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Summary of the 40th Annual Shareholder's Meeting by SQUARE ENIX HOLDINGS CO.,LTD. held on June 24, 2020

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Summary of the 40th Annual Shareholder's Meeting by SQUARE ENIX HOLDINGS CO.,LTD. held on June 24, 2020

The following is a summary of the Company's 40th Annual Shareholders' Meeting.

*This document has been prepared to summarize the proceedings of the Company’s 40th Annual Shareholders’ Meeting for presentation on the Company’s website and is different from the legally mandated minutes of the meeting.

Date and Time: June 24, 2020 (Wed), 10:00 - 10:46 a.m.
Venue Century Room, Hyatt Regency Tokyo, 2-7-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo
Number of Shareholders present 37
Meeting Agenda
Reports 1.Business Report, Consolidated Financial Statements and Audit Reports on the Consolidated Financial Statements by Accounting Auditors and by the Audit & Supervisory Committee for the 40th Term (April 1, 2019 through March 31, 2020)
2.Non-Consolidated Financial Statements for the 40th Term (April 1, 2019 through March 31, 2020)
Operating Highlights

<FY2020/3 Financial Results>
 In the fiscal year ended March 2020, we posted net sales of ¥260.5 billion (down ¥10.7 billion), operating income of ¥32.7 billion (up ¥8.1 billion), ordinary income of ¥32.0 billion (up ¥3.6 billion) and profit attributable to owners of parent of ¥21.3 billion (up ¥2 billion).

 At the Digital Entertainment segment, net sales fell but profits rose versus the previous fiscal year. Net sales were down at the HD Game sub-segment due to the high hurdle set in the fiscal year ended March 2019, when we released multiple major new titles. In addition, the sub-segment posted an operating loss, owing in part to impairment losses booked on the content production account. At the MMO sub-segment, brisk sales of the expansion packs for “FINAL FANTASY XIV” and “DRAGON QUEST X” resulted in higher net sales and operating income than in the previous fiscal year. Net sales and operating income were also up at the Games for Smart Devices/PC Browsers sub-segment, where “Romancing SaGA Re;univerSe” and “DRAGON QUEST WALK” performed well.
 At the Amusement segment, arcade operations were solid, but a decline in sales of amusement machines resulted lower net sales and operating income versus the previous fiscal year.
 Net sales and operating income were up versus the previous fiscal year at the Publication segment, which not only saw sharp growth in digital sales (i.e., via apps and e-books) but also brisk sales of printed media.
 Thanks to the release of new character goods and other products based on our Group’s IP, net sales and operating income also rose versus the previous fiscal year at the Merchandising segment.
 The value of our content production account on our balance sheet stood at ¥71.4 billion at the end of March 2020, but we see this as a measure of our frontloaded investments to enable sales growth for our digital content.


<Guidance for fiscal year ending March 2021>
 The COVID-19 pandemic makes it difficult to predict when we will be able to reopen our amusement facilities in the Amusement segment or what operations will look like after reopening. We also cannot assess the impact that the pandemic is likely to have on our business as a whole. Primarily for these reasons, our guidance for this fiscal year is undecided. We will disclose our forecast as soon as it is possible to do so.


<Medium-term earnings targets>
 We believe that we have for the most part succeeded in creating a business structure that will enable us to reach our medium-term earnings targets (net sales of ¥300-400 billion and an operating profit of ¥40-50 billion). We hope to determine whether we will be able to reach our targets in this fiscal year, the final year of our medium-term plan, once we are able to establish our earnings forecast.

Voting Items First Item: Election of Six (6) Directors (excluding Directors who are Audit & Supervisory Committee Members)
Second Item: Election of Three (3) Directors who are Audit & Supervisory Committee Members
Third Item: Election of One (1) Substitute Director who is an Audit & Supervisory Committee Member
All of the items were approved as originally proposed.

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Statements made in this document with respect to the plans, estimates, strategies and beliefs, including any forecasts or projections, of SQUARE ENIX HOLDINGS CO., LTD. or its consolidated subsidiaries (together, "SQUARE ENIX HOLDINGS") are forward-looking statements about the future performance of SQUARE ENIX HOLDINGS.
 These statements are based on management's assumptions and beliefs in light of information available to it at the time of annual general meeting of shareholders and as such readers should not place undue reliance on them. Further, readers should not assume that statements made in this document will remain accurate or operative at a later time.
 A number of factors could cause actual results to be materially different from or worse than those discussed in forward-looking statements. Such factors include, but are not limited to:
1. Changes in economic conditions affecting our operations;
2. Fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar and the euro;
3. Our ability to continue to win acceptance of our products and services, which are offered in highly competitive markets characterized by the continuous introduction of new products and services, rapid developments in technology, and subjective and changing consumer preferences;
4. Our ability to successfully expand internationally with a focus on our digital content business, online game business and mobile phone content business; and
5. Regulatory developments and changes and our ability to respond and adapt to those changes. 
The forward-looking statements regarding earnings contained in these materials were valid at the time of the annual general meeting of shareholders. SQUARE ENIX HOLDINGS assumes no obligation to update or revise any forward-looking statements, including forecasts or projections, whether as a result of new information, subsequent events or otherwise.
 The financial information presented in this document is prepared according to generally accepted accounting principles in Japan.