Annual Report 2021

PROFILE
KOEI TECMO HOLDINGS CO., LTD. is a legal entity that was established as a result of the merger
between two companies, Koei and Tecmo. Both companies have backgrounds in different fields
of entertainment, with Koei starting out in PC software development and Tecmo in business related to amusement facilities. While both companies have been operating for half a century in thesame industry, they have cultivated different cultures and different expertise.
By unifying these differences, Koei Tecmo will vigorously continue its work in the ethos of “Creativity and Contribution” to deliver even newer and higher quality entertainment content that isable to enrich the hearts of users world-wide.

CONTENTS
Profile............................................................. 1
Top Message................................................. 2
Financial Information................................... 3
Corporate Data............................................... 34

1

TOP MESSAGE

ChairmanKeiko Erikawa
President & CEO

Yoichi Erikawa
Fiscal Year 2020 marked the final year of our current 3-year Mid-term Management Plan, throughout which we continued
to develop the policies of “creating and expanding global IPs” and “advancement of global business”. During this period,
Hyrule Warriors: Age of Calamity, based in the world of Nintendo’s The Legend of Zelda™: Breath of the Wild, was a major
hit, seeing sales of over 3.7 million units. In smartphone games, Romance of the Three Kingdoms Ha-do, which started
service in Japan in September, has successfully achieved monthly sales of 1billion yen. In addition, our IP license title,
Romance of the Three Kingdoms Senryaku-ban, has maintained its high level of sales in China. As a result of all these, thisyear we have recorded the highest achievements in our history for sales, operating profit, ordinary profit and net profit. This
makes the eleventh fiscal year in a row that we have successfully achieved an increase in profits. We have greatly exceeded
our goals for the Mid-term Management Plan (Sales: 51 billion yen, Operating Profit: 17 billion yen, Ordinary Profit: 21
billion yen) and achieved a high level of growth and profitability.
This year we embark on a new Mid-term Management Plan and have set our sights even higher with plans to achieve salesof 90 billion yen, operating profit of 30 billion yen, and ordinary profit of 40 billion yen by March 2024. To achieve this,
we’ve set a few major goals. In package games, we plan to develop a title that will achieve 5 million units in sales, as well
as release titles each year that will reach 2 million units in sales. For smartphone games, our target is to create a game thatwill achieve monthly sales of 2 billion yen, as well as multiple other titles that can achieve 1 billion yen in monthly sales.
With our Group’s long-term vision newly set as “The World’s No.1 Digital Entertainment Company,” we will strive to be
the No.1 company contributing to the growth of spiritual abundance and vitality in our customers worldwide.
We thank you for your support and ask for your continued cooperation in our present and future endeavors.

2

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF MARCH 31

Millions of yen

2021

ASSETS
Current assets:
Cash and deposits (Notes 6 and 8)
Notes and accounts receivable (Note 8)
Securities (Notes 8 and 11)
Merchandise and Finished goods
Work in process (Note 16)
Raw materials and supplies
Other current assets
Allowance for doubtful accounts (Note 8)
Total current assets

2020¥11,995
11,253
5,238
161
113
70
4,916
(9)
33,739¥12,890
11,955
337
97
4
50
4,636
(9)
29,963$108,349
101,648
47,321
1,459
1,026
635
44,406(86)
304,759

Property, plant and equipment:
Buildings and structures, net (Notes 9 and 15)
Land (Notes 9 and 15)
Construction in progress
Other, net
Total property, plant and equipment (Note 7)

24,40914,93042
1,399
40,781

24,545
14,615
9
1,572
40,743

220,479
134,860
381
12,639368,361

240
240

191
191

2,173
2,173

113,176
212
1,228
1,291
115,909¥ 190,671

71,3504,346
1,196
76,894¥ 147,793

1,022,275
1,921
11,10011,665
1,046,962$ 1,722,257

Intangible assets:
Other
Total intangible assets
Investments and other assets:
Investment securities (Notes 8 and 11)
Deferred tax assets (Note 14)
Retirement benefit asset (Note 13)
Other
Total investments and other assets
Total assets

The accompanying notes are an integral part of these statements.

3

Thousands of U.S. dollars

2021Millions of yen

2021

LIABILITIESCurrent liabilities:
Notes and accounts payable – trade
Short-term borrowings
Accounts payable – other
Income taxes payable
Provision for bonuses
Provision for bonuses for directors
Provision for sales returns
Provision for sales discount
Provision for point card certificates
Provision for loss on order received (Note 16)
Other current liabilities
Total current liabilities

2020

¥ 300
5, 3886, 332
1,633
318
0
117
0
35
6, 89421,022¥1,642
13,000
1,594
3,367
1,190
226
0
144
7
2,916
24,090$2,71548,671
57,201
14,754
2,875
0
1,061
5
319
62,279189,884

Long-term liabilities:
Retirement benefit liability (Note 13)
Deferred tax liabilities (Note 14)
Provision for loss on litigation
Other long-term liabilities
Total long-term liabilities
Total liabilities

3, 808710
4, 51925, 541

199
193
181
781
1,356
25,446

34,404
6,414
40,819230,704

15,00015,000135,489

27, 833
110, 529

26,88188,758251,412998,367(1, 364)(2,036)(12,320)

151,999

128,602

1,372,949

14, 596(3,115)
1,174
171
12, 827(3,058)(3,115)130(586)(6,629)131,842(28,136)
10,610
1,545
115,862303
165,129¥ 190,671

373
122,346¥147,793

2,741
1,491,552$1,722,257

NET ASSETS (Note 17)
Shareholders' equity:
Capital stock
Authorized: 350,000,000 shares in 2021 and 2020
Issued : 129,268,048 shares in 2021 and 2020
Capital surplus
Retained earnings
Treasury shares: 1,495,176 shares at March 31, 2021 and
2,247,868 shares at March 31, 2020
Total shareholders' equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Revaluation reserve for land (Note 15)
Foreign currency translation adjustment
Remeasurements of defined benefit plans (Note 13)
Total accumulated other comprehensive income
Share subscription rights
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these statements.

4

Thousands of U.S. dollars

2021

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED MARCH 31

Millions of yen

Thousands of U.S. dollars

2021$545,298

Net sales（Note 22）2021¥ 60, 370

2020
¥ 42,645

Cost of sales（Note 16）
Gross profit

21, 298
39,071

20,08822,556

192,382352,916

Selling, general and administrative expenses (Note 12)
Operating profit（Note 22）

14,67324, 397

8,454
14,102

132,540
220,375

Other income (expenses):
Interest income
Dividend income
Gain on sales of investment securities (Note 11)
Gain on redemption of securities
Foreign exchange gains (losses), net
Gain on valuation of derivatives
Gain on sales of property, plant and equipment
Loss on valuation of investment securities (Note 11)
Loss on sales of investment securities (Note 11)
Loss on redemption of securities
Loss on valuation of derivatives (Note 11)
Provision for loss on litigation
Loss on COVID-19
Other, net
Profit before income taxes

4,955
1,166
10,649
76
236
1,792
(48)
(2,453)(560)(1, 297)(124)
383
39,174

1,688
1,451
6,980
23
(243)
1,559
(2,586)(1,289)(145)(1,253)(181)
141
20,24744,761
10,53996,190695
2,136
16,193(439)(22,163)(5,060)(11,720)(1,123)
3,465
353,850

Income taxes:
Income taxes - current
Income taxes - deferred
Total income tax (Note 14)
Net profit
Profit attributable to owners of the parent:

9, 865(241)
9,624
29, 550¥ 29, 550

5,033
(92)
4,941
15,306¥15,306

89,109(2,177)86,931
266,919$266,919

Per share: (Note 1)
Net income – Basic– Diluted
Cash dividends
The accompanying notes are an integral part of these statements.

Yen¥ 178.68
177.72117.00¥92.96
92.68
61.00

U.S. dollars

$1.61
1.60
1.05

The Company implemented a 1.3-for-1 stock split on April 1, 2021 and net income per share has been calculated by assuming this stock split
was executed at the beginning of the fiscal year ended March 31, 2020.
KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED MARCH 31

Millions of yen

2021$266,919

Net profit:

2020¥15,306

Other comprehensive income
Valuation difference on available-for-sale securities
Revaluation reserve for Land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income (Note 21)

17,6551,043
757
19,456(4,414)
(948)
(573)
(359)
(6,296)

159,473
9,428
6, 840175,742Comprehensive income :49,007

9,010

442,662

Comprehensive income attributable to owners of the parent:¥ 49,007¥9,010$442,662

The accompanying notes are an integral part of these statements.

5

Thousands of U.S. dollars

2021¥ 29, 550

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSFOR THE YEARS ENDED MARCH 31

Millions of yen
Commonstock¥ 15,000

Balance at April 1, 2019
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury shares
Disposal of treasury shares
Effect of change of the
fiscal year-end of certain
consolidated subsidiaries
Net changes of items other thanshareholder’s equity
Total changes during period
Balance at March 31,¥ 15,000and April 1, 2020
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury shares
Disposal of treasury shares
Effect of change of the
fiscal year-end of certain
consolidated subsidiaries
Net changes of items other thanshareholder’s equity
Total changes during period
Balance at March 31, 2021
¥ 15,000

Capitalsurplus¥ 26,389

Retainedearnings¥ 80,404(6,952)

Valuation Revaluation
Foreigndifference on
reservecurrency Remeasurements
Share
Treasury available-forfor translationof defined subscription
shares sale securities
land adjustments
benefit plansrights(¥ 226)¥ 413¥ 703(¥ 2,588) ¥ 1,355 (¥ 2,166)

Net assets¥ 119,284(6,952)
15,30615,306

(8)
1,052

(8)
561

491

-

491

8,354

¥ 26,881¥ 88,758(4,414)

(948)

(573)

(359)

(40)

(6,336)(4,414)

(948)

(573)

(359)

(40)

3,061

(¥ 2,036) (¥ 3,058) (¥ 3,115)¥ 130(¥ 586)¥ 373¥ 122,346

552(7,748)(7,748)29,55029,550
(16)
1,641

(16)
688

952
(31)

21,770952¥ 27,833 ¥ 110,529

(31)

672
(¥ 1,364)

17,655

1,043

757

(69)

19,386

17,655¥ 14,596 (¥ 3,115)

1,043¥ 1,174

757
¥ 171

(69)
¥ 303

42,783¥ 165,129

Thousands of U.S. dollars

Balance at April 1, 2020
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury shares
Disposal of treasury shares
Effect of change of the
fiscal year-end of certain
consolidated subsidiaries
Net changes of items otherthan shareholder’s equity
Total changes during period
Balance at March 31, 2021

Valuation Revaluation
ForeignSharedifference on
reservecurrency Remeasurementsof defined subscription
CommonCapital Retained Treasury available-forfor translation
benefit plansrights Net assets
stock
surplus earnings
shares sale securities
land adjustments$3,369 $1,105,108($5,295)$1,181$135,489 $242,806 $801,719 ($18,395) ($27,630) ($28,136)(69,986)(69,986)(146)
14,827

(146)
6,221

8,605
(284)

(284)
159,473

6,075 159,473
8,605 196,648$135,489 $251,412 $998,367 ($12,320) $131,842 ($28,136)

The accompanying notes are an integral part of these statements.

6

266,919

266,919

9,428

6,840

(627)

175,115

9,428$10,610

6,840$1,545(627)
386,444$2,741 $1,491,552

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED MARCH 31

Millions of yen

2020¥ 39,174
1,547
35
4
91
438
(181)
(6,122)
48(8,195)
483
(495)
(50)
(31)
124
792
(187)
(1,398)
2,463
681
2,024
1,773
33,021
5,420
(3)
(56)
1,424
(10,080)
29,726¥20,247
752
(118)
(1)
50
105
181
(3,140)2,586(5,691)121
1,253(1,609)292(3,644)
31
1,099
30
(681)
(524)
8
11,349
2,554
(1)
1,307
(5,460)9,748$353,850
13,978
319
39
829
3,958
(1,636)(55,300)
439(74,027)
4,364(4,473)
(459)
(287)
1,123
7,156
(1,691)(12,633)
22,254
6,158
18,28516,016298,267
48,959(27)(508)
12,864(91,049)
268,506

Cash flows from investing activities:(956)
Payments into time deposits
531
Proceeds from withdrawal of time deposits(84,175)
Purchase of short-term and long-term investment securities
73,883
Proceeds from sales and redemption of short-term and long-term investment securities(1,520)Purchase of property, plant and equipment(71)
Purchase of intangible assets
97
Proceeds from sales of property, plant and equipment(79)
Other, net(12,291)
Net cash used in investing activities(86)
86(49,432)
50,278(14,238)2,993(97)(10,496)(8,643)
4,798(760,325)
667,363(13,736)
(648)
883
(717)
(111,026)

Cash flows from financing activities:
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from disposal of treasury shares
Purchase of treasury shares
Dividends paid
Other, net
Net cash used in financing activities(13,000)
1,406(16)(7,738)(48)(19,396)

23,500(10,500)882(8)(6,942)(25)
6,906(117,423)
12,701(147)(69,894)(440)(175,204)

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of change of the fiscal year-end of certain consolidated subsidiaries
Cash and cash equivalents at end of year (Note 6)634(1,327)
12,803(36)¥ 11,439

(323)
5,834
6,968
¥12,803

5,734(11,990)
115,649(328)$103,329

Cash flows from operating activities:
Profit before income taxes
Depreciation
Increase (decrease) in provision for loss on order received
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses for directors
Increase (decrease) in provision for bonuses
Increase(decrease) in provision for loss on litigation
Interest and dividend income
Loss(gain) on valuation of securities
Loss(gain) on sales of investment securities
Loss(gain) on redemption of securities
Loss (gain) on valuation of derivatives
Loss(gain) on sales of property, plant and equipment
Foreign exchange losses (gains)
Loss on COVID-19
Decrease(increase) in notes and accounts receivable
Decrease(increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accounts payable - other
Decrease(increase) in consumption taxes receivable
Increase (decrease) in accrued consumption taxes
Other, net
SubtotalInterest and dividends received
Interest paid
Loss on COVID-19 paid
Income taxes refund
Income taxes paid
Net cash provided by operating activities

The accompanying notes are an integral part of these statements.

7

Thousands of U.S. dollars

2021

2021

KOEI TECMO HOLDINGS CO.,LTD. AND CONSOLIDATED SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of significant accounting policies:(1) Basis of presentation of consolidated financial statements The accompanying consolidated financial statements of KOEI TECMO HOLDINGS CO., LTD. (“the Company”) have been prepared inaccordance with the provisions set forth in the Financial Instruments and Exchange Act of Japan and its related accounting regulations, andin conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards.
The accounts of consolidated overseas subsidiaries for the years ended March 31, 2021 and 2020 are prepared in accordance with either
International Financial Reporting Standards or U.S. generally accepted accounting principles, with adjustments for the specified five items asapplicable. The accompanying consolidated financial statements have been restructured and translated into English from the consolidated
financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the
Ministry of Finance as required by the Financial Instruments and Exchange Act of Japan. Some supplementary information included in thestatutory Japanese language consolidated financial statements, but not considered necessary for fair presentation, is not presented in theaccompanying consolidated financial statements.
As permitted by the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen have been omitted. Consequently, the totals shown in the accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily agree withthe sum of the individual amounts. Certain amounts in the prior year’s financial statements have been reclassified to conform to the current
year’s presentation.
The translation of the Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2021, which was ¥110.71 to U.S. $1. These translation should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any otherrate of exchange.
Some captions in prior year financial statements have changed to conform to the current year presentation.
(2) Basis of consolidation and investments in affiliated companies The consolidated financial statements include the accounts of the Company and its subsidiaries, including KOEI TECMO GAMES CO.,LTD., KOEI TECMO NET CO., LTD., KOEI TECMO QUALITY ASSURANCE CO., LTD., KOEI TECMO WAVE CO., LTD., CWS
BRAINS, LTD., KOEI TECMO CAPITAL CO., LTD., KOEI TECMO AMERICA CORPORATION, KOEI TECMO EUROPE LIMITED,KOEI TECMO TAIWAN CO., LTD., KOEI TECMO TIANJIN SOFTWARE CO., LTD., KOEI TECMO BEIJING SOFTWARE CO., LTD.,
KOEI TECMO SINGAPORE PTE. LTD., and KOEI TECMO LIV CO., LTD. Of the above, KOEI TECMO QUALITY ASSURANCE CO.,LTD., is included in the scope of consolidation because it was newly established in the current consolidated fiscal year. Some small-scale
subsidiaries, including KOEI TECMO MUSIC CO., LTD., KOEI TECMO AD CO., LTD., and KOEI TECMO SOFTWARE VIETNAM
CO., LTD., whose total assets, net sales, net income or loss, retained earnings or other items would have no material effect on the financial
statements have not been consolidated. All significant intercompany transactions and accounts have been eliminated in consolidation.
The fiscal year end of KOEI TECMO TAIWAN CO., LTD. and KOEI TECMO TIANJIN SOFTWARE CO., LTD. and KOEI TECMOBEIJING SOFTWARE CO., LTD. is December 31, which differs from that of consolidated fiscal year end and as such, the subsidiary is
consolidated based on its provisional closing balances as of consolidated fiscal year end.
(3) Application of the equity method The company among the unconsolidated subsidiaries not accounted for under the equity method is KOEI TECMO MUSIC CO., LTD., KOEITECMO AD CO., LTD., KOEI TECMO SOFTWARE VIETNAM CO., LTD. This is because the impact each of said companies has on profit
or loss, retained earnings, etc., is negligible, and it is immaterial as a whole.
(4) Translation of foreign currency All the assets and liabilities of foreign subsidiaries are translated into Japanese yen at the appropriate year-end exchange rate and all income
and expense accounts are translated at the average rate of exchange for the year. The translation of net assets is made using historical rates. The
resulting translation differences are presented as “Foreign currency translation adjustment” in the accompanying consolidated balance sheets.
Foreign currency receivables and payables are translated at year-end exchange rates and the resulting translation gains and losses are included
in income.
(5) Cash and cash equivalents For the purpose of the consolidated statements of cash flows, the Company and its consolidated subsidiaries have classified time deposits
and other highly liquid investments as cash equivalents if the original maturities of such investments are three months or less.

8(6) Financial instruments (a) Derivatives
All derivatives are stated at fair value, with changes in fair value being included in the net income or loss for the period in which theyarise.
(b) Securities and investment securities
Trading securities, held for the purpose of generating profits on short-term differences in prices, are stated at fair value, with changes infair value being included in the net income or loss for the period in which they arise.
Held-to-maturity securities are stated at amortized cost method (straight-line method).
Available-for-sale securities for which quoted market price is available are stated at fair value. Net unrealized gains or losses on thesesecurities are reported as a separate component of net assets, net of applicable taxes.
Available-for-sale securities for which quoted market price is not available are stated at cost or at amortized cost, except as stated in thefollowing paragraph:
In cases where the fair value of equity securities issued by non-consolidated subsidiaries, or available-for-sale securities has declined
significantly and such impairment in value is not deemed temporary, those securities are reduced to fair value and the resulting losses areincluded in the net income or loss for the period.
The net amount of equity included in the Company’s financial statements from investment partnerships and similar investments, iscalculated based on the relevant financial statements for the partnership available as of the reporting date.
(7) Inventories Inventories of the Company and its consolidated subsidiaries are determined using (i) the moving-average method for merchandise,finished goods and raw materials, (ii) the last purchase price method for supplies and (iii) the specific identification method for workin process (unless market value of inventories declines significantly and is not expected to recover to cost, in such cases costs are
reduced to net realizable values).
(8) Property, plant and equipment The declining balance method is used for calculating depreciation except for buildings (excluding facilities attached to buildings) whichwere acquired since April 1, 1998 and the straight-line method is used for facilities attached to buildings and structures which were acquiredsince April 1, 2016. The property, plant and equipment held by foreign consolidated subsidiaries is being depreciated by the straight-line
basis, based on the estimated useful lives of the assets.
The range of useful lives for “Buildings and structures” is principally from 3 to 50 years.
(9) Intangible assets Software costs for internal use are capitalized and amortized over their estimated useful lives on a straight-line basis.
(10) Lease assets The lease period is regarded as the useful lives, and the straight-line method is used to reduce the residual value to zero.
Among finance lease transactions that do not transfer ownership, lease transactions with a lease transaction start date before December 31,
2008 are accounted for in accordance with the method for ordinary lease transactions.
(11) Provision for bonuses Provision for bonuses are stated at the estimated amount of the bonuses to be paid to employees based on their services provided during the
fiscal year.
(12) Provision for bonuses for directors Provision for bonuses are stated at the estimated amount of the bonuses to be paid to directors based on their services for the current
fiscal year.
(13) Allowance for doubtful accounts To prepare for bad debt losses of accounts receivable, the estimated uncollectable amounts regarding general accounts receivable arerecorded based on the past credit loss experience, and the estimated uncollectable amounts regarding certain accounts receivable, such as
doubtful accounts receivable, are recorded by separately examining their collectability.
(14) Provision for sales returns A provision for sales returns is provided for future losses due to the return of products at an amount calculated based on historical experience.
(15) Provision for sales discount A provision for sales discount is provided for future losses incurred on sales discount of products.

9

(16) Provision for point card certificates A provision for point card certificates is provided for the accumulation of points granted to online shopping users. The amount of provision
is determined based on the past usage of points.
(17) Provision for loss on order received A provision for loss on order received is provided for the estimated loss of the order. A provision for loss is recognized when it is probablethat the expected revenue to be derived from an order is lower than the unavoidable cost of meeting the obligations.
(18) Revenue for software development contract When the outcome of the software development contract can be reliably estimated, contract revenue is recognized based on the stage ofcompletion applying the percentage of completion method. The stage of completion is primarily determined using the cost-to-cost method.
If the outcome of the software development contract cannot be reliably estimated, the completed contract method is applied(19) Income taxes Provision is currently made for the income taxes applicable to all revenue and expense items reported in income tax returns on the basis ofwhen such items are taxable or deductible. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities.
(20) Retirement benefits (a) Method for attributing projected benefits to periods
The retirement benefit obligation is calculated by attributing projected benefits to periods until the end of the current fiscal year on abenefit formula basis.
(b) Amortization of prior service cost and actuarial gain or loss
Prior service cost is amortized on a straight-line basis over certain periods (from 9 to 12 years), which are shorter than the averageremaining years of service of the eligible employees. Net actuarial gain or loss is amortized from the following year on a straight-line
basis over certain periods (from 9 to 12 years), which are shorter than the average remaining years of service of the eligible employees.
(21) Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial statements The Company has applied “Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial
statements” (ASBJ Practical Issues Task Force No. 18, June 28, 2019), and necessary modifications have been made for consolidation.
(22) Net income per share Net income per share of capital stock (“Basic EPS”) is computed based on the weighted average number of shares of capital stock outstanding during each year. Diluted net income per share of capital stock (“Diluted EPS”) further assumes the dilutive effect of warrants.
The basic information for net income per share computations for the years ended March 31, 2021 and 2020 were as follows:
For the year ended March 31, 2021
Basic EPS
Net income
Other
Profit attributable to owners of parent
Effect of Diluted stock shareholders
Warrants
Diluted EPS
Profit attributable to owners of parent
For the year ended March 31, 2020
Basic EPS
Net income
Other
Profit attributable to owners of parent
Effect of Diluted stock shareholders
Warrants
Diluted EPS
Profit attributable to owners of parent

Millions of yen

Thousands of U.S. dollars

Net income

Thousands of shares
Weighted average number of shares

Yen¥ 178.68$1.61¥ 177.72$1.60¥ 29,550¥ 29,550$266,919$266,919

165,383--897¥ 29,550$266,919

166,280

Millions of yen

Net income¥15,306¥15,306

U.S. dollars

EPS

Thousands of shares
Weighted average number of shares

EPS

164,656¥92.96-503¥15,306

165,160

Yen¥92.68The Company implemented a 1.3-for-1 stock split on April 1, 2021 and the per share at March 31, 2020 has been calculated by assuming thisstock split was executed at the beginning of the fiscal year ended March 31, 2020.
10

2. Significant accounting estimates(Valuation of property, plant and equipment)
Out of ¥40,781 million ($368,361 thousand) in Property, plant and equipment, ¥10,270 million ($92,773 thousand) is the live house type
hall which belongs to the real estate segment.
When assessing the presence or absence of an indication of impairment of any fixed assets in the real estate segment, we define each realestate as the smallest unit that generates independent cash flow. An impairment loss is assessed by comparing the carrying amount against the
total amount of undiscounted future cash flow generated from the asset or the group of assets judged to be having the indication of impairment. An impairment loss should be recognized if such total amount of undiscounted future cash flow generated from the asset or the groupof assets is less than the carrying amount.
As of the end of the current consolidated fiscal year ended March 31 2021, the live house type hall was found to be in significantly deteriorated
business environment due to the impact of the COVID-19 and having the indication of impairment. Therefore, we have assessed whether it
has impairment loss. In the course of assessment, we had created our business plan considering annual event schedules and the hall usage fee
income per performance according to the number of spectators, based on the assumption that the effects of the COVID-19 would continue fora certain period after the next consolidated fiscal year. In addition to that, the undiscounted future cash flow reflects the net sale price basedon real estate valuation by external specialists. As the result of the assessment, impairment loss has not been recognized for the current
consolidated fiscal year since the total amount of undiscounted future cash flow exceeds the carrying amount.
Since the undiscounted future cash flow is based on the current business plan, in case of a change in the business plan it may have a significant
effect on the judgement of whether or not an impairment loss being recognized and the determined impairment amount.

3. Unapplied Accounting Standards, etc.

The Company and its consolidated subsidiaries have not applied the following revised and newly-established accounting standards
published by March 31, 2021.
“Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30, March 26, 2021))“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.19, March 31, 2020)(1) Outline
IASB and FASB jointly developed comprehensive accounting standards for revenue recognition. “Revenue from contracts with customers”
was issued in May 2014 (IFRS 15 by the IASB and Topic 606 by the FASB). IFRS 15 is effective for fiscal years beginning after January 1,
2018, and Topic 606 is effective for fiscal years beginning after December 15, 2017. The comprehensive accounting standard for revenue
recognition was developed and issued together with the implementation guideline by ASBJ.
From the viewpoint of comparability between financial statements, which is one of the benefits of consistency with IFRS 15, ASBJ decided
to establish its accounting standard with the incorporation of the basic principles of IFRS 15 and added alternative treatment for items thathave been subjected to accounting practices in Japan to the extent that comparability is not impaired.
(2) Effective date
The Company and its consolidated subsidiaries plan to apply the standard and the implementation guidances from the beginning of the
fiscal year ending March 31, 2022.
(3) The impact of the application
The impact of adopting the accounting standards would be immaterial.
“Accounting Standard for Fair Value Measurement” (ASBJ Statement No.30, July 4, 2019)“Accounting Standard for Measurement of Inventories” (ASBJ Statement No.9, July 4, 2019)“Accounting Standard for Financial Instruments” (ASBJ Statement No.10, July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.31, July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.19, March 31, 2020)(1) Outline
Under the circumstances that IASB and FASB have similar detailed guidance about fair value measurement IFRS 13 “Fair Value Measurement” in IFRS and Topic 820 in the Accounting Standards Codification “Fair Value Measurement” in U.S.GAAP), ASBJ has made efforts tomake the Japanese standards consistent with international accounting standards, mainly regarding the guidance and disclosure of the fairvalue of financial statements between domestic and overseas companies by using a uniform calculation method as a basic policy for thedevelopment of accounting standards for fair value measurement, ASBJ has basically adopted all the provisions of IFRS 13 and has stipulated other treatments for individual items to the extent that comparability between financial statements is not significantly impaired considering the practices that have been conducted in Japan up to now.
(2) Effective date
The Company and its consolidated subsidiaries plan to apply those accounting standards from the beginning of the fiscal year ending March
31, 2022.
(3) The impact of the application
The impact of the application of the accounting standards on the consolidated financial statements has not yet been determined.
114. Changes in presentation(Application of "Accounting Standard for Disclosure of Accounting Estimates")
The Company has adopted the "Accounting Standard for Disclosure of Accounting Estimates" (ASBJ Statement No.31 of March 31, 2020)
beginning from the consolidated financial statements for the end of the fiscal year ended March 31, 2021, and has disclosed notes on significant accounting estimates on its consolidated financial statements, accordingly.
However, such notes do not state any matters concerning the fiscal year ended March 31, 2020, in accordance with the transitional treatmentprescribed in the proviso to paragraph 11 of the Accounting Standard for Disclosure of Accounting Estimates.
(Consolidated statements of cash flows)“Increase (decrease) in accounts payable - other” and “Decrease (increase) in consumption taxes receivable” and “Increase (decrease) in
accrued consumption taxes”, which were included in “Other, net” under “Net cash provided by operating activities” in the previous fiscal
year, were presented separately for the fiscal year ended March 31, 2021 due to its increased materiality. As a result, (¥1,167) million(($10,545) thousand) included in “Other, net” under “Net cash provided by operating activities” on the consolidated statement of cash flows
for the previous fiscal year has been reclassified as “Increase (decrease) in accounts payable - other ¥30 million ($273 thousand)” and“Decrease (increase) in consumption taxes receivable (¥681) million (($6,156) thousand)” and “Increase (decrease) in accrued consumption
taxes (¥524) million (($4,737) thousand)” and “Other, net ¥8 million ($75 thousand)”.

5. Additional information

Provision for the effects of COVID-19
The Company and its consolidated subsidiaries are estimating provision for revaluation of “Property, plant and equipment” and others withinformation available at the time to prepare consolidated financial statements. Provision for the effects of COVID-19 is estimated with theassumption that these effects will continue after next fiscal year. So, future trends of the effects of COVID-19 will affect to the financial
status and business result, because of its uncertainty.

6. Cash flow information:

Reconciliation of cash and cash equivalents
Cash and deposits at March 31, 2021 and 2020 reconciled to cash and cash equivalents were as follows:
Millions of yen

Cash and deposits
Time deposits with maturity over three months
Total cash and cash equivalents

2021¥ 11,995(555)¥ 11,439

2020¥12,890(86)¥12,803

Thousands of U.S. dollars

2021$108,349(5,019)$103,329

7. Accumulated depreciation of property, plant and equipment:

Accumulated depreciation of property, plant and equipment as of March 31, 2021 and 2020 were as follows:
Millions of yen

Accumulated depreciation of property, plant and equipment

12

2021
¥ 12,967

2020¥11,683

Thousands of U.S. dollars

2021$117,129

8. Financial instruments:(1) Qualitative information on financial instruments(a) Policies for using financial instruments
The Company and its consolidated subsidiaries procure funds that are required for the planning of capital investment, and short-term
operating funds through bank loans. The surplus funds are invested in the compound financial instruments that invested in stocks, debenture, and derivatives aiming to achieve a high yield.
Derivatives that the Company uses are only the compound financial instruments that invested in derivatives.
(b) Details of financial instruments used and the exposures to risk and how they arise
Notes and accounts receivable are exposed to the credit risks in relation to customers. Some of them are denominated in foreign currencies, which consequently expose the Company and its subsidiaries to the risks of exchange rate fluctuations.
Securities and investment securities, which consist of principally equity securities and debt securities, are exposed to the risk of market
price fluctuations.
The investments in the compound financial instruments that invested in derivatives have the risk of the bond market price and theexchange rate fluctuations.
These investments are executed with credit worthy financial institutions. Given their creditworthiness, management does not expect any
counterparty to fail to meet its obligations.
(c) Policies and processes for managing the risk
① Credit risk management (counterparty risk)
The Company and its consolidated subsidiaries have established internal procedures for receivables under which the Finance department
are primarily responsible for periodically monitoring counterparty status. The division manages amounts and settlement dates by counterparty and works to quickly identify and mitigate payment risk that may result from situations including deterioration of the financial
condition of counterparties.
② Market risk management (risk of exchange rate and interest rate fluctuations)
Any investments to compound financial instruments that include stocks, bonds, and derivatives as their components are managed strictly
according to the established policies with upper monetary limits of the investments. In addition, the Company clearly separates its
transaction division and management division in their functions with the view to securely managing its assets. The Company's management division confirms transactions, manages its current position, and ensures that all derivative transactions are executed with theestablished policies so that its internal control functions properly. The Company periodically provides administrative reports on the statusof its position, including market value, to the financial director and treasurer.
Regarding Securities and investment securities, the Company periodically examines the financial condition of the issuing entities. The
Company also regularly reviews the status of its holdings of bonds, not including those held to maturity, taking into consideration its
relationships with corporate business holders.
③ Management of liquidity risk associated with funds procurement (payment default risk)
The Company and its consolidated subsidiaries manage liquidity risk by creating and updating a capital deployment plan based onreports from each division.
(d) Fair values of financial instruments
Fair values of financial instruments include the values based on market prices, and the reasonably estimated values when market prices
are not available. Since certain assumptions and others are adopted for estimating such values, they may differ when adopting different
assumptions and others.
(2) Fair values of financial information
Fair values of financial instruments as of March 31, 2021 and 2020 were summarized as follows:
The financial instruments whose fair values were not available were not included below and were summarized in (b).
(a) Fair values of financial instruments

Cash and deposits
Notes and accounts receivable
Allowance for doubtful accounts*
Marketable and investment securities
Available-for-sale securities
Assets Total

13

Acquisition Amount¥ 11,995
11,253(9)
11,244112,682¥ 135,922

Millions of yen
March 31, 2021

Estimated fair value¥ 11,995

Difference-

11,244-112,682¥ 135,922-

Cash and deposits
Notes and accounts receivable
Allowance for doubtful accounts*
Marketable and investment securities
Available-for-sale securities
Assets Total

Cash and deposits
Notes and accounts receivable
Allowance for doubtful accounts*
Marketable and investment securities
Available-for-sale securities
Assets Total

Carrying amount¥12,890
11,955(8)
11,946

Millions of yen
March 31, 2020

65,063¥89,900

Carrying amount$108,349
101,648(86)
101,562

Fair value¥12,890

Difference-

11,946-65,063¥89,900-

Thousands of U.S.dollars
March 31, 2021

1,017,821$1,227,732

Fair value$108,349

Difference-

101,562-

1,017,821$1,227,732-* The allowance is calculated by applying a percentage based on collection experience to the remaining accounts are included.
Note: Fair values of financial instruments, and matters pertaining to securities and derivative transactions
AssetsCash and deposits, and notes and accounts receivable:
The carrying amount approximate the fair values because of short-term maturities of these instruments.
Marketable and investment securities:
The fair value is based on the market prices or the prices quoted by financial institutions.
These securities are described in the Note on "11. Securities and investment securities".
(b) Financial instruments whose fair values were not available
The financial instruments for which the fair values were not available as of March 31, 2021 and 2020 were summarized as follows:

Millions of yen

Shares of subsidiaries and associates
Investments in capital of subsidiaries and associates
Non-listed equity securities
Investments in associations
Total

2021
¥ 20
98
181
5,530
¥ 5,830

2020
¥20
98
232
6,372
¥6,723Thousands of U.S. dollars

2021
$180
887
1,640
49,954$52,663

It was not practicable to estimate the fair value of the unlisted shares because the market price is not available and the fair value cannot be
estimated reliably. Therefore, these financial instruments were not included in the marketable and investment securities described in (a).

14(c) Maturities of financial instruments
The maturities of the financial instruments at March 31, 2021 and 2020 were as follows:

Within 1 year

Cash and deposits
Notes and accounts receivable
Marketable and investment securities
Available-for-sale securities(1) Government bonds and local government bonds(2) Corporate bonds
Total

¥ 555
11,253
227
5,992¥ 18,029

Within 1 year

Cash and deposits
Notes and accounts receivable
Marketable and investment securities
Available-for-sale securities(1) Government bonds and local government bonds(2) Corporate bonds
Total

¥509
11,955
152
181¥12,798

Within 1 year

Cash and deposits
Notes and accounts receivable
Marketable and investment securities
Available-for-sale securities(1) Government bonds and local government bonds(2) Corporate bonds
Total$5,019101,648
2,057
54,125$162,850

Millions of yen
At March 31, 2021
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

3,600
14,353¥ 17,953

1,395
1,929
¥ 3,324

2,623
3,648
¥ 6,271

Millions of yen
At March 31, 2020
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

2,042
6,290
¥8,3323,514
2,025¥ 5,540

4,378
4,375
¥ 8,754

Thousands of U.S. dollars
At March 31, 2021
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

32,523
129,646$162,170

12,602
17,428$30,030

23,69632,950$56,647

9. Investment and rental property:

The Company and its consolidated subsidiaries own buildings (including land) for leasing in Kanagawa prefecture, other domestic areas,
and foreign countries. The rental income included in net sales was ¥45 million ($410 thousand) and ¥222 million for the years ended March
31, 2021 and 2020, respectively.
Information about fair value of rental property included in the consolidated financial statements at March 31, 2021 and 2020 were as follows:
At March 31, 2021
Carrying amount (net of depreciation)

Millions of yen
Thousands of U.S dollars

March 31, 2020
¥ 18,304$165,338

Decrease
¥ 103
$930

March 31, 2021
¥ 18,201$164,408

At March 31, 2020
Carrying amount (net of depreciation)

Millions of yen

March 31, 2019
¥ 15,288

Increase¥ 3,015

March 31, 2020
¥ 18,304

Fair value

March 31, 2021
¥ 23,358$210,989

Fair value

March 31, 2020
¥ 19,322

Note1: Carrying amount recorded in the consolidated balance sheets present acquisition cost, net of accumulated depreciation and impairment loss.
Note2: The fair value for domestic rental properties was calculated by the Company and its consolidated subsidiaries based on the Real
Estate Appraisal Standard. Locally appraised value was used for the fair value of overseas rental properties.

15

10. Lease:

The future minimum lease receipts for only non-cancelable operating lease contracts as of March 31, 2021 and 2020 were as follows:
Millions of yen

Due within one year
Due after one year
Total

2021
¥ 41
¥ 41

2020
¥50
34
¥84

Thousands of U.S. dollars

2021
$377
$377

11. Securities and investment securities:

Comparisons of the acquisition costs and fair values of other securities for which market quotations are available at March 31, 2021 and 2020
were as follows:

Acquisition cost
Available-for-sale securities for which market prices
are available ¥ 60,301(1) Equity securities
31,410(2) Debt securities
1,368(3) Other¥ 93,080
Total

Acquisition cost
Available-for-sale securities for which market prices
are available ¥47,250(1) Equity securities
21,276(2) Debt securities
1,293(3) Other¥69,819
Total

Acquisition cost
Available-for-sale securities for which market prices
are available $544,679(1) Equity securities
283,717(2) Debt securities
12,361(3) Other$840,757
Total

Millions of yen
At March 31, 2021

Gross unrealized gains

Gross unrealized losses

Fair value¥ 21,304
1,277
372¥ 22,955

¥ 373
2,979
¥ 3,352¥ 81,233
29,708
1,741¥ 112,682

Gross unrealized gains

Gross unrealized losses

Fair value¥2,519710
164¥3,395¥3,946
4,115
91¥8,152¥45,823
17,872
1,367¥65,063

Gross unrealized gains

Gross unrealized losses

Fair value$192,437
11,5393,367$207,344$3,36926,911$30,281$733,746
268,345
15,729$1,017,821

Millions of yen
At March 31, 2020

Thousands of U.S. dollars
At March 31, 2021

Note1: Impairment loss of ¥101 million ($918 thousand) and ¥2,586 million was recognized for the years ended March 31, 2021 and 2020,
respectively.
Note2: Debt securities include compound financial instruments with contract amount of $160 million. A gain on valuation of derivatives in
the amount of ¥1,792 million ($16,193 thousand) is recorded under non-operating income in the consolidated statement of income. A loss on
valuation of derivatives in the amount of ¥1,297 million ($11,720 thousand) is recorded under non-operating expenses in the consolidated
statement of income.
Available-for-sale securities sold for the years ended March 31, 2021 and 2020 were as follows:
Millions of yen

Sales amountGross realized gains
Gross realized losses

16

2021
¥ 47,727
10,6492,453

2020¥46,459
6,980
1,289

Thousands of U.S. dollars

2021$431,103
96,19022,163

12. Research and development expenses:

Research and development expenses included in selling, general and administrative expenses for the years ended March 31, 2021 and 2020
were ¥1,171 million ($10,579 thousand) and ¥1,026 million, respectively.

13. Retirement benefit plan:(1) Outline
The Company and its domestic consolidated subsidiaries have a defined benefit corporate pension plan. One of the foreign consolidated subsidiaries has adopted a defined contribution plan.
(2) Defined benefit plan(a) The reconciliation of defined benefit plans was as follows:
Millions of yen

Retirement benefit obligation at the beginning of the period
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Retirement benefit obligation at the end of the period(b) The reconciliation of plan assets at fair value was as follows:
Plan assets at fair value at the beginning of the period
Expected return on plan assets
Actuarial gain (loss)
Contributions by the employer
Benefits paid
Plan assets at fair value at the end of the period2021¥ 6,066
445
30
4
(107)
¥ 6,439

Millions of yen

2021¥ 5,866
263
1,032
614
(107)
¥ 7,668

2020¥5,694
458
28
(10)
(105)
¥6,0662020¥5,711
256
(557)
562
(105)
¥5,866

Thousands of U.S. dollars

2021$54,798
4,021
272
39
(968)
$58,164

Thousands of U.S. dollars

2021$52,994
2,376
9,322
5,539
(968)
$69,264(c) The reconciliation related to retirement benefit obligation and plan assets at fair value at the end of the period and defined
benefit liability and defined asset recorded on the consolidated balance sheets were as follows:
Millions of yen

Retirement benefit obligations of the funding plan
Plan assets at fair value
Retirement benefit obligations of the non-funding plan
Net amount of liabilities and assets recognized in the consolidated balance sheets
Retirement benefit liability
Retirement benefit asset
Net amount of liabilities and assets recognized in the consolidated balance sheets(d) Retirement benefit expenses and their breakdown:
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service costs
Retirement benefit expenses

17

2021
¥ 6,439(7,668)(1,228)(1,228)(1,228)(¥ 1,228)2020¥6,066(5,866)
199
199
199
¥199

Millions of yen

2021
¥ 445
30
(263)
53
12
¥ 278

2020
¥458
28
(256)
17
10
¥259

Thousands of U.S. dollars

2021$58,164(69,264)(11,100)(11,100)(11 ,100)($11,100)Thousands of U.S. dollars

2021$4,021272(2,376)484
110$2,512(e) The breakdown of prior service cost and actuarial loss recognized in other comprehensive income before deduction of tax
benefit were as follows:
Millions of yen

Prior service costs
Actuarial loss
Total

2021
¥ 12
1,081
¥ 1,093

2020
¥10
(529)
(¥519)

Thousands of U.S. dollars

2021
$110
9,767
$9,877(f) The breakdown of prior service cost and actuarial loss recognized in accumulated other comprehensive income before
deduction of tax benefit were as follows:
Millions of yen

Unrecognized prior service cost
Unrecognized actuarial loss
Total(g) The breakdown of plan assets by major category was as follows:
Bonds
Equities
Other
Total

2021
¥ 99
(345)
(¥ 246)

2020
¥111
735
¥847

2021
46.6%
50.8%
2.6%
100.0%

Thousands of U.S. dollars

2021
$899
(3,123)($2,224)

2020
53.0%
43.8%
3.2%
100.0%The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation at present andin the future, and long-term rate expected to earn the profit from multiple plan assets at present and in the future.
(h) The assumptions used in accounting for the above plans were as follows:
Discount rate
Expected rate of return on plan assets

2021
0.5%
4.5%

2020
0.5%
4.5%

(3) Defined contribution plan
The required contributions to the defined contribution plans of one of the foreign consolidated subsidiaries are ¥1 million ($13thousand) and ¥1 million for the years ended March 31, 2021 and 2020, respectively.

14. Income taxes:
The reconciliation of differences between the statutory tax rate and the effective tax rate for the year ended March 31, 2021 and 2020 wereas follows:
Statutory tax rate
Increase (decrease) in taxes resulting from:
Permanent difference of exclusion from expenses
Permanent difference of exclusion from gross revenue
Special tax credit for research and development expenses and otherTax rate difference in certain subsidiaries
Valuation allowance
Revaluation of collectibility
Reserved profit of foreign subsidiaries
Other, net
Effective tax rate

18

2021
30.6%

2020
30.6%

0.5
(0.2)
(5.4)
(0.5)
(0.1)
0.3
(0.6)
24.6%

0.8
(0.2)
(4.9)
(2.0)
(0.1)
1.2
(0.1)
(0.9)
24.4%

The significant components of deferred tax assets and liabilities included in the balance sheets were as follows:
Millions of yen

Deferred tax assets:
Tax loss carryforwards
Provision for bonuses
Provision for loss on order received
Unrealized loss on inventory reserve
Provision for enterprise tax
Valuation difference on available-for-sale securities
Provision for sales discountLoss on investment securities
Software development expense amortization
Impairment loss on fixed assets
Net retirement benefit liability
Revaluation reserve for land
Other
Subtotal
Valuation allowance
Total deferred tax assets

2021

2020

¥ 61
486
10
33
497
27
1,053
509
1
948
498
4,129
(1,105)¥ 3,024

¥172
332
40
224
1,057
28
1,773
349
4
263
948
345
5,541
(1,194)¥4,346

Millions of yen

Deferred tax liabilities:
Valuation difference on available-for-sale securities
Net retirement benefit asset
Reserved profit of foreign subsidiaries
Other
Total deferred tax liabilities
Net deferred tax assets / Net deferred tax liabilities

2021

2020

(¥ 6,114)
(324)
(107)
(74)
(¥ 6,620)(¥ 3,596)

(¥29)
(145)
(18)
(¥193)¥4,153Thousands of U.S. dollars

2021

$557
4,396
97
306
4,496
244
9,518
4,603
11
8,567
4,503
37,302(9,985)$27,316
Thousands of U.S. dollars

2021$55,227
2,928
968
675
$59,800($32,483)

15. Assets pledged and revaluation of the land:(1) Assets pledged
Buildings and structures
Land
Total

Millions of yen

2021
¥ 229
306
¥ 535

2020
¥235
306
¥541

Thousands of U.S. dollars

2021$2,072
2,764$4,837(2) Revaluation of the land
The subsidiary, KOEI TECMO LIV CO., LTD., revalued land for its business in accordance with the Land Revaluation Law. The Company
recorded the entire difference between the carrying amount and revalued amount as revaluation reserve for land as a separate component of
net assets.
Revaluation of land was performed by making a reasonable adjustment to the land based on the market value estimated in accordance with
relevant provisions of the Land Revaluation Law.
Date of revaluation: March 31, 2000.
Fair value of the revalued land as of March 31, 2021 and 2020 were ¥231 million ($2,088 thousand) and ¥173 million more than the
carrying amount, respectively.

1916. Provision for loss on order received:

Inventories and provision for loss on order received related to the project which is probable to incur losses are presented as is and are notoffset.
Provision for loss on order received included in inventories related to projects which are likely to incur losses as of March 31, 2021 and2020 were as follows:
Millions of yen

Work in process
Total

2021
¥ 44
¥ 44

2020
-

Thousands of U.S. dollars

Provision for loss on order received included in the cost of sales for the years ended March 31, 2021 and 2020 were as follows:
Millions of yen

Cost of sales
Total

2021
¥ 35
¥ 35

2020
-

2021
$398
$398

Thousands of U.S. dollars

2021
$319
$319

17. Net assets:
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as capital stock. However, acompany may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares asadditional paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (“the Law”), in cases where a dividend distribution of surplus is made, the lesser of an amountequal to 10% of the dividend or the excess, if any, of 25% of capital stock over the total of additional paid-in capital and legal
earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained
earnings in the accompanying consolidated balance sheets.
Under the Law, legal earning reserve and additional paid-in capital could be used to eliminate or reduce a deficit or could becapitalized by resolution at a meeting of the shareholders.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, all additional paid-in capital andall legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentiallyavailable for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statementsof the Company in accordance with the Law.
At the annual shareholders’ meeting held on June 17, 2021, the shareholders resolved to pay cash dividends amounting to ¥14,949
million ($135,032 thousand). Such appropriations have not been accrued in the consolidated financial statements as of March 31,
2021. Such appropriations will be recognized in the period when they are resolved.
Note: The Company implemented a one point three-for-one stock split on April 1, 2021. Increases in number of shares by stock split
are as follows:
Issued share:(1) Total number of issued shares before stock split
129,268,048 shares(2) Increase in number of shares by stock split
38,780,414 shares(3) Total number of issued shares after stock split
168,048,462 shares
Treasury shares:(1) Total number of treasury shares before stock split
1,495,176 shares(2) Increase in number of shares by stock split
448,552 shares(3) Total number of treasury shares after stock split
1,943,728 shares20

18. Stock options:
The summarized contents of stock options as of March 31, 2021 were as follows:
Date of the annual shareholders' meeting
Position and number of grantee

Date of grantClass and number of stock
Exercised period

Share subscription rights #8
June 22, 2016
9 directors and
17 employees of theCompany and394 executive officer or
employees of thesubsidiaries

Share subscription rights #9
June 20, 2018
11 directors and
18 employees of theCompany and405 executive officer or
employees of thesubsidiaries

Share subscription rights #10
June 18, 2020
11 directors and
18 employees of theCompany and488 executive officer or
employees of thesubsidiaries

September 26, 2016

September 25, 2018

September 29, 2020

Capital stock
1,299,792

Capital stock
1,184,820

Capital stock602,680

From September 27, 2018 From September 11, 2020 From September 15, 2022
to September 24, 2021
to September 8, 2023
to September 12, 2025

The Company implemented a 1.3-for-1 stock split on April 1, 2021 and the number of stock is adjusted after the stock split.
The following table summarizes scale and movement of share subscription rights for the year ended March 31, 2021
Non‐exercisable (number of shares)
Outstanding at April 1, 2020
GrantedForfeited
VestedOutstanding at March 31, 2021
Exercisable (number of shares)
Outstanding at April 1, 2020
VestedExercised
Forfeited
Outstanding at March 31, 2021
Exercise price

Average stock price at exercise
Fair value price at grant datehare subscription rights #8

Share subscription rights #9

Share subscription rights #10-

1,132,872
18,876
1,113,996-

602,680
1,950
600,730

698,412467,532
5,460
225,420¥1,284$11.59¥4,062$36.69¥384$3.46

1,113,996
515,580
598,416¥1,564$14.12¥4,445$40.14¥364$3.28¥3,877$35.01¥913$8.24

The Company implemented a 1.3-for-1 stock split on April 1, 2021 and the exercise price is adjusted amount after the stock split. Average stock
price at exercise has been calculated by assuming this stock split was executed at the beginning of the fiscal year ended March 31, 2020.

19. Asset retirement obligations:(1) Summary of applicable asset retirement obligations include the duty of restoration arising from contractual requirements set forthin real estate leases for amusement facility arcades.
(2) Instead of posting liabilities for asset retirement obligations, the Company and its consolidated subsidiaries use the method of
estimating the reasonable amount that cannot be finally recovered from the deposit related to a real estate lease contract and posting
the part of that amount belonging to the current fiscal year under costs.

21

(2) Related party transactions between the Company’s consolidated subsidiaries and its related parties.
Principal transactions between the Company’s consolidated subsidiaries and its related parties are as follows:
For the year ended March 31, 2021
Type

Company
with a majorityof thevoting rights
held by an
executive or
close relative

Name

KANKYOKAGAKU
CO., LTD.
(Note 1)

Location

Chiyoda-ku,
Tokyo

Capital orinvestments¥40 million($361 thousand)Business or
profession

Real estateleasing

Voting rights
held(%)

7.59

Relationshipwith therelated parties

Transactions

AmountReal estateleasing

Real estateleasing(Note 2)¥150 million($1,361thousand)Election of
officer--

Account
nameBalance

Deposit¥146 million($1,324 thousand)Prepaid
expense¥12 million($110 thousand)--Note 1: Yasuharu Kakihara, who is a director & advisor of the Company, and his close relatives own 100 percent of the voting rights.
Note 2: The subsidiary, KOEI TECMO GAMES CO., LTD., leases a joint ownership building of the related party, KANKYOKAGAKU
CO., LTD., and the subsidiary, KOEI TECMO LIV CO., LTD.
The lease fee and other transaction terms are determined by price negotiations based on the current status of transactions in the neighborhood.
Notes for the parent company and important affiliated companies(1) Information on the parent company
KOYU HOLDINGS CO., LTD. (as an unlisted company)(2) Condensed financial statements for the important affiliated companies
Not applicable

For the year ended March 31, 2020
Type

Company
with a majorityof thevoting rights
held by an
executive or
close relative

Name

KANKYOKAGAKU
CO., LTD.
(Note 1)

Location

Chiyoda-ku,
Tokyo

Capital orinvestments¥40 million($361 thousand)Business or
profession

Real estateleasing

Voting rights
held(%)

Relationshipwith therelated parties

Company
with a majority
AK FORTUNEof theYokohama-shi,
voting rights
CO., LTD.
Kanagawa
held by an(Note 4)
executive or
close relative

23¥14 million($126thousand)¥14 million($126 thousand)Real estateleasing

Real estateleasing

Balance

Deposit¥146 million($1,324
thousand)¥151 million($1,368
thousand)

Pledge ofcollateral

Pledge ofcollateral(Note 3)¥541 million($4,889
thousand)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Joint acquisition
Joint acquisitionof fixed assetsof fixed assets(Note 5)
Election of
officer-

Account
nameReal estateleasing(Note 2)

7.64-

AmountReal estateleasing

Election of
officerCompany
with a majority
MY PROPERTY
of theYokohama-shi,
voting rights
CO., LTD.
Kanagawa
held by an(Note 4)
executive or
close relative

Transactions-

Joint acquisition
Joint acquisitionof fixed assetsof fixed assets(Note 5)
Election of
officer-

Prepaid
expense¥12 million($114
thousand)Note 1: Yasuharu Kakihara, who is a director & advisor of the Company, and his close relatives own 100 percent of the voting rights.
Note 2: The subsidiary, KOEI TECMO GAMES CO., LTD., leases a joint ownership building of the related party, KANKYOKAGAKU
CO., LTD., and the subsidiary, KOEI TECMO LIV CO., LTD.
The lease fee and other transaction terms are determined by price negotiations based on the current status of transactions in the neighborhood.
Note 3: A Land and building which the subsidiary, KOEI TECMO LIV CO., LTD., owns are pledged as collateral for the borrowing therelated party, KANKYOKAGAKU CO., LTD., required for a construction expense.
The amount is equal to carrying amount of the land and building which our subsidiary, KOEI TECMO LIV CO., LTD., owns.
Note 4: Yoichi Erikawa, who is a President & CEO of the Company, and his close relatives own 100 percent of the voting rights.
Note 5: KOEI TECMO GAMES CO., LTD. (hereinafter, "KTG"), a consolidated subsidiary of the Company, and MY PROPERTY CO.,LTD. and AK FORTUNE CO., LTD. (hereinafter, "these two companies") jointly acquired the composite facilities composed of an office, alive house type hall, a hotel and stores.
The composite facilities are owned jointly and separately by KTG and these two companies. KTG owns the office that has become the newheadquarters and the live house type hall. The acquisition cost of the composite facilities owned by KTG is ¥15,786 million ($142,588
thousand).
KTG and these two companies agreed the acquisition cost and the proportion based on the calculation formulated by an outside expert
asked by KTG.
In addition, KTG asked another outside expert to obtain an opinion about the appropriateness of the calculation method. There are no
credits or debts arisen from the acquisition of the composite facilities between the Company or KTG and these two companies and they haveno plans to increase the amount of them in the future.
Notes for the parent company and important affiliated companies(1) Information on the parent company
KOYU HOLDINGS CO., LTD. (as an unlisted company)(2) Condensed financial statements for the important affiliated companies
Not applicable

21. Comprehensive income:The components of other comprehensive income including reclassification adjustments and income tax effect were as follows.
Millions of yen

Valuation difference on available-for-sale securities:
Increase during the year
Reclassification adjustments
Amount before income tax effect
Income tax effectTotal unrealized gains on securities
Revaluation reserve for land:Tax effectTotal revaluation reserve for land
Foreign currency translation adjustment:
Increase during the year
RecyclingTax effectTotal foreign currency translation adjustment
Remeasurements of defined benefit plans:
Increase during the year
Reclassification adjustments
Amount before income tax effect
Income tax effectTotal changes in remeasurements of defined benefit plans
Total other comprehensive income

24

Thousands of U.S. dollars

2021

2020

2021

¥ 33,244(7,933)25,311(7,655)
17,655(¥2,994)(3,030)(6,024)
1,610(4,414)$300,287(71,661)
228,625(69,152)
159,473

-

(948)
(948)

-

1,043
1,043

(573)
(573)

9,428
9,428

1,027
65
1,093
(336)
757

(547)
28
(519)
159
(359)

9,282
595
9,877
(3,036)
6,840¥ 19,456(¥6,296)$175,742

22. Segment information:(1) Outline of reportable segment
Reportable segments the Company reports are the business unit for which the Company is able to obtain individual financial information
separately in order for the board of directors to conduct periodic investigation to determine the distribution of management resource andevaluate their business performance.
The Company operates principally in the following reportable segments:(a) Entertainment: Development and sale of entertainment contents(b) Amusement: Entrusted development of commercial amusement and management of amusement arcade.
(c) Real estate: Operation and management of real estate for leasing.
(2) Method of calculating sales and income (loss), and other items by reportable segment
Income (loss) of the reportable segment is operating profit. Transfers among segments are based on market prices.
(3) Information on sales and income (loss), and other items by reportable segment
Millions of yen
For the year ended March 31, 2021
Reportable segment

I. Net sales and segment income:Net sales(1) Net sales to external customers(2) Inter-segment net sales
Total
Segment income (loss)
II. Other items:
Depreciation

Entertainment

Amusement

Real estate

Sub Total

Other

Total

¥ 56,603
204
56,808¥ 23,974¥ 2,973
4
2,977
¥ 368

¥ 782
6
789
¥ 99

¥ 60,359
216
60,575¥ 24,442

¥ 10
229
240
(¥ 44)¥ 60,370
445
60,815¥ 24,397

¥ 993

¥ 170

¥ 423

¥ 1,586¥ 29¥ 1,615

Millions of yen
For the year ended March 31, 2020
Reportable segment

I. Net sales and segment income:Net sales(1) Net sales to external customers(2) Inter-segment net sales
Total
Segment income
II. Other items:
Depreciation

25

Entertainment

Amusement

Real estate

Sub Total

Other

Total

¥39,06244
39,106¥13,366¥2,859
0
2,860
¥ 519

¥671
671
¥199

¥42,59344
42,637¥14,085

¥52
101
153
¥17

¥42,645146
42,791¥14,102

¥374

¥155

¥189

¥719

¥32

¥ 752

Thousands of U.S. dollars
For the year ended March 31, 2021
Reportable segment

I. Net sales and segment income:Net sales(1) Net sales to external customers(2) Inter-segment net sales
Total
Segment income (loss)
II. Other items:
Depreciation

Entertainment

Amusement

Real estate

Sub Total

Other

Total

$511,277
1,851
513,128$216,550$26,855
38
26,893$3,330$7,070
61
7,132
$900

$545,203
1,951
547,155$220,781

$95
2,074
2,169
($405)$545,298
4,026
549,325$220,375$8,969$1,537$3,823$14,331$262$14,593

Note 1: ”Other” is an operating segment not included in reportable segment, which is venture capital, etc.
Note 2: The Company’s administrative expenses for the Company’s indirect departments which do not belong to the reportable segment areallocated to each reportable segment in accordance with reasonable allocation standards.
(4) Reconciliation between the reportable segments above and the corresponding amount reported in the consolidated financial statements
was as follows:(a) Reconciliation of net sales
Reportable segment Total
Sales of Other segment
Elimination of intersegment transactions
Total(b) Reconciliation of segment income
Reportable segment Total
Income (Loss) of Other segment
Total

Millions of yen

2021¥ 60,575
240(445)¥ 60,370

2021¥ 24,442(44)¥ 24,397

Note: For management reporting purposes, assets are not allocated to the segments.

26

Millions of yen

2020¥42,637
153(146)¥42,6452020¥14,08517¥14,102

Thousands of U.S. dollars

2021$547,155
2,169(4,026)$545,298

Thousands of U.S. dollars

2021$220,781(405)$220,375

(Segment related information)
Information by country or region
The following tables present sales and assets information by geographic area for the years ended March 31, 2021 and 2020.
(1) Sales
Millions of yen
For the year ended March 31, 2021

Japan
Net sales to external customers:¥ 29,419

North
America¥ 9,456

EuropeAsia, etc.

¥ 4,423¥ 17,072

Millions of yen
For the year ended March 31, 2020

Japan
Net sales to external customers:¥26,854

North
America¥4,099EuropeAsia, etc.

¥1,920¥9,771Thousands of U.S. dollars
For the year ended March 31, 2021

Japan
Net sales to external customers:$265,727

North
America$85,415

Note: The sales amounts are classified by country or region where customers are located.
(2) Tangible fixed assets
Millions of yen
For the year ended March 31, 2021

Japan

Asia

UK

Other

¥ 38,342¥ 1,343¥ 1,094¥0Millions of yen
For the year ended March 31, 2020

Japan

Asia

UK

Other

¥38,445¥1,351¥946¥0Thousands of U.S. dollars
For the year ended March 31, 2021

27

Japan

Asia

UK

Other

$346,331$12,136$9,888$5Consolidated
Total¥ 40,781

Consolidated
Total¥40,743

Consolidated
Total$368,361

EuropeAsia, etc.

$39,952$154,203

Consolidated
Total¥ 60,370

Consolidated
Total¥42,645

Consolidated
Total$545,298

Information about major customers
Millions of yen
For the year ended March 31, 2021

Name of major customers
ALIBABA CULTURE MEDIA CO., LTD.
Nintendo Co., Ltd.

Net Sales¥ 8,641
8,836

Related segment
Entertainment
Entertainment

Thousands of U.S. dollars
For the year ended March 31, 2021

Name of major customers
ALIBABA CULTURE MEDIA CO., LTD.
Nintendo Co., Ltd.

23. Subsequent events:
Not applicable.

28

Net Sales$78,058
79,812

Related segment
Entertainment
Entertainment

29

30

31

32

33

BOARD OF DIRECTORS AND
AUDIT & SUPERVISORY
BOARD MEMBERSCORPORATE DATA

Chairman

KOEI TECMO HOLDINGS CO., LTD.

Keiko Erikawa*
President & CEO

Yoichi Erikawa*Executive Vice-president

Hisashi Koinuma*
Director

Yosuke Hayashi
Director, Senior Executive Officer & CFO

Kenjiro Asano
Director

Kazuyoshi Sakaguchi
Director

Mei Erikawa
Director & Advisor

Yasuharu Kakihara
Director(Outside)

Head Office
1-18-12 Minowa-cho, Kouhoku-ku,
Yokohama, Kanagawa 223-8503 Japan
Tel : +81-45-562-8111
https://www.koeitecmo.co.jp/

Date Established :April 1, 2009

Paid-in Capital :¥15 Billion ( As of March 31, 2021)

Number of Employees :1,983(As of March 31, 2021: Consolidated Basis)

Account Settlement :March 31Transfer Agent of Common Stock :Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
100-8233 Japan

Independent Auditor :KPMG AZSA LLC

Masao Tejima
Director(Outside)

Hiroshi Kobayashi
Director(Outside)

Tatsuo Sato
Director(Outside)

Michiaki Ogasawara
Audit & Supervisory Board Member (Full-time)

Seinosuke Fukui
Audit & Supervisory Board Member (Full-time, Outside)

Masaki Kimura
Audit & Supervisory Board Member

Satoru Morishima
Audit & Supervisory Board Member (Outside)

Kengo Takano
Executive Officer

Tomotoshi Nishimura*Representative Director（As of June 17, 2021）

34

MAJOR SUBSIDIARIESKOEI TECMO GAMES CO., LTD.
KT Bldg.
4-3-6 Minatomirai, Nishi-ku,
Yokohama, Kanagawa 220-8503 Japan
Tel : +81-45-561-6888
https://www.gamecity.ne.jp/

KOEI TECMO WAVE CO., LTD.
KUDANMEIZENDO Bldg.
4-1-34 Kudankita, Chiyoda-ku,
Tokyo 102-8230 Japan
Tel : +81-3-3222-8333
http://www.wave.koeitecmo.co.jp/

KOEI TECMO NET CO., LTD.
1-23-3 Minowa-cho, Kouhoku-ku,
Yokohama, Kanagawa 223-0051 Japan
Tel : +81-45-565-3123
https://shop.gamecity.ne.jp/

KOEI TECMO QUALITYASSURANCE CO., LTD.
1-18-12 Minowa-cho, Kouhoku-ku,
Yokohama, Kanagawa 223-8503 Japan
Tel : +81-45-562-7897
https://www.koeitecmo.co.jp/

CWS Brains, LTD.
KUDANMEIZENDO Bldg.
4-1-34 Kudankita, Chiyoda-ku,
Tokyo 102-8230 Japan
Tel : +81-3-3222-7605
https://web.ultra-soccer.jp/

KOEI TECMOAMERICA Corporation1818 GILBRETH RD. Suite 211,BURLINGAME, California 94010 U.S.A
Tel : +1-650-692-9080
http://www.koeitecmoamerica.com/

KOEI TECMO EUROPE LIMITED
Unit 403A The Spirella Building, Bridge
Road, Letchworth Garden City,
Hertfordshire, SG6 4ET, UK
Tel : +44-1462-476130
http://www.koeitecmoeurope.com/

KOEI TECMO TAIWAN CO., LTD.
11F, No.323, Fu-Hsing S.Road, Sec. 1,
Daan Chiu, Taipei 106, Taiwan
Tel : +886-2-2325-0111
http://www.gamecity.com.tw/

KOEI TECMO SINGAPORE Pte. Ltd.
8 Kallang Avenue, Aperia tower1,#12-01/04, Singapore 339509
Tel : +65-6220-7581
http://www.koeitecmo.com.sg/

KOEI TECMO TIANJINSOFTWARE CO., LTD.
21〜22F, Global Center, No.309 Nanjin Road,
Nankai District, Tianjin , P.R.China
Tel : +86-22-8328-0781
http://www.gamecity.net.cn/

KOEI TECMO BEIJINGSOFTWARE CO., LTD.
RM.701 Beijing Inn
No.6 South ZhuGan HuTong,
Chaoyang men Nei, Dongcheng District,
Beijing China
Tel :+86-10-6588-3571
http://www.gamecity.net.cn/

KOEI TECMO SOFTWAREVIETNAM CO., LTD.
17th Floor, 36 Hoang Cau street,
O Cho Dua ward, Dong Da district,Hanoi City, Vietnam
Tel : +84-24-3232-1284