CEO Interview
CEO Interview on Interim Consolidated Results for FY2007

Nov 22, 2007

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At its FY2006 Results Briefing Session, Square Enix announced record results based on recurring income. We spoke to company president Yoichi Wada following the FY2007 Interim Results Briefing Session and asked him about the current business situation, human resources development, and brand-building.

Review of the Interim Consolidated Results for FY2007
Our Interim Results Show Sound, Steady Progress

The Interim Consolidated Results for FY2007 show the business is making steady progress.

WADA

At the end of July this year we announced an upward revision of the Company’s consolidated results forecast for the first half-period ending September 30, 2007, and the actual results that we announced this time are a little higher than the revised forecast, with sales at ¥72.2 billion, operating income at ¥9.7 billion, and recurring income at ¥9.3 billion. Even so, we cannot be entirely satisfied with these figures. And as a company aiming to be the world’s leading contents provider, there is still room for improvement. In the first half-period we introduced DRAGON QUEST MONSTER BATTLE ROAD, a trading-card based arcade game, and other smash hits, but we cannot award ourselves a pass mark without a number of further “new seedlings.”

The financial figures appear to be strengthening.

WADA

The fundamental soundness of a company depends on the ability to turn a profit at the appropriate time and to reduce the number of opportunity losses, and I think we have been able to build up such fundamentals over the past few years. It is always necessary to take risks, big or small, in the entertainment industry. And in order to be prepared for these feats, it is essential to have appropriate control over the basics of the business such as running costs, contracts, etc., and to stay sound and healthy.

What is your strategy for achieving the “¥50 billion in recurring income by FY2010” which you announced in May this year?

WADA

In order to continue our success for another 10 years once the medium-term business target has been achieved, we are actively exploring new fields, with mergers and acquisitions as a possible option. At this point, the forecast for FY2007 recurring income is ¥20 billion. Achieving an extra ¥30 billion over three-and-a-half years may sound like a loud boast, but we have already begun setting the groundwork for Square Enix itself to reach ¥30 billion. We anticipate the greatest hurdle will be in moving from ¥30 billion to ¥35 billion. Meanwhile, since recurring income for the TAITO Amusement segment has reached the ¥4 billion to ¥5 billion range, we are aiming for the inspiring goal of ¥10 billion from next year. We plan to achieve the remaining ¥10 billion by more effective use of the funds we have, for example, to expand our line-up of contents.

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