative Director of
BANDAI CO., LTD.

12

Director

Director

Shuji Ohtsu

Yuji AsakoDirector (Part-time)

Director (Part-time)

Yasuo Miyakawa

Hitoshi Hagiwara

President andRepresentative Director of
BANDAI NAMCOEntertainment Inc.

President andRepresentative Director of
BANDAI NAMCO
Amusement Inc.

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS

Director (Part-time)

Director (Part-time)

Director (Outside)

Kazumi Kawashiro

Makoto Asanuma

Yuzuru Matsuda

President andRepresentative Director of
BANDAI NAMCO Arts Inc.

President andRepresentative Director of
SUNRISE INC.

Director (Outside)

Director (Outside)

Satoko Kuwabara Mikiharu Noma

Director (Outside)

Koichi Kawana

AUDIT & SUPERVISORY BOARD MEMBERS
Audit & Supervisory Board
Member (Full-time)

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

Audit & Supervisory Board
Member (Outside)

Audit & Supervisory Board
Member (Outside)

Masataka Nagaike

Toru Shinoda

Osamu Sudoh

Katsuhiko Kamijo

13

PRESIDENT’S MESSAGE

Going Forward, We Will Adapt to the New Era,
Draw Out the Appeal of IP with Original Concepts,
and Demonstrate a New Market Presence.
Mitsuaki Taguchi
President and Representative Director
BANDAI NAMCO Holdings Inc.

Influence of the COVID-19 InfectionFirst, I would like to express our condolences for those whohave passed away as a result of the COVID-19 infection andour sympathies for all of those who have been affected by
the spread of the infection.
The BANDAI NAMCO Group has done its utmost to
reduce the risk of infection for employees and their families,
customers, and suppliers, and we have made security andsafety our highest priority from an early stage. In addition,in accordance with our business continuity plan (BCP),
we have given directions to all Group companies around theworld, including directions for closing facilities, exercisingself-restraint in regard to events, and shifting to working
from home.
Moving forward, I believe that we will need to focus on
the status of the spread of the infection and to implement
measures from a long-term viewpoint. In facing this crisis,
the BANDAI NAMCO Group has renewed its determination
to fulfill its duties as a company. The crisis has resulted
in uncertainty, and in these circumstances people need
dreams and fun. And that is our mission — to provide
dreams, fun and inspiration to people around the world
through entertainment. We are hoping for an early end to
this crisis, and as a member of society the Company will
identify steps that we can take and leverage all of ourcapabilities to implement initiatives going forward.

14

Results in FY2020.3


Looking at our full-year results for FY2020.3, net sales
were ¥723.9 billion and operating profit was ¥78.7 billion.
Due to the perseverance of all of our employees, we wereonce again able to achieve our initial numerical plan for
the fiscal year. The operating profit margin was 10.9%
and return on equity (ROE) was 13.1%. Together with operating
profit, these figures exceeded the numerical plan for the
final year of the Mid-term Plan (FY2021.3). In particular,
both net sales and operating profit reached new record-highlevels up to the third quarter.
By business segment, in the Toys and Hobby business,
products for the mature fan base recorded favorable resultsaround the world and grew to approximately 40% of total
Toys and Hobby business sales. Since we consolidated thecategories of products for the mature fan base into a newcompany in FY2018.3, we have seen synergies in marketing,and there has been a favorable effect on each category.
This has led to increases in product quality.
In the Network Entertainment Business, mainstay IP
titles maintained stable popularity in network content.
In addition, in home video games, it was a period with asmall number of new title launches, but repeat sales ofexisting titles were firm. I believe that this is the result of
the effectiveness of development with a focus on quality
and of ongoing measures, such as events and updates.
On the other hand, each of our businesses was affectedin the fourth quarter, when the influence of COVID-19
became apparent. If we add up the obvious lost revenue
opportunities, such as the closure of facilities and thecancellation of live events, we think that there were negative
effects of approximately ¥14.0 billion on net sales and

PRESIDENT’S MESSAGE

Posted record-high results throughthe third quarter and achieved initial
numerical plan for the full year

approximately ¥4.0 billion on operating profit. In particular,
the Real Entertainment Unit was severely affected aroundthe world.
Looking at manufacturing in the fiscal year ending March
31, 2021, from May the operating status at cooperating
plants in Asia returned to nearly the previous level. However,in sales, there are regions that have not yet recovered
adequately. In addition to the closure of facilities, we also
anticipate an influence on the holding of large events andon the development schedules for games and for visual andmusic products. Based on the assumption that current
conditions will continue for the time being, we will continue
to implement a variety of measures from both real anddigital perspectives, including sales and marketing.

An Opportunity for Change during the
COVID-19 Crisis

Since I became president, I have continually emphasizedwithin the Group the importance of having a forward-looking
sense of urgency. A visible crisis has occurred, and we areapproaching our current circumstances as both a major
test and an opportunity to foster the CHANGE that will leadto the next growth stage.
At this time, when daily lifestyles are under a variety ofrestrictions, digitalization is accelerating and consumer
behavior is undergoing significant changes. Many consumers
have become aware of the convenience of having what theywant, when they want it, and only in the amount they want.
We must adapt rapidly to dramatic changes in lifestyles, values,
and preferences and give shape to the vision of the Mid-term
Plan, CHANGE for the NEXT. Moving in tandem with the trends
in society and giving concrete form to new values is thefoundation of entertainment. We are addressing the current
circumstances as an opportunity to link to CHANGE so that
we catch up to and move a half step ahead of the times.

We are approaching our current
circumstances as both a major test andan opportunity to foster the CHANGE
that will lead to the next growth stage.

15

PRESIDENT’S MESSAGE

Changing the Start of the Next Mid-term
Plan and Formulating Strategies with a
Focus on the Changes of the Times

We had previously intended to start the next Mid-term Planfrom April 2021, but we decided to change the start date to
April 2022. The influence of the spread of COVID-19 has
caused major changes in people’s lifestyles and values,
and we expect to see a new era that is entirely different.
Accordingly, we decided that it would be necessary for the
next Mid-term Plan to incorporate a way of competing in
a new era that leverages our distinctive characteristics.
In the current circumstances, which are marked by a large
number of uncertain elements, rather than hurrying tocomplete the next Mid-term Plan, we think that we should
formulate it with careful attention to the changes of thetimes. In this way, we have positioned the period fromFY2021.3 to FY2022.3 as a time for formulating the next
Mid-term Plan and establishing a variety of foundations
for the implementation of these strategies.
In this way, the schedule of the next Mid-term Plan willchange, but there will be no change to our major directionof aiming for sustained growth over the medium to longterm and strengthening the IP axis strategy, our strength,
on a global basis. With the business environment undergoingsignificant change, we will need to adapt to the changes of
the times and further enhance our competitiveness inglobal markets. Accordingly, under the ALL BANDAI NAMCO
concept, we will increase the unity of our businesses aroundthe world and implement close collaboration. In advance ofthe next Mid-term Plan, from April 2021 we will reorganize
certain Units. The Toys and Hobby Unit and the Network
Entertainment Unit will be combined into a single unit, andBANDAI NAMCO Group Organization (From April 2021)

the Visual and Music Production Unit and the IP Creation
Unit will also be combined into a single unit.
Through the integration of the Toys and Hobby Unit andthe Network Entertainment Unit, we will further expand
collaboration between these operations as they mutuallyleverage their respective wide-ranging business fields
with the objective of maximizing IP value. We will thenadvance the integration of the tangible goods and digitalbusinesses, strengthen our digital initiatives, and create
entertainment that addresses the new values of customers.
In this way, we will further increase our competitivenessin global markets.
Furthermore, through the integration of the Visual andMusic Production Unit and the IP Creation Unit, we willconsolidate production studios and production functions
and work to create even higher quality IP. Moving forward,
we will work aggressively not only within the Units but
also through alliances with other businesses and external
partners. We will take steps to strengthen IP creation froma variety of directions. Moreover, we will also establish a
new content outlet strategy in addition to live events andonline distribution.
We will implement this reorganization of the Units inadvance of the next Mid-term Plan, and accordingly thenext Mid-term Plan will be considered on the basis of the
new Units, into which we will concentrate know-how
and resources. We will strive to formulate strategies andmeasures that are more realizable. Furthermore, we
expect that the integration of different Units will activate
the exchange of know-how and personnel, and foster
powerful synergies. I would like employees to approachchange as an opportunity for growth and to make full,mutual use of their respective know-how.

Schedule for the Next Mid-term Plan
2019

New Unit
Toys and Hobby Unit
Network Entertainment Unit

2020

2021

2022

2023

Current
Mid-term Plan

Next
Mid-term Plan

(FY2019.3 – FY2021.3)(FY2023.3 –)Real Entertainment Unit

New Unit
Visual and Music Production Unit
IP Creation Unit

Affiliated Business Companies

16

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

Our Role and the Creationof Social Value

Adapting to a New Era, Continuing tobe the Choice of Customers

A number of large IT companies are rolling out aggressive
strategies to capture demand associated with the worldwide trend toward people staying at home. It is important
to note that these companies are competing to achievedifferentiation based on IP and content. This shows theextremely high level of importance that people place onentertainment. Even in an era of digital innovation, entertainment is an essential element, and it is IP that is at thecenter of entertainment.
One of the strengths that demonstrates the originalityof the BANDAI NAMCO Group is the placement of diverse
Japanese IP at the core of business operations. Japanese
animations have built a world of diverse expression thathas no equal anywhere else. This world includes a large
number of products that address the complexity of people’s
feelings, from major titles that anyone can enjoy to minor
titles that are new and experimental. Our role is to arrangethat appeal in the optimal format for people’s lifestyles,
such as toys, games, facilities, visual products, music, andlive events. In this way, we will strive to shine a brighter
spotlight on the appeal of the IP that we provide to customers
around the world. This is our unique competitive advantage.
With the strongest curiosity and the keenest enthusiasm,
the BANDAI NAMCO Group is devoted to drawing out theworldview of IP. Moving forward, I think that we should
continue to work with commitment and address IP in astraightforward, sincere manner.
The social value that we create involves building foundations that facilitate communication among people aroundthe world through IP. Our products and services can help
communities of fans to develop in regions around theworld, and then people with different living circumstancesand cultures can share common venues and values, centeredon IP. I think that we should continue to boldly take on thechallenge of realizing this type of world.

In an uncertain era, we must move now to accelerate
reforms and demonstrate our presence around the world.
To that end, we will need to adapt to the changes of thetimes. To adapt to a new era and to be the choice of customers,
it is important that we continue to take on challenges
without limiting ourselves to previous ways of doing things.
The diversity of our human resources will be essential tothe achievement of this objective. Innovation is created byaccepting a variety of ideas and using them as catalysts.
The words “same spirit, different talents” express ourapproach to the human resources that we are looking for.
As expressed by these words, it is essential to emphasize
human resources who offer abundant diversity.
Looking at BANDAI and NAMCO before the management
integration, both companies had the founding philosophy
that in any era it is essential to have a presence that meetsthe expectations of customers and that only those companies
that address change can survive. The thoughts of our predecessors are a part of our corporate DNA. We will takea forward-looking approach to opportunities in the world
during the COVID-19 crisis, and in accordance with theconcept that now is the time for the BANDAI NAMCO Group,
we will compete in a new way that leverages our distinctive
strengths. In this way, together with fans around the world,
we will strive to open up a new era in entertainment.
I would like to ask our shareholders, investors, and otherstakeholders for their ongoing support of the BANDAI
NAMCO Group in the years ahead.



PRESIDENT’S MESSAGE

September 2020

President and Representative Director
BANDAI NAMCO Holdings Inc.

The social value that we create
involves building foundations thatfacilitate communication amongpeople around the world through IP.

17

ADDRESSING THE SPREAD OF THE COVID-19 INFECTION

Basic Response Policy 
Due to the effect of COVID-19, unprecedented countermeasures are unavoidable throughout the world. In this setting, thehighest priority of everyone at the BANDAI NAMCO Group is to avoid getting infected and to avoid infecting anyone else.
We have positioned the protection of employees and their families as a priority issue, and are implementing a variety of
initiatives. (For further information about measures for employees, please see page 69.) In addition, in our business operations
we are implementing a range of measures to secure the safety of customers.

Systematic Measures Based On Business Continuity Plan (BCP) andBusiness Continuity Management (BCM) 
In accordance with our BCP and BCM, we are holding regular meetings of the Crisis Management Committee, with a special
focus on preventing the spread of COVID-19. Participants include the Company’s directors and other officers and managers
from Group companies, as well as executives from overseas bases. At these meetings, we are sharing information anddeliberating on policies.
To start, from January 2020 we began to create guidelines summarizing our response as a Group and to communicate
those guidelines throughout the Group. Furthermore, we implemented measures to prevent the infection of employees
as our top priority, and in business operations we worked to rapidly make decisions and implement initiatives, such as
cancellation of events and the closure of amusement facilities.
However, the current BCP and BCM were formulated following the Great East Japan Earthquake, and their content iscentered on natural disasters. We believe that there is room for improvement in our management of other risks, such as
infections. In the future, we plan to improve and update the content in order to facilitate the full comprehension of various
business risks.

Implementing Emergency Social Support 
As a member of society, the Group is committed to contributing to social initiatives for the prevention of the spread of COVID-19
around the world.

Groupwide Measures• Donated ¥100 million to the COVID-19 Solidarity Response Fund for the World Health Organization (WHO)
Note: D onations to this fund, including those from other countries and other companies, have totaled more than $200 million, and $139 million has already been disbursed.
Of this amount, $99 million was disbursed to the WHO, $20 million to the United Nations World Food Programme (WFP), $10 million to UNICEF, and $10 million to the
Coalition for Epidemic Preparedness Innovations (CEPI). These institutions are using these funds for the measures that they are implementing (as of May 31, 2020).

Major Measures by Group Companies• Toys and Hobby Unit: SEEDS CO., LTD., has made masks to prevent droplet infection and has donated them to medical institutions.
•N etwork Entertainment Unit: BANDAI NAMCO Entertainment Inc. has provided PAC-MAN Championship Edition 2, a home
video game, for free on a limited-time basis.
• Visual and Music Production Unit: By donating to a fund established by an industry organization, BANDAI NAMCO Arts Inc.
is supporting business people and specialist staff related to live music entertainment, a field in which activities have had
to be suspended or cancelled.
• I P Creation Unit: SUNRISE INC. distributed free of charge a poster promoting hand washing that features Aqours, aschool idol group that appears in Love Live! Sunshine!! (in collaboration with the Ministry of Health, Labour and Welfare).
In addition, we are providing social support through the use of Group resources, such as offering free online distributionof exercise videos that use IP to enable children to enjoy exercise even when they are indoors.

18

Influence of COVID-19 on Businesses 
The Company assumes that the continued spread of COVID-19 in countries around the world could have the following effects
on business operations.

Major Effects by Unit if the Spread of COVID-19 Continues (FY2021.3)

All Units

Influence on events (postponement, cancellation) and on related promotions, etc.,
in Japan and overseas
Influence on production at in-house plants and cooperating plants

Toys and Hobby

Influence of store closures and distribution restrictions
Influence on inbound demand in Japan
Influence on sales of prizes, digital cards, etc., due to amusement facility closures

Network Entertainment

Influence on development and operation of home video games and network content

ADDRESSING THE SPREAD OF THE COVID-19 INFECTION

Influence on consumption due to store closures, etc.

Influence of store closures
Amusement facility closures in Japan and overseas

Real Entertainment

Influence on sales for amusement machines accompanying closures ofamusement facilities
Live event postponement or cancellation

Visual and Music Production

Influence on visual and music production schedules
Influence on theatrical release and TV broadcast schedules
Influence on packaged product sales

IP Creation

Influence on visual and music production schedules
Influence on theatrical release and TV broadcast schedules

Future Measures 
The Group will continue to give the highest priority to the safety of its various stakeholders, including employees, theirfamilies, and customers. To prevent the spread of COVID-19, we will continue to implement thorough hygiene management,
to introduce work systems and administer operations in accordance with the requests of national and local governments
in countries and regions, and to take other measures. In addition, in business operations, we will continue to collectinformation and adapt to the circumstances in order to minimize the effect.
In the implementation of these initiatives, the Crisis Management Committee will continue to regularly discuss policies
and Group companies will promptly advance initiatives.

19

MESSAGE FROM THE CFO

Influence of COVID-19


The spread of COVID-19 has caused significant harmaround the world. In the fourth quarter of FY2020.3, theBANDAI NAMCO Group was affected by the closure ofamusement facilities and the cancellation of live events inJapan, as well as by the closure of retail stores and delays
and suspended operations at production lines overseas.
These factors had an adverse influence of approximately¥14.0 billion on our net sales and approximately ¥4.0 billion
on operating profit. Nonetheless, our results were favorable
through the third quarter, and accordingly we were able
to achieve the second highest level of operating profit
in our history.
We expect the influence of COVID-19 to continue in thecurrent fiscal year, which will end on March 31, 2021.
The closure of amusement facilities and the cancellation oflive events will have an effect. Furthermore, the closure of
retail stores is resulting in lost opportunities for businesses
that involve the sale of goods, even though the businessitself is able to continue operations. In addition, the production,

opening, and sales schedules of game titles as wellas music and visual products are also being affected.
Furthermore, there are limits on promotional activities inan environment marked by lockdown measures and selfrestraint. In August 2020, when we announced our results forthe first quarter, we released full-year forecasts of ¥650.0
billion for net sales and ¥50.0 billion for operating profit.
These figures reflect these effects of COVID-19, trends in themarket environment, results in the first quarter, and future
product and service plans.

Further Strengthening Our Financial
Position

Looking at cash and net assets, the Group has maintained
a stable financial position, and we do not believe that thesecircumstances will immediately have a major financial
influence for the Group. However, future trends are uncertain,
and accordingly we are implementing the necessary
countermeasures while taking into consideration theGoing Forward,
We Will Work to
Further Strengthen
Our Financial Position to
Facilitate Responses to
Unforeseen Situations.
Shuji Ohtsu
Director and Division General Manager of theGroup Administrative Headquarters
BANDAI NAMCO Holdings Inc.

20

MESSAGE FROM THE CFO

possibility that this state of affairs might continue. From thefourth quarter of FY2020.3, we have already held discussions
with multiple financial institutions regarding increases to ourloan limits, and we have already completed new contracts
or changed contract terms. With consideration for thevolatility that originates from the distinctive characteristics
of our businesses, we are doing our utmost to prepare for
unforeseen circumstances. In addition, if the partner companies that support the Group face financial problems, wewill consider providing the necessary support.
Currently, we have almost no borrowings from external
institutions, but this is not because we are following a passive approach to borrowing. Rather, we have had multiple
financing frameworks in place for some time. We can utilize
these frameworks in accordance with circumstances, suchas for a large-scale investment project. Our generalprinciple is that funds that can be raised within the Groupwill be used internally. Accordingly, given the current
circumstances, we are moving forward with a shift from acash management system centered on principal companies
to a centralized Group system.
Looking at our standards for making decisions about
financing, the main factor is compatibility with the IP axis
strategy. We have no intention of implementing M&A transactions with the sole objective of increasing our operational
scale. We will consider M&A or capital participation initiatives
as one option when they are determined to be necessary toadvance the IP axis strategy, such as to deepen collaboration
with partners that have promising IP.
Moreover, the development and acquisition of technology
is another important investment objective. I also serve as the
director in charge of information. Technologies related todigital transformation can contribute to the developmentof new businesses and improvement in management
decision-making. In addition, I think that these technologies
will become an important pillar supporting the Group, suchas through the use of decentralized (distributed) data.
I also believe that it will be indispensable to invest in thehuman resources who support these technologies.

The acquisition of treasury shares is one effective meansof providing a return. We believe that in implementing theseacquisitions, careful consideration is necessary whileconsidering such matters as social and economic circumstances. In any case, there is no change to our basic stanceof emphasizing the total payout ratio and providing a stable
return of profits to shareholders by working to improvebusiness performance.
In 2019, our stock was included in the Nikkei 225 and the
TOPIX 100. We will once again do our utmost for the capital
markets, and moving forward we will continue working todisclose accurate financial information in a timely manner.
In addition, every year we review whether or not to continue
cross-shareholdings. Through these initiatives, to thegreatest extent possible, we strive to provide a wide range
of information from a neutral viewpoint and to deepen theunderstanding of the BANDAI NAMCO Group.
We hope that our shareholders have high expectations
for the initiatives of the Group as we aim to be the Leading
Innovator in Global Entertainment and provide “Dreams,
Fun and Inspiration.”
September 2020

Cash Dividends per Share and Total Payout Ratio
145

Disclosing Accurate Financial
Information in a Timely Manner

132

123



Our basic policy for shareholder return calls for both stabledividends over the long term and an enhanced emphasis on
cost of capital and ROE. Specifically, ‍our basic policy is totarget a total payout ratio of 50% or more based on stabledividend payments of 2% of dividends on equity (DOE).
In accordance with this policy, for FY2020.3 we paid annual
dividends of ¥132 per share, which included the base dividendof ¥40 per share and a performance-based dividend of¥92 per share.

82

52
Cash Dividends
per Share(Yen)
Total Payout Ratio
(%)

33.0

2016

49.9

50.3

2018

2019

50.3

40.8

2017

2020

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

21

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIES

Toys and Hobby
MID-TERM VISION

Break Out of the Box. Wow the World!

In FY2020.3, the second year of the Mid-term Plan, products for themature fan base registered favorable results around the world, andthese products accounted for approximately 40% of the Toys and Hobby
Unit’s sales. Furthermore, established IP toys and toy-related products
maintained stable popularity in Japan, and the Toys and Hobby Unit
achieved record-high sales and operating profit for the second
consecutive year. In the fourth quarter, due to the influence of the
spread of COVID-19, there were delays in overseas production at ourown plants as well as at cooperating plants. In addition, in Europe, theAmericas, and other regions, operations were affected by the closure of
toy retail stores and distribution restrictions. In FY2021.3, we expect acontinued effect on product sales due to the closure of toy retail stores
and amusement facilities around the world.
In FY2021.3, I think that the most important point will be theexpansion of our overseas development initiatives. These will include
investment and new challenges in China and North America, which arepriority areas. In China, we will aggressively roll out products utilizing
IP from Japan and take steps to enhance the recognition of Mobile Suit
Gundam. In addition, our joint venture with Shueisha Inc., which wasestablished in 2019, will commence full-scale operations. In North
America, we will expand the IP that we roll out, enhance the
e-commerce system, and bolster sales and marketing of products forthe mature fan base.
With Gundam plastic models, which have reached their 40th
anniversary, we will launch strategic products, implement large-scale
promotions, and move ahead with a variety of collaborations, such as
media mix initiatives with visual products. Moreover, in preparation forgrowth in demand overseas, we will expand facilities at the production
plant in Japan.
The Toys and Hobby Unit will strive to address new trends in people’s
daily lives and implement manufacturing. We will aim for the next stage
as we strive to amaze customers around the world.

Masaru Kawaguchi
Executive Vice President and Director
BANDAI NAMCO Holdings Inc.
President and Representative Director of
BANDAI CO., LTD.

22

EXAMPLE OF A TOYS AND HOBBY UNIT BUSINESS MODEL

Customers
Promotion androlling out media

Stores / e-commerce

Media

Provision of products and services
Sponsorship of programand promotion

Toys and Hobby
Unit

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIESProvision of products and services
TV
MoviesPublishing
Internet
Eventsetc.
IP usageapproval

Merchandisingpermission

Rights holders

MAIN STRATEGIESFY2020.3 RESULTS AND RELATED DATA	Create, nurture, and obtain new IPs

Sales of IP Products and Services (Toys and Hobby Business in Japan)	Positioning and business growth

Anpanman	Break into the Chinese market

¥	Expand new business domains
	Strengthen functions to maximize
business

 250.0
 26.0

Segment Sales ¥Segment Profit¥

billion35.7

billion ¥

Ultraman series¥
FY2021.3 NUMERICAL TARGETS*

9.4

Mobile Suit Gundam series

4.3

KAMEN RIDER series

28.5

¥

billion ¥Super Sentai series

billion ¥

6.0

20.7

8.3

billionPokémonbillion ¥

DRAGON BALL series

billion ¥

PRETTY CURE! series

6.6billionONE PIECE

billion ¥

7.9

billionbillion* Results forecasts are as of August 2020

23

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIESNetwork Entertainment
MID-TERM VISION“Transnational Company”
Creating Value for Consumers
In FY2020.3, the second year of the Mid-term Plan, major network
content titles continued to secure stable popularity. In home video
games, in a period with a small number of major title launches, unit
sales of new titles surpassed the planned level. Also, the Network
Entertainment Unit's sustained approaches to customers took effect.
Repeat sales were favorable, and the download sales ratio increased.
Unit results did not reach the previous fiscal year’s level, but we willcontinue to develop high-quality titles and to implement sustained
approaches to customers.
In the fourth quarter, the influence of the spread of COVID-19 wasseen in the closure of retail stores overseas as well as in the postpone­
ment and cancellation of large-scale events in regard to promotional
activities. In FY2021.3, we anticipate an influence on the developmentof certain titles and on operational schedules.
We need to continually think about what is needed from thecustomer’s point of view, and to continue to create new products
and services that maximize the appeal of IP. In addition to productmarketing, we must also communicate the appeal of IP throughout theworld, increase value, and enhance recognition. Moreover, we will alsoneed to achieve growth in businesses other than traditional games, andto step up the pace at which we take on challenges. Going forward, we
will pursue growth by bolstering our development system to support
success in world markets, strengthening marketing, and continually
taking on the challenges of new businesses on a Unit-wide basis.
The Network Entertainment Unit will continue to take on thechallenge of creating customer-focused products and services, witha strong conviction that we can achieve our aims. In this way, we will
strive to enhance our presence around the world.

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

24

EXAMPLE OF A NETWORK ENTERTAINMENT UNIT BUSINESS MODEL

Customers
Promotion androlling out media

Game content

TV
MoviesPublishing
Internet
Eventsetc.

Media
Platforms

Download content
Hold events

Collaboration

Development partners

Game content

Network
Entertainment
Unit

MAIN STRATEGIES

Network content¥

FY2021.3 NUMERICAL TARGETS*¥

Overseas sales ratio

32%billionbillionHome video games

billion99.0¥

billionHome video games

Network content

Segment Profit

Rights holders

Sales by Major Category

200.9	Continued transformation into a“transnational company”

 305.0
 38.0IP usageapproval

Promotion androlling out media

FY2020.3 RESULTS AND RELATED DATA	Shift to a customer-centric businessmindsetSegment Sales ¥Promotion androlling out media

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIES

Download content
Hold events

Unit sales of home video games

24,584 thousand
units

Full package download sales ratio

52%* Results forecasts are as of August 2020

25

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIESReal Entertainment
MID-TERM VISIONWe Create “Entertainment Experience Hereand Now” Worldwide
In FY2020.3, the second year of the Mid-term Plan, our results weresignificantly affected by challenging conditions. Through the third quarter,
results at existing facilities in Japan were favorable. However, in the
fourth quarter, amusement facilities around the world were closed dueto the influence of the spread of COVID-19, and as a result sales in theamusement facility business declined. Moreover, in amusement machines
there were delays in the launch of new products, and we did not achieve
our planned level of sales. As a result, sales were down year on year.
The operating environment in the amusement facility business willremain uncertain in FY2021.3, and accordingly there is also a risk that
amusement machine demand will decline. In consideration of this market
environment, in order to strengthen our financial position, in the fourth
quarter of FY2020.3 we recorded a valuation loss of approximately ¥3.0
billion on amusement machine work in process. Furthermore, certain
amusement facilities are facing especially difficult conditions, and werecorded an impairment loss of approximately ¥3.0 billion on thosefacilities’ fixed assets, which was recorded under extraordinary losses.
There is no change to the fact that the Real Entertainment Unit plays
an important role in advancing the IP axis strategy through its points ofdirect customer contact. In FY2021.3, we will reevaluate amusement
facility development initiatives and our amusement machine development
system, and will work to build a robust structure that can accommodatechange. On this basis, the Unit will approach the current year as a period
for connecting to the future, as we aim for growth over the medium tolong term in the field of real entertainment, which integrates amusement
machines and facilities. With regard to “building a real platform,” which
is a main strategy, we will aim to create new value by linking venues,
people, and content to our customer base network.
The operating environment is uncertain, but nonetheless everyone in
the Real Entertainment Unit will work together to build a foundation forgrowth over the medium to long term.

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

26

EXAMPLE OF A REAL ENTERTAINMENT UNIT BUSINESS MODEL
Provision of
products andservices

Directly operated facilities

Customers

Facilities operated

Amusement machine development
Revenue-sharing
facilities

RealEntertainment
Unit

Sales / New versions

by other companies

Collaboration

IP usage approval

Production partners

Rights holders

MAIN STRATEGIESFY2020.3 RESULTS AND RELATED DATA
Sales by Major Category	Building a real platform	Leveraging the distinctive strengthsof the BANDAI NAMCO Group

Amusement machines

27.1

¥

billionAmusement facilities

FY2021.3 NUMERICAL TARGETS* 70.0 -12.0¥

Segment Sales
Segment Loss¥

* Results forecasts are as of August 2020

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIESProvision of products
and services

¥

64.7

billionNumber of Amusement Facilities(Total of Japan and Overseas)
Directly managed facilities

310 facilities

Revenue-sharing facilities*

1,284 facilities

Other

4 facilities

Totalbillionbillion1,598 facilities* Revenue-sharing facilities: Revenues from theoperation of amusement machines are shared.

27

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

No. 1 Group in Visual, Music, and LiveIn FY2020.3, the second year of the Mid-term Plan, the Visual and Music
Production Unit had favorable results with production initiatives basedon collaboration among visual, music, and live events, centered on
mainstay IP. However, sales were affected by a change in the productmix from FY2019.3, when multiple high-value-added packaged products
were sold. In the fourth quarter, due to the influence of the spread of
COVID-19, live events were affected by cancellation and postponement.
However, the live events that had been held up to that point had donewell, and the effect on results was limited. In FY2021.3, we expect
cancellation and postponement for live events as well as an influenceon visual and music production schedules and opening and package
sales schedules.
In accordance with “strengthen capacity for creating hit IPs,” which
is one of our main strategies, the Visual and Music Production Unit
has implemented a variety of initiatives. These include changing
our organizational structure, implementing significant delegationof authority, investing in production studios, and entering businessalliances. We are starting to see results from these initiatives, such as
the acceleration of IP creation and the discovery and nurturing of new
artists. In addition, in the live event business, in response to changes inthe environment, we will not only implement online live events but also
take on the challenge of new types of live events and work to build thevirtual live event business. Through these types of initiatives, we will
work to further expand our base of fans.
In FY2021.3, the circumstances will be challenging, but I haveconfidence in the strengths that we have accumulated to date, andI believe that we will see results with steady implementation. Goingforward, the Visual and Music Production Unit will focus on what it canachieve during these circumstances, and we will continue to take on
new challenges to link to the future.

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

28

EXAMPLE OF A VISUAL AND MUSIC PRODUCTION UNIT BUSINESS MODEL
Customers
Provision of products and services

Music

Coordination

Coordination

Packaged productsVideo on demand (VOD)
Goods
Music publishingetc.

Content (IP, etc.)
Artists
Creators

Coordination

Visual Products
Packaged productsVideo on demand (VOD)
Goods
etc.

Collaboration

Other companies

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIESManagement
Artist development
Operation of fan clubs
etc.

Lives
Planning and operation
Ticket sales
Goods
etc.

Coordination

Visual andMusic Production
Unit

MAIN STRATEGIESFY2020.3 RESULTS AND RELATED DATAStrengthen capacity for creating hit IPs
 mpower integrated IP productionE
focused on visual products, music, andlive performancePromote IP use with a global vision

FY2021.3 NUMERICAL TARGETS*

Segment Sales 25.0 0.5

Segment Profit¥¥* Results forecasts are as of August 2020

billionVisual and Music Production Unit:
Number of Copyrighted Products(As of 2020.3)

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

1,116
4,224

Number of performances*1

753

times

products
hours

Number of musical works
BANDAI NAMCO Arts Inc.
Number of works withmaster license recordings

Approx.

43,000

Number of works publishedbillionNumber of Lives Held

Approx.

23,000* Number of performances held by
BANDAI NAMCO Live Creative Inc.

29

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

Evolving from an Animation Production
Company to IP Development
In FY2020.3, the second year of the Mid-term Plan, the IP Creation
Unit released new visual products, including TV animations and films
based on the Mobile Suit Gundam series, which has reached its 40th
anniversary. We conducted a variety of information provision activities,
and these products were popular. In addition, to strengthen IP creation,
we reinforced the animation production system and advanced
Groupwide projects. As a result, net sales were about the same as in
the previous fiscal year, while operating profit increased due to changes
in the product mix. In the fourth quarter, due to the influence of the
spread of COVID-19, events were affected by cancellation and postpone­
ment, but the influence on results was limited. However, in FY2021.3
we are expecting an effect on visual and music production schedules aswell as theatrical release and TV broadcast schedules.
In FY2021.3, we will leverage the recognition of Gundam around theworld. In addition, we will work to strengthen development initiatives
for the Love Live! series. Based on the platforms that we have built toimprove our creativity in the creation of IP, which is our main strategy,
we will accelerate IP creation. We believe that the best approach to IP
creation is to focus on content. In other words, the best approach is toimplement manufacturing with a thorough commitment to productquality. Going forward, the IP Creation Unit will communicate thatapproach through our products and link it to the creation of products
and IP that delight customers around the world.
Without limiting ourselves to animations, we will continue to take on
the challenge of IP creation, using various modes of expression in linewith the needs of the times and the business environment. We will
create 1 from 0, in other words, create something from “thin air,” andthen, through collaboration with Group products and services, increase
the value of that 1 by 100 or even 1,000 times. In this way, we will strive
to maximize IP value.

Makoto Asanuma
Director (Part-time)
BANDAI NAMCO Holdings Inc.
President and Representative Director of
SUNRISE INC.

30

EXAMPLE OF AN IP CREATION UNIT BUSINESS MODEL

Customers

Provision of products

Media

Sales of products
IP usage approval

Other companies

Promotion androlling out media

TV
MoviesPublishing
Internet
Eventsetc.

Provision of
products andservices

Promotion androlling out media

IP Creation Unit

Coordination

MESSAGES FROM THE PRESIDENTS OF UNIT CORE COMPANIESProvision of products
and services

Promotion androlling out media

Other Units

Collaboration

BANDAI NAMCO
Group

Creators / Production partners

MAIN STRATEGIESFY2020.3 RESULTS AND RELATED DATA
Number of Copyrighted ProductsImproving creativity(As of 2020.3)

Improving communication

Number of copyrighted products /Total number of hours

Improving branding

SUNRISE INC. and BANDAI NAMCO Pictures INC.

337
2,742

products

FY2021.3 NUMERICAL TARGETS*

Segment Sales 30.0 4.0

Segment Profit

¥

¥

hours

billionbillion* Results forecasts are as of August 202031

MID-TERM PLAN PROGRESS AND RESULTS

Mid-term Plan of the BANDAI NAMCO Group (From April 2018 to March 2021)
Since April 2018, the BANDAI NAMCO Group has been implementing the three-year Mid-term Plan, which includes the
mid-term vision of CHANGE for the NEXT—Empower, Gain Momentum, Accelerate Evolution. Under this plan, we areadvancing the four main strategies described below. In this way, we are aiming to be a Group that is changing in all aspects
in order to progress to the next stage rather than being limited to previous business models and established ideas.

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

Boost capability to create IP (structural changes)

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

Establish and enhance business
infrastructure

REGIONSTRATEGY

Expand and strengthenbusiness fields

Promote incubation

GAIN MOMENTUM WITH ALL BANDAI NAMCO
The regional holding companies and the business companies in each Unit will form aunifying ALL BANDAI NAMCO concept to advance the Group’s strategies autonomously
on a regional basis through their deep knowledge of the customer base in each region.

Make full-blown entry into Chinese market

PERSONNEL
STRATEGY

Invest aggressively in IP creation

Establish system for ALL BANDAI NAMCO

MAKE PERSONNEL THE CORE OF THE GROUP
We have been working for some time on such initiatives as training the necessary global
personnel, actively enabling personnel exchange, and establishing systems for promoting
active participation of a diverse workforce. In addition, we will advance a proposal system for
employees to take up new challenges, as well as systems for supporting their endeavors.

Establish environment to optimize employees’ performance by tapping their individual strengths,
and to empower new ventures

32

IP AXISSTRATEGYACCELERATE EVOLUTION IN IP AXIS STRATEGY

Initiatives to Strengthen New IP Creation
Targeting the creation of new IP, the BANDAI NAMCO Group is implementing initiatives from a variety of perspectives.

Strategic Investment for IP Creation

Strategic Investment for IP Creation
FY2019.3

6.0¥

In addition to the creationof new IP originating fromproducts and services in eachbusiness, we are also working
to create new IP that leverages
BANDAI NAMCO’s distinct
strengths through projects
that extend across businesses.

FY2020.3

billion¥

9.0

Saikyo Kamizmode is a new IP
created through a project including
the Toys and Hobby Unit and the IP
Creation Unit.

billion

IP Strategy Division Initiatives
We established the IP Strategy Division, a Groupwideorganization, within BANDAI NAMCO Holdings Inc. To
strengthen the IP axis strategy over the medium to longterm, we are advancing multiple projects to create new IP
and to foster innovation with established IP.

Internal and External Idea Proposal
Systems
We have a system for the proposal of ideas by employees, andin addition the BANDAI NAMCO Accelerator aims to promoterollouts of innovative businesses and IP by supporting theoperations of start-up companies and combining themwith Group resources. Furthermore, the DREAM SUPPORTPROJECT supports the dreams of the next-generation
creators who will contribute to the entertainment industry in
the future. The project helps creators not only financially but
also through education, such as workshops and a mentor
system by Group employees.

BANDAI NAMCO Content Fund
Through investment by BANDAI NAMCO Holdings and thefive Unit core companies, with the objective of continued IP
creation, we established the BANDAI NAMCO Content Fund,which actively invests in and produces visual products andother content from a long-term viewpoint that is optimizedin an overall manner. In collaboration with partners insideand outside the Group, we are currently advancing content,such as Group-originated content and content developed
jointly with partners outside the Group.

 trengthening Partnerships withS
Production Studios and Others
We are strengthening partnerships with animation studios
and others and reinforcing IP creation and production.

FY2019.3

DREAM SUPPORT PROJECT
Selected and supported 12 people from among
more than 600 applicants•	SUNRISE INC. took over the visual production
operations of XEBEC Inc., an animation production
company, and established SUNRISE BEYOND INC.

•	BANDAI NAMCO Arts Inc. invested in studio MOTHER,
which produces animations, such as the Space
Battleship Yamato series.

FY2020.3 Results
BANDAI NAMCO Accelerator
Implemented initiatives from five companies,
selected from among submissions made bymore than 200 companies

MID-TERM PLAN PROGRESS AND RESULTS

To strengthen the IP axis strategy, in additional to typicalinvestment, over the three years of the Mid-term Plan, we
will implement a total of ¥25.0 billion in strategic investment,such as aggressive investment in creating new IP, engaging
with external partners, and taking on the challenge of new
businesses and new technologies.

I nitiatives Originating from Products
and Services

FY2020.3•	SUNRISE implemented a capital participation in echoes
Inc., which operates a platform exclusively forcontributions of original manga.
•	BANDAI NAMCO Holdings made SOTSU CO., LTD.,a wholly owned subsidiary and unified the Mobile Suit
Gundam value chain.

FY2021.3•	BANDAI NAMCO Arts entered a business alliancewith Eight Bit Inc., which produces animations, such asThat Time I Got Reincarnated as a Slime.

33

IP AXISSTRATEGYACCELERATE EVOLUTION IN IP AXIS STRATEGY

Sokichi Shimooka

Ayaka Negishi

General Manager
Production Department 2
Operations Group

Production Department 2
Operations GroupBANDAI NAMCO Online Inc.

BANDAI NAMCO Online Inc.

Joined BANDAI NETWORKS CO., LTD., in 2004.
Subsequent work centered on the planningand development of smartphone game appsfor Group companies. Has worked at
BANDAI NAMCO Online Inc. since 2014.

In 2013, joined BANDAI NAMCO Online
Inc. as a part-time worker. Through an
in-house program, proposed the idea
for IDOLiSH7. Has worked on this IP as
an employee since 2015.

Messagesfrom FrontLine Staff

Examples of New IP Creation

IDOLiSH7

Succeeding with a Vertical Launch, Acquiring Large Numbers of Fans
IDOLiSH7 is a new IP that was created by BANDAI NAMCO
Online Inc., of the Network Entertainment Unit. The aim
was to develop the market for female customers. IDOLiSH7
was released in August 2015 as a smartphone game app,
and through a wide range of products and services, suchas events and goods, we succeeded with a vertical launch.
In 2018, broadcasts of a TV animation started, and in 2019
approximately 160,000 people attended/watched a live
event that was held over two days, including live viewing.
In these ways, the popularity of IDOLiSH7 increased.

In this market, competitors also take an interest whenan IP is launched, and accordingly we worked with a senseof speed. Prominent outside creators also participated,
and for the music, which is the core of the IP, we worked
together with BANDAI NAMCO Arts Inc. In this way, wewere able to create a high-quality IP. Currently, we continue
working to expand the rollout of products and services
while closely exchanging information with partners insideand outside the Group.

ROLLOUTS OF PRODUCTS AND SERVICES

I nitiatives to Nurture IP That Has Been
Popular for a Long TimeFor BANDAI NAMCO Online, which was established only
10 years ago, I think that in the future IDOLiSH7 will start tohave an effect as a major experience point in the creationof IP. Looking further ahead, a key issue will be whether or
not we can nurture the IP over the long term. The largest
group of IDOLiSH7 active users are women in their early
20s, but including non-revenue users, there are also manyusers in their late teens. Thinking from a long-term
perspective, the fact that, at this point, IDOLiSH7 has
obtained the support of young customers in their teens ishighly important. Moving forward, we will continue to takeon challenges so that, rather than having a product that
becomes a momentary hit and then fades away, we will
have an IP that is enthusiastically supported by fans andis popular over the long term, for more than 20 years.

34

EVENTSLIVE EVENTSANIMATIONSSMARTPHONE GAME APP

GOODS

MUSIC

Strengthening Innovation for Established IP
Through collaboration with outside partners, the BANDAI NAMCO Group is implementing initiatives to strengthen
innovation for established IP.

DRAGON BALL Series
Moreover, we took steps to maximize buzz about the IP,
such as implementing initiatives using collaboration
between visual products and products and services.
Given the further growth in the popularity of the DRAGONBALL series around the world, going forward we willcontinue to expand the lineup of products and services aswell as the regions where this IP has been rolled out.

DRAGON BALL North America Tour 2018

MID-TERM PLAN PROGRESS AND RESULTS

To create more buzz about the DRAGON BALL series, which
is supported by fans around the world, the BANDAI NAMCO
Group, Shueisha Inc., and TOEI ANIMATION Co., Ltd.,
sponsored the DRAGON BALL NORTH AMERICA TOUR,
which visited seven venues in North America in 2018, andthe DRAGON BALL WORLD ADVENTURE, which visited eightvenues around the world in 2019. At the venues, we took
steps to create buzz for fans around the world, such asoffering opportunities to try products and services and tosee exhibits by companies from throughout the Group. In
addition, in conjunction with the release of a film from theend of 2018, we utilized France’s high-speed train (TGV)
to implement promotional activities in line with thecharacteristics of each region, such as train wrapping
advertising and home video game events on the train.

Promotion utilizing a rapid transit railway
in France

ONE PIECE
ONE PIECE has fans in a wide range of age groups, andin conjunction with the opening of a film in 2019, we held
BANNAM Banpaku, a Groupwide campaign linked to thefilm. We introduced prizes limited to approximately 240
NAMCO facilities in Japan, and implemented a campaign
linked to products and services, such as figures and a gameapp. In 2020, in conjunction with ONE PIECE Day on July 22,
we implemented a promotional campaign linking BANDAI
NAMCO Group websites and SNS, and worked to expand
recognition of products and services.

Moving forward, we will continue working to create
further buzz about this IP through rollouts of products
and services in a wide range of categories.

Prizes limited to
NAMCO facilities

KAMEN RIDER Series
The KAMEN RIDER series has been popular for more than 45
years, and we are taking steps to expand the target customer
groups. In addition to products and services for children, we
also have products for the mature fan base, such as a seriesof transformation belts and an apparel brand.
In 2020, through a partnership between BANDAI CO., LTD.,
and TOEI COMPANY, LTD., we opened KAMEN RIDER STORETOKYO, the world’s first official KAMEN RIDER flagship store.
This store, which reproduces the world of KAMEN RIDER, sells
products for a wide range of customers, from children to
adults, and also serves as a place for the creation of buzz
about products and services.

In the future, we will bolster rollouts of KAMEN RIDER
series products and services, not only in Japan but also in
China and other Asian markets.

KAMEN RIDER STORE TOKYO

35

BUSINESSSTRATEGYEMPOWER PUSH INTO NEW ENTERTAINMENT

Expanding and Strengthening Business Fields
The BANDAI NAMCO Group is working to build a foundation for the creation of new entertainment that draws on
BANDAI NAMCO’s distinctive strengths by upgrading and enhancing our business infrastructure, expanding andstrengthening our business fields, and promoting incubation.

 romoting the Integration of Visual, Music, and Live Events throughP
BANDAI NAMCO Arts Inc.
In April 2018, BANDAI NAMCO Arts Inc. was formed
through the integration of BANDAI VISUAL CO., LTD., which
was in the visual business, and Lantis Co., Ltd., which wasin the music business. BANDAI NAMCO Arts, which became
the core company of the Visual and Music Production Unit,
is advancing Mid-term Plan strategies. Through the integrationof the visual and music businesses, we are working tocreate new entertainment with an even greater fusion ofvisual, music, and live events.
The Love Live! series reached its ninth anniversary in
2019. In collaboration with the visual product, a large-scale
live event was held with music and cast members. Thisinitiative was a great success and, including live viewings,
more than 150,000 people attended. Furthermore, for
IDOLiSH7, a new IP created by the Network Entertainment
Unit, a contribution was made to create buzz about the IP
through music provision, TV animation production, andaggressive rollouts of live events.

Love Live! series 9th Anniversary Love Live! Fest

IDOLiSH7 2nd LIVE REUNION aking On the Challenge of Rolling Out New-Format Facilities That Leverage
T
BANDAI NAMCO’s Strengths

36

In the Real Entertainment Unit, we are taking on thechallenge of building differentiated facilities that are notlimited by previous ways of thinking. To that end, we areintegrating venues, which are customer contact points;
technical development capabilities; and know-how inleveraging the worldview of IP. Especially popular are

facilities that enable customers to experience original
entertainment, such as through the use of advanced digitaltechnologies in collaboration with BANDAI NAMCO Studios
Inc. and BANDAI NAMCO Amusement Lab Inc., and throughthe provision of activities in which customers move around.

Variety sports facility
VS PARK

Next-generation athletic facility
SPACE ATHLETIC tondemi

This facility offers sports activities, such as Nigekiru, which enables
participants to compete with all their might over a short distanceas they try to outrun fierce animals that are projected on the wall.
Nigekiru has become popular for its use of digital technology toprovide an activity with a new sensibility.

In addition to one of the largest trampoline areas in Japan, this largescale facility offers athletic activities that can be enjoyed by everyone
from children to adults, such as a climbing wall and rope walk.

REGION
STRATEGYGAIN MOMENTUM WITH ALL BANDAI NAMCO

Sai EnGeneral Manager
Corporate Department
BANDAI NAMCO Holdings CHINA CO., LTD.

Messagesfrom FrontLine Staff

Initiatives for Full-Scale Rollouts in the
Chinese Market

MID-TERM PLAN PROGRESS AND RESULTS

In 2015, joined BANDAI NAMCO (SHANGHAI) CO., LTD.
(predecessor of BANDAI NAMCO Entertainment (SHANGHAI)
CO., LTD.). After working as General Manager of theManagement Planning Department at that company, begancurrent position in 2018.

Completing the Foundation for Full-Scale Rollouts
Japanese IP is very popular in the Chinese market, andunder the ALL BANDAI NAMCO concept, all of thebusinesses are working together to “grow into China’s No. 1
entertainment company.” To accelerate the IP axis strategy,
we are working to bolster the organizational structure.
Under BANDAI NAMCO Holdings CHINA CO., LTD. (BNHC),a holding company, Group companies, including thebusiness companies for the Toys and Hobby Unit, Network
Entertainment Unit, Real Entertainment Unit, and IP
Creation Unit have prepared the foundation for full-scalebusiness initiatives. The roles of BNHC, which is theregional headquarters company, include business support,such as collaboration among the operating companies, andinvestment. In 2019, the business companies all moved into
the same office, establishing an environment in which eachcompany can concentrate on business operations with thesupport of BNHC. BNHC will continue working in the areasof enhancing Group affairs oversight, developing humanresources, and building the optimal organizational structureand environment. With the changes in the businessenvironment due to COVID-19, there is a growing need fora digital shift in the style of consumption in the Chinese
market and for the fusion of real and digital. Market changes
are an opportunity for the BANDAI NAMCO Group.
Leveraging the foundation that has been built to date, wewill deepen relationships with customers through business.

Strengthening the IP Axis Strategy in the Chinese Market
To achieve growth in the Chinese market, we will pursue
customer satisfaction in core games and services, suchas toys and game apps, and will aim for further businessexpansion. Looking at established IP, for the PAC-MAN
40th anniversary we rolled out a variety of commemorativeplans, such as a player participation projection mapping
event, and we utilized SNS. These initiatives have led toenhanced recognition for PAC-MAN. In addition, for Mobile
Suit Gundam, in conjunction with the installation in
Shanghai of a life-size Gundam statue, we are advancing
the Gundam China Project, which involves collaboration
with each business area. I think that these types of
initiatives contribute not only to increasing IP recognition
but also to activating local communities. Furthermore,
the creation of new IP will be indispensable in making

a full-scale entry into the Chinese market. In 2017, we rolled
out our first original new IP, Agents in Otherworld. Moving
forward, we will work aggressively to create this type of
new IP and strengthen the IP axis strategy.
In the Chinese market, the IP axis strategy is a major
strength of the BANDAI NAMCO Group. The future influenceof COVID-19 is not clear, but we will strive to leverage
our know-how and knowledge in order to provide funentertainment experiences that draw on our distinctive
strengths in the Chinese market. Moreover, as we move
forward we will utilize the earnings that we obtain frombusiness activities to invest in growth over the medium tolong term, such as investing in strengthening the IP axis
strategy and in hiring outstanding human resources.

37

REGION
STRATEGY

Messagesfrom FrontLine Staff

GAIN MOMENTUM WITH ALL BANDAI NAMCO

Initiatives in the North American Market

 xpanding the Toys and Hobby Business for the Mature Fan Base in the
E
North American Market
We work at BANDAI NAMCO Collectibles LLC (known as
BLUEfin), which was established in FY2019.3 in conjunction
with a local business partner. The company’s aim is to
grow and accelerate the Toys and Hobby business, principallyfor the mature fan base, in the North American market.
BLUEfin endeavors to be more than just a distributor. We
also play an active marketing role via event planning, digitalpromotion, direct-to-consumer marketing, e-commerce,and store planning.
Due to the diversification of the media environment,
customer contact points have expanded, and as a result
Japanese-origin IP has acquired a high level of recognitionin the North American market. Together with BANDAISPIRITS CO., LTD., BLUEfin has exhibited at anime and pop
culture events throughout North America. In addition, we

have played an important role in exhibits at events for the
40th anniversary of Mobile Suit Gundam, and have also
contributed to large-scale events, such as the DRAGONBALL North America Tour.
Local fans expect to receive the latest information inreal time, just like fans in Japan. Accordingly, through close
communications with Group companies, we will strive tomeet the expectations of fans by making sure thatour productannouncements
and promotional
activities areplanned in tandemwith Japan.
DRAGON BALL North America Tour 2019

Strengthening the IP Axis Strategy in the North American Market
The spread of COVID-19 is having an influence on North
America, and one urgent task is to take steps to strengthenmarketing, such as connections with fans through websites
and SNS. We are already advancing e-commerce initiatives,and in addition we are taking on the challenge of live
streaming events. On the other hand, real venues, which
are points of direct contact with fans, are also indispensable.
Going forward, we will continue working to implement
appealing product displays and product sales throughMegan Sapin (left)
Channel Sales Manager
Sales TeamBANDAI NAMCO Collectibles LLC
In 2017, joined the predecessor of BANDAI NAMCO
Collectibles LLC. Moved to current position in
2020. Responsibilities include sales management
for specialty retail chains.

Adam Newman (right)
Chief Marketing Officer
Marketing and Sales TeamsBANDAI NAMCO Collectibles LLC
Joined BANDAI CO., LTD., in 2003, and moved to
BANDAI AMERICA INCORPORATED in 2016. From
2019, in charge of brand management, marketing,sales, and other areas at BANDAI NAMCO
Collectibles LLC.

38

collaboration with retail stores.
Our strength is our workforce. Our employees are wellversed in pop culture and consumer trends in the North
American market. Leveraging this strength, we will work toincrease recognition of IP from Japan. In addition, throughfurther collaboration with Group companies we will
accelerate the growth of the Toys and Hobby business forthe mature fan base.

SPECIALFEATUREMAXIMIZING THE VALUE OF
LONG-TERM, ESTABLISHED IPs
In 2020, Gundam plastic models and PAC-MAN, which is recognized around the world, both celebrated
their 40th anniversary. For more than 40 years, these IPs have earned the support of fans, andthey exemplify the IP axis strategy, which is our strength. This section introduces these two examples
of how BANDAI NAMCO continues to take on the challenge of maximizing the value of long-term,
established IPs.

CONTENTS
40

Continued Evolution in Plastic Models

		Gundam Plastic Models
40th Anniversary42

Gundam Plastic Models — Continuing
to Grow around the World

44

Planning and Development of Gundam
Plastic Models

45

Handing Down Gundam Plastic Model
Skills46

Widely Recognized Global IP		
PAC-MAN’s

40th Anniversary48

PAC-MAN — Continuing to Grow
around the World

39MAXIMIZING THE VALUE OF LONG-TERM, ESTABLISHED IPs

Continued Evolution in Plastic Models

Gundam Plastic Models
40th Anniversary
99

20

19

In 2020, Gundam series plastic models, which are a familiar presence under the name Gunpla, reached the40th anniversary of their launch in July 1980. Based on close collaboration with visual products, we are moving
in a new direction while incorporating new technologies. Gundam plastic models will always continue to evolveand meet the expectations of fans in the years ahead.

Cumulative total
shipments surpassed

Gundam Plastic Models
Over the Past 40 Years

10

Cumulative total
shipments surpassed

300 million units*

400 million units*

1

1

1979

1987

2006

Broadcasts ofMobile Suit Gundam
TV animation series
began.

Use of the Snap Fit Method, whichenables assembly without the useof adhesives

BANDAI HOBBY CENTER, a Gundam
plastic model production base locatedin Shizuoka City, Shizuoka Prefecture,
Japan went into operation.

1980

1990

2008

Launch of first
Gundam plastic
model, 1/144
GundamLaunch of HG (High Grade) series,
which uses System Injection,
multicolor molding technologies

Commercialization of Eco Plastic
Models, which utilize recycled wastematerials generated during molding

1981
Gundam plastic model boom began.

1983
First introduction of multicolor
molding technologies that form parts
with different colors in a single runner(framework that holds the parts)
Launch of four products in four-color
Iropura series

Four-color injection molding machine that iscurrently in use (multicolor molding machine)

40

2011
2003
Opening of the first THE GUNDAM
BASE in South Korea, an official,directly managed shop for Gundam
plastic models

In a first for Gundam, a BANDAI official
Gundam plastic model worldwide
tournament — the Gunpla Builders
World Cup 2011 — was held in
13 areas around the world.

2020
GUNPLA LINK PROJECT

20

The GUNPLA LINK PROJECT celebrates the 40th anniversary of Gundam plastic models.
By linking the models with a variety of objects, people, and ideas, the project expresses
thoughts about Gundam plastic models in a variety of forms. It links people around the world,and links their thoughts to the future, both through Gundam plastic models themselves and inways that transcend those models. The key word of this project is LINK. Going forward, we willtake steps to create buzz about Gundam plastic models, such as developing products thatare the culmination of 40 years of experience, highlighting the experience of making Gundam
plastic models, implementing large-scale events and other initiatives, rolling out a media
mix with visual products, and planning a variety of collaborations.

20
Cumulative total shipments:

Cumulative total
shipments surpassed

700
More than

1

million units*2

Cumulative number of varieties sold:

2,500

SPECIAL FEATURE

700 million units*More than

2017
Opened THE GUNDAM BASE TOKYO,
the first official Gundam plastic modelcomprehensive facility in Japan*1 Total for Gundam plastic model Realseries only
*2 Gundam plastic model Real series:
525.80 million, SD series: 174.4 million(as of May 2020)

varieties

2018
Opened THE GUNDAM BASE SHANGHAI,
our first flagship shop in mainland China

ColumnTHE GUNDAM BASE

THE GUNDAM BASE shops are official, directly managed
shops for Gundam plastic models. With the objective of
expanding the Gundam plastic model business in Asia, THE
GUNDAM BASE shops were opened in South Korea in 2003
and in Taiwan in 2005. We opened an official Gundam plastic
model comprehensive facility in Tokyo in 2017 and shop in
Shanghai in 2018, and currently we are operating a total of
15 shops around the world. These directly managed shops,
which are points of firsthand contact with customers, help
us to understand customer needs and also fulfill a role asbases for the provision of information.

THE GUNDAM BASE TOKYO41

MAXIMIZING THE VALUE OF LONG-TERM, ESTABLISHED IPs

Koji Fujiwara
Director, Chief Gundam Officer (CGO)
BANDAI SPIRITS CO., LTD.
Joined BANDAI CO., LTD., in 1998. Moved tocurrent position in April 2019, after working
as General Manager of the Hobby Products
Department.

MESSAGE FROM THE CHIEF GUNDAM OFFICER (CGO)

Gundam Plastic Models—Continuing to Grow
around the WorldGUNPLA LINK PROJECT — A Project for the 40th Anniversary of Gundam Plastic Models
The Mobile Suit Gundam series reached its 40th anniversary
in 2019. We implemented a range of measures, centered on
visual products, and worked to further enhance recognitionof this IP. As a continuation of these activities, in 2020 welaunched the GUNPLA LINK PROJECT for the 40th anniversaryof Gundam plastic models.
These models have been popular with fans for 40 years,
due not only to the evolution of the products but also to theway that they have grown in tandem with fans. Fans makeconnections with each other through Gundam plastic
models. As the manufacturer, we have responded to theenthusiasm generated from those connections with initiatives in the areas of planning, development, and marketing,while maintaining links with fans. For this project we arealso prioritizing dealing directly with fans and working
together with them to create buzz.

Growing Overseas Presence for Gundam Plastic Models
In May 2020, cumulative total shipments of Gundam plastic
models surpassed 700 million units, and in FY2020.3,
annual shipments were 31 million units. In addition, theoverseas sales ratio is approximately 50%. The popularity ofthese products is increasing worldwide. Looking at overseas
sales, the Asian region accounts for about 80%, and theChinese market is showing especially strong growth. We
rolled out SD GUNDAM WORLD SANGOKU SOKETSUDEN,
a visual product for which the Chinese market is the main

42

target, and as a result Gundam plastic models are also
posting favorable results. In addition, although the shareis still low, sales in the North American market are alsofavorable. The plan for a Hollywood live-action film is also
moving ahead, and we have high expectations for thismarket, from which we anticipate further growth as wework in collaboration with visual products.
In this way, the overseas presence of Gundam plastic
models has been enhanced, and moving forward we willcontinue to implement measures targeting further growth.
For the time being, we will accelerate measures in the
Chinese and North American markets, which have been
positioned as focus regions. In the future, we will bolster
rollouts on a worldwide basis, without limiting our efforts
to specific regions. In 2020, in Yokohama we will open
GUNDAM FACTORY YOKOHAMA, a display facility for an
18-meter, actual-sized moving Gundam. In addition,
Gundam has been appointed as the PR Ambassador of theJapan Pavilion at the world expo in Dubai, which will beheld in 2021. Going forward, we will strive to achieve further growth in sales of Gundam plastic model products byincreasing global recognition of the Gundam IP throughthese types of initiatives.

One reason for the increased brand value of Gundam plastic
models is that they are known for their high quality. The
achievement of that major competitive advantage is attributable
to the BANDAI HOBBY CENTER in Shizuoka City. At this center,we continue to protect high quality through rigorous quality
control initiatives. In addition, we are maintaining originaltechnologies, such as multicolor molding; introducing newtechnologies; and actively working to reduce the amount ofplastic used. In these ways, we are continually advancing
the evolution of Gundam plastic models. The 40th anniversary
project involves more than enhancing reproducibility, as we
did in the past. It also entails launching products that were
carefully manufactured with state-of-the-art metal molding
technologies and symbolic products that include innovativetransformation gimmicks. I believe that the market
presence of these products will show one of the directions
in which Gundam plastic models will evolve in the future.
In addition, to address rapidly growing demand, we arebuilding the BANDAI HOBBY CENTER New Building on thesite of the BANDAI HOBBY CENTER, and plan to place the
new facility into operation from fall 2020. We also plan toinstall six multicolor molding machines in the new building,Columnwhich will increase the production capacity to roughly
1.4 times the level in FY2019.3. In consideration of growthin the number of shipments to overseas markets, going
forward we will continue to look carefully at our production
system so that we can implement stable production overthe medium to long term.
Please look forward to future Gundam plastic models
as we continue to take on challenges of further evolution
based on quality.

SPECIAL FEATURE

Strengths of Gundam Plastic Models, Which Reflect a Commitment to Overwhelming Quality

For the 40th anniversary project, we are launching multiple products that reflect the
introduction of state-of-the-art technologies.

BANDAI HOBBY CENTER

The BANDAI HOBBY CENTER, which produces Gundam plastic models, uses
its world-class production capacity and technical capabilities to conduct
integrated activities in planning and development, product design, moldmaking, and manufacturing. To increase production efficiency and productquality, the Center continually introduces leading-edge technologies andstrives to make further progress. In addition, the Center conducts high-quality
monozukuri (manufacturing) with a commitment to overwhelming quality.
Moreover, with a theme of coexistence with local communities, we are also
working to use solar power generation, to reuse water, and to reduce theamount of plastic used by leveraging our product design and mold-making
technologies. In addition, we are taking steps to investigate substitute materials.

Please read in conjunction with the following pages.

43

MAXIMIZING THE VALUE OF LONG-TERM, ESTABLISHED IPs

Messagesfrom FrontLine Staff

Monozukuri (Manufacturing) at the BANDAI HOBBY CENTER

Planning and Development of
Gundam Plastic Models

Building a Lineup of Products for Customers of All Generations in All Regions around the WorldMy role is mainly the overall supervision of the planningand development team at the BANDAI HOBBY CENTER.
I work on the formulation of plans, including the creationof annual plans for the Gundam plastic model lineup.
When we determine the product lineup, in addition tocoordination with the plans for rolling out visual products,
we also give consideration to a wide range of other factors,
such as where purchasers live and their age. Gundam
plastic models are also recording favorable sales overseas,
and accordingly it is important to consider not only theneeds of fans in Japan but also the needs of fans in eachoverseas region. Furthermore, the series has continued
over a period of 40 years. The ages of purchasers vary
widely, and there are also differences in the ways eachgeneration thinks about visual products and other products.
I believe that building product lineups that are balanced
throughout the year, with consideration for customers of
all generations in all regions of the world, has led to ourcurrent level of sales.

Expanding the Base of Customers for Gundam Plastic Models
The ENTRY GRADE 1/144 RX-78-2 Gundam, which was plannedand developed in conjunction with the 40th anniversary of
Gundam plastic models, is a representative product that isthe crystallization of the technologies of the BANDAI HOBBYCENTER. A distinctive feature of those technologies is that
we can make a sophisticated Gundam plastic model thatoffers superior coloring and pose-reproducibility and is easy
to assemble even though it has a small number of parts.
Up to this point, we achieved precise, accurate
reproducibility with Gundam plastic models by using a larger
number of parts that were more detailed. In this way, we
addressed the needs of core fans, but to expand the baseof customers for Gundam plastic models, it is important tosimultaneously approach people who have never had one of
the models and people who have not assembled one for along time. Easy assembly and superior reproducibility are
conflicting goals, and we faced a number of difficulties in thecommercialization of a product that achieves both of them.
With the technologies that we have cultivated up to thispoint and the enthusiasm of the people in charge, for the
first time the BANDAI HOBBY CENTER was able to achieveboth of these goals, and I think that this product is appropriate
for the 40th anniversary.
If we work with great enthusiasm, obtain the commitmentof the people involved, and develop a shared determination as
we give shape to a product, I am confident that it will be
popular with customers. Going forward, with enthusiastic
planning and development, we will work to see that
Gundam plastic models continue to be popular as a global
standard hobby that is enjoyed by a wide range of customers,from children to adults.

ENTRY GRADE 1/144
RX-78-2 Gundam

Akihiko Yasunaga
Deputy General Manager
Hobby Products Department
BANDAI SPIRITS CO., LTD.
Joined BANDAI CO., LTD., in 1998.
Subsequently worked in planning anddevelopment of Gundam plastic models.
Moved to current position in April 2020.

44

Ryosuke Otsuka
Engineering Team
Hobby Product Department
BANDAI SPIRITS CO., LTD.
After joining BANDAI CO., LTD., in 2016, wasassigned to the BANDAI HOBBY CENTER. Works
in product design for Gundam plastic models.

Toshiyuki Osuga
Product-Meister
Engineering Team
Hobby Product Department
BANDAI SPIRITS CO., LTD.
Joined BANDAI CO., LTD., in 1989. Acquired
approximately 30 years of experience inproduct design. Currently working to handdown technologies as the only ProductMeister in the Company.

Messagesfrom FrontLine Staff

Handing Down Gundam Plastic
Models Skills

As a Product-Meister, I oversee the product design team ofapproximately 30 people. I work on the development of junioremployees, especially enhancing their expertise and handing
down skills. Specifically, I provide a variety of advice to each
person in charge about the design of products, and I workon sharing skills and holding study sessions for the entire
unit. In addition, in collaboration with other Meisters, I am

helping to formulate human resources development plans
and to enhance the skill level for the entire BANDAI HOBBYCENTER. Unlike managerial positions, under the Meister
System we are evaluated for focusing on skills and handing
them down. This system leads to enhanced motivation for
employees with an interest in skills.

What Is the Meister System?

This system was started in 2012. One aim of the system is to recognize employees who pursue
product quality and have developed knowledge and outstanding skills. Other aims include
developing successors and further enhancing skills at the BANDAI HOBBY CENTER. From 2019,
we established the Matured Meister system to provide further active work opportunities for
Meisters who have reached retirement age and to promote the handing down of skills.

SPECIAL FEATURE

Meister System — A Mission to Hand Down Skills

Product-Meister
1
Senior-Meister
3
Meister
1

What Is Important Is Handing Down Ideas Themselves
The Company has accumulated 40 years worth of know-how
about Gundam plastic models, and I have learned a great
deal by referring to past data about basic design skills.
However, new products cannot be created just from the useof existing skills. It is important for the person in charge tothink from an original perspective, and to consider how thoseideas can be realized through the application of existing skills
or the introduction of new skills. I think that the true natureof handing down skills is to help others to understand thatthe skills are no more than tools for realizing their own
ideas, and to provide support for the enhancement ofColumncapabilities in the areas of creativity and application.
Gundam plastic models have remained popular for 40
years, and the reason is that we have continually taken on
the challenge of new skills and incorporated them into
products, thereby delighting and inspiring fans. Moving
forward, we will continue to advance this process ofevolution. Accordingly, what is more important than anythingelse is the development of the Meisters of the future. I hopethat more Meisters are created in the future and it is my
mission to contribute to the achievement of that goal.

Thoughts from People Being Trained by Meisters

I want to take on the challenge of an original structural design that I developed
from scratch.
I am in my fourth year at the Company. I have products that I am responsible for, and I work on
design each day. I receive advice from the Meister from a variety of perspectives based on his
abundant experience, such as consultations regarding issues from the design concept stage.
In product design, I place importance on the extent to which I can add original ideas andcharacteristics. In the future, I would like to take on the challenge of an original structuraldesign that I developed from scratch.

Ryosuke Otsuka

45

MAXIMIZING THE VALUE OF LONG-TERM, ESTABLISHED IPs

Widely Recognized Global IP

PAC-MAN’s 40th Anniversary
PAC-MAN, which was launched in 1980 as an arcade game machine, reached its 40th anniversary in 2020.
PAC-MAN has been recognized by Guinness World Records as the most successful coin-operated arcade game.
In addition to Japan, in the U.S. it created an unprecedented boom in the 1980s called PAC-MAN fever. In the U.S.
and many other countries and regions, this global IP has a recognition level of more than 90%*.
* From original Company research

40th Anniversary Project—Join the PAC
We would like PAC-MAN to be enjoyed around the world as an even more familiar presence, and tothat end, on the occasion of the 40th anniversary, we are rolling out a number of initiatives with thetheme of Join the PAC. In addition to the distribution of a new game, we are implementing a rangeof collaborations involving music, fashion, sports, and many other fields, including the release ofan anniversary collaboration album by a famous artist. Furthermore, we are also expanding ouractivities to leading-edge technology fields, such as AI research. Leveraging the opportunity
provided by the 40th anniversary, we will work to provide new ways of enjoying PAC-MAN and to
see that PAC-MAN can be enjoyed as a familiar presence in a variety of settings.

PAC-MAN’s 40 Years of History

1980s

Arrival of PAC-MAN Fever

The PAC-MAN arcade game was launched in July 1980.
When it reached Chicago, in the U.S., it set off a social
phenomenon known as PAC-MAN fever. PAC-MAN is also an
IP that succeeded with the media mix from an early stage.
Looking at merchandise, more than 450 items were launchedat that time by about 250 companies. There was a home
video game for the Nintendo Family Computer, and a TV
animation was broadcast during prime time in the U.S. andrecorded a peak audience rating of 56%. In addition, the
PAC-MAN Fever music content reached number nine on the
U.S. music charts.

46

2000sEnduring Popularity of PAC-MAN

Over the seven years from 1980, total unit sales were
293,822 units, and in 2005 PAC-MAN was recognized byGuinness World Records as the most successful coinoperated arcade game. In the 2000s, PAC-MAN was madeavailable for a variety of platforms, and numerous variation
products were created. Furthermore, facsimile versions of

the arcade game and merchandise have continued togenerate sales.
In 2007, we launched PAC-MAN Championship Edition,a home video game, and a worldwide tournament was heldin New York.

SPECIAL FEATURE

2010sContinuing Evolution of PAC-MAN

PAC-MAN continues to evolve as we launch not only arcade
games but also home video games, network content, andother products for a variety of platforms. In addition, in2013 the PAC-World CG animation was broadcast in the U.S.
(It was broadcast in Japan in 2014.) In 2015, PAC-MAN
appeared in Pixels, a Hollywood movie. In these ways, thepopularity of PAC-MAN has transcended the gameframework and continues to grow.

98

Recognition

U.S.:

%

90

Even outside the U.S.,%
or more in many countries andregions
PAC-MAN overseas recognition: From original Company research

47

MAXIMIZING THE VALUE OF LONG-TERM, ESTABLISHED IPs

Yutaka Fuse

Michiko KumagaiManager
PAC-MAN Business Section
Licensing Production Department
IP Business Division 3

Assistant Manager
PAC-MAN Business Section
Licensing Production Department
IP Business Division 3

BANDAI NAMCO Entertainment Inc.

BANDAI NAMCO Entertainment Inc.

In 2007, joined BANDAI NAMCO Games Inc.
(currently, BANDAI NAMCO Entertainment Inc.).
Worked in home video game marketing. Moved tocurrent position after working overseas and in thelicensing business.

After joining BANDAI VISUAL CO., LTD. (currently, BANDAI
NAMCO Arts Inc.), in 2002, was placed in charge of thelicensing business at BANDAI NAMCO Entertainment Inc.

MESSAGE FROM THE MANAGERS OF THE PAC-MAN 40TH ANNIVERSARY PROJECT

PAC-MAN — Continuing to Grow
around the World
40th Anniversary Project — Join the PAC
PAC-MAN reached its 40th anniversary in 2020, and we arerolling out a variety of initiatives on the theme of Join the
PAC. PAC-MAN is an IP that already has an extremely highlevel of recognition, and for the 40th anniversary project,
we are aiming to foster a transition from “I have heardof PAC-MAN” to “I like PAC-MAN.” To that end, we are
implementing initiatives to promote PAC-MAN as a familiar
presence. We will work to see that customers who knew
PAC-MAN 40 years ago will once again think of the IP, andthat customers in their 20s and 30s will develop new
interest in PAC-MAN. In this way, we will strive to further
expand PAC-MAN’s fan base.
Accordingly, together with licensees, we will develop alarge number of commemorative products, and will also
take on the challenge of collaboration in fields other thangames, such as music and fashion. Going forward, we will
work to enhance the value of the PAC-MAN brand and toprovide a wide range of products and services to customers.

Expanding Business by Promoting Brand Strategies and Regional Strategies
We will advance the project strategies in two directions.
First, we will advance the brand strategy. We will roll out
products and services for three target groups. In addition
to fans who like the traditional retro PAC-MAN atmosphereand families including children, we will also target young
consumers, who have been positioned as the most importantgroup. For these young consumers, we will strive to make
PAC-MAN a cool brand.

48

Second, we will advance a regional strategy. Based on
the high level of PAC-MAN recognition, at this point we havepositioned Europe and the Americas as the core businessfoundation. In Europe and the Americas, we will provide
products for core game fans, and for young consumers
we will roll out initiatives in collaboration with fashion andmusic. In this way, we will work to enhance brand value
and expand the scope of PAC-MAN fans.

In the Asia region, especially in China, many people
recognize the simple shape of PAC-MAN despite the factthat the game has not been officially on sale. We distributed
PAC-MAN Championship Edition 2 for free from April 24 to
May 10, 2020, and as a result China had the highest numberof downloads worldwide. In particular, retro games haverecently become a boom, and accordingly young customers
are accepting designs with a retro atmosphere. I think thatthe latent potential of PAC-MAN in China is extremely high.

The reason why PAC-MAN has been popular up to this pointis the concept of “eating,” which is a common point that is
simple and can be understood by everyone. You could saythat PAC-MAN is IP that is popular with everyone because it
can communicate without words and it is easy for people toidentify with. One reason was that the original game, which
was the starting point, had an extremely high degree ofcompleteness, and could be enjoyed by a large numberof people, without regard to age, gender, or nationality.

In addition, another source of support has been the factthat we have continued to launch and commercialize new
PAC-MAN games in line with the times.
The 40th anniversary project has been positioned as anintermediate point on the way to high goals for the next 40
years. Looking ahead, to maximize the value of PAC-MAN,
the PAC-MAN Business Section will play a central role as
the entire Group works under the ALL BANDAI NAMCO
concept to take on challenges.

SPECIAL FEATURE“Eating” and the Enduring Popularity of PAC-MAN

Messagesfrom FrontLine Staff

Targeting growth for PAC-MAN in the future, I would like to work on theplanning and development of games with an entirely new interpretationthat is different from anything done previously. As we take on new
challenges and strive to stay one step ahead of the expectations of fans,
we will continue working to create the appeal of PAC-MAN, and thereby
nurture the IP so that it remains popular with people around the worldin the years ahead.
Yutaka Fuse

From the perspective of commercialization, we will strive to make a large numberof products that fans pick up with a sense of surprise at how cute and cool
PAC-MAN is. Going forward, I will strive to help increase the value of the brandand to identify a variety of partners.

Michiko Kumagai

49

ESG

SECTION

This section introduces environmental (E), social (S), andgovernance (G) initiatives targeting the realizationof sustained growth as well as messages from key executives.

CONTENTS

50

51

MESSAGE FROM THE DIRECTOR IN
CHARGE OF ESG

52

ROUNDTABLE DISCUSSION AMONG OUTSIDEDIRECTORS

56

CORPORATE GOVERNANCE

62

OFFICER SYSTEM

66

PERSONNEL STRATEGY—
MAKE PERSONNEL THE CORE OF THE GROUP

71

CSR INITIATIVESMESSAGE FROM THE DIRECTOR IN CHARGE OF ESG

Going Forward, the Group Will Strive to Further Strengthen
Its Management Foundation and Provide Social Value That
Draws on BANDAI NAMCO’s Distinctive Strengths.
I am serving concurrently as the Division General Manager of the Corporate Planning Division, where I am in chargeof the Group’s corporate governance, and as the Chief ecology Officer, where I have overall responsibility for CSR
activities. From these positions, I will strive to address the issues faced by the Group and to further strengthen ourmanagement foundation.

Aiming to Establish Effective Risk
Management to Address Crises

ESG SECTION

To address the spread of COVID-19, the Group is holding
regular meetings of the Crisis Management Committee. The
Group had previously established and operated BCP and BCM
systems, and the committee has been able to take over thereporting lines and rapidly implement response initiatives.
However, the current BCP and BCM systems were formulated
following the Great East Japan Earthquake, and their content
is centered on natural disasters. I believe that there is room
for improvement in our management of other risks, such as
infectious diseases. Moving forward, we will review the risks
faced by each business and work to reevaluate our BCP and
BCM. In this way, we will strive to further strengthen ourbusiness foundation, which is the basis for sustainability.

With consideration for the evaluation of the effectivenessof the Board of Directors, which was conducted by outside
directors, moving forward the Group will aim to further
enhance governance.
Moreover, in CSR activities, we have implemented initiatives
that are extensions of our business operations, with an emphasison the continuity of activities. Consequently, in regard to the
Sustainable Development Goals (SDGs), the BANDAI NAMCO
Group has been recognized for its implementation of measures
to address a large number of the goals. In conjunction withthe formulation of the next Mid-term Plan, we are moving
forward with the reevaluation of CSR activity guidelines as we
aim to enhance measures to address the demands of society.
In the future, we will continue to bolster our stable foundation and provide social value based on entertainment thatreflects BANDAI NAMCO’s distinctive strengths.

Working to Strengthen the Foundation
for Management That Is Trusted By Society
Looking at the Group’s corporate governance, outside director
Koichi Kawana joined the Group from June 2019, and we arereceiving comments and advice from a new perspective. In
this way, further depth has been added to the deliberationsof the Board of Directors. At the same time, outside directors
make up one-third of directors, and we have realized astructure that further secures objectivity and transparency.

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

51

ROUNDTABLE DISCUSSION AMONG OUTSIDE DIRECTORS

Mikiharu Noma

Yuzuru Matsuda

Satoko Kuwabara

Koichi Kawana

We Will Pursue More-Advanced Crisis Management andGovernance While Providing Support for the Creation of
Sustainable Value.
FY2020.3 was a year in which the BANDAI NAMCO Group’s ability to adapt to change was tested by such eventsas the spread of COVID-19 in the fourth quarter.
The Company’s four outside directors met in a roundtable format to discuss a variety of topics, such ascrisis management and governance, measures to address digital transformation, and the social mission ofentertainment companies.

Cultivating a Sound Sense of Urgency
In FY2020.3, the Company made strenuous efforts
and achieved its initial numerical plan despite theMatsuda
COVID-19 crisis. However, President Taguchi andother executives are not optimistic about the progress ofthe main strategies under the Mid-term Plan. It was
impressive how the Company maintained a focus on theissues while approaching the COVID-19 problem as anopportunity for change.
I was impressed by the achievement of the initial
numerical plan, and especially the record-highresults in the Toys and Hobby business. However,FY2021.3 will likely be even more challenging. The management
environment is undergoing dramatic changes, including theacceleration of digital transformation and the ongoing
fusion of digital and real elements. I think it will benecessary to have a shared sense of urgency about thecircumstances as specific measures for the next Mid-term
Plan are discussed.
Kuwabara

I think the Company did an excellent job in fulfilling the public commitment to a total payout ratioof 50% or more. It is important for the Company
to have a sound sense of urgency that fosters a spirit ofKawana52

taking on challenges. In that regard, I think the Company
has maintained a good balance.
Looking at the current market environment, there
are signs that large companies from the U.S. andChina are investing in IP. Also, there are newcompanies that are posting rapid growth due to thestrength of their promising content. I think that we should
deepen our sense of urgency in regard to the threat fromthese companies and the speed at which they are moving.
President Taguchi has also made this point, and he isemphasizing a sense of urgency.
Noma

Issues Made Visible by the COVID-19
ProblemAccurate, rapid information sharing is the foundation of crisis management. In comparison withother companies, I think that BANDAI NAMCO
has implemented a solid response. It will be necessary to
use this opportunity to verify business risks in more detailand to ensure that nothing is “beyond expectation.” In
addition, in regard to the delay in Japan’s digitalization,
people’s awareness of the problem has increased andliteracy has also improved substantially. To align ourselveswith this trend, it is important to secure appropriate
human resources who can address digital transformation.
MatsudaAiming to raise ourgovernance one level higher,
from FY2021.3 we will change
to a new style in which theidentification of issues is not
limited to questionnaires.

In the business portfolio, the relative importanceof intangible assets, such as entertainment delivered over a network and live events, is increasing.
In this setting, we need to look carefully at the question ofwhether or not the framework for human resources development that has been used to date will continue to functionin the future. In addition, when I talk with the Group’s new
directors, I often hear requests for horizontal connections
among people of the same rank. I think it might be a goodidea for the Company to work more proactively to build
frameworks that promote cooperation transcending theboundaries between Units.
Noma

One measure is to hire experts from outside, and looking
at examples at other companies, there are also many cases
in which it is efficient to develop young Company employees
who understand the front lines.

From a medium- to long-term perspective, theCompany will need to have business models,organizations, and leadership that can demonstrate strength even after the end of the COVID-19 crisis.
And in the promotion of digital transformation initiatives,
it is important to be thoroughly aware that digital transformation is not a core business activity but rather a means
for the achievement of goals.
Noma

ESG SECTION

The COVID-19 problem has been discussed since
January 2020. I think that the Company’s governance has been functioning effectively, with prompt
responses on the front lines and reports made to the Boardof Directors as needed. Looking ahead, issues will include
diversifying risk in the supply chain and maintaining security
and safety in real business areas, such as facilities and live
events. It will likely be necessary to link digital transformation initiatives with working-style reforms.
Kuwabara

I am also assisting as a lecturer in programs topromote active careers for women, and I lookforward to seeing women who have participatedin these programs become inside directors of Group companies. Also, working styles in the post-COVID-19 society
are currently being reevaluated, and in this setting I think it
will be necessary to strive to create environments that offer
work-life balance and are easy to work in, without regard
to whether employees are male or female.
Kuwabara

From the perspective of the development of
global human resources, the creation of systems
for the education and development of young
employees is an urgent task. Also, at the same time, it will
be necessary to accelerate the establishment of an environment that can secure highly capable personnel fromoverseas and facilitate active careers for them.
KawanaTaking Governance One Level Higher
The evaluations of the effectiveness of the Boardof Directors, which began in FY2016.3, have been
based on questionnaires distributed to all officers,
with the utilization of a PDCA cycle drawing on our opinions
and action taken by executives. In consideration of the resultsof these initiatives, aiming to raise our governance one level
higher, from FY2021.3 we will change to a new style in which
the identification of issues is not limited to questionnaires.
MatsudaIn the promotion of digital transformation, it isimportant to have an open innovation approachwithout being committed to doing everythingin-house. Accordingly, the Company first of all has to bean appealing business partner when viewed from outside.
Another key will be shared values within the Company.
I think it will be necessary to hold discussions, centered on
the frontline staff, and to deepen understanding about theissue of how business will be changed by the introductionof digital transformation.
KawanaMore Systematic and Strategic Human
Resources Development
Looking at human resources strategy, humanresources development initiatives are now beingrolled out in a more systematic manner. We arealso working as lecturers in training programs for new
directors. The training programs have been revised, andI think that the content has been considerably enhanced.
MatsudaLooking ahead, issues
will include diversifying
risk in the supply chain
and maintaining
security and safety inreal business areas,such as facilities andlive events.

53

ROUNDTABLE DISCUSSION AMONG OUTSIDE DIRECTORSWith society undergoingsignificant change, I would liketo support those who arerolling out Japanese soft
power around the world,
while maintaining the solidfunctioning of governance.

discussions and information exchange among officers ishighly significant. Meetings of the Board of Directors are
centered on discussions and reports about specific matters.
In contrast, the off-site meetings for officers have theobjective of free and open discussions, and I think thatthese meetings are an extremely beneficial initiative.

What BANDAI NAMCO Needs to Do
The COVID-19 issue has once again brought into
question the Company’s mission, and I think that
this has become an opportunity. In society as awhole, lifestyles associated with staying at home are gaining
ground, and these circumstances have led me to reaffirm
the importance of entertainment. The Company is fulfilling
the role of providing this value to people around the world.
I would like to see the Company continue to make further
progress toward being the Leading Innovator in Global
Entertainment in the world after COVID-19.
MatsudaA new action resulting from the FY2020.3 effectiveness evaluation involves the monitoring ofoverseas business risks. Due to time limitations, theexplanations of risks at the Group Business Report Meeting
had occasionally been limited to a news headline style of reporting. The method of advancing the proceedings has been changed.
Kuwabara

By restricting the areas addressed at the Group
MatsudaBusiness Report Meeting to two regions per
meeting, we have changed to a framework thatenables deep discussions of the details. As outside directors, we also attend the Group Business Report Meeting,and I am looking forward to being able to conduct evenmore dynamic discussions.
Outside directors do not work “inside” theCompany, and accordingly we do not understandeverything about the circumstances on the front
lines. However, I think it is important to recognize that theprovision of a variety of opinions from viewpoints that differ
from those of insiders is, itself, beneficial for the Company.
I definitely would like the inside officers and employees toexchange frank views with us. Through the dynamic exchangeof opinions, I would like to see the Company make active useof our views.
KawanaThe Company continues to hold off-site meetings
for officers in which all of the officers of BANDAI
NAMCO Holdings participate, including the outside
directors. These meetings, which offer a venue for focused
discussions about overall Group policies and the mediumto long-term outlook, have been held since FY2017.3. Eachtime there is a dynamic exchange of opinions. In FY2021.3,
we are discussing new working styles at the Group andmeasures to address digital transformation.
Kuwabara

The Company’s businesses extend over a wide
range. For example, in the Toys and Hobby business and the IP Creation business, the market
environments and expected competitors are entirely different.
To close the gap in the sense of urgency within the Group,
Noma

54

The world is currently under a dark shadow, andpeople want high-quality, appealing entertainment. Moving forward, I would like to see theCompany provide venues for both real and digital fun, andto fulfill the role of lifting the spirits of people around theworld. Discussions about the next Mid-term Plan are currently underway, and, as much as possible, I would like to
see these discussions include post-COVID-19 social changes,
and to see these changes linked to the next step.
Kuwabara

Masaya Nakamura, the founder of NAMCO, said
that department stores without entertainment
venues were not really complete, full-fledged
department stores. I feel that a lifestyle without entertainment is not enjoyable, that something important is missing.
The Company provides the value that completes the department store. This value is an essential part of life, andexpectations for the Company will likely increase going
forward. In an environment marked by the COVID-19
Noma

I think that the Company
is being called on to follow
an approach of pursuing
ethical entertainment for
a new era.

problem, the price-to-book ratio, which is nearly three times,
is a clear indication of that fact. I think that the Company isbeing called on to follow an approach of pursuing ethicalentertainment for a new era.

KawanaWhen traveling overseas recently, I often hearadmiring discussions about Japanese animations
and games, especially from young people. This isalso contributing to Japan’s international presence, and it
leads me to think that global entertainment originating inJapan will record further growth. With society undergoingsignificant change, I would like to support those who arerolling out Japanese soft power around the world, while
maintaining the solid functioning of governance.

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

People5 directors (1 internal and 4 outside)

Chair

Director (Outside) Yuzuru Matsuda

Members

President and Representative Director (Internal) Mitsuaki Taguchi, Director (Outside) Satoko Kuwabara,
Director (Outside) Mikiharu Noma, Director (Outside) Koichi Kawana

ESG SECTION

Status of Activities of the Personnel Committee in the Decision-Making Process for the Amounts of Compensation
The composition of the Personnel Committee in the decision-making process for the amounts of compensation
was as follows.

In FY2020.3, deliberations in the Personnel Committee were held a total of seven times. The chair and the members
all attended on each of these occasions, and the attendance rate was 100%. The major agenda items were as follows.
Meeting dates

Major agenda items

May 28, 2019

Amount of payments for the previous fiscal year’s performance-based bonuses and performance-based stockcompensation for the Company, Unit core companies, etc.
Calculation methods for the current fiscal year’s performance-based bonuses and performance-based stockcompensation
Progress report for next-generation managers development plan

June 23, 2019Concurrent positions of outside directors who also serve as advisors
Officer-related personnel issues accompanying the establishment of a new company

July 24, 2019

Confirmation of issues and matters within the advisory scope of the Personnel Committee
Progress report for next-generation managers development plan

September 18, 2019

Officer-related personnel issues for the next fiscal year (the Company)

November 28, 2019

Officer-related personnel issues for the next fiscal year (Unit core companies, etc.)
Progress report for next-generation managers development plan

January 16, 2020

Officer remuneration for the next fiscal year (the Company, Unit core companies, etc.)
Interviews with new director candidates

February 28, 2020

Progress report for next-generation managers development plan

Message from the Chair of the Personnel Committee
The Personnel Committee has five members, including four outside directors. The chair of
the committee is elected by a vote among the outside directors. I have been the chair of thecommittee since April 2019, and I strive to advance the proceedings of the committee while
receiving timely, appropriate support from the committee’s executive office. Agenda items
cover a wide range of areas related to human resources and compensation, including thenext-generation managers development plan.
In the nomination of the Company’s new directors, the Personnel Committee fulfills its role as
an advisory committee to the Board of Directors. We have open discussions based on a wide range
of information, such as skills required for positions and the past careers of candidates. However,I believe that our role as outside directors is not to judge the capabilities and aptitude of candidates,
but rather to monitor the selection process within the Company. Through objective, outside
viewpoints, we are working to secure fairness and transparency in personnel matters.

Yuzuru Matsuda
Outside Director

55

CORPORATE GOVERNANCE

The Company and the Group sufficiently understand the importance of various stakeholders related to the Company
and have a basic management policy of maximizing the corporate value of the Company and its shareholders’common interests over the medium to long term. In addition, the Company believes that construction of a solidmanagement foundation (corporate governance) is absolutely essential in order to emerge victoriously in the global
competition of the fast-changing world of entertainment. In accordance with this philosophy, the Company has
established a Basic Philosophy on Corporate Governance. Furthermore, we truly embrace the intent and spirit ofJapan’s Corporate Governance Code, and our initiatives on each principle of the Code are disclosed in “Initiatives
Related to Japan’s Corporate Governance Code.*”* For more information, please visit the Company’s website.

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

Corporate Governance System Strengthen the Management Oversight Function

Clarify the Responsibilities of Directors

NUMBER OF OUTSIDE DIRECTORS

4/12

Term of Directors
NUMBER OF INDEPENDENTDIRECTORS OR INDEPENDENT AUDIT &SUPERVISORY BOARD MEMBERS

NUMBER OF OUTSIDE AUDIT &SUPERVISORY BOARD MEMBERS

3/4

7

Organization

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

1Year or Less

Company with Company Auditors

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

General Meeting of Shareholders
Appointment /Dismissal

Appointment /Dismissal

Audit & Supervisory
Board Members
Audit & Supervisory Board

Auditing

Board of Directors

12 directors(of whom 4 are outside directors)

Independent Auditors

Dismissal

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

Appointment /Dismissal /Supervision

Appointment /Dismissal

Account Auditing /Reports on
Results

Independent Directors andAudit & Supervisory Board
Members Committee

7 independent directors (everyone)

Auditing

Representative Director
Directions
Directions

Reports

Reports

Personnel Committee

Reports

Reports

Reports

Cooperation

5 directors (of whom 4 areoutside directors)

Committees

Internal Auditing Division

Group CSR Committee
Group Risk Compliance Committee

Group Business Report MeetingGroup Management Meeting
Content Business Strategy Meeting

Support

Auditing

Group Information Security Committee
Internal Control Committee

IP Strategy Division Meeting
Policy Directions

Reports

Policy Directions

BANDAI NAMCO Group Companies
As of June 22, 2020

56

Board of Directors 

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

Audit & Supervisory Board 

members conduct audits regarding the status of businessexecution by the directors. In addition, Audit & Supervisory
Board members work together with Audit & Supervisory
Board members of Group companies, and in this way theeffectiveness 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
the Group’s business operations is monitored, issues are
identified and understood, and recommendations forresolving those issues are provided.

ESG SECTION

In regard to audits by the Audit & Supervisory Board, thefour 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, such as meetings of the Board of
Directors. In addition, in conformance with the Audit &Supervisory Board regulations determined by the Audit &Supervisory Board, the audit standards for the Audit &Supervisory Board, and the implementation standards andauditing plans related to internal control systems, and inaccordance with audit plans determined by the Audit &Supervisory Board, the Audit & Supervisory Board

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

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

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

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

Chair

Schedule

Agenda / Purpose

Board of Directors

President andRepresentative Director
Mitsuaki Taguchi
Director
Division General
Manager of the
Corporate Planning
Division
Yuji Asako
President andRepresentative Director
Mitsuaki Taguchi

Monthly andotherwise asneededDirectors, Audit & Supervisory Board
Decisions / reports on matters stipulated by law, items to be resolvedin accordance with authority standards, reports on the status of business members, other designatedexecution, reports regarding CSR, crisis management, and compliance employees

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

Directors, Audit & Supervisory Board
members, other designatedemployees

10 timesa yearDeliberations regarding issues extending across Units, other Groupmanagement issues, strategic deliberations

Directors (excluding outside directors),
other designated employees

Quarterly

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

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

Quarterly

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

Directors with related
responsibilities, other designatedemployees

Group Business
Report MeetingGroup Management
Meeting(including off-site
meetings)
Content Business
Strategy Meeting

IP Strategy Division
Meeting

Group CSR
Committee

Waigaya Meeting

Executive Officer
Division General
Manager of IP Strategy
Division
Yoshitaka Tao
Executive Officer
Division General
Manager of IP Strategy
Division
Yoshitaka Tao
President andRepresentative Director
Mitsuaki Taguchi

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

Participants

Directors (excluding outside directors),
other designated employees

Directors (excluding outside directors),
other designated employees

Note: Planned to be held in FY2021.3

57

CORPORATE GOVERNANCE

Policies and Processes for Appointing Directors and Audit & Supervisory Board Members 
Policies and Processes for Appointing Directors
The appointment of directors is based on candidates possessing broad knowledge and experience required for decisionmaking on company management, as well as possessing the track record and insight in the fields and businesses they
have experience in which are required in order to provide management oversight. In addition, the Company's basic
policy is to appoint at least two outside directors.
When appointing candidates for director, the Company considers the necessary abilities, experience, personality, andothers according to the role. Inquiries are made to the Personnel Committee and recommendations are received, andoutside directors hold interviews with new director candidates. Decisions are then made by the Board of Directors.

Appointing Outside Directors
The appointment of outside directors is made with consideration for an appropriate balance of individuals who
possess a wealth of experience as corporate managers,
attorneys-at-law who have thorough knowledge regarding compliance and other aspects of internal control,and individuals who possess deep academic knowledge
on corporate strategy.

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

Outside Directors and Outside Audit & Supervisory Board Members Of the Company’s 12 directors, four meet the conditions foroutside directors. The Company is working to strengthen
the management oversight function. In addition, of the four
Audit & Supervisory Board members (including two fulltime Audit & Supervisory Board members), three meet theconditions for outside Audit & Supervisory Board members.
They work together and monitor the Company’s internal
control situation on a daily basis.
The Company has established "Standards for the
Independence of Outside Directors and Outside Audit &Supervisory Board Members," and outside directors andoutside Audit & Supervisory Board members are appointed
in accordance with those standards. In the Company’s
judgment, the outside directors and outside Audit &Supervisory Board members meet those standards, there
is no concern that they will have a conflict of interest withgeneral shareholders, and they possess high levels of independence. Accordingly, the Company has notified the Tokyo
Stock Exchange (TSE) that they are all independent directors or independent Audit & Supervisory Board membersin accordance with TSE regulations.
The status of audits by internal auditors, audits by the
Audit & Supervisory Board members, and audits by the
independent auditors are reported to the Board of
Directors. By attending meetings of the Board of Directors,
the outside directors track the status of these audits andwork to maintain close ties.

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

Roles and Duties of the Personnel Committee Related to Officer Remuneration, Etc. 
The Company’s Personnel Committee, which is chaired byan outside director, holds appropriate deliberations about
the validity of systems for officer remuneration, including
the basic policy for the Group’s officer remuneration system,
the remuneration framework, the variable remuneration
framework, etc. These deliberations are based on objective
information related to officer remuneration (most recent
system status, trends at other companies, etc.). The com­mittee

58

then submits a report to the Board of Directors. The Company’s
Board of Directors accepts the report and makes the final
decision on the details of the officer remuneration system.
In addition, in the same way, the board of directors for eachof the Unit core companies, etc., accepts the decision of theCompany’s Board of Directors and makes the final decisionon the details of the officer remuneration system for the
Unit core company, etc.

In some cases, as necessary in the conduct ofdeliberations, external remuneration consultants, etc.,
attend meetings of the Personnel Committee or provide
information to the committee. This is intended to provide

support for effective deliberations and consensus formation.
Opinions, etc., as to appropriateness regarding the detailsof the report to the Board of Directors are not received.

Policy Regarding Compensation of Directors and Audit & Supervisory Board Members 

Remuneration framework
From the viewpoint of promoting the sharing of values withshareholders, steadily improving results each fiscal year,
and supporting an appropriate level of risk-taking toenhance the Company’s corporate value over the medium
to long term, the specific remuneration framework comprises fixed remuneration consisting of base remuneration(including remuneration whereby a fixed proportion of thebase remuneration is contributed to the shareholding
association for directors and officers to buy back theCompany’s shares) and variable remuneration consistingof performance-based bonuses and performance-based
stock compensation.
Each director contributes a fixed proportion of the baseremuneration 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 suchshares, as well as shares acquired through performancebased stock compensation.
Remuneration standards are determined by utilizing amanagement remuneration database with which data on
remunerations are aggregated and analyzed by an external
specialist organization, setting objective benchmarks inlight of the scales of the Company’s business operations
and other factors, and comprehensively taking into
consideration the proportion of medium- and long-term
performance-based remuneration within annual total
remuneration and the level of difficulty of achieving
business performance targets. Where the standard
performance for the period of the Mid-term Plan has
been achieved, the ratio of fixed remuneration to variable
remuneration within annual total remuneration shall be

about 50:50. Also, each director contributes a fixed proportion of the base remuneration to the shareholding association for directors and officers, and the ratio of share-type
remuneration which is the added amount of this contribution and the performance-based stock compensation shallbe slightly more than 20%.
Variable remuneration framework 
In regard to the Company’s variable remuneration, with theobjectives of clearly linking the numerical targets in the
Mid-term Plan and remuneration and of directly reflecting
evaluations of the management efforts of the Group’s
managers in remuneration payment amounts.
KPI targets / results for performance-based remuneration

ESG SECTION

The basic policy of the remuneration system for theCompany’s directors, excluding outside directors, is to createa remuneration framework that promotes the Company’s
continuous growth and improves the Company’s corporate
value over the medium to long term by promoting the sharing of values with shareholders, ensuring objectivity andtransparency so that the Company can adequately fulfill its
accountability obligations, and fostering a healthy sense ofentrepreneurship in the directors while taking into accountthe level of remuneration that will enable the Company tosecure and retain top-grade personnel.
Specifically, to strengthen awareness regarding theachievement of the numerical targets in the BANDAI NAMCO
Group Mid-term Plan (April 2018 – March 2021), which covers
the three-year period starting in April 2018; to clearly linktarget results and remuneration; and to strengthen awareness regarding shareholder return, under this frameworkchanges in the stock price from that in the first fiscal yearof the Mid-term Plan are reflected directly in remuneration.
Furthermore, the same basic policy applies to the directors of the five core companies of the Group’s Units:
BANDAI CO., LTD., BANDAI NAMCO Entertainment Inc.,BANDAI NAMCO Amusement Inc., BANDAI NAMCO Arts
Inc., and SUNRISE INC., as well as to the directors of
BANDAI SPIRITS CO., LTD.

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

Consolidated operating profit of ¥60,000 million or higher

Performance-based bonuses
In regard to the Company’s performance-based bonuses,
the payment amount is decided based on the Group’s
consolidated operating profit each fiscal year, within therange of 0% to 200% of the predetermined standard
amount. The payment amount is limited to the smaller ofthe ¥450 million limit for cash bonuses based on a resolution of the Company’s 10th Ordinary General Meeting of
Shareholders or 1.5% of profit attributable to owners ofparent. For executive directors other than the President
and Representative Director, in addition to the evaluation
portion of the Group’s consolidated operating profit, an
individual evaluation portion (qualitative evaluation portion)is included.
Performance-based stock compensation
Performance-based stock remuneration is provided only
when the Group’s consolidated operating profit is ¥60,000
million or higher. Whether or not performance-based stockcompensation will be paid and the level of payment is decided
each fiscal year during the period of the Mid-term Plan.
The framework is as follows. In accordance with position,
the reference number of share units is determined in advance.
The common stock of the Company and cash are deliveredor provided in accordance with the number of provided share
units, as decided according to the degree of attainment of
the performance target for consolidated operating profit.
Performance-based remuneration results
Consolidated operating profit in FY2020.3¥78,775 million

Achievement rate
in regard to standard
results

131%

Payment ratio for
performance-based
bonuses

200%

Payment ratio for
performance-based
stock compensation

100%

59

CORPORATE GOVERNANCE

Procedure for determining compensation
The policy for remuneration, the remuneration framework,and the structure for performance-based remuneration for
directors, excluding outside directors, shall be decided at
Board of Directors’ meetings after receiving opinions fromthe Personnel Committee, in order to elicit outside directors’ adequate participation and appropriate advice. In thecourse of deliberations by this committee, sufficient information is provided to the outside directors so that they areable to perform their analysis, including for instance byasking for advice from external specialist organizations
where necessary.
In regard to the method of calculating performancebased stock compensation, the matter is submitted to
the Personnel Committee. A precondition is that among
committee members, executive directors do not participate
in deliberations regarding decisions on performance-based
stock compensation. When all independent outside

Shareholdings Standards for and approach to the classification of
investment shares
The Company holds as investment shares only crossshareholdings that can be recognized to contribute toincreasing the corporate value. The Company does not holdinvestment shares for pure investment purposes (investment
shares held exclusively with the objective of obtaining profits
through stock price fluctuations or stock-related dividends).
Investment shares held for purposes other than pureinvestment
The Company has a basic policy of implementing crossshareholdings on a strategic, limited basis, provided thatholding such shares can be recognized to contribute toincreasing the Company’s corporate value by further
bolstering business partnerships and by maintaining and/or strengthening the stable business relationship withsuch companies. Such a determination is based on factors
including the companies’ business developments, thestatus of business with the companies, and the market
price of the shares.
Also, each year, the Company shall implement a
sufficient review, including whether or not to continue tohold cross-shareholdings, by the Board of Directors of all
cross-shareholdings from a medium- to long-term
perspective, taking into consideration the economic
rationale and importance of the cross-shareholdings, suchas the associated risks and returns, business relationships,
the cost of capital, etc. The Company shall also reflect theresults of these reviews in explanations regarding theobjectives of the cross-shareholdings, etc. As a resultof the review in FY2020.3, the Company confirmed theappropriateness of holding all of the shares held.

Compliance and Risk Management 

In order to ensure abidance of laws, respect of ethicalbehavior, and compliance with internal regulations, theCompany has set in place the BANDAI NAMCO Group
Compliance Charter to define behavioral guidelines for
directors, etc., and employees of the Company and its
subsidiaries, and is working to ensure that they are familiar
with the Charter, through putting up posters and distributing a Compliance Book. In addition, the director in chargeof compliance of the Company strives to strengthen thecompliance systems by carrying out management of theoverall compliance of the Group and periodical training60

directors have agreed on performance-based compensation, the decision is made through a resolution of the Boardof Directors. In addition, at the Unit core companies, etc., in
accordance with decisions based on the resolution of theCompany’s Board of Directors, decisions are made throughresolution of each company’s board of directors.
2020.3
Total amount ofcompensation,etc., by type(¥ million)

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

Performancebased stockcompensation

Number of
eligible officers(People)

482

189

293

4

Audit &
Supervisory
Board members

24

24

—

1

Outside officers

91

91

—

7

Officer category

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

In exercising the voting rights of cross-shareholdings,
the Company does not unconditionally agree with theproposals of the companies whose shares it owns. Rather,voting rights are exercised based on whether or not the
proposals will contribute to increasing the Company’s
corporate value through the maintenance and/or bolsteringof the business partnership and business relationship withsuch companies.
Number of issues and carrying amount on balance sheet
Number of issues

Total carrying amount onbalance sheet (¥ million)

Unlisted shares

6

1,320

Shares other than unlisted
shares37

46,333Issues for which the number of shares increased in FY2020.3

Number of issues

Unlisted shares
Shares other than unlisted
sharesTotal acquisition cost
related to the increasein the number of shares(¥ million)

—

—

2

504

Issues for which the number of shares decreased in FY2020.3

Number of issues

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

Unlisted shares

22

Shares other than unlisted
shares1

28

using e-learning tools and other programs. The Company
also investigates the degree of actual awareness throughdistributing surveys on compliance awareness to all
employees and strives to strengthen the compliance systems
BANDAI NAMCO Group Compliance Charter

The Charter brings together matters that need to be strictly observed in businessexecution by all Group officers and employees. Rules related to appropriate products and services / fair dealings, respect for all employees, information disclosure,respect for and usage of intellectual property, protection of information andresources, rejection of anti-society groups, harmony with the environment, andharmony with society are clearly expressed.

by sharing the results of the survey with each subsidiarydirector in charge of compliance. Furthermore, the Company
has established and operates a whistleblowing system toprovide a point of contact for internal and external consultations and an Audit & Supervisory Board Members Hotline toallow direct reporting to Audit & Supervisory Board members.
The Company and its major subsidiaries have also included
provisions in their internal regulations to ensure the protectionof whistleblowers.
For risk management, the Company and its subsidiaries
have established guidelines on risk management and haveformulated and operate a Business Continuity Plan (BCP)
and a Business Continuity Management (BCM) system for
the Group. The Company is working to ensure that directors, etc., and employees of the Company and its subsidiaries
are well aware of these guidelines and systems. Also, in

Takeover Defenses 

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

ESG SECTION

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

working to prevent the spread of COVID-19, we are holding
regular meetings of the Crisis Management Committee,
with a special focus on preventing the spread of COVID-19.
Participants include the Company’s directors and otherpeople in charge from related departments. At these meetings, we are sharing information and deliberating on policies.
The results are made known within the Group and initiatives are advanced in accordance with the policies of eachcompany. Should violations of compliance occur or riskarise, a meeting of the Group Risk Compliance Committee,
chaired by the President and Representative Director, isconvened immediately to ensure a quick and appropriate
response. Each month, the Group Risk Compliance
Committee Secretariat reports to the Board of Directors
any information on compliance and risk and how they havebeen managed in the Company and its subsidiaries.

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 formulated the Groupwide “Important CSR Themes” and made them available on the Company’s website. We also hold meetingsof the Group CSR Committee (chairperson: president) and the Group CSR Subcommittee, which is a subordinate organization under the Group CSR
Committee. In these ways, we are implementing initiatives to strengthen CSR on a Groupwide basis. Moreover, we disclose the details of these 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 disclosure of 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 in accordance with the IR policy. In addition, thestatus of IR activities and the reactions of investors andanalysts are shared with directors and continually communicated as feedback to the Unit core companies andthroughout the Group.

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

Results of Major IR Activities in FY2020.3
Results presentations for investors and analysts

2 (164 people)

Results telephone conferences for investors
and analysts

2 (160 people)

Overseas IR

1 (1 region)*

Separate meetings for investors and analysts

288 people

Presentations for individual investors in Japan

2 times (252 people)** Implemented three times each in an ordinary year. In FY2020.3, due to the
influence of the spread COVID-19, there was a reduction in implementation due toself-restraint in regard to overseas travel and events.

In presentations for investors
and analysts, explanations
are provided directly by the
representative director,
full-time directors, andpresidents of Unit corecompanies who are directorsof BANDAI NAMCO Holdings.

61

OFFICER SYSTEM
As of June 22, 2020

Inside Directors
Position
Name
Areas of responsibility

President andRepresentative Director

Number of Company
shares owned

Reasons for appointment

80,100Mr. Taguchi has supervised the business appropriately since he wasappointed as President and Representative Director of the Company in 2015,and he achieved the previous Mid-term Plan through his leadership skills
based on extensive business experience and broad knowledge. He wasappointed director as the Company considers him capable of ensuring that
the Group continues to grow.

49,100

Mr. Kawaguchi possesses extensive experience, achievements, and knowledge in the Toys and Hobby business and has driven the business forward
as the President and Representative Director of BANDAI CO., LTD., whichis the core company of the Group’s Toys and Hobby business, since 2015.
In addition to these factors, he was appointed director as the Company
considers him capable of enhancing collaboration in Group management.

39,100Mr. Ohtsu possesses specialist expertise as a certified public accountant, as
well as extensive experience and achievements as Division General Managerof the Group Administrative Headquarters of the Company. He was appointed
director as the Company considers him capable of strengthening Groupmanagement structures and ensuring highly transparent management.

41,100

Mr. Asako possesses extensive experience, achievements, and knowledge
relating to management and administration, including business planningand accounting, and also has experience in roles where he was responsiblefor internal and external communications, such as IR, SR, and PR. He wasappointed director as the Company considers him capable of implementing
the Group’s management strategies and seeking a sustained increase incorporate value.

17,050Mr. Miyakawa possesses extensive experience, achievements, andknowledge from his wide-ranging involvement in multiple businesses in theGroup. He has driven the business forward as the President and Representative
Director of BANDAI NAMCO Entertainment Inc., which is the core companyof the Network Entertainment business in the Group, since 2019. He wasappointed director as the Company considers him capable of building closer
ties between the Network Entertainment business and Group management.

20,100Mr. Hagiwara possesses extensive experience, achievements, and knowledge in the Real Entertainment business. He has driven the businessforward as the President and Representative Director of BANDAI NAMCO
Amusement Inc., which is the core company of the Real Entertainment
business in the Group, since 2014. He was appointed director as theCompany considers him capable of building closer ties between the RealEntertainment business and Group management.

28,700

Mr. Kawashiro possesses extensive experience, achievements, and knowledge in the Visual and Music Production business. He has driven thebusiness forward as the President and Representative Director of BANDAI
NAMCO Arts Inc., which is the core company of the Group’s Visual andMusic Production business, since 2012. He was appointed director as theCompany considers him capable of building closer ties between the Visualand Music Production business and Group management.

14,400

Mr. Asanuma possesses extensive experience, achievements, and knowledge from his wide-ranging involvement in multiple businesses in the Group.
He has driven the business forward as the President and Representative
Director of SUNRISE INC., which is the core company of the IP Creation
business in the Group, since 2019. He was appointed director as theCompany considers him capable of building closer ties between the IP
Creation business and Group management.

Mitsuaki Taguchi

Executive Vice President and Director
Masaru Kawaguchi
Director in charge of theToys and Hobby Unit

Director
Shuji Ohtsu
Division General Manager of theGroup Administrative Headquarters

Director
Yuji Asako
Division General Manager of the
Corporate Planning Division

Director (Part-time)
Yasuo Miyakawa
Director in charge of the Network
Entertainment Unit

Director (Part-time)
Hitoshi Hagiwara
Director in charge of the RealEntertainment Unit

Director (Part-time)
Kazumi Kawashiro
Director in charge of the Visual andMusic Production Unit

Director (Part-time)
Makoto Asanuma
Director in charge of the
IP Creation Unit

Note: N umber of shares held is as of the end of March 2020. Attendance rates at meetings of the Board of Directors are for FY2020.3
Member of the Personnel Committee

62

Attendance at meetings ofthe Board of Directors(FY2020.3)

Major experience and expertise

Corporate
management

Operational experience
Toys and
hobby

Game
content

Facilities/
machines

Visual/music

Finance and Environment
International
IP creation/ New business accounting
and society
nurturingcreation

Knowledgeof othercompanies

Number ofmeetings
attendedNumberof meetings
held

19

19
ESG SECTION

19

19

19

19

19

19

19

63

OFFICER SYSTEM
As of June 22, 2020

Outside Directors
Position
Name

Director (Outside)
Yuzuru Matsuda

Director (Outside)
Satoko Kuwabara

Director (Outside)
Mikiharu Noma

Director (Outside)
Koichi Kawana

Major concurrent positions

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

Attorney at Law Partner of GAIEN PARTNERS
Outside Auditor of Unicafe Inc.

Professor, Graduate School of Business
Administration, Hitotsubashi University
Business School
Outside Auditor of Nice Corporation
Outside Audit & Supervisory Board Member of
DarWin Capital Partners Ltd.
Vice Chairman of JGC HOLDINGSCORPORATION
Outside Director (Audit & Supervisory
Committee Member) of COMSYS Holdings
Corporation
Outside Director of TOKYO ELECTRON DEVICE
LIMITED

Number ofCompany shares
owned

Reasons for appointment—

Given Mr. Matsuda’s extensive experience in corporate
management and his excellent character and insight, theCompany anticipates that he will 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 theduties of an outside director appropriately.

—

Although Ms. Kuwabara has not been involved incorporate management other than through serving as an
outside director, given her many years of experience as
an attorney-at-law, the Company believes that she will beable to further strengthen management oversight andchecking functions, mainly from a legal risk perspective,
and thus believes that she will be able to perform theduties of an outside director appropriately.

—

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

—

Mr. Kawana possesses extensive knowledge andexperience in corporate management. The Company
anticipates that he will be able to further strengthen
management oversight and checking functions, andintroduce a global managerial perspective based on his
extensive experience working overseas, and thus believes
that he will be able to perform the duties of an outside
director appropriately.

Number ofCompany shares
owned

Reasons for appointment

3,000

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

100

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

10,400Given his many years of experience as an
attorney-at-law, the Company expects Mr.
Sudoh to utilize his wealth of knowledge andexperience in legal affairs for the audit &supervisory system of the Company.

Audit & Supervisory Board Members
Position
Name

Major concurrent positions

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

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

Attorney at Law Partner in Sudoh & Partners

Audit & Supervisory
Board Member(Outside)

Outside Audit & Supervisory Board Member of
MITSUI-SOKO HOLDINGS Co., Ltd.

Osamu Sudoh

Statutory Auditor of Keikyu Corporation

Audit & Supervisory
Board Member(Outside)

Outside Audit & Supervisory Board Member of
The Resolution and Collection Corporation

Katsuhiko Kamijo

64

Outside Corporate Auditor of PRONEXUS INC.

—

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

Major experience and expertise
Corporate
management

Finance/accounting

International

Law

Knowledge of othercompanies

Independence

Attendance at meetings of the Boardof Directors (FY2020.3)
Number ofmeetings attended

Number ofmeetings held

19

19

19

ESG SECTION

19

15

15

Note: M r. Koichi Kawana was elected at the 14th Ordinary General Meeting of Shareholders held on June 24, 2019, and accordingly the
number of Board of Directors’ meetings on which the attendance rate is based differs from that of other directors.

Major experienceand expertise

Businessknowledge

Independence

Attendance at meetings of the Boardof Directors (FY2020)
Number ofmeetings attended

Number ofmeetings held

Attendance at meetings of the Audit &Supervisory Board (FY2020.3)
Number ofmeetings attended

18

13

19

14

Number ofmeetings held

Law

Knowledgeof othercompanies
Finance/accounting

19

14

Law

19

14

Taxes

19

14

Note: N umber of shares held is as of the end of
March 2020. Attendance rates at meetingsof the Board of Directors are for FY2020.3.
Member of the Personnel Committee
Member of the Independent Directors and Audit &Supervisory Board Members Committee

65

PERSONNELSTRATEGY

MAKE PERSONNEL THE CORE OF THE GROUP

Cultivating Diversity and a Senseof Unity in Targeting the Realization of
ALL BANDAI NAMCO Concept
Aiming to be “a group centered on human resources management, with a focus onentertainment and imagination,” BANDAI NAMCO has worked to leverage active
personnel exchanges in order to cultivate a sense of unity through the
ALL BANDAI NAMCO concept. Moreover, in accordance with the concept of “a diverse
team with a single goal,” we are working to discover and nurture diverse humanresources who are eager to take on challenges.
With an emphasis on this sense of unity and diversity, we will advance the creationof environments in which employees with a wide range of individual characteristics
can work with motivation and energy.

Naomi Tobita
Executive Officer
Deputy Division General Manager of
Administrative Headquarters
BANDAI NAMCO Holdings Inc.
Joined BANDAI CO., LTD., in 1986. Engaged
in planning and development in the girls toy
department and the digital department, etc.
Moved to current position after working as
director of BANDAI CO., LTD.

Addressing the Spread of COVID-19
Accompanying the spread of COVID-19, the BANDAI NAMCO
Group implemented emergency countermeasures. With ourhighest priority on the health and safety of employees andtheir families, we implemented a variety of initiatives.
These included supporting working from home, paying
special allowances for setting up to work from home,
implementing staggered commuting and flextime to avoid
congestion during rush hour, and offering a special leavesystem for people who are not feeling well. From theperspective of enhancing work-life balance and laborproductivity, we had previously advanced measures toachieve flexible working styles, and in these circumstances,
we believe that the measures that we had previously been
implementing have been rapidly adopted.
In addition, the experience of different types of working
styles has made employees aware of many issues regarding work efficiency and communication. Moving forward,
we believe that we will need to leverage this experience andtake steps to address the changing environment whileworking to create new working styles that reflect the distinctive characteristics of the BANDAI NAMCO Group. For
example, we will need to verify the operational status of the66

measures that we have implemented due to the COVID-19
crisis and establish a framework with an enhanced focus
on productivity. Also, with consideration for diverse working
styles, we will need to rapidly formulate systems for managing goals and results and systems for evaluations. Goingforward, we will approach changes as opportunities andadvance initiatives that enable employees to work energetically even in new environments.

Nurturing Human Resources andPromoting Active Careers for Women in
Order to Cultivate a Sense of Group Unity
The ALL BANDAI NAMCO concept is indispensable for thegrowth of the BANDAI NAMCO Group. Under ALL BANDAI
NAMCO, we work to transcend the barriers between
regions and Units and work together as a unified Group.
To cultivate this type of attitude, we hold Global Training,a Groupwide training program, once a year. In FY2020.3,
the Global Training program was implemented in two levels.
The Cross-Unit Lecture was centered on employees with
about three years of experience after entering overseas
Group companies, while the Cross-Unit Discussion was forNumber of Consolidated Employees

9,052

people2020

Number of Female
Managers*

147

people2020

Ratio of Female Managers
to Total Managers*

18.1%
2020

For the Fiscal Years Ended March 31* Figures are for the five Unit core companies

Employment Ratio for People with Disabilities*

2.10%
2019

2.20%
2020

For the Fiscal Years Ended March 31* For consolidated subsidiaries that use the services of
special subsidiary BANDAI NAMCO Will INC.

ESG SECTION

Koji Hamano
General Manager of Human Resources
Administrative Headquarters
BANDAI NAMCO Holdings Inc.
Joined NAMCO LIMITED (currently, BANDAI
NAMCO Entertainment Inc.) in 1996. Moved tocurrent position after working in amusement
facility operations and in personnel at various
companies.

people in managerial positions and people with administrative responsibility in Japan and overseas Group companies.
In the Cross-Unit Lecture, there were 18 participants fromoverseas and 8 from Japan. They deepened their understanding of the Group by visiting the front lines of IP creationand various bases in Japan. In the Cross-Unit Discussion,
there were 8 participants from overseas and 8 from Japan.
They discussed such topics as the future direction of theGroup. One specific theme was the global rollout of Mobile
Suit Gundam. The participants were able to have enthusiastic
discussions about the types of business development
initiatives that could be implemented for the worldwide
IP rollout.
In initiatives to promote active careers for women, theJ Project training has been provided to women who are
expected to have active careers as managers. In FY2020.3,
the program was further subdivided into two courses —J Project FIRST and J Project NEXT. The J Project FIRST
training program provides education at an early stage forwomen who aim to become managers. J Project NEXT wasoffered to women who have already served in managerial
positions. By supporting female employees through training,
we will strive to expand the number of female employees
who positively take on the challenge of potential promotions.

Diversity in Accordance with the Concept
of “Same Spirit, Different Talents”
As an entertainment group, we need to continually provide
the world with new value. To that end, we must respondrapidly to change and continue to take on challenges without
fearing failure. In human resources, as we conduct hiring,development, and evaluation, we keep in mind the profile
of people who can approach change in a positive manner,are eager to take on challenges, and can achieve goals inaccordance with their own convictions.
Furthermore, the concept of “same spirit, different
talents” is deeply rooted within BANDAI NAMCO. Concentrating
the diverse talents of people with the same spirit gives riseto new concepts and significant capabilities. Moving forward,
we will work to create environments in which all employees
can work together energetically while leveraging their individuality, and will strive to contribute to the Group’s diversity
and sense of unity.

67

PERSONNELSTRATEGY

MAKE PERSONNEL THE CORE OF THE GROUP

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

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

Groupwide recognition system: BANDAI NAMCO Awards

Initiatives to Support Challenges with Outside Partners
To support people who are taking on challenges, including not
only employees but also external partners, we are implementing
initiatives that involve the co-creation of IP and businesses.
These include the BANDAI NAMCO Accelerator, which accepts
business plans from external companies and facilitates co-creation
initiatives targeting their realization, and the Dream Support
Project, which aims to support the dreams of next-generation
creators by assisting them with skill enhancement and funding.

BANDAI NAMCO Accelerator

Dream Support Project

Initiatives to Cultivate Global Human Resources
The cultivation of global human resources is essential for theGroup to achieve sustained growth over the medium to longterm. In addition to actively implementing personnel rotations
that transcend the boundaries between regions, we are also
operating the Global Training program for employees worldwide.
Under this program, we offer the Cross-Unit Lecture, which isfor young employees, and the Cross-Unit Discussion, which isfor managers. We are taking steps to promote understandingof the IP axis strategy, such as through observation of development bases, discussions, and other initiatives. In addition, we
are working to cultivate an awareness of the ALL BANDAI
NAMCO concept and to foster the spirit of taking on challenges.

Global Training

Initiatives That Use Stock
We introduced an employee stock ownership plan with theobjectives of fostering interest among employees in the activitiesof the entire Group from the perspective of shareholders, as wellas cultivating a sense of unity within the Group. Moreover, Group
employees in Japan who agreed to contribute a set amount or

68

more each month for three years or more from April 2018,
when the Mid-term Plan started, received 50 shares of BANDAI
NAMCO Holdings stock. In addition, proposal briefings areprovided to employee shareholders to explain the importanceof the shareholders’ meetings and the details of proposals.

Initiatives for New Working Styles That Draw On BANDAI NAMCO’s Distinctive
Characteristics
Initiatives for Working While Remaining Healthy in Body and Mind
We are implementing a variety of initiatives so that employees
can work while remaining healthy in body and mind. As countermeasures to long work hours, we have taken such steps as
establishing a limit for overtime hours and implementing

working hour intervals. Moreover, as a mental health measure,
we have implemented stress checks and established a systemfor personal consultations with industrial physicians.

Initiatives to Prevent the Spread of the COVID-19 Infection
With our highest priority on the health and safety of employees
and their families, we have implemented thorough infection
prevention measures. In addition, we have aggressively introduced
such initiatives as working from home, staggered commuting,and flextime, and have taken such steps as implementing a
special leave system for people who are not feeling well andpaying special allowances for setting up to work from home.
Moreover, we are approaching the changes resulting fromthe ongoing influence of COVID-19 on society as opportunities

to transition to new working styles, and established the
BANDAI NAMCO Group New Working Style Guidelines. These
guidelines recommend such measures as advancing workclassification and efficiency; enhancing work-life balance;
creating new forms of communication that integrate online
and real elements; introducing flexible working styles, suchas working from home and rotation work; effectively using
satellite offices; and moving away from the use of paper.
ESG SECTION

Addressing Diverse Working Styles
The Group is operating a variety of systems to achieve worklife balance, such as systems to support child-rearing withpeace of mind. Other initiatives include the introduction ofa system to provide congratulations money for childbirth,the provision of facilities to nursery schools certified by

Tokyo Prefecture, and the introduction of satellite offices.
Furthermore, we have introduced systems that address family
circumstances, including not only child-rearing but also family
nursing and caregiving, etc.

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

Childcare leave

Can be taken until the day the child turns two years old.
Available until March 31 of the year in which the child completes sixth grade. In addition to shorter working hours, includes
exemption from overtime and late-night work.
Male employees can take up to five days of paid leave when their wife gives birth.
Normal working hours are determined not on a daily basis but on a monthly basis.
Up to March 31 of the year in which the child completes sixth grade, core time can be adjusted in line with child-rearing circumstances.
Provision of ¥200,000 at the birth of each of the first and second children.

Childcare support
Childbirth leave for male employees
Flextime system
Child-rearing flextime system
Provision of support funds forchildbirth and childcare

Lifestyle-support system

Provision of ¥2,000,000 at the birth of each of the third and subsequent children.
(Acquisition of childcare leave for one continuous week or more is a requirement for the receipt of this support.)
Introducing lifestyle-support system with the objective of establishing supportive environments for employees in a variety ofhousehold circumstances.
Offering 30-day leaves as well as shorter working hours / flextime, in accordance with the reason.
Examples of reasons: (1) truant children, (2) infertility treatment, (3) family nursing or caregiving for spouses and 1st and 2nd
degree relatives of employees, and (4) receiving outpatient care at medical facilities due to disease

Note: Systems used by Group companies are different.

Initiatives to Facilitate Active Participation by Diverse Human Resources
The BANDAI NAMCO Group is working to create environments
in which diverse human resources with abundant individuality
can work energetically. We offer programs to develop employees inline with a wide range of positions and characteristics, fromnew employees to managers. In addition, promotions are notinfluenced by gender, age, nationality, or cultural background.
Examples of Groupwide Development Programs• Providing New Officer Training, with the objective of developing the next
generation of leaders• Implementing J Project FIRST (for young employees) and J Project NEXT
(for managers) with the objective of promoting active careers for women

J Project FIRST

Initiatives to Promote Active Careers for Diverse Human Resources• Establishment of special subsidiary for promoting the employment of people
with disabilities• Employment of seniors (hiring people who are past the retirement age but
want to continue working as senior employees, introducing a retirement age of
65 in certain companies, framework for the active employment of seniors/
experienced employees)

Establishment of special subsidiary for promoting theemployment of people with disabilities

69

PERSONNELSTRATEGY

MAKE PERSONNEL THE CORE OF THE GROUP

Initiatives for Human Resources on the Front Lines of Visual Product Creation—IP Creation Unit—
In the IP Creation Unit, we believe that the creation of stable environments in which internal and external staff canmaintain their enthusiasm, are well treated, and can work with peace of mind, will lead to the continued provisionof high-quality products in the future. Accordingly, we are striving to enhance our workplace environments and todevelop our human resources.

Achieving Workplace Environments in Which Human
Resources Can Work Actively and EnergeticallyIn April 2019, SUNRISE INC., the core company of the IP Creation Unit, changed theemployment status of approximately 230 staff members, who had been working underbusiness consignment contracts, etc., to full-time, permanent status.
Previously, in animation production the main style of working involved the flexible
assembly of staff members for each visual product. SUNRISE concluded businessconsignment contracts with staff members and advanced production in a free manner.
However, the IP axis strategy is a strength of the BANDAI NAMCO Group, and under
this strategy it is better to have staff members work over the long term with a focus on
IP, rather that having them work on a product-by-product basis. As full-time, permanent
employees, they will be able to create and nurture IP from a long-term perspective.
In addition, this initiative also has the benefit of enabling staff members to enhancetheir concentration on product creation because they have stable incomes and aretreated well. In addition, they can also participate in internal training and job rotations,
including temporary transfers to Group companies. Furthermore, through the implementation of labor management in accordance with company guidelines, this initiative
is expected to support the maintenance of employee health in body and mind.
Moving forward, we will continue to implement a variety of initiatives to enableenergetic, active work by our human resources, who are indispensable in the creationof high-quality animations.

Internal training

Developing the Creators Who Will Support the Next
Generation of Animations
Media is diversifying, and Japanese animations are drawing attention around theworld. In this setting, the number of animations made by the entire industry is
increasing each year. On the other hand, the labor shortage on the front lines of
production has become a serious challenge, and issues include developing young
creators who will support the next generation and passing down production skills.
In response to these circumstances, SUNRISE INC. established Sunrise Sakuga
Academy, which aims to develop the human resources who will support the next
generation of animations.
Under this system, SUNRISE Drawing Academy selects approximately 20 people
between the ages of 18 and 25 from the applications received in accordance with theapplication guidelines. These students are then provided training related to drawing
animations. The aim is for the students to acquire skills and knowledge that will
enable them to actively contribute to actual work after a year of practical training,with working animators serving as instructors. The training is provided for free, andwe have established a system for grants of ¥100,000 per month so that students canconcentrate on acquiring skills without worrying about living expenses. (There areconditions for these payments.) Students who pass the graduation exam are given theopportunity to work as staff members at SUNRISE after graduation. The graduates include
people who are working in such positions as director and animation director for products
made by companies in the IP Creation Unit, such as the Mobile Suit Gundam series,
the Love Live! series, and the Aikatsu! series.
In April 2021, we plan to open the SUNRISE Art Academy. Through these initiatives,
we are working to build foundations for the industry to support the continued provisionin the future of high-quality animation products, and to develop the creators who will
support the Group’s future IP creation.

70

Visual product studio

SUNRISE Drawing Academy

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 

The BANDAI NAMCO Group has identified the Groupwide CSR Initiatives, which incorporate environmental and social
responsibilities, economic responsibilities, and legal and ethical responsibilities. In addition, we have formulated the BANDAI
NAMCO Group’s Important CSR Themes, which require special initiatives. Furthermore, each Unit and affiliated business company
formulates its own CSR Major Initiative Themes and leverages the special characteristics of its operations to implement activities inaccordance with those themes.

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

ESG SECTION

MissionCSR Action Concept

Fun For the Future!
The Group’s CSR Initiatives
1 Environmental and Social

Responsibilities

3 Legal and Ethical Responsibilities

2 Economic Responsibilities

Safety and Cleanliness of
Products and Services

Environmental Consideration

The Group strives to further enhance the safety and cleanlinessof its products and services, which are the foundation of theprovision of “Dreams, Fun and Inspiration,” so that customers
can enjoy them with peace of mind.

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

BANDAI NAMCO Group’s
Important CSR Themes
Policies Regarding Influence on
Society of the Group’s Content and Products
To provide “Dreams, Fun and Inspiration” to people around theworld, we value freedom of expression, and are working toappropriately provide customers with a wide range of content
and products.

Supply Chain Management
To achieve qualitative improvements in the “Dreams, Fun andInspiration” that we provide, the Group is working to enhance
supply chain management in each of its business areas.

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

71

CSR INITIATIVESBANDAI NAMCO Group’s CSR Promotion System 
The BANDAI NAMCO Group has established the Group CSR Committee, which comprises the directors (excluding outside
directors) of BANDAI NAMCO Holdings and others. The committee is chaired by the President and Representative Directorof BANDAI NAMCO Holdings. In this way, the Group is advancing CSR activities rapidly and in a manner that is integrated
with operations. In addition, in accordance with the idea that the promotion of CSR activities is an important initiative fromthe perspective of management strategy, the status of activities is periodically reported to the Company’s Board of Directors.
Moreover, to advance the Important CSR Themes, we have established the Group CSR Subcommittee, which is a subordinate
organization under the Group CSR Committee. The manager of the Group CSR Subcommittee is a director of BANDAI
NAMCO Holdings with related responsibilities (Chief ecology Officer), and the participants include the people in charge of
CSR at each Unit’s core company and at affiliated business companies. The subcommittee’s activities include sharing thestatus of progress with the important initiative themes in each business, exchanging information, and discussing various
issues. In FY2021.3, in preparation for the next Mid-term Plan, we are also implementing reviews of the appropriatenessof the Important CSR Themes. The specific measures formulated by the Group CSR Subcommittee are implemented after
being discussed by the Group CSR Committee.

CSR Promotion System
Board of Directors (CSR matters reported as needed)
Supervision

Reports

Group CSR Committee

Chair	President and Representative Director,
Mitsuaki Taguchi
Participants	Directors of BANDAI NAMCO Holdings Inc.
(excluding outside directors), other designatedemployees
Schedule

Semiannually and otherwise as needed

Agenda/Purpose	Discussions and sharing of information related to
the Group's important CSR strategies, discussions/deliberations regarding proposals or reports to theBoard of Directors, supervision of the Group CSR
Subcommittee, supervision of progress of important
items by each Unit and affiliated business company

Group CSR Subcommittee

Manager	Director of BANDAI NAMCO Holdings
with related responsibilities (Chief ecology
Officer)
Participants	People in charge of CSR at each Unit’s corecompany and major affiliated businesscompanies
Schedule	Quarterly and otherwise as needed

72

Unit CSR Projects

Agenda/Purpose • Advancing the Important CSR Themes(major initiative themes)• Considering and advancing activities based on
the concept of Fun For the Future!

• Reports on the details of the activities of eachcompany, information exchange, discussion ofvarious issues, etc.

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

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

Important CSR Theme Formulation Process <Important Viewpoints for the Formulation of the 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
BANDAI NAMCO Group Environmental Policy
BANDAI NAMCO Group Environmental VisionB ANDAI NAMCO Group Basic Policy on Social Contribution<Perspectives That Are Referenced during Verification>

1 BANDAI NAMCO Group guidelines related to CSRTrends in Japan and overseas / Demands of society

2 BANDAI NAMCO Group Mid-term PlanInterviews with outside experts

3 Standards such as the GRI Guidelines, ISO 26000

BANDAI NAMCO Group Mid-term Plan

(Japanese translation), and the Ministry of the

ESG SECTION

The BANDAI NAMCO Group’s Important CSR Themes were
established through a process of reconfirming which CSR
themes are the most important from the perspective of the
BANDAI NAMCO Group and its stakeholders.
First, 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.
The appropriateness of the Important CSR Themes isevaluated for each Mid-term Plan, and related measures
are implemented after we confirm that there are no inconsistencies between the themes and the demands of society.

Environment’s Environmental Reporting Guidelines
4 Initiatives of corporations with innovative CSR activities
5 Opinions of outside experts

Important CSR Themes — Establishment and Process Steps

Implementation of measures

Implemented every mid-term plan
STEP

1Gain understandingof society’s
expectations throughinterviews withoutside experts, etc.
(Selection of specificitems related to CSR
activities)

STEP

2

Evaluate theimportance of thespecific items related
to CSR activities

STEP

3

Organize and classify
high-importancespecific items related
to CSR activities
and consolidatethem within the 4
important themes

STEP

Establishmentof the Group’s
Important CSR
Themes4

Individual Units decidemajor initiative themes
based on the important
themesSTEP

5

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

Periodic verification of important themes73

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

Pursuing Product Designs and Materials with Consideration for Safety For each product, the BANDAI NAMCO Group anticipates
misuse by children and a wide range of customer needs,
and is working to further enhance safety management
systems. As one part of those initiatives, BANDAI CO., LTD.,
conducts necessary tests in accordance with such factors
as product characteristics, selecting from among testing
standards (approximately 370 items) to confirm productsafety, strength, durability, etc. For example, with the KAMENRIDER series transformation belt, we
implement rigorous
testing, inspection,and confirmation ofUsing gas chromatography–mass spectrommore than 130 items,
etry equipment, inspections are conducted
to determine the presence or absence ofand confirm productregulated chemical substances that havequality from a variety
the potential to harm the human body.
of perspectives. In

addition, standards related to the safety of materials
include more than 20 items. In addition to acquiring certification from third-party inspection institutions, we also
conduct internal analysis and inspection to confirm thatthe products do not include poisonous heavy metals or
regulated chemical substances that have the potential toharm the human body.
BANDAI has received the METI Minister’s Award, thehighest award, in the Large Manufacturer and Importer
Category of the Awards for Best Contributors to Product
Safety, which are sponsored by the Ministry of Economy,
Trade and Industry (METI). We have received the award threetimes — in 2008, 2012, and 2015 — and have been certified asa Product Safety Contributor Gold Company.
In addition, at BANDAI NAMCO Entertainment Inc., wehave formulated internal regulations and guidelines forgame production. These are periodically reevaluated andcontinually applied. In this way, we are working to see that
customers can enjoy games with peace of mind.

Pursuing Security and Safety in Facilities 

To enable a wide range of age groups to enjoy facilities safely
and with peace of mind, the BANDAI NAMCO Group is conducting facility design, safety reviews, checks, and employee
education. For example, at all facilities BANDAI NAMCO
Amusement Inc. implements safety checks for building
structure, electricity, fire prevention, cabinets, installed playequipment, etc. In addition, with the objective of cultivating
places for wholesome fun, we are promoting the acquisitionof certification as an AOU Youth Advisor, who have specialized
knowledge and experience in youth development activities.

Awards Results Related to Product Safety
Best contributors to productsafety awards program,sponsored by METI

Certified as a
Product Safety
Contributor Gold
CompanyBANDAI CO., LTD.

Safety checks

FY2020.3 Results Data
Number of checks/reviews related to facility safety*1
Facility safety checks

250

locations

Play equipment checks

55

locations*1 Results for BANDAI NAMCO Amusement Inc.

Acquisition rate for AOU Youth Advisor certification*2100%*2 Acquisition rate for newly assigned facility managers and facility leaders
at amusement facilities operated by BANDAI NAMCO Amusement Inc.

74

ENVIRONMENTAL CONSIDERATIONTo ensure ongoing Dreams, Fun and Inspiration for the next generation, the BANDAI NAMCO Group is working toshow consideration for the environment, to reduce energy consumption in its operating activities, and to reduce theuse of resources in its products and services.

Initiatives to Reduce CO2 Emissions and Conserve Energy 

The BANDAI NAMCO Group is working to reduce CO2
emissions and has set objectives for the reduction of CO2
emissions each year in each Unit. Consequently, Groupwide
emissions in FY2020.3 were down approximately 2.3% fromthe previous fiscal year, to 58,169 tons of CO2. From FY2019.3,
in addition to total emissions management, we are also
working to control CO2 emissions through the introductionof management based on emissions intensity for each Unit.

Furthermore, as one part of our initiatives to conserve
energy, in amusement machines and store lighting at
amusement facilities we are converting from halogen
lamps and fluorescent lighting to LED lamps. The Groupis also implementing a range of other initiatives, such asincreasing operational efficiency at plants, aggressively
utilizing LEDs at live events, recycling materials, andpromoting eco-driving.

attention because they combine new product value withconsideration for the environment, and there have been
multiple hit products, such as the Dango Mushi series.

ESG SECTION

Packaging and Containers — Reducing Material Usage and Promoting Recycling 

The BANDAI NAMCO Group is working to reduce the use ofmaterials in packaging materials and containers related tosales of products and services, and to promote the recycling of these items. For example, BANDAI CO., LTD., has
worked to reduce the amount of plastic used in the capsulecontainers for capsule toys. From 2013, we began to introduce lighter containers that are only about 60% of theweight of previous containers. Currently, we have shifted tolighter models for nearly all capsule containers. In addition,
we are working to collect empty capsules from stores andto promote their recycling. In FY2020.3, we collected
approximately 7 tons of capsules. The empty capsules thatare collected are recycled and used for such applications asplastic flower pots and office stationery trays.
In addition, in recent years we have been selling capsuleless products. These products do not use capsule containers
and are dispensed without a capsule. They have drawn

Capsule-Less Products

FY2020.3 Results Data
BANDAI NAMCO Group CO2 emissions

58,169t-CO2

Capsule-less Gashapon products

61

61,795(YOY 97.7%)

59,04359,55059,551

58,169products

 lectricity use* reduction for amusementEfacility amusement machines
Lighting for

1,030

amusement machinesconverted to LEDs
2016

2017

2018

2019

2020

For the Fiscal Years Ended March 31

10% reduction
in electricity use incomparison withfluorescent lights* Main unit power consumption in the CLENA 2 amusement
machine rolled out by BANDAI NAMCO Amusement Inc.

75

EXAMPLES OF INITIATIVES ADDRESSING IMPORTANT CSR THEMESPOLICIES REGARDING INFLUENCE ON SOCIETY OF THE
GROUP’S CONTENT AND PRODUCTS
To provide Dreams, Fun and Inspiration to people around the world, the BANDAI NAMCO Group values freedom of
expression, and we are working to appropriately provide customers with a wide range of content and products.

I mplementing Timely Training and Collecting andSharing Information Regarding Ethical Expression 

Each Unit implements a variety of employee training related to
ethical expression in order to facilitate the provision of products
and services in accordance with appropriate expression.
In addition, the Group is taking steps to advance the sharing of
information related to ethical expression. For example, basedon the latest information and past examples, we are distributing
mail magazines to employees and holding study sessions.

IP Protection Initiatives 

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

ColumnStudy session related to ethicalexpression

Furthermore, in China BANDAI NAMCO Holdings CHINA
CO., LTD., is taking steps to promote education in this area,such as working jointly with game-related media to implement online radio broadcasts aiming to increase IP awareness.
In addition, as one facet of measures to address counterfeit
products, BANDAI SPIRITS CO., LTD., began to utilize
special specification hologram
seals with forgery prevention processing. These seals, which are
now being applied to all TAMASHIINATIONS brand products for themature fan base, are used to verify
that a product is genuine.
Hologram seals are applied to
TAMASHII NATIONS products.

Universal Design Initiatives

The BANDAI NAMCO Group is working to provide products and services that incorporate the Universal Design
approach so that they can be enjoyed by more customers.

Universal Design in Toys
The companies in the Toys and Hobby Unit incorporate theUniversal Design approach not only into the products
themselves but also into the packaging and instruction
manuals. In this way, we are working to provide productsthat are easy to use for as many customers as possible.
With Daikaiten Othello, the stones do not get
lost because they are built into the squares.
It is possible to distinguish between black
and white by touching the surface pattern.

I ntroducing Barrier-Free Voice Guides, etc., in Visual
Products Packaging
BANDAI NAMCO Arts Inc. is implementing initiatives for theprovision of subtitles and commentary, such as information
about the background or about people’s movements andexpressions, so that the original versions can be enjoyed bypeople with visual disabilities or hearing disabilities.
Number of titles available under these initiatives

Recording of Japanese-language voice guides forpeople with visual disabilities
The shape of this packaging makes it
easy for consumers to grasp the trays
with their fingers, and as a result thetrays are easy to pull out.

76

7
5
34

Supplementary audio channel for people with visual disabilities

Recording of Japanese-language subtitles forpeople with hearing disabilities

titlestitlestitles(as of March 31, 2020)

SUPPLY CHAIN MANAGEMENT
To achieve qualitative improvements in the Dreams, Fun and Inspiration that we provide, the BANDAI NAMCO Groupis working to enhance supply chain management in each of its business areas.

Implementing a Variety of Audits 

overall CSR; human rights (prevention of forced labor,
discrimination, harassment, etc.); safety (work environment,
emergency response, etc.); the environment (managementof chemical substances in products, waste management,etc.); fair trade and ethics; quality and safety; and information security. BANDAI NAMCO Amusement Inc. only conducts
business with suppliers that do not have issues with illegal
activity. Furthermore, audits of plant line production
management systems, etc., are conducted at amusement
machine assembly plants that are starting a new transaction
relationship with BANDAI NAMCO Amusement.

ESG SECTION

The BANDAI NAMCO Group strictly observes the laws andregulations of each country. We also establish our own
standards. In this way, the Group is working to strengthen
supply chain management.
As well, BANDAI CO., LTD., implements BANDAI Factory
Audits (BFAs), which combine new plant audits and Code of
Conduct (COC) audits, at overseas final packaging plantsthat make BANDAI products. The basic policy for BFAs is the
BANDAI Code of Conduct, which calls for strict observanceof eight COC standards (forced labor, child labor, working
hours, wages and allowances, punitive action, discrimination,
environmental protection, origin of products). Audits are
conducted in accordance with our original BFA manual.
In addition, when it starts to do business with a supplier,
BANDAI NAMCO Amusement Inc. implements a CSR
Procurement Questionnaire related to seven major items —Audit at plant in China

Initiatives in Cooperation with Suppliers 

BANDAI CO., LTD., which conducts business with a large
number of suppliers, holds supplier conferences every year.
Information is shared with suppliers at these conferences,including information about safety standards accompanying
revisions of toy-related laws in Japan and overseas, as wellas original quality standards. Furthermore, BANDAI CO., LTD.,
has established the BANDAI Supplier Awards, which recognize suppliers that maintain high levels of performance inregard to evaluation indicators. We are working together
with suppliers to improve working environments and quality.
In addition, suppliers that receive awards share theirknow-how by giving lectures to other suppliers about theirinitiatives on the front lines.

BANDAI Supplier Awards

FY2020.3 Results Data
Numberof BANDAI Factory
Audits implemented

168

companies(implemented at all suppliers subject
to audits)
CSR

Numberof supplier conferences
implemented

3

times

(once each in Tokyo, Shanghai, andShenzhen)Number of audits implemented
at amusement machine productassembly plants with which we
started a new business relationship1company(implemented at all suppliers subject
to audits)

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

77

FINANCIAL
				 SECTIONCONTENTS

78

79

C ONSOLIDATED SIX-YEAR FINANCIAL SUMMARY80

F INANCIAL REVIEW84

C ONSOLIDATED BALANCE SHEETS

86

 ONSOLIDATED STATEMENTS OFC
INCOME AND CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME

87

 ONSOLIDATED STATEMENTS OFCCHANGES IN NET ASSETS

88

C ONSOLIDATED STATEMENTS OF CASH FLOWS89

N OTES TO CONSOLIDATED FINANCIAL STATEMENTS

118

I NDEPENDENT AUDITOR’S REPORT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

2015

2016

2017

2018

2019

2020

Net sales¥565,486¥575,504¥620,061¥678,312¥732,347¥723,989

Gross profit

213,112

202,600

223,759

241,581262,555

260,948

Selling, general and administrative expenses

156,791

152,959

160,520

166,557

178,510

182,172

Operating profit

56,32049,641

63,23875,024

84,04578,775Recurring profit

59,38350,77463,29075,38086,86379,797

Profit attributable to owners of parent

37,58834,58344,15954,10963,383

57,665Comprehensive income

43,35627,377

43,10456,02469,95253,312

Capital expenditures

27,761

26,98625,01660,50129,01633,406

Depreciation and amortization

23,712

21,626

21,85423,545

21,37023,239Cash flows from operating activities

50,10358,04964,13655,13879,811

43,131

Total assets¥441,763¥448,336¥488,032¥540,490¥612,955¥619,819

Total current assets

317,516

322,176

357,782

350,618

397,951

383,662

Total current liabilities

123,136

114,333

126,110

136,202

163,893

142,506

Total net assets

303,512317,304

348,784

387,354429,644454,684¥171.10¥157.43¥201.03¥246.29¥288.40¥262.39

62.00

52.00

82.00

123.00145.00132.00Return on equity (ROE)*2 (%)

13.2

11.2

13.3

14.7

15.5

13.1

Return on assets (ROA)*3 (%)

14.0

11.4

13.5

14.7

15.1

12.9

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

27.7

26.6

25.9

24.6

24.4

25.2

Operating profit margin (%)

10.0

8.6

10.2

11.1

11.5

10.9

Profit attributable to owners of parent margin (%)

6.6

6.0

7.1

8.0

8.7

8.0

Shareholders’ equity ratio (%)

68.6

70.6

71.3

71.5

70.0

72.5

Debt/equity ratio (Times)

0.01

0.01

0.00

0.00

0.00

0.01

For the Year:*1

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

Main Financial Indicators:

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

79FINANCIAL REVIEWOverview of Performance in the
Fiscal Year Ended March 31, 2020

Cost of Sales

During the fiscal year ended March 31, 2020, the economy continued

and the ratio of cost of sales to net sales was 64.0%. As a result,to moderately recover until the third quarter in Japan. However,gross profit was ¥260,948 million (year-on-year decrease of 0.6%),

overseas economies were showing a slowdown trend. In addition,and the gross profit margin was 36.0%.

Cost of sales was ¥463,041 million (year-on-year decrease of 1.4%),

the global economy as a whole was significantly affected by the

SG&A Expenses

spread of COVID-19 in the fourth quarter.
The BANDAI NAMCO Group (“the Group”) started a three-year

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

Mid-term Plan in April 2018, under the Mid-term Vision of “CHANGE¥182,172 million (year-on-year increase of 2.1%), and the ratio offor the NEXT: Empower, Gain Momentum, and Accelerate Evolution,”

SG&A expenses to net sales increased to 25.2%, from 24.4% in thewhich reflects our aspiration to achieve changes in all aspects toprevious fiscal year. Principal items included advertising expenses

progress to a next stage without being bound by previous businessof ¥44,367 million, directors’ remuneration and employees’ wages

models and established ideas. Aiming for medium- and long-termof ¥48,179 million, employees’ retirement and severance benefits ofgrowth, the Group has been promoting a range of measures. As one¥3,114 million, provision for directors’ bonuses of ¥1,885 million,of these initiatives, we have been taking advantage of the worldview

and research and development expenses of ¥19,035 million.

and unique characteristics of IP (Intellectual Property: meaning
characters and other intellectual property) to further evolve the “IP

Operating Profit

Axis Strategy” that aims to maximize IP value through the provision

Operating profit was ¥78,775 million (year-on-year decrease ofof the optimal products and services at the optimal possible times.

6.3%), and the operating profit margin declined to 10.9%, from11.5%

The measures also include an initiative to strengthen developmentin the previous fiscal year.

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

Other Income (Loss)the world under the ALL BANDAI NAMCO concept.

In other income (loss), gain on sales and disposal of fixed assets,

During this fiscal year, although there were effects from thenet was ¥1,635 million. However, loss on impairment of fixed assets

spread of COVID-19 in the fourth quarter, the Toys and Hobby

was ¥3,596 million. Due to these and other factors, there was a net

Business performed favorably, gaining in popularity in products forother loss of ¥22 million.

the mature fan base in Japan and overseas, and key IP products andservices in each business segment also performed stably.

Profit Attributable to Owners of Parent
The Group recorded profit attributable to owners of parent of

Net Sales¥57,665 million (year-on-year decrease of 9.0%). The profit attributable

On a consolidated basis, the Group’s net sales were ¥723,989 million

to owners of parent margin was 8.0%, and basic earnings pershare(year-on-year decrease of 1.1%)

declined to ¥262.39, from ¥288.40 in the previous fiscal year.

Results by Segment

80

Millions of yen

Millions of yen

Net sales

Segment profit (loss)

2020

2019

Year on year

2020

2019

Year on year

Toys and Hobby¥253,714¥242,865¥ 10,848¥26,733¥21,710¥ 5,022

Network Entertainment

328,079

340,927(12,847)

43,87947,534(3,655)

Real Entertainment

91,753

101,493(9,740)(1,502)

4,264(5,766)Visual and Music Production

46,95145,518

1,433

8,032

8,797

(765)

IP Creation

19,75022,464(2,714)

5,758

5,020

738

Other

35,752

29,764

5,987

1,864

1,197

667

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

As for the Toys and Hobby Business, in Japan, products for theBusiness were ¥46,951 million (year-on-year increase of 3.1%), andmature fan base such as plastic models of the Mobile Suit Gundam

segment profit was ¥8,032 million (year-on-year decrease of 8.7%).

series and collectible figures performed favorably along with longestablished IP toys and peripheral products, such as the DRAGONIP Creation Business

BALL series, the KAMEN RIDER series, the Super Sentai series, andAs for the IP Creation Business, in visual production, we stirred up

ONE PIECE. Overseas, in the Asian region, products for the mature fanpublic attention around IP by releasing a new movie and dissemi-base and products such as the ULTRAMAN series gained in popularity.

nating various information for the Mobile Suit Gundam series, which

In the Americas and Europe, the Group promoted efforts tomarked its 40th anniversary, and other series, which brought

strengthen sales and marketing of products for the mature fan base.

greater popularity to those series. We also took steps such as those

As a result, net sales in the Toys and Hobby Business were ¥253,714

to strengthen our Group-wide initiatives and animation production

million (year-on-year increase of 4.5%), and segment profit was

structure with a view to enhancing IP creation. Profits were up year

¥26,733 million (year-on-year increase of 23.1%).

on year due to factors including differences in the product mix.

Network Entertainment Businessmillion (year-on-year decrease of 12.1%), and segment profit was

As for the Network Entertainment Business, in network content, key¥5,758 million (year-on-year increase of 14.7%).

As a result, net sales in the IP Creation Business were ¥19,750

titles being distributed worldwide such as the DRAGON BALL series

Other Businesses

series, continued to perform stably due to ongoing measures

Other Businesses consist of companies that conduct businesses

targeting users. In home video games, new titles such as DRAGON

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

BALL Z KAKAROT and CODE VEIN gained in popularity, and repeat

and operational support for each of the Group companies. We havesales of existing titles such as the DRAGON BALL series, TEKKEN 7,

been making efforts to manage such operations related to groupand the DARK SOULS series enjoyed popularity, primarily overseas,

support in an efficient manner.

due to ongoing measures targeting users.
As a result, net sales in the Network Entertainment Businesswere ¥328,079 million (year-on-year decrease of 3.8%), andsegment profit was ¥43,879 million (year-on-year decrease of 7.7%).

Real Entertainment BusinessNet sales in the Other Businesses were ¥35,752 million(year-on-year increase of 20.1%), and segment profit was ¥1,864

FINANCIAL SECTION

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

million (year-on-year increase of 55.7%).

Financial Position
As of March 31, 2020, total assets stood at ¥619,819 million, an

As for the Real Entertainment Business, in amusement facilities,

increase of ¥6,864 million from the end of the previous fiscal year.

net sales in existing facilities in Japan continued to perform stably,

The main factors were increases of ¥11,720 million in inventories,

and we promoted the development of new business formats that

¥9,313 million in property, plant and equipment, such as construc-provide venues where customers are able to enjoy experiences thattion in progress, and ¥14,771 million in goodwill, mainly due toonly BANDAI NAMCO can offer. However, the business was affected

SOTSU CO., LTD. becoming a consolidated subsidiary, despite aby the closure of facilities both in Japan and overseas due to thedecrease of ¥23,995 million in cash and time deposits.

spread of COVID-19 in the fourth quarter. Performance of amuse-

Total liabilities amounted to ¥165,135 million, a decrease ofment machines did not reach the level seen in the previous fiscal¥18,175 million from the end of the previous fiscal year. The main

year when a new major title and a new version of a popular title

factor was a decrease of ¥11,924 million in accrued income taxes.

were launched, owing to factors including the postponement of the

Total net assets stood at ¥454,684 million, an increase of ¥25,040

launch of new products. In light of the current market environment,

million from the end of the previous fiscal year. The main factor was

we recorded a loss on valuation such as works in process for

an increase of ¥25,383 million in retained earnings due to theamusement machines and a loss on impairment of fixed assets

recording of ¥57,665 million in profit attributable to owners ofrelated to certain facilities as other loss.

parent, despite cash dividends paid of ¥32,328 million.

As a result, net sales in the Real Entertainment Business wereAs a result, the equity ratio became 72.5% compared with 70.0%¥91,753 million (year-on-year decrease of 9.6%), and segment loss

at the end of the previous fiscal year. The current ratio*1 was 269.2%,

was ¥1,502 million (segment profit for the previous fiscal year wascompared with 242.8% at the end of the previous fiscal year; the¥4,264 million).

quick ratio*2 was 192.0%, compared with 187.3%; and the interest

Visual and Music Production BusinessNotes:*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 paidcoverage ratio*3 was 345.8 times, compared with 2,180.5 times.
As for the Visual and Music Production Business, we stirred up
public attention through the development of IP productions, such as
the sales of visual and music package software and the holding oflive events of The iDOLM@STER series, LoveLive! Sunshine!! andIDOLiSH 7, and the cinematic release of a new GIRLS und PANZER
movie, leading to those series gaining popularity. However, profits
did not reach the level seen in the previous fiscal year when the
Company launched several high-added-value package software
products, due to differences in the product mix and the postponement or cancellation of events in response to the spread of
COVID-19 in the fourth quarter.

81

Cash Flows

Targets and Management Performance Indicators

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

The Group aims to increase profitability and capital efficiency andremaining on hand had decreased by ¥17,603 million from the end ofemphasizes return on equity (ROE) as a management performancethe previous fiscal year to ¥188,667 million.

indicator. Under the three-year Mid-term Plan that started from April

Below is the breakdown of cash flows by activities.

2018, the Company will continue working to achieve revenue growthand higher capital efficiency by advancing its main strategies. We will

Cash Flows from Operating Activities

aim to build a business foundation that can achieve results without

The amount of funds provided by operating activities totaled ¥43,131

being overly influenced by changes in the operating environment and to

million (year-on-year decrease of 46.0%). As a breakdown of funds

achieve ROE of 10% or more.

used, income taxes paid was ¥36,079 million (compared with
¥21,186 million in the previous fiscal year). However, overall, there

Outlook for the Fiscal Year Ending March 31, 2021

was a net increase in funds due to profit before income taxes of

Looking ahead, the Group expects uncertainty to continue in countries¥78,753 million (compared with ¥86,838 million in the previous fiscal

around the world due to the impact of the spread of COVID-19 onyear) and depreciation and amortization of ¥23,239 million

society, the overall economy, people’s daily lives and consumption.

(compared with ¥21,370 million in the previous fiscal year).

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

Cash Flows from Investing Activities

Under these circumstances, the Group will continue carrying out

The amount of funds used in investing activities totaled ¥23,067

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

million (year-on-year decrease of 7.4%). The main breakdown ofpriority to the safety of our stakeholders, including employees andfunds used was purchases of property, plant and equipment andtheir families, and customers. Moreover, as a member of society,intangible assets totaling ¥22,629 million (compared with ¥15,341

we wish to respond to the requests from society and our customers

million in the previous fiscal year).

under our Group ’s mission to offer “Dreams, Fun and Inspiration”
to people around the world through products and services. On the

Cash Flows from Financing Activities

business front, the Group is working to minimize the impact that the

The amount of funds used in financing activities totaled ¥35,258

spread of COVID-19 is having on society, the overall economy, people’s

million (year-on-year increase of 21.7%). The main breakdown ofdaily lives and consumption, and the impact from the change in thefunds used was cash dividends paid of ¥32,328 million (comparedmarket environment and user preferences, by continuing to collectwith ¥28,366 million in the previous fiscal year).

information and take flexible countermeasures.

Basic Policy on the Distribution of Profits

projections for the fiscal year ending March 31, 2021. These projections

The Company ranks the return of profits to shareholders as one ofits highest priorities in its management. The Company aims tofurther strengthen the Group’s competitiveness and, while maintaining
a sound financial status, to achieve regular distributions of dividends
and improvement in the Company’s corporate value. Specifically, theCompany follows a basic policy of providing a return to shareholders
that targets a total return ratio of 50% or more based on stabledividend payments of 2% of DOE (dividends on equity). Under thispolicy, the Company strives to maintain long-term and stabledividend levels and be more aware of capital cost.
For the annual cash dividend per share for the fiscal year ended
March 31, 2020, a performance-based dividend of ¥92 was added toa base dividend of ¥40. In total, the annual cash dividend for the
fiscal year was ¥132 per share. Since the Company paid an interim
dividend of ¥20 per share on December 6, 2019, the year-end dividendwas ¥112 per share. The Company’s annual dividend forecast for the
fiscal year ending March 31, 2021 is ¥42 per share, which is the basedividend set in accordance with the Company’s basic policy on the
distribution of profits. The year-end cash dividend for the fiscal year
ending March 31, 2021 will be considered by the Company based on
the basic policy on the distribution of profits.

On August 7, 2020, the Company disclosed business performance
were calculated based on information currently available such as
trends in the market environment, the impact of the spread of
COVID-19 on business operations*, results for the first quarter(three months), and plans for future products and services.
In terms of the future outlook, uncertainties are expected toremain for society and the overall economy, and changes in market
conditions and other factors may affect our business results. Should
any matters requiring disclosure arise in the future, the Company willpromptly disclose them.
* For your reference, we are experiencing or expect to experience thefollowing impacts on business operations from the spread of COVID-19.
• Impact on consumption due to factors including the closure ofsales outlets• Postponement or cancellation of events and an associated impact
on promotion• Impact on the development schedule of products• Impact on the production schedule of the Group’s factories andother cooperating factories• Impact on the development schedule of home video games andnetwork content and on operation systems• Impact from the closure of amusement facilities• Impact on the schedules or releases of visual productions andpackage launch scheduled82

* Mid-term Plan of the BANDAI NAMCO Group(From April 2018 to March 2021)
Vision of “CHANGE for the NEXT: Empower, Gain Momentum, andConsolidated Plan for the Fiscal Year Ending March 31, 2021
(As of August 7, 2020)
Millions of yen
Net sales Segment profit (loss)
Segments

Accelerate Evolution,” which reflects our aspiration to achieve changes

Toys and Hobby¥250,000in all aspects to progress to a next stage without being bound by

Network Entertainment

305,000

38,000Real Entertainment

70,000(12,000)

Visual and Music Production

25,000500

IP Creation

30,0004,000

In our Mid-term Plan, we have been proceeding under the Mid-term

previous business models and established ideas. In the Mid-term
Plan, the Group will aim to evolve “IP Axis Strategy” further tomaximize IP value through taking advantage of the worldview andunique characteristics of its IPs and providing the optimal products¥ 26,000

Other

30,0001,000

penetration and expansion in global markets. At the same time, we

Adjustments(60,000)(7,500)will also strengthen development in regions and businesses with

Consolidated¥650,000¥ 50,000and services at the optimal possible times, thereby achieving

high growth potential. Furthermore, we will drive creation of new IP
and pursue strategies by unifying the efforts in each region acrossthe Group under the ALL BANDAI NAMCO concept.
We will implement the following four strategies as the main
strategies in the Mid-term Plan:
1. IP axis strategy “Accelerate evolution in IP axis strategy”
strength, we will drive creation of new IP while continuing toinnovate long-established IP.
		Boost capability to create IP (structural changes) / Invest
aggressively in IP creation
2. Business strategy “Empower push into new entertainment”

Forecasts for the next fiscal year and other future projections in thisreport are based on information available to the Group at the time they
were made and are therefore subject to various risks and uncertainties.
Actual results therefore may differ materially from projections due toa variety of factors. Major factors that could influence results include
changes in the Company and the Group’s operating environment,
market trends, and exchange rate fluctuations.

FINANCIAL SECTION

		To further solidify the IP axis strategy, the Group’s greatest

Forward-Looking Statements		To empower a push into new entertainment, we will upgradeand enhance our business infrastructure, expand andstrengthen our business fields, and promote incubation.
		Establish and enhance business infrastructure / Expand andstrengthen business fields / Promote incubation
3. Region strategy “Gain momentum with ALL BANDAI NAMCO”
		The regional holding companies and the business of each unit
will form a unifying ALL BANDAI NAMCO concept to advancethe Group’s strategies autonomously on a regional basis throughtheir deep knowledge of the customer base in each region.
		Make full-scale business expansion in the Chinese market /Establish system for ALL BANDAI NAMCO
4. Personnel strategy “Make personnel the core of the Group”
		In addition to training the necessary global personnel, actively
enabling personnel exchange, and establishing systems forpromoting active participation of a diverse workforce, as wellas various systems to enable employees to work in goodmental and physical health, the Group will work on initiatives
such as a proposal system for employees to take up newchallenges, and systems for supporting their endeavors.
		Establish environment to optimize employees’ performance bytapping their individual strengths, and to empower new ventures
By implementing these main strategies, we aim to further
strengthen the Group’s foundation so that we can make steadyprogress in an operating environment marked by dramatic change,
and achieve growth in global markets.

83CONSOLIDATED BALANCE SHEETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
As of March 31, 2019 and 2020

Millions of yen

Thousands of
U.S. dollars (note 3)

2019

2020

2020

¥ 213,851¥ 189,856$ 1,744,520

Trade receivables (notes 6 and 12)

93,08383,754

769,590

Allowance for doubtful receivables(890)(1,398)(12,849)

Inventories (note 7)

65,07076,790705,603

Other current assets (notes 4 and 5)

26,83634,658318,468

397,951

383,662

3,525,334

Buildings and structures (note 8)

31,15233,076

303,925

Amusement facilities and machines (note 8)

72,882

72,030661,860

Land (note 8)

42,67743,156

396,553

Construction in progress

3,175

7,720

70,938103,484

126,155

1,159,199

253,372

282,1392,592,477

Less accumulated depreciation(165,778)(185,232)(1,702,033)

		 Net property, plant and equipment

87,59396,906890,443933

15,704

144,303

10,912

11,718

107,678

11,84527,423251,982

74,02366,453

610,614

147

223

2,050

Deferred tax assets (note 13)

24,81927,313250,971

Other investments and assets (notes 8 and 21)

16,941

18,270167,883

(366)

(432)

(3,977)

115,564

111,827

1,027,542¥ 612,955¥ 619,819$ 5,695,302

AssetsCurrent assets:
Cash and time deposits (notes 4, 12 and 21)

		 Total current assets

Property, plant and equipment:

Other property, plant and equipment (note 8)
		TotalIntangible assets:
Goodwill
Other intangible assets (note 8)
		 Total intangible assets

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

Allowance for doubtful receivables
		 Total investments and other assets
		Total assets
See accompanying Notes to Consolidated Financial Statements.

84Millions of yen

Thousands of
U.S. dollars (note 3)

2019

2020

2020

Trade payables (notes 10 and 12)¥ 74,804¥ 70,169$ 644,758

Accrued income taxes (note 12)

17,495

5,571

51,194

Provisions

3,505

3,892

35,768Other current liabilities (note 9)

68,08762,873

577,720

163,893

142,506

1,309,442

Net defined benefit liability (note 11)

10,383

9,840

90,420

Deferred tax liabilities (note 13)

2,453

1,878

17,259Other long-term liabilities (note 9)

6,580

10,910100,248

		 Total long-term liabilities

19,417

22,628207,928

		Total liabilities

183,311

165,135

1,517,371

10,00010,00091,886

Capital surplus

52,30852,004

477,847

Retained earnings (note 16)369,315394,699

3,626,750(2,298)(3,634)(33,393)429,326

453,069

4,163,090

20,19016,837

154,713

5

250

2,300

Revaluation reserve for land, net of tax (note 17)(5,920)(3,902)(35,862)

Foreign currency translation adjustments(8,864)(12,321)(113,220)

Remeasurements of defined benefit plans, net of tax (note 11)(5,705)(4,639)(42,635)

		Subtotal(294)(3,776)(34,704)

Non-controlling interests

612

5,392

49,545

		 Total net assets

429,644454,684

4,177,931

		 Total liabilities and net assets¥612,955¥619,819$5,695,302

Liabilities and net assets
Current liabilities:

		 Total current liabilities

Long-term liabilities:

FINANCIAL SECTION

Net assets:
Shareholders’ equity:
Common stock (note 18)
		 Authorized: 1,000,000,000 shares
		 Issued: 222,000,000 shares

Treasury stock, at cost; 2,209,402 shares in 2019 and 2,324,320 shares in 2020 (note 18)
		Subtotal
Accumulated other comprehensive income (note 15):
Valuation difference on available-for-sale securities, net of tax (note 5)
Deferred gains or losses on hedges, net of tax

85

CONSOLIDATED STATEMENTS OF INCOME ANDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
BANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2019 and 2020

Consolidated Statements of Income
Millions of yen

Thousands of
U.S. dollars (note 3)

2019

2020

2020

Net sales¥732,347¥723,989$6,652,482

Cost of sales (note 7)

469,791

463,041

4,254,721

		Gross profit

262,555

260,948

2,397,760

Selling, general and administrative expenses (note 14)

178,510

182,172

1,673,920

		Operating profit

84,04578,775

723,840

1,121

1,514

13,912

(36)

(124)

(1,146)

7(1,008)(9,266)

Share of profit (loss) of entities accounted for using equity method

242

(182)

(1,681)

Rent income

398

304

2,798

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

1,753

1,635

15,032

Loss on impairment of fixed assets (note 8)

Other income (loss):
Interest and dividend income
Interest expense
Foreign exchange gains (losses)(954)(3,596)(33,051)

Gain on step acquisitions

—

1,722

15,822

Other

260

(285)

(2,626)

2,793

(22)

(205)

Profit before income taxes

86,83878,753

723,634

Income taxes (note 13)

24,205

20,845191,538

Profit62,632

57,908532,096

(751)

242

2,231

¥ 63,383¥ 57,665$ 529,864

Yen

U.S. dollars (note 3)

2019

2020

2020

¥1,952.00¥2,045.25$18.79288.40262.39

2.41

—

—

—

145.00132.00

1.21

Millions of yen

Thousands of
U.S. dollars (note 3)

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

Per share data:
Net assets at March 31
Earnings per share:
Basic
DilutedCash dividends applicable to period (note 16)
See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

Profit

2019

2020

2020

¥62,632¥57,908$532,096

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

8,685(3,101)(28,502)

Deferred gains or losses on hedges, net of tax

305

244

2,243

Revaluation reserve for land, net of tax (note 17)

—

682

6,273

Foreign currency translation adjustments(531)(3,468)(31,866)

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

(948)

1,065

9,787

Comprehensive income

(190)

(17)

(160)

7,319

(4,595)(42,224)¥69,952¥53,312$489,871¥70,700¥52,847$485,597

(747)

465

4,274

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

86

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2019 and 2020

Year ended March 31, 2019
Millions of yen
Shareholders’ equity

Balance at beginning of year

Commonstock(note 18)

CapitalsurplusRetainedearnings(note 16)

¥10,000¥52,196¥334,264

Accumulated other comprehensive income (note 15)

Treasurystock(note 18)¥(2,326)

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

Deferred
gains orlosses onhedges,net of tax

Revaluation
reserve forland,
net of tax(note 17)¥394,133¥11,696¥(300)¥(5,887)

Total
Remeasurements accumulated
Foreigncurrency of defined benefit
othertranslation plans, net of tax comprehen(notes 11)
adjustments
sive income¥(8,330)¥(4,756)¥(7,577)

Noncontrollinginterests

Total net
assets atend of year

¥ 797

¥387,354

Cash dividends(28,366)(28,366)(28,366)

Profit attributable to owners of parent

63,38363,38363,383Purchase of treasury stock
Disposal of treasury stock

112

(5)

(5)

(5)

33

145

145

0

0

0

Change in treasury stock
accompanying changes to holdings
in companies to which the equity
method is applied
Reversal of revaluation reserve
for land33

33

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

(33)
8,494

¥10,000¥52,308¥369,315¥(2,298)

¥

—

(33)

305

—

(534)

(948)

7,316

(185)

7,131

5

¥(5,920)¥(8,864)¥(5,705)¥ (294)¥ 612¥429,644¥429,326¥20,190

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

Deferred
gains orlosses onhedges,net of tax¥20,190¥

Year ended March 31, 2020
Millions of yen
Shareholders’ equity

Balance at beginning of year

CapitalsurplusRetainedearnings(note 16)

Treasurystock(note 18)

¥10,000 ¥52,308¥369,315¥(2,298)¥429,326

10,000370,264(2,298)430,275

Cumulative effects of changes inaccounting policies
Restated balance948
52,308(32,328)(32,328)

Profit attributable to owners of parent

57,66557,665433

Capital increase of consolidated
subsidiaries(1,370)1Change in scope of consolidation- foreign currency translation
adjustment
(715)
409

Change in treasury stock
accompanying changes to holdings
in companies to which the equity
method is applied¥(5,705)¥ (294)¥ 612¥429,644

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

(294)

612

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

(937)

4,032

3,095

1

28

30

15

¥394,699

15
274

(441)
(8)

42

451

451

(1,335)¥10,000 ¥52,004

15

(8)

0

0
1,335

(1,335)

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

¥ (8,864)(8)0Reversal of revaluation reserve
for land

Total net
assets atend of year¥(5,920)(715)

Purchase of treasury stock
Disposal of treasury stock

Noncontrollinginterests

5—

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

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

948

Cash dividends
Change in scope of consolidation

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

FINANCIAL SECTION

Commonstock(note 18)

Accumulated other comprehensive income (note 15)

1,335

—

(3,353)244

682(3,472)

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

Year ended March 31, 2020
Thousands of U.S. dollars (note 3)
Shareholders’ equity

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

Capitalsurplus$91,886 $480,645 $3,393,508

Cumulative effects of changes inaccounting policies
Restated balance

Retainedearnings(note 16)

Accumulated other comprehensive income (note 15)

Treasurystock(note 18)

Total
shareholders’equityValuationdifference on
availablefor-salesecurities,
net of tax(notes 5)$(21,116)$3,944,923$185,525

8,719
91,886 480,645

3,402,228(21,116)

3,953,643

Cash dividends(297,058)(297,058)

529,864

529,864

3,982

Capital increase of consolidated
subsidiaries(12,596)

16

Change in scope of consolidation- foreign currency translation
adjustment
Change in ownership interest ofparent due to transactions with
non-controlling interests(6,574)
3,761$(52,422)$ (2,704)$ 5,627$3,947,846

53(54,404)(52,422)(2,704)

5,627

3,956,566

8,719
185,525(81,456)(297,058)
529,864
37,05528,442

16

259

275

140

140

140
2,522

(4,052)

(74)

(74)

(74)

392

4,153

4,153

1
(12,267)$91,886 $477,847 $3,626,750

Total net
assets atend of year

(8,613)1

1
12,267(12,267)

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

Noncontrollinginterests$(54,404) $ (81,456)(6,574)

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

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

53—

Purchase of treasury stock
Disposal of treasury stock$

Revaluation
reserve forland,
net of tax(note 17)

8,719

Profit attributable to owners of parent
Change in scope of consolidation

Deferred
gains orlosses onhedges,net of tax$(33,393)$4,163,090(30,812)2,246$154,713$2,300

6,273

12,267—(31,904)

9,787(44,408)

4,080(40,328)$(35,862) $(113,220)$(42,635)$(34,704)$49,545$4,177,931

See accompanying Notes to Consolidated Financial Statements.

87

CONSOLIDATED STATEMENTS OF CASH FLOWSBANDAI NAMCO Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2019 and 2020

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

88

Millions of yen

Thousands of
U.S. dollars (note 3)

2019

2020

2020

¥ 86,838
21,370954
177(1,321)(509)
648(1,121)
36
126
(242)
(1,753)161—(4,965)(7,689)(10,187)
5,270
14,102(1,950)99,945
1,088(36)(21,186)
79,811¥ 78,753
23,239
3,596
667
199
532
610
(1,514)124
232
182(1,635)337(1,722)
12,813(10,864)(7,335)(7,349)(6,612)(6,466)
77,7891,545(124)(36,079)
43,131$ 723,634
213,542
33,051
6,129
1,829
4,893
5,611
(13,912)
1,146
2,138
1,681
(15,032)
3,104(15,822)
117,736(99,827)(67,407)(67,528)(60,761)(59,422)714,782
14,203(1,146)(331,522)
396,317(3,027)(10,093)
2,980(5,247)(1,574)347(4,018)

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

64,020(155,293)
26,400(52,638)(8,282)
1,000(5,147)—(7,531)(69,201)(1,991)(1,385)892(2,135)541(185)(24,899)

—
(237)
24
(1,698)746(229)(23,067)—(2,186)
222(15,610)
6,863(2,106)(211,959)

94
639(1,266)(67)(5)(28,366)(1,500)
200
(249)
(931)
(8)
(32,328)(13,782)
1,837(2,289)(8,558)(74)(297,058)

—

(441)

(4,052)(28,972)(501)
25,438
180,831—¥206,270(35,258)(2,531)(17,726)
206,270
123¥188,667(323,978)(23,262)(162,883)
1,895,344
1,132$1,733,594

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, 2020.

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

Some overseas consolidated subsidiaries recognized revenue in accor-

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

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

the accompanying consolidated financial statements. Investments in

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

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

Investments in unconsolidated subsidiaries and certain affiliates

online functions, estimated sales value is calculated for undelivered

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

obligations are expected to be satisfied.

FINANCIAL SECTION(a) Principles of Consolidationaccompanying consolidated financial statements.
All significant inter-company accounts and transactions have been
eliminated in consolidation.

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

cannot be separated into identifiable components.

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

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

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

data. Once management makes a decision to go forward in distributing a title, the Company records the software and content develop-(c) Foreign Currency Translation
Foreign currency transactions are translated into yen at rates in effectat the dates they are transacted, and the gains or losses arising fromment costs as inventories.
The capitalized production costs are amortized to cost of sales
based on projected sales volumes.

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

of income.

Available-for-sale securities with market quotations are principally

Receivables and payables denominated in foreign currencies at

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

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

market quotations is recognized in “Valuation difference on available-

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

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

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

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

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

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

average method. Investments in investment limited partnerships or

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

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

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

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

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

assets” in the consolidated balance sheets.

in the partnership agreement.

89

(f) Allowance for Doubtful Receivables(i) Property, Plant and Equipment

The allowance for doubtful receivables is provided for possible losses(Exclusive of leased assets and right-of-use assets):on unrecoverable receivables. For ordinary receivables, the amount of

The Company and Its Domestic Consolidated Subsidiaries:

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

Depreciation of property, plant and equipment is principally computedfrom debtors at risk of bankruptcy and receivables from debtors inby the declining-balance method based on estimated useful lives.

bankruptcy or under reorganiza­tion, the amount of the allowance is

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

based on individually estimated unrecoverable amounts.

fixtures) acquired since April 1, 1998. The estimated useful lives for
Buildings and structures and Amusement facilities and machines are(g) Inventories

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

Domestic Consolidated Subsidiaries:
Generally, inventories are stated using the cost method based on theForeign Consolidated Subsidiaries:

average method. The value stated in the consolidated balance sheets

Depreciation of property, plant and equipment is principally computed

is calculated by writing down the carrying amount based onby the straight-line method based on estimated useful lives. The

declining profitability.

estimated useful lives for Buildings and structures and Amusement
facilities and machines are 5–50 years and 3–7 years, respectively.

Foreign Consolidated Subsidiaries:
Generally, inventories are stated using the lower cost or market
method based on the average method.

(j) Intangible Assets(Exclusive of leased assets and right-of-use assets):
Amortization of intangible assets is computed by the straight-line

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

method based on estimated useful lives. Software for internal use isamortized over 1–5 years.
Goodwill is amortized using the straight-line method over theperiod within 10 years. The Company reasonably estimates the period
for which the effects of goodwill are expected to emerge.

(h) Income Taxes
Current income taxes are accounted for based on income. Deferred(k) Leased Assets and Right-of-Use Assets

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

Depreciation of leased assets is computed by the straight-line

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

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

quences attributable to dif­ferences between the financial statement

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

carrying amounts of existing assets and liabilities and their respective

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

tax bases and operat­ing loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to(l) Derivatives and Hedging Activities

apply to taxable income in the years in which those temporary differ-

The Company and its consolidated subsidiaries use derivative instru-

ences are expected to be recovered or settled. The effect on deferredments, such as forward foreign exchange contracts and currency

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

option contracts, to reduce market risks arising from fluctua­tions

income in the period that includes the enactment date.

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

The Company and some of its domestic consolidated subsidiaries
apply a consolidated taxation system.

consolidated subsidiaries use these deriva­tive instru­ments solely forthe purpose of reducing the risks resulting from such fluctua­tions towhich they are exposed in the course of their ordinary business

Application of Tax Effect Accounting for the Transition from theactivi­ties. Accordingly, the Company and its consolidated subsidiaries

Consolidated Tax Payment System to the Group Taxation System

do not use derivative instru­ments or other financial instruments for

Having regard to paragraph 3 of “Practical Solution on the Treatment

speculative purposes.

of Tax Effect Accounting for the Transition from the Consolidated

The Company and its consolidated subsidiaries’ counterparties for

Taxation System to the Group Tax Sharing System” (Practical Issues

derivative instruments are all highly creditworthy financial institutions

Task Force (PITF) No. 39, March 31, 2020), the Company and its

and, therefore, the Company believes that it is exposed to almost

domestic consolidated subsidiaries did not follow paragraph 44 ofno counterparty risk. Derivative transactions are conducted in“Implementation Guidance on Tax Effect Accounting” (Accounting

accordance with internal rules that specify transaction authority

Standards Board of Japan (ASBJ) Guidance No. 28, February 16, 2018),

and transaction amount limits.

but applied provisions of pre-amended tax laws when calculating the

As a general rule, derivative instruments are stated at fair value.

amounts of deferred tax assets and liabilities that relate to transi-

For derivative instruments that meet the criteria for hedge

tioning to the group taxation system and related amendments of tax

accounting, recognition of unrealized gains or losses is deferred.

laws for transitioning to the single tax payment system.

In cases where forward foreign exchange contracts meet certain
hedging criteria, the hedged receivables and payables are translated
at the corresponding forward foreign exchange contract rate (the“Allocation Method”).

90The Company and its consolidated subsidiaries assess the effec-(o) Per Share Data

tiveness of hedging transactions from the start of the transaction

In computing basic earnings per share, the average number of sharesto the point at which effectiveness is assessed by comparing theoutstanding during each year has been used. Diluted earnings per

cumulative changes in the fair value or the cumulative changes inshare assumes the dilution that could occur if securities or otherthe cash flows of the hedged item with the cumulative changes in thecontracts to issue common stock were exercised or converted into

fair value or the cumulative changes in the cash flows of the hedging

common stock, or resulted in issuance of common stock.

instrument. In the event that critical terms are the same for thehedging instrument and the hedged assets, liabilities, or scheduled

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

transaction, it is assumed that the hedge is 100% effective, so theassessment of effectiveness is not performed.
In the event that a hedge becomes ineffective, hedge accounting(p) Changes in Accounting Policy(Application of US GAAP ASU No. 2014-09 “Revenue from Contracts

is no longer applied and the recognition of the gains or losses on thewith Customers”)

hedge transaction is no longer deferred.

Effective from this fiscal year, the Company’s consolidated subsidiaries in the United States have applied the US GAAP ASU No. 2014-09(m) Retirement and Severance Benefits
The Company and certain domestic consolidated subsidiaries have

“Revenue from Contracts with Customers.”
With the application of ASU No. 2014-09, it is required that, at thetime of transfer of the promised goods or services to customers, thebenefit retirement lump-sum benefit system plan, and a definedCompany recognizes revenue in an amount that reflects the consider-

contribution pension plan. Retirement benefits trusts have been

ation to which the Company expects to be entitled in exchange forestablished for certain defined benefit corporate pension plans.

those goods or services. In applying this ASU, the Company used the

Other domestic consolidated subsidiaries (excluding domestic

method in which it recognizes the cumulative effect of retrospective

consolidated subsidiaries with no retirement benefit system) haveadjustments as of the commencement date of application.

established a defined benefit corporate pension plan and a defined

As a result of this change, in the consolidated statements ofbenefit retirement lump-sum benefit system. Certain consolidated

income for this fiscal year, net sales increased by ¥537 million, costsubsidiaries have established a defined contribution pension planof sales increased by ¥328 million, and operating profit and profit

and a defined contribution smaller corporate retirement allowance

before income taxes each increased by ¥208 million. In addition, themutual aid system. Certain foreign consolidated subsidiaries havebalance at beginning of year of retained earnings in the consolidated

established defined benefit pension plans, retirement lump-sum

statements of changes in net assets increased by ¥936 million.

FINANCIAL SECTION

established a defined benefit corporate pension plan, a defined

benefit systems, and defined contribution pension plans. Moreover,additional benefits may be paid at retirement.
In calculating the retirement benefit obligations, the benefit
formula basis is principally used to attribute expected benefit(Application of IFRS 16 “Leases”)
Effective from this fiscal year, some overseas consolidated subsidiaries have applied IFRS 16 “Leases.”

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

IFRS 16 requires the lessee to recognize both the right-of-useyear. Prior service costs are amortized from the time they are incurredassets, which is the right to use the underlying assets, and the leaseby the straight-line method for a certain number of years (10 years)

liabilities, which is the obligation to make lease payments, for all

within employees’ average remaining years of service. Actuarial gains

leases in principle. In applying this standard, the Company used theor losses are amortized from the consolidated fiscal year following

method in which it recognizes the cumulative effect of retrospective

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

adjustments as of the commencement date of application.

method for a certain number of years (7–14 years) not longer thanAs a result of this change, in the consolidated balance sheets of

employees’ average remaining years of service. The Company andthis fiscal year, current assets increased by ¥23 million, property,

certain consolidated subsidiaries use a simplified method in calcu-

plant and equipment increased by ¥4,794 million, current liabilities

lating net defined benefit asset, net defined benefit liability, andincreased by ¥1,197 million, and long-term liabilities increased byperiodic pension cost under which retirement benefit obligations¥3,492 million, while investments and other assets decreased byare principally based on accrued benefits at the end of the year.

¥149 million. The impact of this change on the consolidated statements of income is immaterial. In addition, the balance at beginning(n) Appropriation of Retained Earningsof year of retained earnings in the consolidated statements of changes

Retained earnings with respect to a given financial period are appro-in net assets increased by ¥12 million.

priated by resolution of the shareholders at a general meeting to beheld subsequent to the close of such financial period. The accounts
for that period do not, therefore, reflect such appropriations.

91

(q) New Accounting Standards Not Yet Applied(2) Planned date of application

The Company and Its Domestic Consolidated Subsidiaries:

The Company will apply the accounting standard from the end of the• “Accounting Standard for Revenue Recognition” (ASBJ Statementfiscal year ending March 31, 2021.

No. 29, March 31, 2020)• “Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30, March 31, 2020)

Overseas Consolidated Subsidiaries:• ASU 2016-02 “Leases”(1) Overview(1) Overview

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

	Under this accounting standard, in principle, lessees are required

Financial Accounting Standards Board (FASB) jointly developed

to record assets and liabilities for all leases on the balance sheet.

comprehensive accounting standards related to revenue recogni-

There are no significant changes in lessor accounting.

tion. In May 2014, “Revenue from Contracts with Customers”(2) Planned date of application(IASB IFRS 15 and FASB Topic 606) were published. IFRS 15 is to	Application will start from the fiscal year ending March 31, 2023.

be applied from fiscal years starting on or after January 1, 2018,(3) Impact of the application of the standard

and Topic 606 is to be applied from fiscal years starting after	The impact on the consolidated financial statements resulting

December 15, 2017. Accordingly, the ASBJ has developed compre-

from the application of the standard is currently under evaluation.

hensive accounting standards related to revenue recognition, whichhave been published in conjunction with implementation guidance.
	  From the viewpoint of comparability among financial statements,(Accounting estimates associated with the spread of COVID-19)

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

With the spread of COVID-19, as for the Group, it may cause an impact

the basic policy of the ASBJ in regard to the development ofon consumption due to factors including the closure of sales outlets,

accounting standards related to revenue recognition is to deter-

as well as the postponement or cancellation of events and an associatedmine the accounting standards by starting with the incorporation

impact on promotion both in Japan and overseas, an impact on theof the basic principles of IFRS 15. Furthermore, if there are items

development schedule of products and services and on operationthat should be taken into account regarding practices, etc., thatsystems, an impact on the production schedule of the Group’s factories

have been implemented to date in Japan, then alternativeand other cooperating factories, the closure of amusement facilities,

accounting treatments are added, given that this addition will not

and an impact on the schedules or releases of visual productions.

cause a loss of comparability.

Therefore, the Group makes accounting estimates, such as deter-(2) Planned date of application

mining the recoverability of deferred tax assets, on the assumption	Application will start from the fiscal year ending March 31, 2022.

that the spread of COVID-19 will affect at least the first half of the(3) Impact of the application of the standard and guidance

next fiscal year.

	The impact on the consolidated financial statements resulting

However, there are many uncertainties regarding the impact of thefrom the application of the Implementation Guidance on

spread of COVID-19, which could affect the financial position and“Accounting Standard for Revenue Recognition,” etc., it is currently

financial performance of the Group in the next fiscal year.

under evaluation.
• “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, March 31, 2020)(1) Outline
In 2003, the IASB issued International Accounting Standards (IAS) 1,“Presentation of Financial Statements” (IAS 1). Paragraph 125 of IAS
1 requires disclosure of “major sources of estimation uncertainty.”
There were requests that consideration be given to also requiring thedisclosure of these “major sources of estimation uncertainty” asnotes under Japanese GAAP in order to provide useful information tousers of financial statements. In response, the ASBJ developed andissued “Accounting Standard for Disclosure of Accounting Estimates.”
The fundamental policy of the ASBJ in regard to the developmentof this accounting standard was not for entities to expand individual
notes but rather for entities to first identify the purpose of the disclosure and then to decide specific details of the disclosure in light ofits purpose. In the development of this standard, the ASBJ referred to
IAS 1 Paragraph 125.

92(r) Additional Information

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, 2020 have been translated into U.S. dollars at the rate of ¥108.83=U.S.$1, the approximate
exchange rate on the Tokyo Foreign Exchange Market on March 31, 2020.
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, 2019 and 2020 between the amounts shown in the consolidated balance sheets andthe consolidated statements of cash flows are as follows:
Millions of yen

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

2019

2020

2020

¥213,851¥189,856$1,744,520

738

60

554

(8,319)(1,189)(10,926)

—

(60)

(554)

¥206,270¥188,667$1,733,594

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, 2019

FINANCIAL SECTION

Cash and cash equivalents

Thousands of
U.S. dollars

None
Fiscal year ended March 31, 2020
SOTSU CO., LTD. and J-Broad Co., LTD. were newly consolidated into the Group through the acquisition of their shares. The breakdown of major
assets and liabilities as of the start of consolidation and the relationship between the acquisition cost of the shares of SOTSU CO., LTD. and J-Broad
Co., LTD., and the net expenditures for the acquisition, are as follows:
Current assets¥23,685 million (   $217,635 thousand)Fixed assets¥ 4,465 million (   $ 41,036 thousand)

Goodwill¥14,355 million (   $131,911 thousand)Current liabilities–¥ 3,634 million (–$ 33,397 thousand)Long-term liabilities–¥

Non-controlling interests–¥ 4,550 million (–$ 41,809 thousand)

720 million (–$ 6,617 thousand)

Investment value under the equity method up to the time of acquisition of control –¥ 4,961 million (–$ 45,587 thousand)Gain on step acquisitions–¥ 1,722 million (–$ 15,822 thousand)Acquisition cost of the shares of SOTSU CO., LTD. and J-Broad Co., LTD.	  ¥26,918 million (   $247,347 thousand)
SOTSU CO., LTD. and J-Broad Co., LTD. cash and cash equivalents–¥21,370 million (–$196,364 thousand)Net expenditures for acquisition of SOTSU CO., LTD. and J-Broad Co., LTD.

¥ 5,548 million (   $ 50,983 thousand)With respect to other consolidated subsidiaries, the information has been omitted because the amounts are insignificant.

93

5 Marketable Securities and Investment Securities
Marketable securities and investment securities as of March 31, 2019 and 2020 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2019

2020

2020

¥52,231¥47,623$437,591

Securities without market quotations

2,815

3,784

34,774

Investments in non-consolidated subsidiaries and affiliated companies

19,314

14,599134,152

400

506

4,650

¥74,762¥66,513$611,168

Securities with market quotations

Contributions to investment partnerships
Total

The original cost, carrying amount (fair value), and gross unrealized gain (loss) for securities with market quotations as of March 31, 2019 and2020 are summarized as follows:
Millions of yen

2019
Gross unrealized Gross unrealized Carrying amount
Original cost
gain
loss
(fair value)

Securities with market quotations:
Equity securities
Other		Total¥23,038¥29,084¥(630)¥51,492

738

—

—

738

¥23,777¥29,084¥(630)¥52,231

Millions of yen

2020
Gross unrealized Gross unrealized Carrying amount
Original cost
gain
loss
(fair value)

Securities with market quotations:
Equity securities
Corporate bond securities
		Total¥23,937¥24,487¥(962)¥47,461

161

—

(0)

161

¥24,098¥24,487¥(962)¥47,623

Thousands of U.S. dollars

2020
Gross unrealized Gross unrealized Carrying amount
Original cost
gain
loss
(fair value)

Securities with market quotations:
Equity securities
Corporate bond securities
		Total94$219,948$225,005$(8,842)

1,485

—

(4)

1,480

$221,433$225,005$(8,847)$437,591$436,110

The following is a summary of the carrying amount of securities without market quotations as of March 31, 2019 and 2020:
Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

Carrying amount

Carrying amount

Carrying amount¥2,815¥3,784$34,774¥2,815¥3,784$34,774

Securities without market quotations:
Unlisted securities
		TotalProceeds and gross realized gains and losses from the sales of securities in the fiscal years ended March 31, 2019 and 2020 are as follows:
Millions of yen

Equity securities

Thousands of
U.S. dollars

2019

2020

2020

¥305

¥ 44

$ 406

715

6,570

¥305

¥759

$6,976Gross realized gains from the sales of securities

231

22

204

Gross realized losses from the sales of securities

5

1

15

Millions of yen

Thousands of
U.S. dollars

6 Trade Receivables
Trade receivables as of March 31, 2019 and 2020 are summarized as follows:

Notes receivable

2019

2020

2020

¥ 5,073¥ 3,810$ 35,017

Accounts receivable–trade

88,00979,943

734,572

		Total¥93,083¥83,754$769,590

Millions of yen

Thousands of
U.S. dollars

FINANCIAL SECTION—

Proceeds from the sales of securities

Other

7 Inventories
Inventories as of March 31, 2019 and 2020 are summarized as follows:

2019

2020

2020

Finished goods and merchandise¥19,062¥22,282$204,744

Work in process

42,42851,098469,527

Raw materials and supplies

3,580

3,409

31,331¥65,070¥76,790$705,603

		TotalThe value of inventories stated in the consolidated balance sheets is calculated by writing down the carrying amount based on declining profitability,
and the valuation loss on inventories included in cost of sales is as follows:
Millions of yen

Valuation loss on inventories

Thousands of
U.S. dollars

2019

2020

2020

¥4,842¥6,949$63,857

95

8 Loss on Impairment of Fixed Assets
For the Company and consolidated subsidiaries, evaluation of impairment is performed by grouping assets according to management accountingclassifications based on Units, excluding significant idle assets, assets scheduled for disposal, and assets for lease. In the amusement facility
operations of the Real Entertainment Business, the individual facility is the smallest unit used in management accounting and is the basic unit forevaluating impairment.
The carrying amounts of the following assets, which exclude reusable assets, were reduced to the recoverable amount. The reduction amounts
were recorded as loss on impairment in other income (loss).
Millions of yen

Thousands
ofU.S. dollars

2020

2020

Unit

Location

Items

Classification

2019

Toys and Hobby

Zhongshan, China andothers (note 1)
Musashino City, Tokyo andothers (note 2)

Business assets

Other property, plant and equipment¥133

Assets scheduled for
disposal

Buildings and structures

89

—

—

Shimotsuga-gun, Tochigi(note 4)
Minami Uonuma City, Niigata(note 5)

Assets scheduled for
disposalAssets scheduled for
disposal

Other property, plant and equipment
Land

0
48

—
—

—
—

Buildings and structures

4

—

—

Business assets

Land
Intangible assets

0
44

—
—

—
—

Amusement facilities

Amusement facilities and machines

241

—

—

Toshima-ku, Tokyo and others(note 2)

Amusement facilities

Intangible assets
Other investments and assets
Amusement facilities and machines

0
35
109

—
—
—

—
—
—

Minato-ku, Tokyo and others(note 3)

Amusement facilities

Intangible assets
Amusement facilities and machines

10
23

—
—

—
—

IP Creation
Corporate(Common)Suginami-ku, Tokyo (note 2)
Shinagawa-ku, Tokyo andothers (note 3)

Business assets
Assets scheduled for
disposal

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

206
0
0

—
—
—

—
—
—

Toys and Hobby

Suita City, Osaka and others(note 1)Business assets

Intangible assets
Buildings and structures

1
—

—
31

—
286

Suita City, Osaka and others(note 2)

Assets scheduled for
disposal

Other property, plant and equipment
Intangible assets
Buildings and structures

—
—
—

4
20
35

43
189
328

Network
Chiyoda-ku, Tokyo (note 1)
Entertainment
Real Entertainment Chiyoda-ku, Tokyo and others(note 1)

¥

—

$

—

Real Entertainment Yokohama City, Kanagawa andothers (note 1)

Amusement facilities

Other property, plant and equipment
Amusement facilities and machines

—
—

3
2,967

35
27,265

Hachioji City, Tokyo and others(note 2)
Yokosuka City, Kanagawa andothers (note 3)

Amusement facilities

Intangible assets
Other investments and assets
Amusement facilities and machines

—
—
—

422
31
55

3,886
292
508

Amusement facilities

Amusement facilities and machines

—

0

7

Business assets

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

—
—

0
21

6
201

¥954

¥3,596$33,051

Visual and Music
Production
		TotalMitaka City, Tokyo (note 1)

Notes: 1. Impairment loss was recorded because it was forecast that the carrying amount of these fixed assets could not be recovered due to the decline in business profitability. In addition,these assets were determined that the value in use is considered to be zero.
		
2. Impairment loss was recorded because it was judged that the recoverable amount of these fixed assets had decreased substantially due to the decision to close the facility. In addition,these assets were determined that the value in use is considered to be zero.
		
3. Impairment loss was recorded on these fixed assets for which no future use is anticipated. In addition, these assets were determined that the value in use is considered to be zero.
		
4. Impairment loss was recorded on these fixed assets for which no future use was anticipated. The recoverable amount was calculated based on the net selling price, which wasevaluated based on property tax value.
		
5. A decision was made to dispose of this real estate, and accordingly impairment loss was recorded. The recoverable amount was calculated based on the net selling price, which wasevaluated based on a reasonable estimated sales price.

96

9 Loans Payable and Lease Obligations
Loans payable and lease obligations as of March 31, 2019 and 2020 are summarized as follows:
Millions of yen

Thousands of
U.S. dollars

2020

2020

Carrying
amountWeighted averageinterest rate (%)

Carrying
amountWeighted averageinterest rate (%)

Carrying
amountShort-term loans payable

¥500

0.31

¥ 700

0.31

$ 6,432

Current portion of long-term loans payable

180

0.28

246

0.47

2,265

Current portion of lease obligations

50

11.17

1,227

2.02

11,280Long-term loans payable (Less current portion)

138

0.25

171

0.52

1,575

Lease obligations (Less current portion)

39

6.41

3,765

1.81

34,597¥909—¥6,110—$56,151

2019

Total

The aggregate maturities of long-term loans payable and lease obligations (Less current portion) outstanding as of March 31, 2020 are as follows:
Thousands of
U.S. dollars

More than one year, within two years¥ 900$ 8,270

More than two years, within three years

643

5,910

More than three years, within four years

478

4,401

More than four years, within five years

354

3,253

1,560

14,338¥3,936$36,173

Millions of yen

Thousands of
U.S. dollars

More than five years
Total

FINANCIAL SECTION

Millions of yen

10 Trade Payables
Trade payables as of March 31, 2019 and 2020 are summarized as follows:

Notes payable
Accounts payable–trade
Total

2019

2020

2020

¥13,969¥11,326$104,072

60,83558,842

540,686¥74,804¥70,169$644,758

97

11 Retirement and Severance Benefits
1. Defined benefit plans(a) For the fiscal years ended March 31, 2019 and 2020, 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

2019

2020

2020

¥26,212¥29,303$269,263

1,746

1,850

17,003

116

39

360

Actuarial gains or losses incurred

1,918

(547)

(5,029)Retirement benefits paid

(896)

(1,492)(13,715)

—

200

1,839

206

—

—

—

(319)

(2,936)

—

(30)

(283)

¥29,303¥29,003$266,501Interest cost

Prior service costs incurred
Increase resulting from changes from the simplified method to theprinciple method
Effect of business combinations
Other
Ending balance of retirement benefit obligations(b) For the fiscal years ended March 31, 2019 and 2020, the reconciliation of the beginning and ending balances of plan assets is as follows(excluding plans for which the simplified method is applied):
Millions of yen

Beginning balance of plan assets

Thousands of
U.S. dollars

2019

2020

2020

¥19,144¥20,318$186,696

Expected rate of return on assets

352

396

3,646

Actuarial gains or losses incurred

(211)

(166)

(1,527)

Contributions to plan from employer

1,546

1,613

14,827Retirement benefits paid

(514)

(983)

(9,041)

Effect of business combinations

—

(277)

(2,546)

Other

—

(25)

(229)

¥20,318¥20,876$191,824

Ending balance of plan assets(c) For the fiscal years ended March 31, 2019 and 2020, 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

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

2019

2020

2020

¥1,300¥1,250$11,489
2,759

Retirement benefit expenses

392

300

Retirement benefits paid

(131)

(108)

(996)

Contributions to plan from employer

(160)

(187)

(1,723)

Decrease resulting from changes from the simplified method to theprinciple method

(148)

—

—

Effect of business combinations

—

242

2,225

Other

(2)

(6)

(62)

¥1,250¥1,490$13,693

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

98

Thousands of
U.S. dollars

(d) As of March 31, 2019 and 2020, the reconciliation of the ending balances of retirement benefit obligations and plan assets with the net defined
benefit liability and net defined benefit asset recorded on the consolidated balance sheet is as follows:
Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

Retirement benefit obligations of funded plans¥ 25,711¥ 26,317$ 241,822

Plan assets(22,159)(23,080)(212,082)

3,552

3,236

29,739Retirement benefit obligations of non-funded plans

6,683

6,380

58,629Net amount of liabilities and assets recorded on consolidated balance sheet

10,236

9,617

88,369Net defined benefit liability

10,383

9,840

90,420Net defined benefit asset

(147)

(223)

(2,050)¥ 10,236¥ 9,617$ 88,369

Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

Service cost

¥1,746¥1,850$17,003

Interest cost

116

39

360

Expected rate of return on assets

(352)

(396)

(3,646)

Amortization of actuarial gains or losses

780

1,169

10,747

Net amount of liabilities and assets recorded on consolidated balance sheet(e) For the fiscal years ended March 31, 2019 and 2020, the breakdown of retirement benefit expenses is as follows:

19

65

602

Retirement benefit expenses calculated using the simplified method

392

300

2,759

58

—

—

2,760

3,028

27,826

142

109

1,006

¥2,903¥3,137$28,833

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

FINANCIAL SECTION

Amortization of prior service costs

Note:	In the fiscal year ended March 31, 2019, the following extra retirement payments were recorded: ¥135 million in “Selling, general and administrative expenses” and ¥7 million in“Other income (loss).” In the fiscal year ended March 31, 2020, the following extra retirement payments were recorded: ¥66 million ($610 thousand) in “Selling, general and administrative
expenses” and ¥43 million ($396 thousand) in “Other income (loss).

(f) For the fiscal years ended March 31, 2019 and 2020, the breakdown of items recorded in remeasurements of defined benefit plans (before tax
effect) is as follows:
Millions of yen

Prior service costs

¥

2019

2020

2020

19

¥ (134)$ (1,237)(1,349)1,550

14,248¥(1,329)¥1,416$13,011

Actuarial gains or losses
Total

Thousands of
U.S. dollars(g) As of March 31, 2019 and 2020, 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

¥

Thousands of
U.S. dollars

2019

2020

2020

(70)

¥ (205)$ (1,886)(8,044)(6,493)(59,665)¥(8,114)¥(6,698)$(61,551)

99

(h) As of March 31, 2019 and 2020, the major categories of plan assets as a percentage of total plan assets are as follows:
2019

2020

40%

Bonds

35%

Equities

109Life insurance general account

20

16

Other (note 1)
Total

35

35

100%

100%

Notes: 1. The “other” category mainly includes cash and alternative investments.
2. The total of plan assets includes 27% and 25% representing assets contributed to a retirement benefit trust for the corporate pension
plan as of March 31, 2019 and 2020, respectively.
(i) For the fiscal years ended March 31, 2019 and 2020, the principal actuarial assumptions are as follows:
2020

2019

Discount rate

0.00%~0.60%

0.00%~0.60%

Long-term expected rate of return on assets

1.82%~2.50%

1.96%~2.50%

Salary increase rate

1.65%~5.44%

1.84%~5.12%

Method of determining long-term expected rate of return on assets
Note: To determine the long-term expected rate of return on plan assets, reference was made to the current and expected future allocations of plan assets and to the current and expected
future long-term rate of returns on the various assets that make up plan assets.

2. Defined contribution plans
For the fiscal years ended March 31, 2019 and 2020, the required contributions to defined contributions plans for the Company and its consolidated
subsidiaries were as follows:
Millions of yen

Required contributions to defined contribution plans

100

Thousands of
U.S. dollars

2019

2020

2020

¥652

¥732

$6,731

12 Financial Instruments
1. Financial instruments

and in addition the Company and its consolidated subsidiaries track(1) Policy for financial instruments

market trends and, as necessary, utilize forward foreign exchange

The Company and its consolidated subsidiaries manage funds by means

contracts and currency option contracts for hedging.

of highly secure financial instruments only and procure funds

Trade payables and Accrued income taxes are exposed to liquidity

through borrowing from banks and other methods, such as issuingrisk. The Company and its consolidated subsidiaries manage this risk

corporate bonds.

through the formulation and revision of monthly funding plans for the

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

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

hedge accounting is applied, please refer to Note “2 Summary ofWith regard to credit risk posed by customers with respect to tradeSignificant Accounting Policies—(l) Derivatives and Hedging Activities.”

receivables, the Company and its consolidated subsidiaries manage

Derivative transactions are executed and managed according tobalance by counterparty and due date, and credit information oninternal rules that determine trading authority and limits on amounts

major customers is updated at least once a year to minimize suchtraded. Derivatives are used in ways that minimize credit risk,

credit risk. The Company and its consolidated subsidiaries have aand thus transactions are carried out only with highly creditworthysystem for immediately sharing within the Company and its consoli-

financial institutions.

counterparties in the event that such information is received.
As of March 31, 2019 and 2020, designated large customers were(3) Supplementary explanation on the fair value offinancial instruments

counterparties for 23.7% and 13.7% of trade receivables, respectively.

The fair value of financial instruments includes, in addition to

Receivables denominated in foreign currencies arising as a result of

the value determined based on market prices, valuations calculated

the fact that the Company and its consolidated subsidiaries conduct

on a reasonable basis if no market price is available. However, asbusiness on a global basis are subject to foreign exchange ratecertain variables are used for these calculations, the result of such

fluctuation risk. The Company and its consolidated subsidiaries

calculations may vary if different assumptions are used.

manage balances by counterparty and currency, and in addition the

The contract amounts of derivative transactions in Note “20Company and its consolidated subsidiaries track market trends and,Foreign Exchange Risk Management and Interest Rate Risk

as necessary, utilize forward foreign exchange contracts for hedging.

Management” should not be considered indicative of the market

Marketable securities and investment securities are principally the

FINANCIAL SECTION

dated subsidiaries adverse credit and other information regarding

risk associated with the derivative financial instruments.

shares 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,101

2. Fair value of financial instruments
The carrying amounts of financial instruments as stated in the consolidated balance sheets, their fair values as of March 31, 2019 and 2020,
and the differences between carrying amounts and fair values are as stated below. This table does not include assets for which it was judged
extremely difficult to assess the fair value (Note 2 below).
Millions of yen

Carrying
amountFair value¥213,851¥213,851

93,08393,08368,562

71,446

		Total assets¥375,497(1) T rade payables¥ 74,804
17,495

17,495¥ 92,300¥ 92,300

¥

¥

(1) C
 ash and time
deposits(2) T rade receivables(3) M arketable securities
and investment
securities(2) A ccrued income taxes
		Total liabilities
Derivative financial
instruments*

12

Thousands of U.S. dollars

2020

2019

2020

Difference

Carrying
amountFair value¥—¥189,856¥189,856—

83,75483,7542,884

58,73657,261(1,474)¥378,381¥2,884¥332,347¥330,872¥(1,474)$3,053,818$3,040,267$(13,551)¥ 74,804¥—¥ 70,169¥ 70,169¥—$ 644,758$ 644,758

$

  —

—

5,571

5,571

—

51,194

51,194¥—¥ 75,740¥ 75,740¥—$ 695,953$ 695,953

$

  —

¥

—

¥

¥

¥

—

$

$

$

  —

12

337

Carrying
amountFair value—$1,744,520$1,744,520—

769,590

769,590539,706

526,155

Difference

¥

337

3,099

Difference$  —(13,551)

3,099* Assets and liabilities derived from derivative transactions are stated on a net basis. Items for which the total is a net liability are shown in parentheses.
Notes: 1. Method for calculating the fair value of financial instruments and matters related to securities and derivative transactions
		
Assets		(1) Cash and time deposits
			 Since these are readily convertible into cash, their fair value is almost identical with the book value, and thus these are stated at the book value.
		(2) Trade receivables
			Since trade receivables that are settled in a short period of time are readily convertible into cash, their fair value is almost identical with the book value, and thus these are stated at
the book value. For trade receivables that are settled after a long period of time, the fair values are measured based on the present values calculated by discounting receivableamounts classified by certain periods of time at a rate for which time to maturity and credit risk has been taken into account.
		(3) Marketable securities and investment securities
			Since the Money Management Fund is readily convertible into cash, its fair value is almost identical with the book value, and thus 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 fair value is almost identical with the book value, and thus these are stated at the book value.
		
Derivative financial instruments
		 Please refer to Note “20 Foreign Exchange Risk Management and Interest Rate Risk Management.”
2. Financial instruments for which fair value is extremely difficult to determine
Millions of yen

Thousands of U.S. dollars

2019

2020

2020

Carrying amount

Carrying amount

Carrying amountUnlisted stocks¥2,815¥3,784$34,774

Stocks of affiliated companies (unlisted stocks)

2,984

3,486

32,036

400

506

4,650

Contributions to investment partnerships

	As these instruments do not have readily available fair values, and their fair values are extremely difficult to determine, they are not included in “(3) Marketable securities andinvestment securities” in the table above.
3. Maturity analysis of financial assets
Millions of yen

2019Withinone year

Cash and time
deposits
Trade receivables¥210,477
91,662More than
one year,withinfive years¥

More than
five years,
withinten years

More thanten years

Withinone year

—

¥—

¥—

¥187,287

1,420

—

—

82,775More than
one year,withinfive years¥

Thousands of U.S. dollars

2020

More than
five years,
withinten years

More thanten years

70

¥—

979

—

2020

Withinone yearMore than
one year,withinfive years

More than
five years,
withinten years

More thanten years¥ —$1,720,914

$ 645

$—

$ —

—

760,593

8,996

—

—

Marketable securitiesand investment
securities
Bonds(Corporate bonds)
Total

102

—

—

—

—

60

—

—

100

551

—

—

918

¥302,140¥1,420¥—¥—¥270,122¥1,049¥—¥100$2,482,059$9,642$—$918

13 Income Taxes
The Company and its domestic consolidated subsidiaries are subject to Japanese corporate, inhabitant, and enterprise taxes based on income
which, in the aggregate, resulted in a normal tax rate of 30.6% for the fiscal years ended March 31, 2019 and 2020, respectively.
Income tax expenses reflected in the accompanying consolidated statements of income for the fiscal years ended March 31, 2019 and 2020
consist of the following:
Millions of yen

Income taxes–current
Income taxes–deferred		TotalThousands of
U.S. dollars

2019

2020

2020

¥29,566¥22,541$207,121(5,361)(1,695)(15,582)¥24,205¥20,845$191,538

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,
2019 and 2020 is as follows:
2020

30.6%

30.6%

Entertainment expenses not deductible for tax purposes

0.4

0.4

Corporate inhabitant tax on per capita basis

0.3

0.4

Directors’ bonuses

0.6

0.7

Change in valuation allowance for deferred tax assets

(2.1)

(2.3)

Differences in tax rates of domestic consolidated subsidiaries

0.8

2.0

Differences in tax rates of foreign consolidated subsidiaries

(0.7)

0.9

Tax credits for research and development expenses

(2.0)

(5.3)

Tax credit for acceleration of wage increases and productivity improvement

—

(1.0)

Gain on step acquisitions

—

(0.7)

Amortization of goodwill

0.0

0.2

Other

0.0

0.6

Effective tax rate

27.9%

26.5%

FINANCIAL SECTION

2019

Normal tax rate103

Significant components of deferred tax assets and liabilities as of March 31, 2019 and 2020 are as follows:
Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

Deferred tax assets:¥ 10,695¥ 9,373$ 86,126

Excess depreciation of fixed assets

13,93016,705

153,500

Accrued employee bonuses

4,685

3,929

36,108Inventory valuation losses

2,604

3,187

29,291

Net defined benefit liability

4,818

4,674

42,954

Loss on valuation of advance payments

1,366

1,285

11,813

Loss on impairment of fixed assets

376

341

3,136

Accrued enterprise taxes and others

1,606

1,146

10,534

Research and development expenses

531

401

3,692

Allowance for doubtful receivables

501

326

2,998

2,043

1,367

12,565

Tax loss carryforward (note 2)

Revaluation reserve for land

8,073

8,096

74,396

51,23250,836467,117

Valuation allowance for tax loss carryforward (note 2)(9,870)(8,634)(79,343)

Valuation allowance for total deductible temporary differences(8,910)(7,475)(68,693)

Total valuation allowance (note 1)(18,781)(16,110)(148,037)

32,451

34,725

319,080

Other
		 Total gross deferred tax assets

Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced depreciation of fixed assets

(60)

(60)

(559)

Retained earnings of foreign consolidated subsidiaries

(684)

(799)

(7,347)

Valuation difference on available-for-sale securities(8,367)(7,307)(67,149)

Revaluation reserve for land

(333)

(249)

(2,293)

Other

(640)

(872)

(8,018)

Total deferred tax liabilities(10,086)(9,290)(85,368)

Net deferred tax assets¥ 22,365¥ 25,434$ 233,711

Notes: 1.	The valuation allowance declined by ¥2,670 million ($24,537 thousand). The principal content of this decline was a decrease in valuation allowance for tax loss carryforward atconsolidated subsidiaries.
2.	Amounts of tax loss carryforward and related deferred tax assets by carryforward period
Millions of yen

2019Within one year

Tax loss carryforward*¥62

Valuation allowance(2)

Deferred tax assets

60

More thanMore thanMore thanMore than
one year, within two years, within three years, within four years, within
two years
three years
four years
five years

¥275
(237)
38

¥60

¥75

¥411

(60)

(70)

(411)

—

4

—

More than
five years¥9,810(9,088)721

Total¥10,695(9,870)824* The tax loss carryforward were calculated using the normal tax rate.
Millions of yen

2020

Within one year

Tax loss carryforward*¥ 223

Valuation allowance(223)

Deferred tax assets

0More thanMore thanMore thanMore than
one year, within two years, within three years, within four years, within
two years
three years
four years
five years

¥ 13
(13)
—

¥ 122

¥ 385

¥ 150

(118)

(385)

(147)

3

0

3

More than
five years¥ 8,477(7,746)731

Total¥ 9,373(8,634)738* The tax loss carryforward were calculated using the normal tax rate.
Thousands of U.S. dollars

2020

Within one year

Tax loss carryforward*$ 2,051

Valuation allowance(2,051)

Deferred tax assets

0* The tax loss carryforward were calculated using the normal tax rate.

104

More thanMore thanMore thanMore than
one year, within two years, within three years, within four years, within
two years
three years
four years
five years

$ 128
(128)
—

$ 1,127$ 3,540$ 1,385(1,092)(3,540)(1,356)35

028More than
five years$ 77,892(71,175)
6,717

Total

$ 86,126(79,343)6,782

14 Selling, General and Administrative Expenses
Significant components of selling, general and administrative expenses for the fiscal years ended March 31, 2019 and 2020 are as follows:
Thousands of
U.S. dollars

Millions of yen

2019

2020

2020

¥ 44,491¥ 44,367$ 407,679

Directors’ remuneration and employees’ wages

47,27848,179442,702

Employees’ retirement and severance benefits

2,830

3,114

28,621

Provision for directors’ bonuses

1,786

1,885

17,328

Research and development expenses

19,811

19,035

174,914

14

406

3,735

Advertising expenses

Provision of allowance for doubtful accounts
Other		Total62,296

65,182598,937¥178,510¥182,172$1,673,920

15 Other Comprehensive Income
The components of “Other comprehensive income” for the fiscal years ended March 31, 2019 and 2020 are as follows:
FINANCIAL SECTION

Millions of yen

2019
Amounts Reclassification
arising
adjustments

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

Net oftax effect¥12,794¥(231)¥12,562¥(3,877)¥8,685

935

(551)

383

(78)

305

(531)

—

(531)

—

(531)

(2,129)799(1,329)

380

(948)

(191)

0

(190)

—

(190)

¥10,876¥ 17¥10,894¥(3,574)¥7,319Millions of yen

Thousands of U.S. dollars

2020
Amounts Reclassification
arising
adjustments

Valuation difference on
available-for-salesecurities, net of tax¥(4,651)¥

Beforetax effect

(22)

2020

Tax effect

Net oftax effectAmounts Reclassification
arising
adjustments

Beforetax effectTax effect

Net oftax effect¥(4,673)¥1,571¥(3,101)$(42,738) $(202)$(42,941) $14,438$(28,502)

Deferred gains or losses onhedges, net of tax

345

(29)

315

(71)

244

3,171

(269)

2,902

(658)

2,243

Revaluation reserve forland, net of tax

—

—

—

682

682

—

—

—

6,273

6,273

(3,468)—(3,468)—(3,468)(31,866)—(31,866)—(31,866)

180

1,235

1,416

(350)

1,065

1,661

11,34913,011(3,223)

9,787

(17)

0

(17)

—

(17)

(161)

0

(160)

—

(160)

¥(7,610)¥1,183¥(6,427)¥1,831¥(4,595)$(59,055) $16,830$(42,224)

Foreign currencytranslation adjustments
Remeasurements ofdefined benefit plans,
net of tax
Share of othercomprehensive incomeof associates accounted
for using equity method
Total$(69,933) $10,878

105

16 Retained Earnings and Dividends
In Japan, in the event a dividend distribution of surplus is made,the lesser of an amount equal to 10% of the dividend or the excess,if any, of 25% of common stock over the total of additional paid-in
capital and legal earnings reserve must be set aside as a legal
reserve until the aggregate amount of capital surplus and thelegal reserve equals 25% of stated capital.
Certain foreign consolidated subsidiaries are also required toappropriate their earnings to legal reserves under the laws of therespective countries.
The Company’s retained earnings includes legal reserves of ¥1,645
million and ¥1,645 million ($15,119 thousand) at March 31, 2019 and2020, respectively. Proposed appropriations of retained earnings havenot been reflected in the consolidated financial statements at the endof the fiscal year. The Company’s approved appropriations of retained
earnings for the fiscal year ended March 31, 2020 were cash dividendsof ¥24,635 million ($226,364 thousand). In addition, a mid-year
dividend may be paid based on approval by the Board of Directors,
which is subject to limitations. The mid-year dividend for the fiscal

year ended March 31, 2020 was ¥4,399 million ($40,422 thousand).
Dividend limitation
On March 23, 2016, the Company concluded global credit facility
agreements with financial institutions. These agreements have thefollowing restrictive financial covenants:(1)	The Company shall maintain the amount of net assets in the
consolidated balance sheet as of the closing dates of the second
quarter and the end of each fiscal year (the “Second Quarter or
End of Fiscal Year”) at 75% or above of whichever is greater:(i) the amount of net assets in the consolidated balance sheet asof 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.
(2)	With respect to recurring profit and loss* in the consolidated statement of income for each fiscal year, the Company shall not record
recurring losses for two consecutive fiscal years.
*R ecurring profit and loss is a Japanese accounting term denoting income before
extraordinary items.

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

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

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

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

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

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

adjustments are made to the official notice prices.
Unrealized gains for land of ¥75 million ($697 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 fair value

assesses and publishes the method to calculate land value that formsof the land as of March 31, 2020.

18 Common Stock and Treasury Stock
The changes in the number of common stock and treasury stock for the fiscal years ended March 31, 2019 and 2020 are as follows:
SharesCommon stock (number of shares)
Number of shares at beginning of year
Number of shares at end of year

2019

2020

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

2019

2020

2,239,901(30,499)
2,209,402

2,209,402
114,918
2,324,320

19 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 non-cancellable operating leases as of March 31, 2019 and 2020 are as follows:
Millions of yen

Within one year

Thousands of
U.S. dollars

2019

2020

2020

¥2,305¥1,641$15,082

Over one year

5,634

2,800

25,736

		Total¥7,939¥4,442$40,818

Note: Since some overseas consolidated subsidiaries have applied IFRS 16 Leases from the beginning of this fiscal year, the operating leases of those subsidiaries are included only in theamount for the previous fiscal year.

106

20 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 non-performance by the counterparties to forward foreign exchange contracts and currency
option contracts, but the Company does not expect any instances of non-performance due to the high credit ratings of the counterparties.
Contract amounts, fair values, and gains or losses from valuation of forward foreign exchange contracts outstanding as of March 31, 2019 and2020 are as follows. The contract amounts in themselves should not be considered indicative of the market risk associated with the derivative
financial instruments.
(1) Derivative transactions not qualifying for hedge accounting
Millions of yen

Contract
amountHedging method

Estimated Unrealized
fair value gain (loss)

Thousands of U.S. dollars

2020

2019
Contract
amountEstimated Unrealized
fair value gain (loss)

2020
Contract
amountEstimated Unrealized
fair value gain (loss)

Forward foreign exchange contracts
Sold:¥1,997

¥(21)

¥(21)

¥1,958¥ 24¥ 24$17,999

$ 222

$ 222

U.S. dollars

1,553

(25)

(25)

1,756

(19)

(19)

16,139

(178)

(178)

503

6

6

773

(0)

(0)

7,109

(6)

(6)

U.S. dollars

1,336

25

25

677

3

3

6,222

30

30

H.K. dollars

46

0

0

47

0

0

436

1

1

Euro
Purchased:

Currency option contracts

FINANCIAL SECTION

Yen

Sold/Purchased:
U.S. dollars
		Total

747

0

0

—

—

—

—

—

—

¥6,185

¥(13)

¥(13)

¥5,213¥ 7¥ 7$47,907

$ 69

$ 69

Notes: 1.	Method of calculating fair value
		 Calculated based on prices provided by counterparty financial institutions.
2.	For certain of the above forward foreign exchange contracts, hedge accounting is applied mainly for the transactions between consolidated subsidiaries in non-consolidated financial
statements, but these transactions have been eliminated in the consolidated financial statements. As a result, these transactions are not treated as effective hedges of the hedged
assets and/or liabilities in the consolidated financial statements.
3.	Currency option contracts are zero cost options, and option premiums are not paid or received. In addition, call options and put options are contained within a single integrated contract
and are therefore listed as a single amount.

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

Hedge accounting
methodHedging method

Hedged items

Thousands of U.S. dollars

2020

2019

2020

Contract
amountEstimated
fair value

Contract
amountEstimated
fair value

Contract
amountEstimated
fair value

Forward foreign exchange contracts
Sold:

DeferredYen

Accounts receivable–trade¥ 4,661¥(39)¥ 9,359¥  131$ 85,999$1,211

U.S. dollars

Accounts receivable–trade

934

(0)

2,026

(18)

18,619

(173)

Euro

Accounts receivable–trade

114

2

—

—

—

—
1,964

Purchased:
U.S. dollars

Accounts payable–trade

10,83992

10,893

213

100,100

Yen

Accounts payable–trade

—

—

38

0

357

5

H.K. dollars

Accounts payable–trade

263

1

89

2

824

22

Chinese yuan

Other current liabilities

932

(28)

—

—

—

—

301

(note 2)124

(note 2)

1,148

(note 2)

¥18,046¥ 26¥22,533¥  329$207,050$3,030Forward foreign exchange contracts

Foreign exchange
Purchased:
allocation method
U.S. dollars
		Total

Accounts payable–trade

Notes: 1. Method of calculating fair value
			 Calculated based on prices provided by counterparty financial institutions.
		
2.	Forward foreign exchange contracts and other contracts for which the allocation method is applied are accounted for together with the accounts payable–trade that are the hedged
items, and as a result the fair values of those contracts are included in the fair values of the accounts payable–trade.

107

21 Commitments and Contingent Liabilities
1. Pledged assets
As of March 31, 2019 and 2020, the detail of pledged assets is as follows:
Millions of yen

Cash and time deposits
Land
Total

Thousands of
U.S. dollars

2019

2020

2020

¥44

¥ 27

$ 250

—

300

2,756

¥44

¥327

$3,006

As of March 31, 2020, there were no claims relating to pledged assets.
In addition to the above, there were assets deposited as a security deposit for issuance under the Payment Services Act of ¥1,553 million and¥1,937 million ($17,798 thousand) in “Other investments and assets” at March 31, 2019 and 2020, respectively.

2. Commitments
Commitments as of March 31, 2019 and 2020 are summarized as follows:
Millions of yen

Guarantee of obligation resulting from rental contracts of unconsolidated subsidiary

Thousands of
U.S. dollars

2019

2020

2020

¥6

¥20

$191

22 Real Estate for Lease
The Company and certain consolidated subsidiaries own real estate for lease (including land) in Tokyo and other regions. Lease income or loss
associated with this real estate for lease in the previous fiscal year was ¥220 million (lease revenues recorded in other income (loss); major lease
expenses recorded in SG&A expenses); impairment loss was ¥48 million (recorded in other income (loss)); and gain on sale was ¥2,065 million(recorded in other income (loss)).
In this fiscal year, lease income or loss associated with this real estate for lease was ¥141 million ($1,301 thousand) (lease revenues recorded inother income (loss); major lease expenses recorded in SG&A expenses); and gain on sale was ¥1,013 million ($9,308 thousand) (recorded in otherincome (loss)).
Also, the book value stated in the consolidated balance sheet, change during the period, and fair value at end of year are as follows:
Millions of yen

Thousands of
U.S. dollars

2019

2020

2020

¥35,347¥34,506$317,068

Consolidated balance sheet
Balance at beginning of year
Changes during the period

(840)

(545)

(5,016)

Balance at end of year

34,50633,960312,052

Fair value at end of year

¥39,033¥38,578$354,482

Notes: 1. The book value stated in the consolidated balance sheet is calculated by deducting accumulated depreciation from acquisition cost.
2.	Among the changes during the year, the principal decrease in the previous fiscal year was sale of real estate—¥774 million. The principal decrease in this fiscal year was sale of realestate—¥713 million ($6,555 thousand).
3.	The fair value at the end of this fiscal year is the amount calculated by the Company primarily based on the Real Estate Appraisal Standards (including adjustments using relevant
indices, etc.).

108

23 Segment Information
The reportable segments of the Company are components of the Group whose separate financial information is available and which are periodicallyevaluated by the Board of Directors in deciding how to allocate management resources and in assessing performance.
The Group is made up of (1) five Units, one for each business domain, namely the Toys and Hobby Unit, the Network Entertainment Unit, theReal Entertainment Unit, the Visual and Music Production Unit, and the IP Creation Unit, and (2) the affiliated business companies that mainly
serve a supporting role for these Units. The core company of each Unit leads the planning and promotion of the business strategies of the unit forJapan and overseas.
Accordingly, the Group has the following five reportable segments: Toys and Hobby Business, Network Entertainment Business, Real Entertainment
Business, Visual and Music Production Business, and IP Creation Business.
The Toys and Hobby Business conducts production and sales of toys, candy toys, and products for vending machines. The Network
Entertainment Business conducts planning, development, and distribution of network content, and planning, development, and distribution ofhome video games, etc. The Real Entertainment Business conducts planning, production, and sales of arcade games, etc., and planning andoperation of amusement facilities. The Visual and Music Production Business conducts planning, production, and sales of visual and music content
and packaged software, and live entertainment operations. The IP Creation Business conducts planning and development of animations, etc., andmanagement and administration of copyrights and other rights, etc.
The accounting method used for the business segments reported is the same as the accounting method stated in Note “2 Summary of
Significant Accounting Policies.” Segment profit or loss in the segment information below is measured by operating profit, and segment assets aremeasured by total assets. Amounts of inter-segment transactions are based on the prevailing market prices.
2019
Reportable Segment
Toys and
Hobby

Network
Entertainment

Real Entertainment

Visual andMusic
Production

IP Creation

Subtotal

Other(note 1)

Total

¥234,924¥333,805¥100,699¥37,425¥16,186¥723,041¥ 9,305¥732,347

Adjustments Consolidated(note 2) total (note 3)

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

¥

—

FINANCIAL SECTION

Millions of yen¥732,347

7,941

7,121

793

8,093

6,278

30,22820,45950,687(50,687)—¥242,865¥340,927¥101,493¥45,518¥22,464¥753,269¥29,764¥783,034¥(50,687)¥732,347

Segment profit (loss)

21,71047,534

4,264

8,797

5,020

87,328

1,197

88,526(4,480)84,045

Segment assets

127,726

158,563

65,87634,215

21,764

408,145

33,708441,853

171,101

612,95547¥ 20,544

455¥ 21,000¥370¥ 21,370

Other items:
Depreciation andamortization¥ 10,877

¥

1,522

¥

7,461

¥

635

¥

¥

	Amortization of goodwill

126

0

28

21

—

177

—

177

—

177

	Loss on impairment of
fixed assets

278

44

628

—

0

951

—

951

2

954

	Investments in associates
accounted for using
equity method

969

—

—

—

—

969

15,87916,849—16,849	Increase in property,
plant and equipment
and intangible assets

12,002

2,587

12,342633

29

27,595430

28,025991

29,016109

Millions of yen

2020
Reportable Segment
Toys and
Hobby

Network
Entertainment

Real Entertainment

Visual andMusic
Production

IP Creation

Subtotal

Other(note 1)

Total

¥245,880¥322,872¥90,983¥38,742¥13,291¥711,770¥12,219¥723,989

7,834

5,207

770

8,209

6,458

28,47923,532Adjustments Consolidated(note 2) total (note 3)

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

¥

—

¥723,989

52,012(52,012)—¥253,714¥328,079¥91,753¥46,951¥19,750¥740,249¥35,752¥776,001¥(52,012)¥723,989

Segment profit (loss)

26,73343,879(1,502)

8,032

5,758

82,901

1,864

84,766(5,991)

78,775

Segment assets

121,625

168,058

62,79324,384

17,584394,446

71,390465,837

153,982

619,819¥

Other items:
Depreciation andamortization

2,555¥ 7,97446¥ 21,910

591¥ 22,502

737¥ 23,239

	Amortization of goodwill

215

—

14

21

56

308

359

667

—

667

	Loss on impairment of
fixed assets

96

—

3,478

21

—

3,596

—

3,596

—

3,596

	Investments in associates
accounted for using
equity method

801

—

—

—

—

801

10,677

11,479—11,479	Increase in property,
plant and equipment
and intangible assets

11,908

3,692

10,160650

979

27,392

1,193

28,5854,820

33,406¥ 10,815

¥

¥

519

¥

¥

Thousands of U.S. dollars

2020
Reportable Segment
Toys and
Hobby

Network
Entertainment

Real Entertainment

Visual andMusic
Production

IP Creation

Subtotal

Other(note 1)

$2,259,308$2,966,762$836,010$355,988$122,131$6,540,202$112,280$6,652,482 $

71,98447,846

7,075

75,43659,344

261,686

216,235

477,921$2,331,292$3,014,609$843,085$431,424$181,475$6,801,888$328,515

245,646

403,190(13,806)

73,81052,914

761,755

17,136

778,892(55,051)

723,840

1,117,571

1,544,227

576,989

224,063

161,580

3,624,432

655,980

4,280,412

1,414,889

5,695,302

Total

Adjustments Consolidated(note 2) total (note 3)

Net sales:
To external customers
Inter-segment sales
and transfers
Total
Segment profit (loss)
Segment assets—$6,652,482(477,921)—$7,130,403 $ (477,921) $6,652,482

Other items:
Depreciation andamortization$

99,381 $

$

4,773

$

426 $ 201,332$

5,432 $ 206,764$

6,777 $ 213,542

23,480$ 73,270

	Amortization of goodwill

1,979

—

133

201

516

2,831

3,298

6,129

—

6,129

	Loss on impairment of
fixed assets

882—

31,966201—

33,051—33,051—33,051

	Investments in associates
accounted for using
equity method

7,367

—

—

—

—

7,367

98,111

105,478—

105,478	Increase in property,
plant and equipment
and intangible assets

109,418

33,93093,365

5,981

8,999

251,695

10,964

262,660

44,295306,956

Notes: 1.	The “Other” category is a business segment not included in reportable segments under which operations such as logistics services and printing for each of the Group companies are classified.
2. The details of adjustment amounts are as follows:		(1) T he adjustment to segment profit (loss) of -¥4,480 million for the fiscal year ended March 31, 2019 includes elimination of inter-segment transactions of -¥1,381 million andcorporate expenses not allocated to reportable segments of -¥5,861 million. The adjustment to segment profit (loss) of -¥5,991 million (-$55,051 thousand) for the fiscal year
ended March 31, 2020 includes elimination of inter-segment transactions of ¥920 million ($8,457 thousand) and corporate expenses not allocated to reportable segments of-¥6,911 million (-$63,509 thousand). Principal corporate expenses are expenses related to administrative divisions not belonging to reportable segments.
		(2) T he adjustment to segment assets of ¥171,101 million as of March 31, 2019 includes elimination of inter-segment transactions of -¥36,069 million and corporate assets notallocated to reportable segments of ¥207,171 million. The adjustment to segment assets of ¥153,982 million ($1,414,889 thousand) as of March 31, 2020 includes elimination ofinter-segment transactions of -¥34,501 million (-$317,023 thousand) and corporate assets not allocated to reportable segments of ¥188,484 million ($1,731,913 thousand).
Principal corporate assets are cash and deposits, investment securities, and assets related to administrative divisions not belonging to reportable segments.
		(3) T he adjustment to depreciation and amortization expense of ¥370 million for the fiscal year ended March 31, 2019 includes elimination of inter-segment transactions of -¥745
million and depreciation and amortization expense not allocated to reportable segments of ¥1,115 million. The adjustment to depreciation and amortization expense of ¥737 million($6,777 thousand) for the fiscal year ended March 31, 2020 includes elimination of inter-segment transactions of -¥378 million (-$3,479 thousand) and depreciation andamortization expense not allocated to reportable segments of ¥1,116 million ($10,256 thousand).
		(4) T he adjustment to loss on impairment of fixed assets of ¥2 million for the fiscal year’s ended March 31, 2019 is related to corporate assets not allocated to reportable segments.
		(5) T he adjustment to increase in property, plant and equipment and intangible assets of ¥991 million and ¥4,820 million ($44,295 thousand) as of March 31, 2019 and 2020,
respectively, are related to corporate assets not allocated to reportable segments.
3. Segment profit (loss) is adjusted with operating profit or loss in the consolidated statements of income.

110Additional segment information as of and for the fiscal years ended March 31, 2019 and 2020 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

2019

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥519,068¥84,274¥63,384¥65,619¥732,347

76,196

2,135

4,461

4,799

87,593

Property, plant and equipment

Millions of yen

2020

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥500,952¥91,118¥61,374¥70,543¥723,989

80,938

2,084

8,159

5,723

96,906

Property, plant and equipment

Thousands of U.S. dollars

Net sales

Americas

EuropeAsia, excluding Japan

Total$4,603,073$837,258$563,951$648,198$6,652,482

743,713

19,157

74,97752,595890,443

Property, plant and equipment
3. Information by major customer
Fiscal year ended March 31, 2019

Net sales(Millions of yen)

Name

FINANCIAL SECTION

2020
Japan

Name of related segment

Toys and Hobby Business,
Apple Inc.

¥103,883

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

Google Inc.

¥84,677

Network Entertainment Business, andVisual and Music Production BusinessNote: Apple Inc. and Google Inc. are both platform-provision companies. The actual results of sales to these companies are usage fees, etc., for users (ordinary users) of game services provided
by the Group.

Fiscal year ended March 31, 2020

Name

Net sales(Millions of yen)

Net sales(Thousands of U.S.
dollars)

Name of related segment

Toys and Hobby Business,
Apple Inc.

¥102,697$943,652

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

Google Inc.

¥77,590$712,954

Network Entertainment Business, andVisual and Music Production BusinessNote: Apple Inc. and Google Inc. are both platform-provision companies. The actual results of sales to these companies are usage fees, etc., for users (ordinary users) of game services provided
by the Group.

111

4.	By reportable segment, information regarding the amount of amortization of goodwill for the fiscal years ended March 31, 2019 and 2020, andthe unamortized balance of goodwill as of March 31, 2019 and 2020, is as follows:
Millions of yen

2019

Toys and Hobby

Network
Entertainment

RealEntertainment

Visual andMusic
Production

Amortization of
goodwill

¥126

¥0

¥28

¥21

¥—

¥—

¥—

¥177

Unamortizedbalance of goodwill

843

—

29

60

—

—

—

933

IP Creation

Other

Corporate andeliminations

Total

Millions of yen

2020

Toys and Hobby

Network
Entertainment

RealEntertainment

Visual andMusic
Production

Amortization of
goodwill

¥ 215

¥—

¥14

¥21

¥ 56

Unamortizedbalance of goodwill

1,429

—

14

38

224

IP Creation

¥

Other

Corporate andeliminations

Total

359

¥—

¥667

13,997—

15,704

Thousands of U.S. dollars

2020

112

Toys and Hobby

Network
Entertainment

RealEntertainment

Visual andMusic
Production

Amortization of
goodwill$ 1,979

$—

$133

$201

$ 516

$

Unamortizedbalance of goodwill

13,136

—

134

353

2,065

IP Creation

Other

Corporate andeliminations

3,298

$—

$

128,613—

144,303

Total

6,129

24 Related-Party Disclosures
Fiscal year ended March 31, 2019(1) Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type
Affiliatedcompany

Company
Happinet
Corporation

Address
Taito-ku,
Tokyo

Capital orcontribution
to capital¥2,751 million

Content of business
Wholesaler of toys,
video games, andamusement products

Ratio of voting rights
ownership
Holding
directly 26.9%
indirectly 0.3%

Relationshipwith related
party
Sales agency

Content

Transaction
amountSales of products,¥56,259 million
and others

Account items
Accounts
receivable–
trade

Balance asof March 31,
2019¥10,963 million

Notes: 1. The above “Transaction amount” does not include consumption tax; the balance includes consumption tax.
2. Transaction terms and policy for determining transaction terms
		 For the transaction stated above, the products were sold on the same terms as general transactions with third parties in the ordinary course of business.

(2) Transactions between the Company and related parties
Directors, Audit & Supervisory Board Members, major shareholders (limited to individuals), etc.

Type

ShukuoIshikawa

Officer

Mitsuaki
Taguchi

Officer

MasaruKawaguchi

Officer

YusukeFukudaOfficer

Satoshi
OshitaAddress

—

—

—

—

—

—

Content of business

Adviser of theCompany

Ratio of voting
rights ownership

Ownership
directly 0.0%—

President andRepresentative Directorof the Company

Ownership
directly 0.0%—

Director of theCompany

Ownership
directly 0.0%—

Director of a
subsidiary of theCompany

Ownership
directly 0.0%—

Director of theCompany

Ownership
directly 0.0%

Relationshipwith related
partyTransaction
amountAccount items

Balance asof March 31,
2019

Disposal of treasury
stock accompanying
contribution in kindof the monetarycompensation
claims (note 1)¥13 million——

Payment of advisory
fees (note 2)¥12 million

—

—

—

Disposal of treasury
stock accompanying
contribution in kindof the monetarycompensation
claims (note 1)¥13 million

—

—

—

Disposal of treasury
stock accompanying
contribution in kindof the monetarycompensation
claims (note 1)¥12 million

—

—

—

Disposal of treasury
stock accompanying
contribution in kindof the monetarycompensation
claims (note 1)¥10 million

—

—

—

Disposal of treasury
stock accompanying
contribution in kindof the monetarycompensation
claims (note 1)¥12 million

—

—

—

Content

FINANCIAL SECTION

Personequivalent to
Officer

Name

Capital orcontribution
to capital

Notes: 1.	These items are due to contribution in kind of monetary compensation claims accompanying the performance-based stock compensation plan. The disposal price of treasury stock is
determined based on the closing price of common stock of the Company on the First Section of the Tokyo Stock Exchange on June 15, 2018 (the business day immediately preceding
the date of the resolution at the Board of Directors’ meeting).
2. Advisory fees are determined through negotiations between both parties.

113

Fiscal year ended March 31, 2020
(1) Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type

Company

Address

Affiliatedcompany

Happinet
Corporation

Taito-ku,
Tokyo

Capital orcontribution
to capitalContent of business¥2,751 million($25,280
thousand)

Wholesaler of toys,
video games, andamusement products

Ratio of voting rights
ownership
Holding
directly 26.8%
indirectly 0.3%

Relationshipwith related
party
Sales agency

Content

Transaction
amount¥51,669 million
Sales of products,($474,768
and others
thousand)Account items

Balance asof March 31,
2020

Accounts
receivable–
trade¥7,517 million($69,073
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.

(2) Transactions between the Company and related parties
Directors, Audit & Supervisory Board Members, major shareholders (limited to individuals), etc.

Type

Officer

Officer

Personequivalent
to Officer

Name

Mitsuaki
Taguchi

MasaruKawaguchi

Satoshi
OshitaAddress———

Capital orcontribution
to capital

—

—

—

Content of businessPresident andRepresentative Directorof the Company

Director of theCompany

Adviser of theCompany

Ratio of voting
rights ownership

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Relationshipwith related
party

Account items

Balance asof March 31,
2020—

Disposal of treasury
stock accompanying
contribution in kind
¥17 millionof the monetary ($158 thousand)compensation
claims (note 1)

—

—

—

Disposal of treasury
stock accompanying
contribution in kind
¥14 millionof the monetary ($134 thousand)compensation
claims (note 1)——

Disposal of treasury
stock accompanying
contribution in kind
¥15 millionof the monetary ($143 thousand)compensation
claims (note 1)——

Payment of advisory¥18 million
fees (note 2)($167 thousand)

—

—

—

—

—

—

—

Content

Transaction
amountOfficer

Kazumi
Kawashiro——

Director of theCompany

Ownership
directly 0.0%—

Disposal of treasury
stock accompanying
contribution in kind
¥12 millionof the monetary ($110 thousand)compensation
claims (note 1)

Officer

SatokoKuwabara——

Director of theCompany
Attorney-at-law——

Payment of lawyers’
fees to Mori Hamada ¥21 million& Matsumoto law ($198 thousand)firm (note 3)

Notes: 1.	These items are due to contribution in kind of monetary compensation claims accompanying the performance-based stock compensation plan. The disposal price of treasury stock is
determined based on the closing price of common stock of the Company on the First Section of the Tokyo Stock Exchange on June 21, 2019 (the business day immediately preceding
the date of the resolution at the Board of Directors Meeting).
2. Advisory fees are determined through negotiations between both parties.
3.	Lawyers’ fees are transactions with Mori Hamada & Matsumoto law firm, at which Satoko Kuwabara, a director of the Company, is a partner. Decisions about these fees are madebased on negotiations, with consideration for ordinary transaction terms, contract details, etc.

114

25 Business Combinations
Business Combination through Acquisition

5.	Difference between the acquisition cost of the acquired company

1. Overview of business combinationand the total amount of the acquisition costs of the individual(1) Name and description of business of the acquired company
		Name of the acquired company: SOTSU CO., LTD.

transactions that led to the acquisition of control
Gain on step acquisitions: ¥1,722 million ($15,822 thousand)		Description of business: Media business, rights business, andsports business

6.	Amount, cause, amortization method, and amortization period of(2) Main reasons for business combination

goodwill arising on the acquisition

		“Accelerate evolution in IP axis strategy” is one of the main
strategies in the Group’s Mid-term Plan. The purpose of thebusiness combination is to advance “Accelerate evolution in IP
axis strategy,” etc., in a more certain and rapid manner throughthe further strengthening of collaboration with SOTSU CO., LTD.
(3) Date of business combination		

1. Goodwill amounts arising¥14,355 million ($131,911 thousand)
2. Reason for goodwill
The goodwill arose primarily due to future excess earning power
expected to result from future business development.
3. Amortization method and period

December 2, 2019

Amortized over 10 years by the straight-line method(4) Legal form of business combination		

Acquisition of shares in consideration for cash(5) Name of company after combinationon the date of the business combination

No change.

(6) Ratio of voting rights acquired		 1. Ratio of voting rights owned immediately before
business combination:

22.79%

		 2. Ratio of voting rights acquired additionally on the
day of the business combination:

59.26%

Current assets¥23,685 million ($217,635 thousand)Fixed assets¥ 4,465 million ($ 41,036 thousand)Total assets¥28,151 million ($258,671 thousand)Current liabilities¥ 3,634 million ($ 33,397 thousand)Long-term liabilities¥

Total liabilities¥ 4,354 million ($ 40,014 thousand)

720 million ($ 6,617 thousand)

FINANCIAL SECTION		

7. Amounts and breakdown of assets acquired and liabilities assumed

		 3. Ratio of voting rights after acquisition: 82.05%(7) Main reasons for identification of the acquiring company
		The Company was identified as the acquiring company since it
acquired the shares in consideration for cash.

8. Estimated amounts and calculation method regarding the impact on
the consolidated statement of income for this fiscal year, assuming
the business combination was completed at the start of the fiscal year
Net sales¥11,216million ($103,065 thousand)Operating profit¥883 million ($8,117 thousand)dated financial statements

Profit before income taxes¥810 million ($7,443 thousand)From December 1, 2019, to March 31, 2020

Profit attributable toowners of parent¥197 million ($1,812 thousand)Earnings per share¥0.90 ($0.008)

2. Period of business results of acquired company included in consoli-	The acquired company was an equity-method affiliate, and accordingly the business results from March 1, 2019 to November 30,
2019, are recorded as share of (profit) loss of entities accounted forusing equity method.

The estimated amounts of the impact are the difference between the

3.	Breakdown of the acquisition cost of the acquired company by typeof consideration
Market value at time of business combination of shares owned
immediately before business combination:(Calculation Method for Estimated Amounts)¥6,683 million ($61,410 thousand)	Consideration for shares acquired on thedate of the business combination: Cash
¥26,918 million ($247,347 thousand)Acquisition cost¥33,602 million ($308,758 thousand)4. Details and amounts of major acquisition-related expenses
Advisory expenses, etc.: ¥172 million ($1,580 thousand)net sales and earnings information calculated as if the businesscombination had been completed at the start of the date of the fiscal
year, and the net sales and earnings information on the consolidated
statements of income. From the net sales and earnings information
calculated as if the business combination had been completed on thestarting date of the fiscal year, the share of (profit) loss of entities
accounted for using equity method related to the acquired company,
which the Company recorded for the current consolidated fiscal year,
is subtracted. In regard to amortization of goodwill, the goodwill
recognized on the date of the business combination is calculated ashaving arisen at the start of the date of the fiscal year. This note 8 has
not been audited by the independent auditor.

115

26 Significant Subsequent Events(Change to Reportable Segments).
In order to advance the main strategies outlined in the Mid-term Plan, namely “Accelerate evolution in IP axis strategy,” more reliably and promptly,
the Group changed its organizational structure in April 2020.
In the fiscal year ended March 31, 2020, SOTSU CO., LTD., which became a consolidated subsidiary upon its shares being acquired throughtender offer, has been classified as a business under the “Other” category. However, in order to strengthen IP axis strategy, the Group has reclassified
it as a business under the “IP Creation Business” from the following fiscal year.
Information regarding the amounts of net sales, profit/loss, assets, and others by reportable segment for this fiscal year, assuming the classification of its reportable segments after the organizational change, is as follows:
Millions of yen

2020
Reportable Segment
Toys and
Hobby

Network
Entertainment

Real Entertainment

Visual andMusic
Production

IP Creation

Subtotal

Other(note 1)

Total

¥245,880¥322,872¥90,983¥38,742¥16,084¥714,563¥ 9,426¥723,989

Adjustments Consolidated(note 2) total (note 3)

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

¥

—

¥723,989

7,834

5,207

770

8,209

7,412

29,433

21,62851,061(51,061)—¥253,714¥328,079¥91,753¥46,951¥23,497¥743,996¥31,054¥775,051¥(51,061)¥723,989

Segment profit (loss)

26,73343,879(1,502)

8,032

6,269

83,412

1,346

84,759(5,983)78,775

Segment assets

121,625

168,058

62,79324,38455,489432,351

32,408464,760

155,059

619,819¥

Others:Depreciation andamortization

2,555¥ 7,974

48¥ 21,913

588¥ 22,502

737¥ 23,239

	Amortization of goodwill

215

—

14

21

415

667

—

667

—

667

	Loss on impairment of
fixed assets

96

—

3,478

21

—

3,596

—

3,596

—

3,596

	Investments in associates
accounted for using
equity method

801

—

—

—

—

801

10,677

11,479—11,479	Increase in property,
plant and equipment
and intangible assets

11,908

3,692

10,160650

979

27,392

1,193

28,5854,820

33,406¥ 10,815

¥

¥

519

¥

¥

Thousands of U.S. dollars

2020
Reportable Segment
Toys and
Hobby

Network
Entertainment

Real Entertainment

Visual andMusic
Production

IP Creation

Subtotal

Other(note 1)

Total

$2,259,308$2,966,762$836,010$355,988$147,798$6,565,868$ 86,613$6,652,482 $Adjustments Consolidated(note 2) total (note 3)

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

71,98447,846

7,075

75,436

68,108

270,450

198,736$2,331,292$3,014,609$843,085$431,424$215,906$6,836,319$285,349

Segment profit (loss)
Segment assets

469,186—$6,652,482(469,186)—$7,121,668 $ (469,186) $6,652,482

245,646

403,190(13,806)

73,81057,606

766,447

12,374

778,821(54,981)

723,840

1,117,571

1,544,227

576,989

224,063

509,873

3,972,726

297,787

4,270,514

1,424,788

5,695,302

Others:Depreciation andamortization$

99,381 $

$

4,773

$

446 $ 201,353$

5,411 $ 206,764$

6,777 $ 213,542

23,480$ 73,270

	Amortization of goodwill

1,979

—

133

201

3,815

6,129

—

6,129

—

6,129

	Loss on impairment of
fixed assets

882—

31,966201—

33,051—33,051—33,051

	Investments in associates
accounted for using
equity method

7,367

—

—

—

—

7,367

98,111

105,478—

105,478	Increase in property,
plant and equipment
and intangible assets

109,418

33,93093,365

5,981

8,999

251,695

10,964

262,660

44,295306,956

Notes: 1. The “Other” category is a business segment not included in reportable segments under which operations such as logistics services and printing for each of the Group companies are classified.
2. The details of adjustment amounts are as follows:		(1) T he adjustment to segment profit (loss) of -¥5,983 million (-$54,981 thousand) includes elimination of inter-segment transactions of ¥928 million ($8,528 thousand) and corporate
expenses not allocated to reportable segments of -¥6,911 million (-$63,509 thousand). Principal corporate expenses are expenses related to administrative divisions not belonging toreportable segments.
		(2)	The adjustment to segment assets of ¥155,059 million ($1,424,788 thousand) includes elimination of inter-segment transactions of -¥33,424 million (-$307,124 thousand) and corporate
assets not allocated to reportable segments of ¥188,484 million ($1,731,913 thousand). Principal corporate assets are cash and deposits, investment securities, and assets related toadministrative divisions not belonging to reportable segments.
		(3)	The adjustment to depreciation and amortization expense of ¥737 million ($6,777 thousand) includes elimination of inter-segment transactions of -¥378 million (-$3,479 thousand) anddepreciation and amortization expense not allocated to reportable segments of ¥1,116 million ($10,256 thousand).
		(4)	The adjustment to increase in property, plant and equipment and intangible assets of ¥4,820 million ($44,295 thousand) is related to corporate assets not allocated to reportable segments.
3. Segment profit (loss) is reconciled to operating profit or loss in the consolidated statements of income.

116

(Additional Acquisition of Stock of a Subsidiary)(Borrowing of Substantial Funds)

The Company acquired court permission and implemented an

In preparation for the lengthening of the effect of the spread of theacquisition of fractional shares pursuant to the provisions of Article

COVID-19 infection, with the objective of securing sufficient liquidity

234, Paragraph 2 of the Companies Act as applied mutatis mutandis

on hand, the Company borrowed funds from the following financial

pursuant to Article 235, Paragraph 2 of the same act with respect toinstitutions.

fractional shares that arose from the share consolidation that SOTSU
CO., LTD. carried out with an effective date of March 1, 2020. As a result,

1. Lenders	MUFG Bank, Ltd.,
Sumitomo Mitsui Banking Corporation,

SOTSU CO., LTD. became a wholly owned subsidiary of the Company.

Mizuho Bank, Ltd.
2. Amount of borrowing¥45,000 million

3. Loan interest rates

Basic interest rate + spreadthe combination

4. Loan dates

May to July, 2020

Name: SOTSU CO., LTD.

5. Loan periods

Within one year

6. Collateral, etc.

None

1. Overview of business combination(1)	Name and description of business of the company involved in				Description of business: Media business, rights business, andsport business(Disposal of Treasury Stock as Stock Compensation)(2) Date of business combination		

Based on a resolution at a Board of Directors’ meeting held on June

May 15, 2020

22, 2020, a disposal of treasury stock as stock compensation has(3) Legal form of business combination
		been implemented, as follows:

Acquisition of shares in consideration for cash

		

1. Overview of disposal

No change(1) Date of disposal: July 10, 2020(2) Class and number of shares to be disposed

2. Overview of accounting process

44,300 shares of the Company’s common stock	The additional acquisition is treated as part of a single transaction
together with the acquisition of shares by public tender conducted(3) Disposal value: ¥5,945 per shareon December 2, 2019, in accordance with the “Accounting Standard(4) Total disposal value: ¥263 million

for Business Combinations” (ASBJ Statement No. 21, January 16,(5) Method of offering or disposal
Stock compensation allotment method2019) and the “Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business Divestitures”

FINANCIAL SECTION(4) Company name after combination(6) People eligible for allotment, number of eligible individuals, andnumber of shares to be allotted(ASBJ Guidance No. 10, January 16, 2019), and the goodwill on equity
interests that were additionally acquired after controlling interest		

Directors of the Company (note 1)

acquisition is calculated on the assumption that the goodwill was		

3 individuals 6,700 shares

recognized at the time of controlling interest acquisition.

		Directors of subsidiaries of the Company (note 2)
31 individuals 37,600 shares

3.	Acquisition cost of the acquired company, and consideration for the(7) Other

acquisition and breakdown thereof by consideration type

The taking effect of the securities registration statement filed in

Consideration for the acquisition: Cash¥8,154 million

accordance with the Financial Instruments and Exchange Act is

Acquisition cost¥8,154 million

a condition for this disposal of treasury stock.
Notes:
1. Company Directors (excluding those serving concurrently as President and Representative
Director of BANDAI CO., LTD., BANDAI NAMCO Entertainment Inc., BANDAI NAMCO
Amusement Inc., BANDAI NAMCO Arts Inc., SUNRISE INC., and BANDAI SPIRITS CO.,LTD., and Outside Directors)
2. Directors (excluding Non-executive Directors) of BANDAI CO., LTD., BANDAI NAMCOEntertainment Inc., BANDAI NAMCO Amusement Inc., BANDAI NAMCO Arts Inc., SUNRISE
INC., and BANDAI SPIRITS CO., LTD.

2. Objective and reasons for the disposal	As performance-based remuneration related to this fiscal year,
monetary compensation claims from the Company and subsidiaries
are granted to the directors of the Company and subsidiaries(“eligible directors”). Eligible directors pay in the monetarycompensation claims as property contributed in kind to receive
delivery of the Company’s common stock.

117

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report
To the Board of Directors of BANDAI NAMCO Holdings Inc.:
OpinionWe have audited the accompanying consolidated financial statements of BANDAI NAMCO Holdings Inc. (“the Company”) and its consolidated
subsidiaries (collectively referred to as “the Group”), which comprise the consolidated balance sheets as at March 31, 2020 and 2019, and theconsolidated statements of income and consolidated statements of comprehensive income, consolidated statements of changes in net assets andconsolidated statements of cash flows for the years then ended , and the notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of theGroup as at March 31, 2020 and 2019, and its consolidated financial performance and cash flows for the years then ended in accordance withaccounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of theGroup in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we havefulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
Responsibilities of Management and Corporate auditors and the board of corporate auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the ability to continue as a going concern,
disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’ performance of their duties including thedesign, implementation and maintenance of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.
•O btain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,while the objective of the audit is not to express an opinion on the effectiveness of the Group’s internal control.
•E valuate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures madeby management.
•C onclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosuresin the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as agoing concern.
• Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with accounting standards generally
accepted in Japan, the overall presentation, structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
•O btain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express
an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.

118

We communicate with corporate auditors and the board of corporate auditors regarding, among other matters, the planned scope and timingof the audit, significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2020 are presented solely
for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made on the basis described in Note 3 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Naoki Matsumoto
Designated Engagement Partner

Mayuka Katsuki
Designated Engagement Partner
Certified Public Accountant

FINANCIAL SECTION

Certified Public Accountant

Yasuko Kawamata
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Tokyo Office, Japan
August 11, 2020

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by the Company and KPMG AZSA LLC.

119

OVERVIEW OF MAIN GROUP COMPANIESAs of August 1, 2020

BANDAI NAMCO Holdings Inc.

 lanning and execution of the BANDAI NAMCO Group’s medium- and long-term management
P
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.

 egional headquarters in the Americas, providing support for the implementation of strategies byR
operating companies, etc.

BANDAI NAMCO Holdings UK LTD.

 egional headquarters in Europe, providing support for the implementation of strategies byR
operating companies in Europe

BANDAI NAMCO Holdings ASIA CO., LTD.

 egional headquarters in Asia, providing support for the implementation of strategies by operatingR
companies in Asia (excluding China)

BANDAI NAMCO Holdings CHINA CO., LTD.

 egional headquarters in China, providing support for the implementation of strategies byR
operating companies, etc.

BANDAI NAMCO Holdings France S.A.S.

 egional holding company in Europe, providing support for the implementation of strategies byR
operating companies in Europe

Toys and Hobby Unit
BANDAI CO., LTD.
BANDAI SPIRITS CO., LTD.
MegaHouse Corporation
CCP Co., Ltd.
SUN-STAR STATIONERY CO., LTD.
HEART CORPORATION
PLEX CO., LTD.
SEEDS CO., LTD.

BANPRESTO SALES CO., LTD.
People Co., Ltd.*TSUBURAYA PRODUCTION CO., LTD.*BANDAI AMERICA INCORPORATEDBANDAI NAMCO Collectibles LLC
BANDAI CORPORACION MEXICO, S.A. de C.V.
BANDAI S.A.S.
BANDAI UK LTD.
BANDAI ESPAÑA S.A.
BANDAI NAMCO ASIA CO., LTD.
BANDAI NAMCO Toys & Hobby (SHANGHAI) CO., LTD.
BANDAI (SHENZHEN) CO., LTD.
BANDAI NAMCO KOREA CO., LTD.
BANDAI NAMCO (THAILAND) CO., LTD.
BANDAI NAMCO PHILIPPINES INC.
BANPRESTO (H.K.) LTD.

Planning, development, manufacturing, and marketing of toys, capsule toys, cards, confectionery
and foods, apparel, sundries, and other products
Planning, development, manufacturing, and sales of toys and plastic models for the mature fanbase as well as prizes, sundries, etc.
Planning, development, production, and sales of toys, candy toys, figures, etc.
Planning, development, production, and sales of 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, production, processing, and sales of seasonal special event candy and candy toys
Planning, design, development, and sales of character-based products
Planning, development, and manufacturing of toys, plastic models, medical equipment (ISO 13485
certified), pachinko and pachislot machines, electronic-related equipment, etc.; contract operations
for various types of inspecting and testing (ISO 17025-accredited testing organization)
Sales of prizes, etc., for amusement facilities
Planning, development, and sales through outsourced contract production for toys, playgroundequipment, bicycles, and furniture
Planning, production, and distribution of visual products, etc.
Sales of toy-related products in the Americas
Sales, promotions, event sales, e-commerce, etc., for collectible figures and other products forthe mature fan base
Sales of toy-related products in Mexico
Sales of toy-related 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 toys, etc., in Asia (excluding Japan)
Manufacturing and sales of toys, etc., for China
Quality assurance and quality control operations; contracting for production management, plant
audits, etc., for cooperating manufacturers; planning and sales of toy-related products in China
Planning and sales of toy-related products
Production of Super Sentai series robot toys as well as molds
Manufacturing of toys (principally capsule toys, figures, and lower-priced toys)
Manufacturing and production management of prizes for amusement facilities, convenience stores

Network Entertainment Unit
BANDAI NAMCO Entertainment Inc.
BANDAI NAMCO Studios Inc.
BANDAI NAMCO Online Inc.
D3PUBLISHER INC.
B.B.STUDIO CO., LTD.
VIBE Inc.
BANDAI NAMCO Rights Marketing Inc.
BANDAI NAMCO Network Services Inc.
BANDAI NAMCO Sevens Incorporated
BANDAI NAMCO Research Inc.
BXD Inc.

120

Planning, distribution, and sales of entertainment content, such as network content andhome video games
Planning, development, and operation of home video games, network content, PC content, etc.
Planning, development, and operation of Internet-based online games, other software, and services
Planning, development, and sales of home video games; planning, development, and distributionof network content
Planning and development of home video games, network content, and amusement machines
Provision of content and products using various interactive media options, advertising, and promotion
Development, operation, and sales of online video distribution platform services; development,
operation, and sales of various communications services and related tools
Content operation, distribution, localization, and technical support for network services
Development and sales of pachinko and pachislot machines; development, manufacturing, andsales of visual substrates; planning and operation of other new businesses
Development of technologies for use in Groupwide services for the BANDAI NAMCO Group,
demonstration and verification in new business fields
Development, operation, and analysis of online games, online distribution platforms, andservices for IP fans, etc.

BANDAI NAMCO Entertainment America Inc.
BANDAI NAMCO Entertainment Europe S.A.S.
BANDAI NAMCO Entertainment (SHANGHAI) CO., LTD.
BANDAI NAMCO Studios Singapore Pte. Ltd.
BANDAI NAMCO Mobile S.L.
D3Publisher of America, Inc.

 lanning, development, and sales of home video games; planning, development, and distribution
Pof network content
Planning, development, and sales of home video games; planning, development, and distributionof network content; holding company; shared services company
Planning, operation, and production of network content
Planning and development of home video games, amusement machines, etc.
Development and marketing of network content
Planning, development, and distribution of network content

Real Entertainment Unit
BANDAI NAMCO Amusement Inc.
PLEASURECAST CO., LTD.
HANAYASHIKI CO., LTD.
BANDAI NAMCO Technica Inc.
BANDAI NAMCO Amusement Lab Inc.
BANDAI NAMCO Amusement America Inc.
BANDAI NAMCO Amusement Europe Ltd.
NAMCO USA INC.
NAMCO UK LTD.
NAMCO ENTERPRISES ASIA LTD.
BANDAI NAMCO Amusement (SHANGHAI) CO., LTD.

Planning, development, operation, and sales of facilities, machines, and services related toreal entertainment
Planning and operation of amusement facilities
Planning, operation, etc., of ASAKUSA HANAYASHIKI amusement park, ASAKUSA KAGEKIJO
Hall, restaurants, etc.
After-sales service operations related to amusement machines; stocking and sales of
pre-owned amusement machines and products from other companies
Operations related to the research, planning, and development of content for real entertainment
facilities and areas related to amusement machines
Sales of amusement machines
Sales of amusement machines
Planning and operation of amusement facilities
Planning and operation of amusement facilities
Planning and operation of amusement facilities
Planning and operation of amusement facilities

Visual and Music Production Unit
BANDAI NAMCO Arts Inc.
Actas Inc.
Highway Star Inc.
BANDAI NAMCO Live Creative Inc.

 lanning, production, and management of visual and music content, artist discovery andPdevelopment, production of live events, etc.
Planning and production of animation
Management of artists, production of music, and operation of fan clubs;
audio engineering operations
Planning and production of live performances and events; ticket sales; planning, production,and sales of goods; management of live viewings, etc.

IP Creation Unit
SUNRISE INC.
BANDAI NAMCO Pictures INC.
SUNRISE BEYOND INC.
SUNRISE Music INC.
SOTSU CO., LTD.
Evolving GUNDAM Inc.
SUNRISE (SHANGHAI) CO., LTD.

Planning and production of animation; management and administration of copyrights
Planning and production of animation; management and administration of copyrights
Animation planning and production
Management and administration of music copyrights and masters; production of music
related to animations; planning and production of labels; planning and production of events; etc.
Planning, production, and copyright business for TV animation programs; production andagency operations in sports entertainment
Operation of facilities; management of restaurants; sales of toys, plastic models, sundries,
and other products, etc.
Planning and production of visual content; management and administration of copyrights
and other rights, etc.

Affiliated Business Companies
BANDAI LOGIPAL INC.
LOGIPAL EXPRESS INC.
BANDAI NAMCO Business Arc Inc.
ARTPRESTO CO., LTD.
HAPPINET CORPORATION*
Italian Tomato Ltd.*I nternational distribution, customs brokerage, amusement-related business, productinspection, 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 toys, visual and music products, video games, and amusement products(Tokyo Stock Exchange, First Section)
Management of restaurants; franchise operations; production, sales, and provision of
production guidance for pastries* Companies accounted for by the equity method

121

CORPORATE DATA
As of March 31, 2020

Corporate Name:BANDAI NAMCO Holdings Inc.

Head Office:

BANDAI NAMCO Mirai Kenkyusho, 5-37-8, Shiba, Minato-ku, Tokyo 108-0014, Japan
URL: www.bandainamco.co.jp/

Capital:¥10 billion

Stock Exchange Listing:Tokyo Stock Exchange, First Section (Code number: 7832)

Main Business:

Planning and execution of medium- and long-term management strategies for the
BANDAI NAMCO Group;
provision of support for business strategy implementation by Group companies andmanagement of business activities

Stock Information:

Number of shares authorized:
Number of shares issued:

1,000,000,000 shares
222,000,000 shares

Number of shareholders of share units:

30,129Number of shares per trading unit:

Shareholders:

100 shares

Number of shares(Thousands)% of total

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

34,715

15.78

Japan Trustee Services Bank, Ltd. (Trust account)

18,310

8.32

Kyoko Nakamura

6,203

2.82

XIL, LTD.

6,000

2.73

The Nomura Trust and Banking Co., Ltd. (Retirement and severance
benefits trust. MUFG Bank, Ltd. account)

4,586

2.08

MAL Ltd.

4,400

2.00

Japan Trustee Services Bank, Ltd. (Trust account 5)

4,211

1.91

Nintendo Co., Ltd.

3,845

1.75

JP MORGAN CHASE BANK 385151

3,419

1.55

Japan Trustee Services Bank, Ltd. (Trust account 7)

3,363

1.53

Number of shares(Trading units)% of total——

916,626

41.33

Name

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

Ownership Breakdown:

Public entities
Financial institutions

Status of Inclusion in Indexes:

Brokerage

51,234

2.31

Other corporate entities

254,410

11.47

Foreign corporate entities and others

724,749

32.67

Individuals, etc.

270,977

12.22• TOPIX 100• Nikkei Stock Average (Nikkei 225)
• MSCI Japan Empowering Women Index (WIN)©窪岡俊之 ©BANDAI NAMCO Entertainment Inc. ©BNOI ／アイナナ製作委員会 ©円谷プロ ©ウルトラマンZ製作委員会・テレビ東京 ©創通・サンライズ ©2020 石森プロ・テレビ朝日・ADK EM・東映 ©2020 テレビ朝日・東映 AG・東映 ©やなせたかし／フレーベル館・TMS・NTV PAC-MAN™＆©BANDAI NAMCO Entertainment Inc.
©BANDAI,WiZ ©ABC-A・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 ©2019 プロジェクトラブライブ！サンシャイン ! ! ムービー ©岸本斉史 スコット／集英社・テレビ東京・ぴえろ ©尾田栄一郎／集英社・フジテレビ・東映アニメーション ©OSO ／ BNP, KAMIZMODE PROJECT©BIRD STUDIO ／ SHUEISHA, TOEI ANIMATION ©尾田栄一郎／ 2019「ワンピース」製作委員会 " ©石森プロ・テレビ朝日・ADK EM・東映 ©石森プロ・東映 Ⓒ2013 プロジェクトラブライブ！ Ⓒ2017 プロジェクトラブライブ！サンシャイン ! ! Ⓒプロジェクトラブライブ ！虹ヶ咲学園スクールアイドル同好会 ©BANDAI ©'76,'19 SANRIO©2019 Pokémon. ©1995-2019 Nintendo ／ Creatures Inc. ／ GAME FREAK inc. ©TPC ©KSW TM&© Othello, Co.and MegaHouse122

www.bandainamco.co.jp