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02 SQUARE ENIX 2004
To Our Shareholders
President and Representative Director
Yoichi Wada
Square Enix Co., Ltd. is proud to present its first
annual report for fiscal 2003, ended March 31, 2004,
following the merger of Enix Corporation and Square
Co., Ltd. on April 1, 2003.
For its first fiscal year, consolidated net sales totaled
¥63,202 million, operating income was ¥19,398 million
and net income amounted to ¥10,993 million for an
operating income margin of 30.7% and return on
equity (ROE) of 11.9%. Compared against the simple
addition of the historical figures of the former Enix
Corporation and Square Co., Ltd., performance in
fiscal 2003 reached a record high. Square Enix got an
excellent start to its new journey owing to the smooth
integration of the two companies following the merger.
The Square Enix Group aims to become one of the
world’s largest and best digital content providers.
While our performance during the fiscal year under
review was encouraging, we believe it was nothing
more than a start of what is to come. Here, we would
like to discuss our vision, perception of the operating
environment and future management strategies.
A Fundamental Industry Change from Evolution in
Network Technology
One factor why we decided on the merger was the
major changes underway in the video game industry.
The structure of the IT industry in general has
been changing from a vertically integrated to a hori-
zontally linked industry—the typical example is the PC
industry. Being part of the increasingly horizontally
linked IT industry the video game business has been in
the rare position of being able to maintain a vertically
integrated business model. We believe that this atypical
position was possible due to the unique capability of
game consoles to make unique entertainment experi-
ences possible—experiences that other hardware and
software vendors were unable to provide on other plat-
forms. We also believe that it was possible due to