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Koei Tecmo Holdings Annual Report 2021

Key insights

6 takeaways

01
Koei Tecmo achieved record-breaking financial performance for the fiscal year ending March 31, 2021, marking eleven consecutive years of profit growth with consolidated net sales of 60,370 million yen.See it on page 6
02
The company has set ambitious growth targets for 2024, aiming for 90 billion yen in sales and 30 billion yen in operating profit by scaling its package and mobile game portfolios.See it on page 3
03
Growth in the Entertainment segment was primarily driven by the success of high-profile titles like 'Hyrule Warriors: Age of Calamity' and strong performance in the mobile gaming sector.See it on page 3
04
Management maintains a conservative financial strategy with a diversified investment portfolio and has confirmed that no impairment losses were required for its real estate holdings, including its new headquarters.See it on page 14
05
The firm is strengthening its corporate governance and financial structure through a 1.3-for-1 stock split, the issuance of executive stock options, and the adoption of new ASBJ accounting standards.See it on page 21
06
Key revenue contributors, including partnerships with Nintendo and Alibaba Culture Media, provide a stable foundation for the company to navigate ongoing market fluctuations.See it on page 29

Summary

Koei Tecmo Holdings achieved record-breaking financial performance during the fiscal year ending March 31, 2021, marking eleven consecutive years of profit growth. Consolidated net sales reached 60,370 million yen, a success driven primarily by the Entertainment segment through high-profile titles such as Hyrule Warriors: Age of Calamity and robust performance in the mobile gaming sector. Having surpassed the targets of its previous three-year management plan, the company has established ambitious new objectives for 2024, targeting 90 billion yen in sales and 30 billion yen in operating profit by aggressively scaling its package and mobile game portfolios.

The company maintains a conservative financial strategy characterized by rigorous internal controls and a diversified investment portfolio comprising equity, debt, and derivative instruments. Despite the global economic uncertainty introduced by the COVID-19 pandemic, the firm’s financial position remains stable. Management conducted extensive impairment testing on significant real estate holdings, including its new headquarters and live house facilities. While these assets were identified as a key audit matter due to the volatility in operating rates and rental revenues, auditors concluded that projected cash flows sufficiently supported the carrying amounts, necessitating no impairment losses.

Corporate governance remains a priority, evidenced by a 1.3-for-1 stock split, the issuance of executive stock options, and transparent disclosures regarding related party transactions. The company is also proactively aligning with evolving regulatory requirements, including the adoption of new Accounting Standards Board of Japan standards for revenue recognition and fair value measurement. With significant R&D investment and a stable foundation of major revenue contributors like Nintendo and Alibaba Culture Media, the firm is positioned to navigate ongoing market fluctuations while pursuing its long-term growth trajectory.