Sankyo Co., Ltd. · TSE:6417

Sankyo — CLSA Japan Forum 2012

26 slides from Sankyo's conference presentation, Feb 27, 2012

  1. Slide 1: Presentation on CLSA Japan Forum 2012

    Presentation P t ti on CLSA Japan Forum 2012 Kimihisa Tsutsui Director & Senior Executive Vice President February 27, 2012 at Grand Hyatt Tokyo The Company's plans, strategies and forecasts, except historical facts, contained in this document may be subject to change due to factors of risk and uncer

  2. Slide 2: Company Overview

    > 2 > i= ® > Oo > = © 2. £ 3 oO

  3. Slide 3: Company Overview

    C Company O Overview i 2 SANKYO CO., LTD. 1st Sec. of the TSE #6417 Development, Manufacture, and Sales of Pachinko and Pachislot Machines 2 Brands Structure

  4. Slide 4: 5-year Financial Highlights

    5 5-year Fi Financial i l Highlights Hi hli h 3 Forecast Consolidated: mill. yen FY 3/2008 FY 3/2009 FY 3/2010 FY 3/2011 FY 3/2012 Net Sales 280,511 187,877 222,673 201,606 160,000 Pachinko Machines 217,955 133,195 180,471 149,876 110,000 Pachislot Machines 40,511 33,598 23,698 30,316 25,000 Ball Be

  5. Slide 5: Analyst Coverage

    A l Coverage Analyst C 4 Mr. Souichiro Fukuda Mr. Koki Shiraishi Mr. Satoru Kikuchi Mr. Masanori Minami Mr. Yoshihiko Tabei Mr. Takeshi Koyama Source: QUICK Mr. Yuta Sakurai Mr. Masashi Morita Mr. Eiji Maeda

  6. Slide 6: Focused on Game Machine-related Businesses

    F Focused d on Game G Machine-related M hi l d Businesses B i 5 S l Composition Sales C ii 10.7% 15.0% 74.3% Pachinko Machines Pachislot Machines Ball Bearing Supply Systems and Others

  7. Slide 7: Prosper with the Pachinko Industry

    P Prosper with i h the h Pachinko P hi k Industry I d 6 2012 2001 1992 1980 1975 CR Fever Wide Powerful Fever Powerful III Fever Open Tulip CR Evangelion E g li 7

  8. Slide 8: 30% of the Leisure Market

    30% off the h LLeisure i M Market k 7 L i Leisure Market M k 67.9 67 9 trill. ill yen 19.3 Pachinko player population: trill. yen 16.7 million 1 in every 6.3 adults Pachinko Rental Ball Fee Source: Japan Productivity Center for Socio-Economic Development

  9. Slide 9: Structure of Pachinko Industry

    S Structure off P Pachinko hi k IIndustry d 8 Pachinko Rental Gross Profit Ball Fee of Parlor 19.3 trill. yen 3.0 trill. yen Prize Other Expenses （85%） Operating Income （2/3） Cost of Size of Game Machine Machine Market Gross Profit Purchase 1 0 ttrill. 1.0 ill yen （15%） （1/3）

  10. Slide 10: Size of Pachinko Machine Market

    Si off Pachinko Size P hi k Machine M hi Market M k 9 978 900 886 856 800 3,173 3,331 3,332 Challenging for the time being 2,900 2,500 Market Size (bn. yen) No. of Sales for Pachinko Machines ((thou. units)) CY2007 2008 2009 2010 2011E Source: Yano Research Institute Ltd.

  11. Slide 11: Share of Pachinko Machine Market

    Sh Share off P Pachinko hi k Machine M hi Market M k (unit ( i basis) b i ) 10 D i Dominance off top-tier i companies i 17.2% 14.6% 12-13% 29 3% 29.3% 29 8% 29.8% CY 2009 CY 2010 CY 2011E SANKYO Kyoraku Sanyo Sammy Newgin Others Source: Yano Research Institute Ltd.

  12. Slide 12: Size of Pachislot Machine Market

    Si off Pachislot Size P hi l Machine M hi Market M k 11 500 370 286 242 225 Upward trend after hitting 1,744 bottom in 2009 979 1,150 , 913 765 Market Size (bn. yen) No. of Sales for Pachislot Machines ((thou. units)) CY2007 2008 2009 2010 2011E Source: Yano Research Institute Ltd.

  13. Slide 13: Share of Pachislot Machine Market

    Sh Share off Pachislot P hi l Machine M hi Market M k (unit ( i basis) b i ) 12 I Increasing i dominance d i off top-tier i companies i 13.6% 11.9% 9-10% 34 7% 34.7% 23 5% 23.5% CY 2009 CY 2010 CY 2011E SANKYO Sammy Daito Universal Yamasa Others Source: Yano Research Institute Ltd.

  14. Slide 14: "Evangelion" Bolstered Sales and Profit

    “E “Evangelion” li ” Bolstered B l dSSales l and d Profit P fi 13 N S Net Sales l (mill. ( ill yen)) 280,511 222,673 , 201,606 187 877 187,877 160,000 29% 42% 44% 31% 18% Sales of “Evangelion” series (value) 3/2008 3/2009 3/2010 3/2011 3/2012E

  15. Slide 15: Present Situation and Initiatives

    Present Situation and Initiatives

  16. Slide 16: SANKYO's Ideal Profile

    SANKYO’ Ideal SANKYO’s Id l P Profile fil 15 Expansion of the Market No.1 Market Capitalization No.1 No 1 Market Share No.1 N 1 Popularity among Players FY 3/2012

  17. Slide 17: Revision of the Forecast (FY 3/2012)

    R i i off the Revision h Forecast F (FY 3/2012) 16 FY 3/2012 million yen (2-Feb) (13-May) Change Net Sales 160 000 160,000 182 000 182,000 -22,000 , -12.1% Operating Income 33,000 40,000 -7,000 -17.5% 17 5% Recurring Income 37,000 43,000 -6,000 -14.0% Net Income 21,000 26,000 -5,000 -19.2% Sales Uni

  18. Slide 18: Limited Popularity of Models Introduced in 3Q among Players

    Limited Popularity of Models Introduced in 3Q among Players Pl 17 Sales Units The Story of ayumi hamasaki Evangelion g 7 –Introduction I t d ti Fever Space p Battleship p F Fever Macross M Frontier F ti YAMATO Fever Lucent Pachislot X JAPAN Mumu World DX II Pachinko Pachislot Popularity among Player

  19. Slide 19: Introduction of Promising Products Postponed to the Next Fiscal Year

    Introduction of Promising Products Postponed to the Next Fiscal Year 18 4Q FY 3/2012 FY 3/2013 Fever Haouden ZERO Fever Space Battleship YAMATO -- Amadeji & Tamashii 7 2 Titles Evangelion 7 Evangelion-- the Heartbeat of Life Pachinko Pachislot 3 Titles

  20. Slide 20: Flying Start of "Evangelion 7" Pachinko Machine

    Fl i Start Flying S off “Evangelion “E li 7” Pachinko P hi k M Machine hi 19 High hopes for vitalization of the lackluster mid-spec segment Entrenched popularity of Evangelion recognized anew

  21. Slide 21: Next is SANKYO

    N Next is i SANKYO 20 “This may be a new idea” New development structure came into its own Line-up of super-powerful content “2009: Future Research Team launched”

  22. Slide 22: The Issue is to Expand the Base of Individual Shareholders

    The Issue is to Expand the Base of Individual Shareholders 21 Sh h ld Composition Shareholder C ii 4.1% 19.9% Owners Group 4.1% 45 1% 45.1% Foreigners Individuals Others 26.8% Treasury Stock As of September 30, 2011

  23. Slide 23: Dividend Policy

    Di id d Policy Dividend P li 22 Di id d per Share Dividends Sh (yen) 3/1992 25 3/1993 / - 3/1995 / 30 3/1996 - 3/1997 40 3/1998 50* 3/1999 - 3/2004 40 No dividend cut since the listing 3/2005 70 Commitment to 25% payout ratio 3/2006 - 3/2007 100 3/2008 - 150 *Note: Commemorative dividends

  24. Slide 24: Share Buyback Policy

    Sh Share B Buyback b k Policy P li 23 Sh h ld Composition Shareholder C ii Treasury Stock Owners Oth Others Decide the timing and the Group amount flexibly Purchase shares from the owners group as well as from other shareholders As of September 30, 2011

  25. Slide 25: SANKYO Highlights

    SANKYO Highlights Hi hli h 24 1 Focused on Game Machine-related Businesses 2 “Evangelion” Bolstered Sales and Profit 3 Three No. 1’s (Popularity among Players, Market Share, Market Capitalization) 4 Flexible Share Buyback 5 No Dividend Cut since the Listing in 1991

  26. Slide 26: Good luck, Good life

    Good luck* Good life" SANGYO

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