Investors

From 12:00 A.M. on Wednesday, May 15, 2024, we held an online financial results briefing for the fiscal year ended March 31, 2024.
This page provides information on our explanations (summary) at the briefing session.

Consolidated financial results for the year ended March 31, 2024
Kenichi Ozawa, Director

Difference between the consolidated performance forecast and actual results for the FY2023

⇒Pages 1-2 of “Financial presentation for the year ended March 31, 2024”

The following is an explanation of the difference between the consolidated results forecasts and actual results. Net sales increased 15.4% compared to the forecast to ¥14.19 billion. This was due to strong pachinko and pachislot machines (hereinafter, "PS") sales in the PS business. Profit attributable to owners of the parent increased 35.9%
compared to the forecast to ¥11.55 billion. This was mainly attributable to share of profit of entities accounted for using equity method for DAIKOKU DENKI Co., Ltd., which became an equity-method affiliate in Q2 FY2023, and gain on bargain purchase of Sophia Co., Ltd., which became a subsidiary in March 2024.

Overview of the results for the FY2023 [Consolidated P/L]

⇒Page 3

Net sales for the FY2023 was ¥141.92 billion (up 21.2% YoY), operating profit ¥11.82 billion (up 8.0% YoY), ordinary profit ¥12.94 billion (up 15.4% YoY), and profit attributable to owners of parent ¥11.55 billion (up 40.5% YoY). For FY2024, the company forecasts a 9.2% YoY increase in net sales to ¥155 billion, a 28.5% increase in operating profit to ¥15.2 billion, a 24.3% increase in ordinary profit to ¥16.1 billion, and a 0.4% increase in net profit attributable to owners of parent to ¥11.6 billion.

Overview of the results for the FY2023 [P/L by business segment]

⇒Page 4

In FY2023, the content and digital segment reported net sales of ¥15.33 billion (up 5.5% YoY) and operating profit of ¥3.78 billion (down 13.6% YoY). This business segment forecasts a net sales of ¥18 billion (up 17.4% YoY) and an operating profit of ¥4 billion (up 5.8% YoY) for FY2024. In PS business segment, net sales was ¥125.59 billion (up24.6% YoY) and operating profit was ¥10.41 billion (up 35.0% YoY) in FY2023. This business segment forecasts a 7.5% YoY increase in net sales to ¥135 billion and a 29.7% increase in operating profit to ¥13.5 billion in FY2024.

Shareholder return and dividend policy
Basic policy on profit distribution/ Changes in dividend per share

⇒Pages 5-7

The basic policy on profit distribution is as described. For the past three years, the company has announced an increase in dividends per share during the fiscal years in addition to the initial dividend forecast. The dividend forecast for FY 2024 is ¥40 per a share.

Cancellation and acquisitions of treasury shares

⇒Page 8

On the same day as the announcement of financial results, the Company announced cancellation and acquisitions of treasury shares.
Existing treasury shares 3,970,000 shares are scheduled to be cancelled on May 31, 2024. As shown in the chart, the Company acquired 3.5 million new shares of treasury shares on May 15.
This was completed by placing a sell order for 2.5 million shares from Mr. Hidetoshi Yamamoto, the President and Group CEO and 1 million shares from SMBC Nikko Securities. Since SMBC Nikko Securities offers stock lending services, they will later purchase and sell our shares from the market. As a result, the total number of shares outstanding is expected to be 65,420,000 shares.

Masayuki Nagatake, Director, TSUBURAYA FIELDS HOLDINGS INC./ President and COO, Tsuburaya Productions Co., Ltd.

Content and digital business segment 5-year new medium-term management plan (FY2024-FY2028)
Historical review

⇒Pages 1-2 of “5-year new medium-term management plan (FY2024-FY2028) of content and digital business segment”

P.2 chart below shows the operating profit forecasts and results for the contents and digital business segment.
As a historical review, in the FY2021, the segment's operating profit was ¥1.46 billion, which was a record high for the time.
In this response, the company announced the 2022 medium-term management plan to accelerate global expansion and announced a three-year operating profit plan (see (1) in the chart). The company planned ¥2 billion for the first year, but this was ¥4.37 billion due to growth in the Chinese MD and license business in particular (see (2) in the chart).
In response to the fact that it greatly exceeded the plan from the first year of the medium-term management plan, the Company announced a new medium-term management plan for 2024 and beyond, and a three-year operating profit plan (see (3) in the chart).
In the FY2023, as a result of temporary inventory adjustments of existing card games and active investment, operating profit was ¥3.8 billion compared to the ¥6 billion plan (see (4) in the chart).
We take this outcome seriously and announce plans to move toward a new growth stage by clarifying areas for improvement in the future.

Outline of the 5-Year New Medium-Term Management Plan

⇒Page 3

The previous fiscal year (FY 2023) and the current fiscal year (FY 2024) will be positioned as a thorough branding period to increase awareness and favorability, and to lay the groundwork for growth.
From FY2025, the company hopes to enter an aggressive growth phase.
Thereafter, the company aims to become a globally dynamic business entity based on a variety of content.

Growth potential of Tsuburaya Productions, Stable Growth of B2B Businesses, and change and growth to new business models

⇒Page 4-6

The first major factor supporting the growth of Tsuburaya Productions is the steady expansion of the fan base through continued product development. In Japan, three-generation fans are familiar. In overseas, particularly in China and other Asia countries, the development of over 10 years of TV series and other works has produced results, creating a very strong fan base centered on parents in their 30s and their children who have grown by viewing popular works such as Ultraman Tiga.
Second, Tsuburaya Productions is reforming its business model and is in the process of changing and growing to a new business model in addition to a stable growth model for B2B businesses. In addition to B2B businesses (mainly royalty income and licensing business revenues), the company is strengthening its B2B2C and D2C businesses as a business to expand globally. Currently, the company is in the midst of strengthening merchandise planning and development, further domestic expansion and cross-overseas expansion, and marketing in conjunction with merchandise development.

Basic strategies for achieving the 5-Year new medium-term management plan

⇒Page 7

The company is promoting the development and expansion of distribution networks to deliver to each distribution partner or directly to fans. In addition, through marketing that utilizes CRM linked to Merchandise development, the company is further enhancing IP value and fostering communities. The company is currently building the flow of “1 Live events, 2 Merchandise planning and development, and 3 Development and expansion of distribution network” in order to expand the number of fans through the continuous development of the global market it serves.

Tsuburaya Production strategy (1. Live events)

⇒Page 8

The past live event business was conducted only domestically, and it was a very low-profit business. The COVID-19 pandemic had an extremely difficult situation with evens attendance of around 100,000 customers per year. However, the company changed its approach and implemented various measures to attract as many as 700,000 visitors. Ticket sales and product sales accompanying this have been extremely strong and are steadily expanding. We think there is plenty of room for growth, and in addition to the traditional Tokyo hosting of large-scale summer events, we plan to hold these events in Osaka from this year. In overseas, the company is also working to expand horizontal expansion using similar know-how.

Tsuburaya Productions Strategy (2. MD and license)

⇒Page 9

In addition to the licensing business, the company is strengthening its merchandise planning and development. The expansion of live events enables the company to deliver merchandise planned and developed in-house to direct fans at the venues. Growth in terms of strengthening merchandise planning and development is ample, and further expansion in the domestic market and horizontal expansion in the overseas market are expected. Sales of MD and license, which were ¥1.5 billion as of FY2020, are projected to exceed ¥6.4 billion in FY2023 and ¥10 billion in the future. Examples of merchandise planning and development

⇒Page 10

An example of event-linked merchandise is "color timers," which are merchandise that customers who come to the event always buy so much.
In addition, in the e-commerce website of Tsuburaya Store, which we have developed independently, we are developing a variety of merchandise, including limited merchandise and collaborative merchandise through order-based sales. Due to merchandise categories and patterns that have not yet been launched, it is planned to be expanded in the future.

Tsuburaya Productions Strategy (3. Development and expansion of distribution network)

⇒Page 11

The company established a domestic retail organization in FY2021 and is working to expand its general sales channels. Domestically, the company launched the TSUBURATA STORE ONLINE on its own website. The company has also begun planning measures to expand the number of fans in cooperation with major retailers, and has begun activities to expand the sales floor by developing these measures with the cooperation of each licensee. Looking ahead, the company will work to develop and expand its distribution network, focusing on two bases in North America and Singapore.

Global business enterprise group centered on Tsuburaya Productions

⇒Page 12

With Tsuburaya Productions at its core, the North American base Tsuburaya Fields Media & Pictures Entertainment, Inc., Singapore-based Tsuburaya Fields Entertainment International Pte. Ltd., and the Group-based Digital Frontier will work together to engage in global businesses.

Net sales growth of the global business enterprise group centered on Tsuburaya Productions

⇒Page 13

In terms of net sales growth among global business companies, revenues from events and related MD and license revenues from the development of visual products are steadily growing on a baseline basis.
Going forward, along with the rollout of new merchandise lineups, including card games, we will steadily grow the various merchandise categories.

Growth investment (plan) during the current medium-term management plan

⇒Page 14

During the period of the current medium-term management plan, the company will invest in new businesses and IP development, as well as structural reforms, with a view to achieving further growth. In the next fiscal year (FY 2024), the Company will focus on global promotional activities in line with the development of card games and new merchandise lineups, and will continue to invest a certain amount in the future. The company will also invest in video production, acquire and develop human resources in line with structural reforms, and strengthen its overseas bases.

Changes in selling, general and administrative expenses during the current medium-term management plan

⇒Page 15

The current fiscal year’s advertising expenses totaled ¥370 million, but in FY 2024 the company will aggressive invest more than ¥1 billion for thorough branding.
This will lead to new developments by branding, such as acquiring awareness of a wide range of targets. The company's policy is to maintain other fixed costs at a level below net sales growth rate.

Structural reforms for growth of the Digital Frontier

⇒Pages 16-17

Digital Frontier will work to restructure its business by developing new markets in North America and other regions and expanding its business globally, in addition to domestic VFX production and game-related contract development.
In the future, the Digital Frontier aims to reach net sales of ¥10 billion and become a Japanese-leading global content production company.

Content and digital business segment operating profit targets

⇒Page 19

The table below shows the operating profit targets for the contents and digital business segment.
For the next fiscal year (FY 2024), the company plans ¥4 billion, taking into account aggressive investments for further global expansion.
Following thorough branding up to the next fiscal year, from FY2025 onward, the company plans to move into an aggressive phase from FY2026, with a target of ¥10 billion in FY2027.

Supplementary) Hidetoshi Yamamoto, President and Group CEO, TSUBURAYA FIELDS HOLDINGS INC.

Since FY2021, the company has announced a medium-term management plan, but it is keenly aware of the difficulty of setting targets due to the ups and downs of the plan. In respect of Tsuburaya Productions, the company will thoroughly invest in order to increase the recognition and favorability of characters as it solidifies its foothold for approximately 2 years. As a result, the medium-term management plan announced in FY2022 (FY2023: ¥6 billion; FY2024: ¥7.5 billion; FY2025: ¥9 billion) is postponed by about 2 years. For the next fiscal year (FY 2024), the company intends to invest firmly in major advertising and promotions, as well as in the strategy for new card games.

Hidetoshi Yamamoto, President and Group CEO, TSUBURAYA FIELDS HOLDINGS INC.

Historical review and formulating a new medium-term management plan

⇒Page 10 of "Overview of PS business segment"

In respect of PS business segment, the company is aiming to review the targets in the medium-term management plan because it has achieved its first-year plan and has achieved results that are higher than anticipated. In August 2023, it acquired a 20% stake in DAIKOKU DENKI Co., Ltd., and in March 2024, it acquired a 51% stake in Sophia Co., Ltd. We are currently formulating a business plan that includes this plan, and will report it to you during FY2024. For information on the PS market, and our overview, please see the documentation.
▸Overview of PS business segment