Progress of the Medium-Term Plan

The first year of our Medium-Term Plan—themed “WELCOME TO THE NEXT LEVEL!”—got off to a smooth start, with adjusted EBITDA exceeding our initial target to reach 62.2 billion yen and ROE reaching 12.2% in FY2025/3.

We worked on expanding our transmedia strategy, which is a key focus of this Medium-Term Plan, and made progress in the video adaptation, merchandizing development and other initiatives of our mainstay IPs. For “Sonic IP” in particular, those initiatives has led to an increase in not only game sales but also licensing revenue and contributed to profit growth for the Entertainment Contents Business.

In addition, as part of measures aimed at optimizing our business portfolio, we have transferred the PHOENIX RESORT and Amplitude Studios (an overseas development studio). Conversely, in the Gaming Business, which was newly launched as this fiscal year, we moved forward with the acquisition of two companies: GAN and Stakelogic.

Key Indicators in the Medium-Term Plan

For FY2026/3, the second year of the Medium-Term Plan, we expect our results to fall below guidelines mainly due to factors such as the impact of delayed launch of new F2P titles and changes to the scheduled launch dates of Full Games of our mainstay IP titles. However, we will aim to achieve our targets for the final year of the Medium-Term Plan through the full-year revenue contribution of new F2P titles, launch of major new titles of Full Game, continued steady growth in licensing revenues, and accumulation of repeat sales.

Value Creation Process

In addition, last year we publicly announced our “Value Maximization Cycle” and “Value Creation Process” which is linked to it.

Powerfully driving this cycle built on these four strengths enables us to expand both business area and region, which in turn leads to further reinforcement of each of these strengths. We believe this virtuous cycle to be the basis for creating our “social value” and “economic value.”

In terms of “social value,” we have set targets for “human capital” (one of our four strengths) using four key indicators—“Cultural diversity,” “Career development for women,” “Training of core personnel,” and “Improvement of the work environment”—and all of them are showing consistent improvement. We will continuously develop even more human resources that support the continuous creation of captivating experiences.

SEGA SAMMY HOLDINGS (the “Company”) is expanding TSR (Total Shareholder Return) by expanding equity spread and implementing proactive shareholder returns based on a management system focused on capital efficiency to maximize corporate value.

The three key components for increasing equity spread are “Growth of profit,” “improvement of asset efficiency,” and “maintaining optical capital structure.” First, we aim for “Growth of profit” by increasing the business efficiency of each of our Group’s core businesses. In the Entertainment Contents Business, specifically in the Consumer area, we aim to establish a structure for stable profit growth as well as implement business investments for business growth and creating new profit opportunities to respond to changes in the environment and continue to expand profit. In the Pachislot & Pachinko Machines Business, we will build a structure that creates stable earnings. We will achieve this by launching competitive products that adapt to changes in the regulatory environment to expand market share and improve business efficiency. Regarding ” improvement of asset efficiency,” we are introducing ROIC and monitoring indicators for each business which enable each business division to realize management that is conscious of improving asset efficiency and profitability. We plan to realize “maintaining optical capital structure” through several measures including reduction of WACC through an optimal capital structure, utilization of debt financing to procure funds for growth business investments, and reduction of long-term risks, etc. by strengthening ESG.

Regarding capital allocation, we planned an investment frame of 250.0 billion yen during the Medium-term Plan (from FY2025/3 to FY2027/3). This frame included development investment in the Consumer area and strategic investments, including M&A mainly targeting the Consumer area and Gaming Business and we have been proceeding with these investments. However, we have revised our capital allocation policy considering the recent situation and decided not to conduct large-scale M&A for the time being. Furthermore, we have decided to reallocate funds to expand working capital as the business scale grows and to acquire treasury stocks.

We will continue to execute financial strategies that meet the expectations of our investors to improve corporate value.