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To Our Shareholders
SQUARE ENIX CO., LTD.
Yoichi Wada
President and Representative Director
am pleased to present the SQUARE ENIX annual report for
fiscal 2005, ended March 31, 2006, to our shareholders and
other stakeholders.
In fiscal 2005, on a consolidated basis, net sales rose 68.5%,
to ¥124,473 million, operating income declined 41.4%, to
¥15,470 million, recurring income decreased 39.9%, to ¥15,547
million, and net income climbed 14.3%, to ¥17,076 million.
The operating income margin was 12.4%, and return on
equity (ROE) was 14.9% in fiscal 2005.
When we inaugurated SQUARE ENIX, I’ve laid out the actions
to be taken as follows. The first two fiscal years were to be
largely devoted to building up strength and stamina. Our primary
focus for the third year —the year under review—and fourth
year was to modify our physique. In addition to accomplishing
structural reforms, we would work toward a significant leap for-
ward through the completion of our new structure in fiscal 2010.
In fiscal 2005, we met the challenges of a changing operating
environment and the change of the industry structure by
preparing a stronger than ever product lineup. FINAL FANTASY
XII and KINGDOM HEARTS II became record-setting game titles
in the industry during the fiscal year under review, while the
release of the computer-generated imagery (CGI)-animated film
FINAL FANTASY VII: Advent Children gained considerable
attention in both the United States and Japan for its unprece-
dented success. Although our major products performed as
strongly as anticipated, changes in the operating environment
were even harsher than initially expected, and therefore other
products were unable to mirror our major-product successes. As
a result, we were unable to avoid a decline in operating income.
While committed to reassessing the current circumstances
and modifying our approach, based on our firmly held philosophies,
we will continue to push forward, our resolution firm, until we
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