Interim report
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SEGASammy ( Translation ) Consolidated Financial Results for the Three Months Ended June 30 , 2026 ( Japanese GAAP ) Name of Company : SEGA SAMMY HOLDINGS INC . Listing Code number URL Representative Inquiries : Tokyo Stock Exchange Prime : 6460 : Haruki Satomi : https://www.segasammy.co.jp/en/ : : President and Group CEO , Representative Director Tomoaki Ishibashi Managing Director of Finance & Accounting Division + 81-3-6864-2400 TEL Scheduled date to commence dividend payments Preparation of supplementary material on quarterly financial results Holding of quarterly financial results briefing : Yes August 7 , 2026 : Yes ( for institutional investors ) ( Figures are rounded down to the nearest million yen ) 1. Consolidated Financial Results for the Three Months Ended June 30 , 2026 ( April 01 , 2026 - June 30 , 2026 ) ( 1 ) Consolidated Operating Results ( Percentage represents changes from the prior period ) Profit attributable to owners of parent Net sales Millions Three months ended % of yen June 30 , 2026 95,028 17.3 Operating income Millions of yen 2,384 % Ordinary income Millions of yen 3,612 Millions % of yen 2,169 June 30 , 2025 81,026 ( 22.7 ) ( 519 ) ( 2,124 ) ( 3,387 ) ( Note ) Comprehensive income Three months ended June 30 , 2026 Three months ended June 30 , 2025 ( Note ) Adjusted EBITDA Three months ended June 30 , 2026 Three months ended June 30 , 2025 : ¥ 5,760 million ( 98.8 % ) ¥ 2,897 million ( ( 92.6 ) % ) : ¥ 7,847 million ( 437.0 % ) ¥ 1,461 million ( ( 94.4 ) % ) Basic earnings per share Diluted earnings per share Three months ended Yen Yen % June 30 , 2026 June 30 , 2025 10.70 ( 15.89 ) ( Note ) For the three months ended June 30 , 2026 , diluted earnings per share is not presented because dilutive potential shares do not exist . For the three months ended June 30 , 2025 , diluted earnings per share is not presented because a basic loss per share was recorded although potential shares exist . ( 2 ) Consolidated Financial Position Total assets Net assets Equity ratio As of Millions of yen Millions of yen % June 30 , 2026 610,342 355,323 58.2 March 31 , 2026 627,388 354,967 56.5 ( Reference ) Shareholders ' equity As of June 30 , 2026 ¥ 355,290 million As of March 31 , 2026 ¥ 354,693 million 1-
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― 2 ― 22222..... CCCCCaaaaassssshhhhh DDDDDiiiiivvvvviiiiidddddeeeeennnnndddddsssss Cash dividends per share First quarter Second quarter Third quarter Year-end Total Yen Yen Yen Yen Yen Year ended March 31, 2026 - 27.00 - 28.00 55.00 Year ending March 31, 2027 - Year ending March 31, 2027 (plan) 27.00 - 28.00 55.00 (Note) Revision to the forecast of cash dividends most recently announced: No 33333..... FFFFFooooorrrrreeeeecccccaaaaasssssttttt ooooofffff CCCCCooooonnnnnsssssooooollllliiiiidddddaaaaattttteeeeeddddd FFFFFiiiiinnnnnaaaaannnnnccccciiiiiaaaaalllll RRRRReeeeesssssuuuuullllltttttsssss fffffooooorrrrr ttttthhhhheeeee YYYYYeeeeeaaaaarrrrr eeeeennnnndddddiiiiinnnnnggggg MMMMMaaaaarrrrrccccchhhhh 3333311111,,,,, 22222000002222277777 (((((AAAAAppppprrrrriiiiilllll 0000011111,,,,, 22222000002222266666 ----- MMMMMaaaaarrrrrccccchhhhh 3333311111,,,,, 22222000002222277777))))) (Percentage represents changes from the prior year) Net sales Operating income Ordinary income Profit attributable to owners of parent Basic earnings per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Full-year 510,000 4.6 44,500 (5.6) 47,500 (12.4) 32,500 - 160.36 (Note) Revision to the forecast of operating results most recently announced: No 44444..... OOOOOttttthhhhheeeeerrrrr (1) Changes in significant subsidiaries during the period: No New: - Company name:- Exclusion: - Company name: - (2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: Yes (3) Changes in accounting policies, changes in accounting estimates, and restatements 1. Changes in accounting policies due to revisions to accounting standards and other regulations: No 2. Changes in accounting policies due to other reasons: No 3. Changes in accounting estimates: No 4. Restatements: No (4) Number of issued shares (common stock) 1. Number of issued shares at the end of the period (including treasury stock) As of June 30, 2026 : 213,545,376 As of March 31, 2026 : 221,229,476 2. Number of treasury stock at the end of the period As of June 30, 2026 : 10,565,154 As of March 31, 2026 : 18,564,547 3. Average number of shares during the period (cumulative from the beginning of the fiscal year) For the three months ended June 30, 2026 : 202,754,913 For the three months ended June 30, 2025 : 213,201,536 (Note) The Company has introduced the "BIP Trust" for directors and the "Stock-granting ESOP Trust" for employees, and the Company's shares held by these trusts are included in the number of treasury stock at the end of the period above. These shares are also included in the number of treasury stock which is subject to be excluded for calculation by the average number of shares during the period above. (Note) Auditing procedures reviewed for this document by certified public accountants or accounting auditors: No
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― 3 ― (Note) - This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. - The forward-looking statements, such as results forecasts, included in this document are based on information available to SEGA SAMMY HOLDINGS INC. (the Company) at the time of the announcement and assumptions considered reasonable, and do not purport to be a promise by the Company to achieve such results. Actual results could differ materially, depending on a range of factors. For the assumptions prerequisite to the results forecasts and the points to be noted in the use of the forecasts, please see "Forecast of Consolidated Operating Results" on page 8. - The Company plans to hold a briefing on financial results for institutional investors on August 7, 2026. The presentation materials to be used on the day will be posted on TDnet and the Company's website in advance, and the details of the briefing and the content of the explanation (video and audio) will also be posted on the Company’s website.
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― 4 ― OOOOOpppppeeeeerrrrraaaaatttttiiiiinnnnnggggg RRRRReeeeesssssuuuuullllltttttsssss aaaaannnnnddddd FFFFFiiiiinnnnnaaaaannnnnccccciiiiiaaaaalllll PPPPPooooosssssiiiiitttttiiiiiooooonnnnn (((((11111))))) OOOOOpppppeeeeerrrrraaaaatttttiiiiinnnnnggggg rrrrreeeeesssssuuuuullllltttttsssss fffffooooorrrrr ttttthhhhheeeee ttttthhhhhrrrrreeeeeeeeee mmmmmooooonnnnnttttthhhhhsssss eeeeennnnndddddeeeeeddddd JJJJJuuuuunnnnneeeee 3333300000,,,,, 22222000002222266666 (((((AAAAAppppprrrrriiiiilllll 0000011111,,,,, 22222000002222266666 ----- JJJJJuuuuunnnnneeeee 3333300000,,,,, 22222000002222266666))))) ■ Overall highlights In the first quarter for the fiscal year ending March 31, 2027, the Group started off with net sales of ¥95,028 million, operating income of ¥2,384 million, and adjusted EBITDA of ¥7,847 million. While the launches of major new titles will be weighted toward the third quarter onward, net sales in each segment were generally in line with expectations, and operating income and adjusted EBITDA exceeded expectations. For details, please refer to the Highlights by segment. ■ Highlights by segment « Entertainment Contents » In the Consumer area, catalogue sales of Full Game titles were in line with expectations, and the operating results of Rovio Entertainment Ltd and license revenue associated with Transmedia developments were also generally in line with expectations. In the Animation area, distribution income from the first and second Sonic movies and revenue related to distribution licensing for animation works were recorded. In the AM&TOY area, performance was off to a start that exceeded expectations due to strong sales of amusement machines. Key Full Game titles for the fiscal year ending March 31, 2027, are scheduled to be launched sequentially from the third quarter onward. Prior to this, information dissemination and promotional activities were conducted for titles such as "STRANGER THAN HEAVEN" (scheduled to be released on January 15, 2027) and "Persona 4 Revival" (scheduled to be released on February 18, 2027) at game-related events held in May and June. Leading indicators such as the number of wishlist registrations and related video view counts are favorable, and the Group will continue efforts to increase anticipation ahead of their releases to maximize sales. Furthermore, under the Transmedia strategy, by promoting global, multifaceted deployment of owned IPs including flagship IPs, efforts will be made to enhance IP value and further expand license revenue. In the Animation area, the theatrical movie "Detective Conan: Fallen Angel of the Highway", released in April, has become a hit with box office revenue exceeding ¥13.6 billion. In addition to distribution income from this title, distribution income from the first and second Sonic movies is expected to continue. « Pachislot & Pachinko Machines » In the first quarter for the fiscal year ending March 31, 2027, in addition to sales of "Smart Pachislot BIG DREAM THE GOLDEN PUSHER", additional sales of "Smart Pachislot Bakemonogatari" and "Smart Pachislot Kabaneri of the Iron Fortress: The Battle of Unato", which were released in the fiscal year ended March 31, 2026, also contributed, marking a solid start. In addition, reel unit sales for pachislot commenced in March 2026, and in the first quarter, reel unit sales accounted for approximately 20% of total pachislot sales volume. Going forward, multiple new titles utilizing popular IPs and owned IPs will be launched. In the second quarter, titles such as "Smart Pachislot Lycoris Recoil" (September 2026) for pachislot and "e The Seven deadly Sins 3" (August 2026) for pachinko will be installed, and in the third quarter, titles such as "Smart Pachislot Beast King" (October 2026) for pachislot will be installed. In addition, additional sales will continue to be conducted for "Smart Pachislot Kabaneri of the Iron Fortress: The Battle of Unato". Additionally, while the acquisition of approval for pachislot remains at a low level in the overall pachislot and pachinko machines industry, the acquisition of approval is currently progressing steadily for the Group. While aiming to acquire approval for planned titles, efforts will continue to be made to launch products that meet user expectations through uncompromising development.
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― 5 ― « Gaming Business » In the first quarter for the fiscal year ending March 31, 2027, sales of gaming machines, which is the existing business area, showed steady performance, leading to a start that slightly exceeded expectations. Regarding sales of gaming machines, sales of key titles such as "Railroad RICHES ™ " and "Super Burst ™ " continued to grow. In contrast, due to the impact of incorporating the operating results of GAN Limited ("GAN") and Stakelogic B.V. ("Stakelogic"), which were acquired in the fiscal year ended March 31, 2026, net sales increased from the same period in the prior year, while operating loss widened. As for "PARADISE CITY", casino sales showed steady performance, driven by Japanese VIP and mass market customers who continued to show strong performance. In addition, although equity in earnings of affiliates decreased from the same period in the prior year due to factors such as the occurrence of one-time start-up expenses related to the newly opened hotel and a decrease in tax refunds, it contributed to profit in line with expectations. * GAN, Stakelogic and PARADISE SEGASAMMY Co., Ltd. are recorded with a three-month delay due to the December fiscal year-end. Going forward, the Group will build the foundation for achieving the "Omnichannel strategy" set forth in the Gaming Business. In sales of gaming machines, in addition to strengthening sales of existing titles that are showing strong performance mainly in the North American market, efforts will be made to launch highly competitive new titles. Other efforts, aimed at building a stable revenue base over the medium to long term, will also include strengthening lease sales, developing new customers, and acquiring new licenses. At GAN and Stakelogic, a business revitalization program is being promoted. As a key initiative for GAN, migration to the new platform V2, which serves as the foundation for business growth, will proceed with the aim of improving business efficiency and expanding the business. As for Stakelogic, while withdrawing from unprofitable businesses and streamlining the product lineup, the Group will promote the adaptation of proven gaming machine IPs for online offerings to establish a new revenue base. For other details, please refer to "Results Presentation Q1 for the fiscal year ending March 31, 2027." https://www.segasammy.co.jp/en/ir/library/ ■ Consolidated Financial Results for the Three Months Ended June 30, 2026 (Unit: Millions of yen) Three months ended June 30, 2025 Three months ended June 30, 2026 Changes from the prior period amount % Net sales 81,026 95,028 14,002 17.3 Operating income (loss) (519) 2,384 2,904 - Ordinary income (loss) (2,124) 3,612 5,737 - Profit (loss) attributable to owners of parent (3,387) 2,169 5,557 - Adjusted EBITDA※1 1,461 7,847 6,386 437.0 Yen Yen Yen % Basic earnings (loss) per share (15.89) 10.70 26.59 - Items Breakdown ※1 Adjusted EBITDA Ordinary income + Interest expenses + Depreciation and amortization ± Adjustment items※2 ※2 Adjustment items: + Extraordinary income of business - Extraordinary losses of business (impairments, title write-down, etc.) - Profit attributable to non-controlling interests + Goodwill and trademark right amortization associated with M&A
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― 6 ― Overview by segment is as follows. « Entertainment Contents » (Unit: Millions of yen) Three months ended June 30, 2025 Three months ended June 30, 2026 Changes from the prior period amount % Sales to third parties 67,715 68,449 733 1.1 Inter-segment sales and transfers 154 140 - - Total net sales 67,870 68,589 719 1.1 Ordinary income 5,022 5,862 839 16.7 Adjusted EBITDA 7,983 8,068 85 1.1 « Pachislot & Pachinko Machines » (Unit: Millions of yen) Three months ended June 30, 2025 Three months ended June 30, 2026 Changes from the prior period amount % Sales to third parties 11,049 17,532 6,483 58.7 Inter-segment sales and transfers 27 25 - - Total net sales 11,076 17,558 6,481 58.5 Ordinary income (loss) (3,632) 2,858 6,490 - Adjusted EBITDA (2,884) 3,684 6,569 - « Gaming Business » (Unit: Millions of yen) Three months ended June 30, 2025 Three months ended June 30, 2026 Changes from the prior period amount % Sales to third parties 1,358 8,034 6,676 491.5 Inter-segment sales and transfers - - - - Total net sales 1,358 8,034 6,676 491.5 Ordinary income (loss) 180 (1,798) (1,978) - Adjusted EBITDA 102 (946) (1,049) -
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― 7 ― (2) Financial position as of June 30, 2026 (Assets and liabilities) Total assets as of the end of the first quarter of the current fiscal year decreased by ¥17,046 million from the end of the prior fiscal year to ¥610,342 million. Current assets decreased by ¥20,743 million from the end of the prior fiscal year. This was attributable to decreases in trade receivables and cash and deposits, among other factors, while inventories increased. Non-current assets increased by ¥3,696 million from the end of the prior fiscal year. This was attributable to an increase in investments in capital associated with production investments, among other factors. Total liabilities as of the end of the first quarter of the current fiscal year decreased by ¥17,402 million from the end of the prior fiscal year to ¥255,018 million. This was attributable to decreases in income taxes payable and provision for bonuses, among other factors. (Net assets) Net assets as of the end of the first quarter of the current fiscal year increased by ¥355 million from the end of the prior fiscal year to ¥355,323 million. This was attributable to an increase in foreign currency translation adjustment and the recording of profit attributable to owners of parent, among other factors, while shareholders' equity decreased due to the payment of dividends. Additionally, due to the cancellation of treasury stock, capital surplus and treasury stock each decreased by ¥19,443 million. (Financial ratio) The current ratio at the end of the first quarter of the current fiscal year increased by 44.1 percentage points from the end of the prior fiscal year to 387.4%. In addition, the equity ratio at the end of the first quarter of the current fiscal year increased by 1.7 percentage points from the end of the prior fiscal year to 58.2%.
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― 8 ― (((((33333))))) FFFFFooooorrrrreeeeecccccaaaaasssssttttt ooooofffff CCCCCooooonnnnnsssssooooollllliiiiidddddaaaaattttteeeeeddddd OOOOOpppppeeeeerrrrraaaaatttttiiiiinnnnnggggg RRRRReeeeesssssuuuuullllltttttsssss No changes will be made to the forecast of consolidated financial results for the fiscal year ending March 31, 2027, announced on May 12, 2026.
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― 9 ― QQQQQUUUUUAAAAARRRRRTTTTTEEEEERRRRRLLLLLYYYYY CCCCCOOOOONNNNNSSSSSOOOOOLLLLLIIIIIDDDDDAAAAATTTTTEEEEEDDDDD FFFFFIIIIINNNNNAAAAANNNNNCCCCCIIIIIAAAAALLLLL SSSSSTTTTTAAAAATTTTTEEEEEMMMMMEEEEENNNNNTTTTTSSSSS SEGA SAMMY HOLDINGS INC. QUARTERLY CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2026 AND JUNE 30, 2026 (Unit: Millions of yen) Prior year (As of March 31, 2026) Current period (As of June 30, 2026) Assets Current assets Cash and deposits 153,366 141,251 Notes and accounts receivable - trade 67,576 49,023 Securities 509 457 Merchandise and finished goods 14,051 16,673 Work in process 78,486 89,557 Raw materials and supplies 18,454 18,856 Other 42,848 38,839 Allowance for doubtful accounts (581) (691) Total current assets 374,711 353,968 Non-current assets Property, plant and equipment Land 13,715 13,723 Other, net 37,348 37,471 Total property, plant and equipment 51,063 51,194 Intangible assets Goodwill 14,568 14,319 Trademark right 45,313 45,358 Other 20,229 19,907 Total intangible assets 80,111 79,585 Investments and other assets Investment securities 53,384 53,875 Other 68,242 71,813 Allowance for doubtful accounts (124) (94) Total investments and other assets 121,502 125,594 Total non-current assets 252,677 256,374 Total assets 627,388 610,342
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― 10 ― SEGA SAMMY HOLDINGS INC. QUARTERLY CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2026 AND JUNE 30, 2026 (Unit: Millions of yen) Prior year (As of March 31, 2026) Current period (As of June 30, 2026) Liabilities Current liabilities Accounts payable - trade 17,448 19,700 Short-term borrowings 7,500 7,500 Income taxes payable 11,460 2,347 Provision 11,711 4,542 Asset retirement obligations 25 25 Other 61,002 57,247 Total current liabilities 109,147 91,362 Non-current liabilities Bonds payable 10,000 10,000 Long-term borrowings 124,500 124,500 Provision 2,518 3,038 Retirement benefit liability 5,247 5,462 Asset retirement obligations 2,497 2,523 Other 18,509 18,131 Total non-current liabilities 163,273 163,656 Total liabilities 272,420 255,018 Net assets Shareholders’equity Capital stock 29,953 29,953 Capital surplus 29,819 10,146 Retained earnings 297,607 294,047 Treasury stock (46,282) (26,042) Total shareholders’equity 311,096 308,104 Accumulated other comprehensive income Valuation difference on available-for-sale securities 2,576 2,750 Deferred gains or losses on hedges 1,543 1,513 Revaluation reserve for land (1,109) (1,109) Foreign currency translation adjustment 37,950 41,693 Remeasurements of defined benefit plans 2,635 2,337 Total accumulated other comprehensive income 43,596 47,185 Share acquisition rights 243 - Non-controlling interests 31 33 Total net assets 354,967 355,323 Total liabilities and net assets 627,388 610,342
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― 11 ― SEGA SAMMY HOLDINGS INC. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND 2026 (Unit: Millions of yen) Prior period From April 01, 2025 To June 30, 2025 Current period From April 01, 2026 To June 30, 2026 Net sales 81,026 95,028 Cost of sales 46,868 51,700 Gross profit 34,158 43,327 Selling, general and administrative expenses 34,677 40,942 Operating income (loss) (519) 2,384 Non-operating income Interest income 666 828 Dividend income 88 91 Equity in earnings of affiliates 1,193 185 Gain on investments in investment partnerships 38 188 Foreign exchange gains - 420 Other 371 529 Total non-operating income 2,358 2,244 Non-operating expenses Interest expenses 563 705 Loss on investments in investment partnerships 365 235 Foreign exchange losses 2,912 - Other 121 75 Total non-operating expenses 3,962 1,016 Ordinary income (loss) (2,124) 3,612 Extraordinary income Gain on sale of non-current assets 0 6 Gain on sale of investment securities 18 - Gain on reversal of share acquisition rights - 149 Other 0 - Total extraordinary income 19 155 Extraordinary losses Loss on sale of non-current assets 0 0 Impairment losses 294 6 Loss on valuation of investment securities 179 302 Other - 19 Total extraordinary losses 474 328 Income (loss) before income taxes (2,579) 3,439 Income taxes - current 161 2,205 Income taxes - deferred 646 (937) Total income taxes 808 1,268 Profit (loss) (3,387) 2,171 (Breakdown) Profit (loss) attributable to owners of parent (3,387) 2,169 Profit attributable to non-controlling interests 0 1
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― 12 ― SEGA SAMMY HOLDINGS INC. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND 2026 (Unit: Millions of yen) Prior period From April 01, 2025 To June 30, 2025 Current period From April 01, 2026 To June 30, 2026 Other comprehensive income Valuation difference on available-for-sale securities 1,249 174 Deferred gains or losses on hedges (98) (30) Foreign currency translation adjustment 5,450 3,629 Remeasurements of defined benefit plans, net of tax (54) (297) Share of other comprehensive income of entities accounted for using equity method (261) 113 Total other comprehensive income 6,285 3,589 Comprehensive income 2,897 5,760 (Breakdown) Comprehensive income attributable to owners of parent 2,897 5,759 Comprehensive income attributable to non-controlling interests 0 1
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― 13 ― [[[[[NNNNNooooottttteeeeesssss]]]]] (Notes on assumptions for going concern) Not applicable. (Notes on significant changes in shareholders' equity) At the Board of Directors meeting held on March 31, 2026, the Company resolved to cancel 7,684,100 shares of treasury stock pursuant to Article 178 of the Companies Act of Japan, and completed the cancellation on April 24, 2026. As a result, capital surplus and treasury stock each decreased by ¥19,443 million in the first quarter of the current fiscal year. (Changes in method of presentation) (Quarterly consolidated balance sheets) The account title "Notes and accounts payable - trade" has been changed to "Accounts payable - trade" as there was no balance of notes payable for both the prior fiscal year and the first quarter of the current fiscal year. (Special accounting treatment applied in preparing quarterly consolidated financial statements) (Tax expense calculation) Taxes are calculated by reasonably estimating the effective tax rate after application of tax effect accounting to income before income taxes for the fiscal year and multiplying the quarterly income before income taxes by such estimated effective tax rate. However, a legally designated effective tax rate will be applied if such tax expenses are found to be very unreasonable after calculation based on the relevant estimated effective tax rate.
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― 14 ― SSSSSEEEEEGGGGGMMMMMEEEEENNNNNTTTTT IIIIINNNNNFFFFFOOOOORRRRRMMMMMAAAAATTTTTIIIIIOOOOONNNNN 1. Prior period (From April 01, 2025 to June 30, 2025) (1) Information on the amounts of net sales and income (loss) by each reporting segment (Unit: Millions of yen) Reporting segment Subtotal Adjustment (Notes) Amount in consolidated financial statementsEntertainment Contents Pachislot & Pachinko Machines Gaming Net sales (1) Sales to third parties 67,715 11,049 1,358 80,123 902 81,026 (2) Inter-segment sales and transfers 154 27 - 181 (181) - Total 67,870 11,076 1,358 80,305 720 81,026 Segment income (loss) 5,022 (3,632) 180 1,571 (3,695) (2,124) (Notes) 1. Adjustment of ¥ 902 million for sales to third parties represents sales that do not belong to any business segment. 2. Adjustment to segment income (loss) of ¥(3,695) million includes losses of ¥(119) million that do not belong to any business segment, elimination of inter-segment transactions of ¥72 million, and general corporate expenses of ¥(3,648) million which are not allocated to each reporting segment. General corporate expenses mainly consist of Group management expenses incurred by the Company. 3. Adjustment has been made to segment income (loss) and ordinary income of the quarterly consolidated statements of income and comprehensive income. (2) Information related to impairment losses on non-current assets, goodwill, etc. by reporting segment (Significant changes in the amount of goodwill) In the Gaming Business segment, Stakelogic and its 12 subsidiaries were included in the scope of consolidation from the first quarter ended June 30, 2025 following the acquisition of its shares. As a result, in the Gaming Business segment, goodwill of ¥17,998 million was recorded. The amount of the goodwill reflects the finalization of the provisional accounting treatment. No adjustment to the amount of goodwill was recognized upon the finalization of the provisional accounting treatment. In addition, at the end of the fiscal year ended March 31, 2026, the Group recorded impairment losses for the full unamortized balance of the relevant goodwill. In the Gaming Business segment, GAN and its 23 subsidiaries were included in the scope of consolidation from the first quarter ended June 30, 2025 following the acquisition of its shares. As a result, in the Gaming Business segment, goodwill of ¥14,240 million was recorded. The amount of the goodwill reflects a material revision to the preliminary purchase price allocation resulting from the finalization of the provisional accounting treatment. 2. Current period (From April 01, 2026 to June 30, 2026) Information on the amounts of net sales and income (loss) by each reporting segment (Unit: Millions of yen) Reporting segment Subtotal Adjustment (Notes) Amount in consolidated financial statementsEntertainment Contents Pachislot & Pachinko Machines Gaming Net sales (1) Sales to third parties 68,449 17,532 8,034 94,016 1,011 95,028 (2) Inter-segment sales and transfers 140 25 - 166 (166) - Total 68,589 17,558 8,034 94,182 845 95,028 Segment income (loss) 5,862 2,858 (1,798) 6,922 (3,309) 3,612 (Notes) 1. Adjustment of ¥1,011 million for sales to third parties represents sales that do not belong to any business segment. 2. Adjustment to segment income (loss) of ¥(3,309) million includes losses of ¥(244) million that do not belong to any business segment, elimination of inter-segment transactions of ¥0 million, and general corporate expenses of ¥(3,065) million which are not allocated to each reporting segment. General corporate expenses mainly consist of Group management expenses incurred by the Company. 3. Adjustment has been made to segment income (loss) and ordinary income of the quarterly consolidated statements of income and comprehensive income.
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― 15 ― (Notes to cash flow statements) Quarterly consolidated statements of cash flows for the first quarter of the current fiscal year have not been prepared. Depreciation and amortization (including amortization related to intangible assets excluding goodwill) and amortization of goodwill for the first quarter of the current fiscal year are as follows. (Unit: Millions of yen) For the three months ended June 30, 2025 For the three months ended June 30, 2026 Depreciation and amortization 3,249 4,413 Amortization of goodwill 770 443