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Management Plan & Business Strategy

FUNDAMENTAL MANAGEMENT POLICY

The basic philosophy of SANKYO Co., Ltd. (the Company) and its consolidated subsidiaries and affiliates (SANKYO Group) is to fulfill its mission, namely, to contribute to the sound development of pachinko and pachislo, which are popular leisure activities in Japan, and to the quality of life in society at large as a leading company in the pachinko and pachislo industry.

SANKYO Group’s stakeholders include shareholders, pachinko parlors, which are the Group’s customers, pachinko players, suppliers, local communities, and employees. One of the most important management tasks is to maintain good relations with each of these stakeholders, and accordingly, the Group has set the following fundamental management policies:

  1. Maximize stakeholder value and achieve the optimum distribution of that value
  2. Ensure compliance with laws and regulations, social norms, and corporate ethics
  3. Enhance efficiency and transparency of management
  4. Inspire employees and develop their capabilities
  5. Enhance society’s trust in the pachinko and pachislo industry

PERFORMANCE INDICATORS

SANKYO Group aims to achieve stable, permanent growth by establishing a solid position in the industry through increasing its share of the pachinko and pachislo markets. The Company believes that the results of this effort are reflected in the ratio of operating income to net sales and formulates and implements various measures to increase competitive advantage in product planning, development, production, and marketing with the objective of increasing this ratio. The Group will continuously engage in cost reduction measures, including improvement of the efficiency of advertising and sales promotion, the sharing of parts and materials, and the streamlining of logistics.
The table below depicts change in the ratio of operating income to net sales for the most recent three-year period.

FY2012 FY2013 FY2014
Ratio of operating income to net sales (%) 23.2 6.7 17.7

MEDIUM-TO-LONG-TERM MANAGEMENT STRATEGY

To maintain growth and increase profitability, the SANKYO Group will concentrate its resources on the game machines business in order to offer highly competitive innovative products that vitalize the pachinko and pachislot industry, while aiming to secure a competitive advantage as a manufacturer that continues to lead the market.
The new management structure launched in April 2012 is tackling the following issues from a medium- to long-term perspective.

a. Expanding the Group’s market share for pachinko and pachislot machines

JB Co., Ltd., a game machine manufacturer, became a consolidated subsidiary of SANKYO in March 2012. As a result, the Group now has three brands—SANKYO, Bisty, and JB.
For the SANKYO brand, our strategy is to offer a complete line-up addressing the full spectrum of market needs by deploying our accumulated technological capabilities, know-how, and experience. Our current key task is to develop a flagship title under the SANKYO brand. For the Bisty brand, through collaboration with the Group’s business partner Fields Corporation, product planning emphasizes conjuring up the worldviews embodied in the title concepts and leveraging the attractiveness of characters. With regard to the JB brand, our product development emphasizes specifications for innovative products offering entertainment unavailable with game machines focused on LCD presentation. By effectively promoting three distinctive brands and establishing their strong presence in the market, we will pursue continuous expansion of the Group’s market share.

b. Establishing brands with the support of players

As player needs become increasingly sophisticated and diversified, analysis of market trends remains important but is unlikely to lead to creation of innovative products because it clarifies players’ current conscious needs, not their latent needs. In order to become a trendsetter in the market, we recognize that, in addition to conducting effective marketing, the Group must strengthen its development structure with an eye to the future, including by vigorously utilizing external resources through alliances. We believe this will allow the Group to establish the development structure necessary for offering a stream of products whose attributes ensure enduring popularity among players. Some of the Group’s recent products have met with an enthusiastic response, achieving solid popularity. We intend to optimize the positioning of the Group’s brands and continually strengthen their appeal by steadily enhancing the evaluation of our products in the market.

c. Maximization of corporate value

We recognize the importance of cultivating relationships rooted in trust with shareholders and investors by enriching IR activities and through sustained improvement of financial performance. In addition to actively engaging in communication with shareholders and investors by improving the Company's website and briefings, we participate in IR events and periodically hold briefings for individual investors with the aim of broadening participation of the investor community, including that of individual investors. We will strive to enhance corporate value by promoting vigorous communication with shareholders and investors.

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