Annual Report 2018

PROFILE
KOEI TECMO HOLDINGS CO., LTD. is an entity that was born as a result of a merger between two
companies, Koei and Tecmo. Both companies have roots in different fields of entertainment, with
Koei starting out in PC software development and Tecmo in business related to amusement facilities . Even though both companies have been around for half a century in the same industry, they
have cultivated different cultures and different expertise.
By unifying these differences, Koei Tecmo will vigorously continue its work in the spirit 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............................................... 291

TOP MESSAGE

ChairmanKeiko Erikawa
President & CEO

Yoichi Erikawa
In FY2017, our major titles were received extremely well, and increased royalty income from collaborative titles and IP
licenses, for example, increased profit rates. Blessed with a favorable financial environment, non-operating income, especiallyreturns from investment securities, was the highest ever recorded. As a result, we achieved the highest sales and profit since
the merger of Koei and Tecmo, and net income has increased for the eighth consecutive year.
For our 3-year medium term management plan that started in FY2018, we are aiming for ¥51 billion in sales, ¥17 billion
in operating income, and ¥21 billion in income before income taxes in FY2020. For the global market, we will work toachieve sales that exceed 5 million copies for console title and ¥1 billion per month for smartphone game.
For FY2018, the first year of the medium term management plan, we will adhere to the policies of “creating and expanding global IPs” and “advancement of global business”. Also, we will strive to create and expand IPs that are supported worldwide,
as well as adjust and expand our business structure.
2019 marks the 10th anniversary of Koei Tecmo. With the completion of our new office building in January of 2020, we
expect that business will proceed even more efficiently. As a company, we will all make our best effort to achieve more
growth potential and profitability.
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

2018

ASSETS
Current assets:
Cash and time deposits (Notes 4 and 6)
Notes and accounts receivable (Note 6)
Marketable securities (Notes 6 and 9)
Merchandise and Finished goods
Work in process (Note 14)
Raw materials
Deferred tax assets (Note 12)
Other current assets
Allowance for bad debts (Note 6)
Total current assets

2017¥ 6,626
8,978
115
30
45
959
2,885
(11)
19,631¥11,868
8,168
1,871
96
4
42
939
3,721
(23)
26,689$62,375
84,513
1,089
291
426
9,032
27,160(106)
184,781

Property and equipment:
Buildings and structures, net (Notes 7 and 13)
Land (Notes 7 and 13)
Construction in progress (Note 3)
Other
Total property and equipment (Note 5)

10,746
14,6153,531
520
29,413

10,993
14,6159508
26,126

101,148
137,570
33,241
4,901
276,861

190
190

208
208

1,797
1,797

78,938287
906
80,131¥ 129,367

65,484142
809
66,436¥ 119,461

743,0162,703
8,528
754,248$ 1,217,688

Intangible assets:
Other
Total Intangible assets
Investments and other assets:
Investment securities (Notes 6 and 9)
Deferred tax assets (Note 12)
Other
Total investments and other assets
Total assets
The accompanying notes are an integral part of these statements.

3

Thousands of U.S. dollars

2018Millions of yen

2018

LIABILITIESCurrent liabilities:
Notes and accounts payable – trade
Accounts payable – other
Income taxes payable
Accrued bonuses to employees
Accrued bonuses to directors
Allowance for sales returns
Allowance for sales discountAllowance for customer‐discount points
Allowance for loss on order received (Note 14)
Deferred tax liabilities (Note 12)
Other current liabilities
Total current liabilities

2017

¥ 843
1,185
3,426
1,043
168
0
475
19
595
1
3,268
11,028

¥487
4,244
2,566
949
242
0
255
21
0
2,691
11,460$7,937
11,15932,256
9,819
1,589
2
4,473
187
5,602
9
30,767
103,806

Long-term liabilities:
Liability for retirement benefits (Note 11)
Deferred tax liabilities (Note 12)
Other long-term liabilities
Total long-term liabilities
Total liabilities

57
1,201
836
2,096
13,124

295
326
861
1,484
12,944543
11,3107,875
19,729123,535

15,00015,000141,189

26,17573,26925,937
66,159246,385689,655

NET ASSETS (Note 15)
Shareholders' equity:
Common stock
Authorized : 350,000,000 shares in 2018 and 2017
Issued: 107,723,374 shares in 2018 and 2017
Capital surplus
Retained earnings
Treasury stock : 1,930,912 shares at March 31, 2018 and2,229,512 shares at March 31, 2017
Total shareholders' equity(1,266)(1,456)(11,919)

113,178

105,639

1,065,310

Accumulated other comprehensive income:Unrealized gains or losses on securities
Unrealized losses on revaluation of the land (Note 13)
Foreign currency translation adjustments
Accumulated adjustments for retirement benefits (Note 11)
Total accumulated other comprehensive income

4,885(3,115)
997
(48)
2,719

3,130
(3,115)
697
(90)
622

45,981(29,320)
9,388
(454)
25,594345
116,242¥ 129,367

254
106,516¥119,461

3,248
1,094,153$1,217,688

Share subscription rights: (Note 16)
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these statements.

4

Thousands of U.S. dollars

2018

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

2018$ 366,402

2018¥ 38,926

2017¥ 37,034

Cost of sales (Note 14)
Gross profit

19,566
19,36019,823
17,211

184,170
182,232

Selling, general and administrative expenses (Note 10)
Operating income (Note 20)

7,649
11,711

8,429
8,781

71,998110,233

Other income (expenses):
Interest income
Dividend income
Gain on sales of investment securities (Note 9)
Gain on redemption of securities
Loss on valuation of securities (Note 9)
Loss on sales of investment securities (Note 9)
Loss on redemption of securities
Foreign exchange loss, net
Other, net
Income before income taxes

2,081
1,374
4,299
25
(492)
(130)
(728)
(177)
330
18,293

1,797
1,349
3,848
168
(378)
(255)
(33)
(355)
288
15,211

19,58912,93640,471
235(4,631)(1,226)(6,858)(1,674)
3,113
172,187

Income taxes:
Current
Deferred
Total corporate tax (Note 12)
Net income
Net income attributable to owners of parent:

5,345
(69)
5,275
13,01713,017

3,681
(94)
3,587
11,624
11,62450,316(658)
49,657
122,530
122,530

Net sales (Note 20)

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

Yen¥ 123.24
122.91
62.00¥110.46110.14
56.00

U.S. dollars

$1.16
1.15
0.58

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

Millions of yen

2018$ 122,530

2017¥ 11,624

Other comprehensive income
Unrealized gains or losses on securities
Foreign currency translation adjustments
Adjustments for retirement benefits (Note 11)

1,754
300
41

2,121
(939)
(35)

16,513
2,826
393

Total other comprehensive income (Note 19)

2,096

1,146

19,733

15,114

12,771

142,264¥ 15,114¥12,771$ 142,264

Net income:Comprehensive income :Comprehensive income attributable to owners of parent:

The accompanying notes are an integral part of these statements.

5

Thousands of U.S. dollars

2018¥ 13,017

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, 2016
Cash dividends paid
Net income
attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes of items otherthan shareholder’s equity
Total changes of items
during period
Balance at March 31,¥ 15,000and April 1, 2017
Cash dividends paid
Net income
attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes of items otherthan shareholder’s equity
Total changes of items
during period
Balance at March 31, 2018
¥ 15,000

Capitalsurplus¥ 25,699

Retainedearnings¥ 60,003(5,469)Unrealized Unrealized
Foreign Accumulated
gains or losses oncurrency adjustments
Share
Treasury losses on revaluation translation for retirement subscription
stock securities of the land adjustments
benefits
rights(¥ 1,657) ¥ 1,009 (¥ 3,115)(¥ 54)¥ 1,636¥ 184

11,624

Net assets¥ 98,706(5,469)
11,624

(6)
207

238

238

6,155

200

¥ 25,937¥ 66,159(¥ 1,456)

(6)
445
2,121

-

(939)

(35)

69

1,216

2,121

-

(939)

(35)

69

7,810

¥ 3,130 (¥ 3,115)¥ 697(¥ 90)

254¥ 106,516(5,907)(5,907)13,01713,017
(7)
436

(7)
197

238

238

7,109

190

¥ 26,175¥ 73,269(¥ 1,266)

1,754

-

300

41

90

2,187

1,754

-

300

41

90

9,726

¥ 4,885 (¥ 3,115)¥ 997(¥ 48)¥ 345¥ 116,242

Thousands of U.S. dollars
Unrealized Unrealized
Foreign AccumulatedSharegains or losses oncurrency adjustments
Capital Retained Treasury losses on revaluation translation for retirement subscription
Commonrights Net assets
surplus earnings
stock securities of the land adjustments
benefitsstock$ 2,393 $1,002,604$ 141,189 $ 244,137 $ 622,731 ($ 13,709) $ 29,467 ($ 29,320)$ 6,561($ 847)(55,606)(55,606)

Balance at April 1, 2017
Cash dividends paid
Net income
122,530
attributable to owners of parent(70)
Purchase of treasury stock
2,247
1,859
Disposal of treasury stock
Net changes of items other
16,513than shareholder’s equity
Total changes of items
2,247
1,789
66,923
16,513during period$ 141,189 $ 246,385 $ 689,655 ($ 11,919) $ 45,981 ($ 29,320)
Balance at March 31, 2018
The accompanying notes are an integral part of these statements.

6

122,530
(70)
4,106
2,826

393

854

20,588

2,826

393

854

91,548$ 9,388($ 454)$ 3,248 $1,094,153

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

Millions of yen

2017¥ 18,293
701
595
(12)
(74)
90
(3,455)492(4,169)
703
(1)
141
(836)
(48)
359
(539)
12,238
2,667
(0)
1,377
(5,894)
10,389¥15,211
714
290
1
8
(50)
(3,147)378(3,592)
(134)
(2)
301
2,761
103
(1,731)595
11,707
2,618
(0)
940
(5,375)
9,890$172,187
6,604
5,602
(118)
(697)
849
(32,525)
4,631(39,245)
6,622
(11)
1,331
(7,877)(457)
3,380(5,079)115,197
25,110(7)
12,969(55,478)
97,791(84)122(30,397)
24,272(45)
810(12,275)
16,326(799)
1,154(286,123)
228,468(3,729)
(14)
1
(155)
(9,984)(8,644)
(65)
6
(52)
5
(3,935)(35,102)(132)
17(1,462)(93,978)

Cash flows from financing activities:
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from disposal of treasury stock
Purchase of treasury stock
Cash dividends paid
Net cash used in financing activities

5,500(5,500)374(7)(5,900)(5,533)1,000(1,000)383(6)(5,460)(5,082)

51,769(51,769)3,526(70)(55,538)(52,082)

Effect of exchange rate changes on cash andcash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 4)(76)(5,204)
11,745¥ 6,540(397)
474
11,270¥ 11,745(719)(48,988)
110,552$61,563

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in allowance for loss on order received
Increase (decrease) in allowance for bad debts
Increase (decrease) in accrued bonuses to directors
Increase (decrease) in accrued bonuses to employees
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 sales of property and equipment
Foreign exchange losses (gains)
Decrease(increase) in notes and accounts receivable
Decrease(increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Other, net
Sub totalInterest and dividend income received
Interest paid
Income taxes refund
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of short-term and long-term securities
Proceeds from sales and redemption of short-term andlong-term securities
Purchase of property and equipment
Purchase of intangible fixed assets
Proceeds from sales of property and equipment
Payments of investment in capital of subsidiary
Other, net
Net cash used in investing activities

The accompanying notes are an integral part of these statements.

7

Thousands of U.S. dollars

2018

2018

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 toapplication and disclosure requirements of International Financial Reporting Standards.
The accounts of consolidated overseas subsidiaries for the years ended March 31, 2018 and 2017 are prepared in accordance with either
International Financial Reporting Standards or U.S. generally accepted accounting principles, with adjustments for the specified four 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 translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using theprevailing exchange rate at March 31, 2018, which was ¥106.24 to U.S. $1. The convenience translations 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
other rate of exchange.

(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 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 TECMOTIANJIN SOFTWARE CO., LTD., KOEI TECMO BEIJING SOFTWARE CO., LTD., KOEI TECMO SINGAPORE PTE. LTD., and KOEITECMO LIV CO., LTD. Some small-scale subsidiaries 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.
(3) Translation of foreign currency All the assets and liabilities of foreign subsidiaries are translated into Japanese yen at the appropriate year-end rate and all income andexpense 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 Adjustments” in the accompanying consolidated balance
sheets.
Foreign currency receivables and payables are translated at year-end rates and the resulting translation gains and losses are included inincome currently.
(4) 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.
(5) Financial instruments (a) Derivatives
All derivatives are stated at fair value, with changes in fair value being included in the net profit or loss for the period in which they arise.
(b) Marketable 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 profit or loss for the period in which they arise.
Held-to-maturity securities are stated at amortized cost method (straight line method).
Other securities for which quoted market price is available are stated at fair value. Net unrealized gains or losses on these securities arereported as a separate component of net assets, net of applicable taxes.
Other securities for which quoted market price is not available are stated at cost or at amortized cost, except as stated in the following
paragraph:
In cases where the fair value of equity securities issued by unconsolidated subsidiaries, or other securities has declined significantly andsuch impairment in value is not deemed temporary, those securities are reduced to fair value and the resulting losses are included in the net
profit 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.

8(6) Inventories Inventories of the Company and its consolidated subsidiaries are determined using the moving-average method for merchandise,finished goods and raw materials and the specific identification method for work-in-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).
(7) Property and equipment Declining balance method is used, except for straight line method for buildings (excluding facilities attached to buildings), which wereacquired since April 1, 1998 and facilities attached to buildings and structures, which were acquired since April 1, 2016.
The property and equipment held by foreign consolidated subsidiaries is being depreciated by the straight-line basis, based on the estimateduseful lives of the assets.
The range of useful lives for “Buildings and structures” is principally from 3 to 50 years.
(8) Intangible assets Software costs for internal use are capitalized and amortized over their estimated useful lives on a straight-line basis.
Goodwill is amortized over its estimated useful lives on a straight-line basis. When the amounts are immaterial, the goodwill is amortized as
incurred.
(9) Accrued bonuses to employees Accrued bonuses are stated at the estimated amount of the bonuses to be paid to employees based on their services provided during the
fiscal year.
(10) Accrued bonuses to directors Accrued bonuses are stated at the estimated amount of the bonuses to be paid to directors based on their services for the current fiscal year.
(11) Allowance for bad debts An allowance for bad debts is established at an amount considered to be appropriate based primarily on the past credit loss experience of the Company and its consolidated subsidiaries, plus an additional amount deemed necessary to cover possible losses estimatedon an individual account basis.
(12) Allowance for sales returns An allowance for sales returns is provided for losses due to the return of products at an amount calculated based on historical experience.
(13) Allowance for sales discount An allowance for sales discount is provided for the losses incurred on sales discount of products.
(14) Allowance for customer-discount points An allowance for customer-discount points is provided for the accumulation of points granted to online shopping users. The amount ofallowance is determined based on the past usage of points.
(15) Allowance for loss on order received An allowance for loss on order received is provided for the estimated loss of the order. An allowance for loss is recognized when it is probable that the expected revenue to be derived from an order is lower than the unavoidable cost of meeting the obligations.
(16) 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. 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.
(17) Finance leases For finance lease transactions other than those which transfer ownership to the lessee, the straight-line method is adopted with a residual
value of zero, with the lease period deemed equal to the service life of the asset.

9(18) 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 andliabilities.
(19) 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.
(20) 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, March 26, 2015), and necessary modifications have been made for consolidation.
(21) Net income per share Net income per share of common stock (“Basic EPS”) is computed based on the weighted average number of shares of common stock
outstanding during each year. Diluted net income per share of common 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, 2018 and 2017 were as follows:

For the year ended March 31, 2018
Basic EPS
Net income
Other
Net income attributable to owners of parent
Effect of Diluted stock shareholders
Warrants
Diluted EPS
Net income attributable to owners of parent
For the year ended March 31, 2017
Basic EPS
Net income
Other
Net income attributable to owners of parent
Effect of Diluted stock shareholders
Warrants
Diluted EPS
Net income attributable to owners of parent

10

Millions of yen

Thousands of U.S. dollars

Net income

Thousands of shares
Weighted average number of sharesYen¥ 123.24$1.16¥ 122.91$1.15¥ 13,017¥ 13,017$ 122,530$ 122,530

105,630--278¥ 13,017$ 122,530

105,908

Millions of yen

U.S. dollars

EPS

Net income

Thousands of shares
Weighted average number of shares

EPS¥ 11,624¥ 11,624

105,237¥ 110.46-

302¥ 11,624

105,539

Yen¥ 110.14

2. Unapplied Accounting Standards,etc.

The Company and its domestic consolidated subsidiaries have not applied the following revised and newly-established accounting standards
published by March 31, 2018.
“Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue Recognition ”(ASBJ Guidance No.30, March 30, 2018)(1) Outline
Those accounting standards were issued to show the accounting treatment and the disclosure on revenue from contracts with customers.
Those accounting standards were prepared applying basic principles of IFRS 15” Revenue from Contracts with Customers” which has
applied on or after January 1, 2018, while adding alternative accounting treatments within a range not to impair the comparability if there has
been some practical accounting treatments in our country to be considered.
(2)Effective date
The Company and its consolidated subsidiaries plan to apply those accounting standards from the beginning of the fiscal year beginning on
April 1, 2021.
(3)The impact of the application
The impact of the application is under evaluation at the time of the preparation of these consolidated financial statements.

3. Changes in presentation:(Consolidated balance sheet)“Construction in progress”, which was included in “Other” under “Property and equipment” in the previous fiscal year, is presented separately for the fiscal year ended March 31, 2018 due to its increased materiality. As a result, ¥517 million included in “Other” under “Property andequipment” on the consolidated balance sheet for the previous fiscal year has been reclassified as “Construction in progress ¥9 million” and“Other ¥508 million”.

4. Cash flow information:

Reconciliation of cash and cash equivalents
Cash and time deposits at March 31, 2018 and 2017 reconciled to cash and cash equivalents were as follows:
Millions of yen

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

2018¥ 6,626(86)¥ 6,5402017¥ 11,868(123)¥ 11,745

Thousands of U.S. dollars

2018$ 62,375(811)$ 61,563

5. Accumulated depreciation of property and equipment:

Accumulated depreciation of property and equipment as of March 31, 2018 and 2017 were as follows:
Millions of yen

Accumulated depreciation of property and equipment

11

2018
¥ 11,521

2017¥ 11,019

Thousands of U.S. dollars

2018$ 108,450

6. 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 products that build in the stocks, the debenture, and derivatives aiming to operate it by a high yield.
Derivatives that the Company uses are only the compound financial products that build 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.
Marketable securities and investment securities, which consist of principally equity securities and debt securities, are exposed to the risk ofmarket price fluctuations.
The investments in the compound financial products that invested in derivatives have the risk of the bond market price and the exchange
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 related divisions areprimarily responsible for periodically monitoring counterparty status. The department 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 with theestablished policies and within the specified limit on the amounts of investments allowed. 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 the establishedpolicies so that its internal control functions properly. The Company periodically provides administrative reports on the status of its
position, including market value, to the financial director and treasurer.
Regarding marketable securities and investment securities, the Company periodically examines the financial condition of the issuingentities. 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 on reports
from each division.
(d) Fair values of financial instruments
Fair values of financial instruments include the values based on market prices, and the values deemed as market prices are reasonably
estimated by the reasonable estimate when market prices are not available. Since certain assumptions and others are adopted for estimatingsuch values, they may differ when adopting different assumptions and others.

12(2) Fair values of financial information
Fair values of financial instruments as of March 31, 2018 and 2017 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 time deposits
Notes and accounts receivable
Allowance for bad debts*
Marketable and investment securities
Other securities
Assets Total

Cash and time deposits
Notes and accounts receivable
Allowance for bad debts*
Marketable and investment securities
Other securities
Assets Total

Cash and time deposits
Notes and accounts receivable
Allowance for bad debts*
Marketable and investment securities
Other securities
Assets Total

Acquisition Amount¥ 6,626
8,978
(10)
8,968

Millions of yen
March 31, 2018

Estimated fair value¥ 6,626

Difference
-

8,968

-

74,484¥ 90,078-

74,484¥ 90,078

Book value¥ 11,868
8,168
(21)
8,146

Millions of yen
March 31, 2017

63,926¥ 83,941

Book value$ 62,375
84,513(100)
84,412Estimated fair valu
¥ 11,868

Difference
-

8,146

-

63,926¥ 83,941-

Thousands of U.S.dollars
March 31, 2018

Estimated fair value$62,375

Difference-

84,412-701,093$ 847,881-

701,093$ 847,881* The amounts for probable losses calculated by applying a percentage based on collection experience to the remaining accounts areincluded.
Note: Fair values of financial instruments, and matters pertaining to securities and derivative transactions
AssetsCash and time deposits, and Notes and accounts receivable:
The book values 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 "9. Marketable 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, 2018 and 2017 were summarized as follows:
Millions of yen

Stocks of subsidiaries and affiliates
Non-listed equity securities
Investments in associations
Total

2018
¥ 20
268
4,165
¥ 4,453

2017
¥ 20
110
3,298
¥ 3,429

Thousands of U.S. dollars

2018
$ 188
2,524
39,210$ 41,923

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).

13(c) Maturities of financial instruments
The maturities of the financial instruments at March 31, 2018 and 2017 were as follows:

Within 1 year

Cash and time deposits
Notes and accounts receivable
Marketable and investment securities
Other securities(1)Government bonds and local government bonds(2)Corporate bonds(3)OtherTotal¥ 1,632
8,978¥ 10,611

Within 1 year

Cash and time deposits
Notes and accounts receivable
Marketable and investment securities
Other securities(1)Government bonds and local government bonds(2)Corporate bonds(3)OtherTotal¥ 1,801
8,168
516
1,402
¥ 11,888

Within 1 year

Cash and time deposits
Notes and accounts receivable
Marketable and investment securities
Other securities(1)Government bonds and local government bonds(2)Corporate bonds(3)OtherTotal

14$ 15,367
84,513$ 99,881

Millions of yen
At March 31, 2018
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

1,803
1,209
¥ 3,012

6,224
4,471
¥ 10,696

5,504
5,280
¥ 10,784

Millions of yen
At March 31, 2017
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

1,959
710
¥ 2,669

4,428
3,797
¥ 8,225

7,164
6,175
¥ 13,339

Thousands of U.S. dollars
At March 31, 2018
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

16,971
11,387$ 28,359

58,59042,090$ 100,680

51,81049,699$ 101,509

7. 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 ¥387 million ($3,649 thousand) and ¥280 million for the years ended
March 31, 2018 and 2017, respectively.
Information about fair value of rental property included in the consolidated financial statements at March 31, 2018 and 2017 was as follows:

Millions of yen
Thousands of U.S dollars

Millions of yen

March 31, 2017
¥ 15,700$ 147,786

March 31, 2016
¥ 10,773

At March 31, 2018
Book value (net of depreciation)

Decrease
¥ 105
$ 995

March 31, 2018
¥ 15,595$ 146,791

At March 31, 2017
Book value (net of depreciation)

Increase¥ 4,927

March 31, 2017
¥ 15,700

Fair value

March 31, 2018
¥ 17,222$ 162,105

Fair value

March 31, 2017
¥ 16.621

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

8. Lease:

The future minimum lease receipts for only non-cancelable operating lease contracts as of March 31, 2018 and 2017 were as follows:
Millions of yen

2018
¥ 217
839
¥ 1,056

Due within one year
Due after one year
Total

2017
¥ 204
994
¥ 1,198

Thousands of U.S. dollars

2018$ 2,044
7,903$ 9,947

9. Marketable securities and investment securities:

Comparisons of the acquisition costs and fair values of “Other securities for which market quotations are available” at March 31, 2018 and 2017
were as follows:

Acquisition cost
Other securities for which market prices are available ¥ 46,142(1)Equity securities
19,462(2)Debt securities
1,991(3)Other¥ 67,595
Total

Other securities for which market prices are available (1)Equity securities(2)Debt securities(3)Other
Total

15

Millions of yen
At March 31, 2018

Gross unrealized gains

Gross unrealized losses

Fair value¥ 8,903930
595¥ 10,429¥ 1,0132,526
1¥ 3,540¥ 54,032
17,866
2,585¥ 74,484

Millions of yen
At March 31, 2017

Acquisition cost

Gross unrealized gains

Gross unrealized losses

Fair value¥ 36,025
20,9882,495¥ 59,510¥ 6,128
1,232
1,328¥ 8,688¥ 1,144
3,109
19¥ 4,273¥ 41,009
19,112
3,804¥ 63,926

Other securities for which market prices areavailable (1)Equity securities(2)Debt securities(3)Other
Total

Thousands of U.S. dollars
At March 31, 2018

Acquisition cost

Gross unrealized gains

Gross unrealized losses

Fair value$ 434,320
183,189
18,744$ 636,254$ 83,803
8,759
5,604
$ 98,167$ 9,537
23,7819$ 33,328$ 508,585
168,168
24,338$ 701,093

Impairment loss of ¥492 million ($4,631 thousand) and ¥378 million was recognized for the years ended March 31, 2018 and 2017, respectively.

Available-for-sale securities sold for the years ended March 31, 2018 and 2017 were as follows:
Millions of yen

Sales amountGross realized gains
Gross realized losses

2018¥ 16,874
4,299
130

2017
¥ 14,324
3,962
255

Thousands of U.S. dollars

2018$ 158,829
40,471
1,226

10. Research and development expenses:

Research and development expenses included in selling, general and administrative expenses for the years ended March 31, 2018 and 2017
were ¥962 million ($9,060 thousand) and ¥728 million, respectively.

11. Retirement benefit plan:

For the year ended March 31, 2018
(1) Outline
The Company and its consolidated domestic subsidiaries have a defined benefit corporate pension plan. One of the foreign consoli
dated 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
Benefits paid
Other
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
Retirement benefits paid
Other
Plan assets at fair value at the end of the period

16

2018
¥ 4,954
410
24
19
(95)
¥ 5,313Millions of yen

2018¥ 4,658
208
95
386
(93)
¥ 5,2552017¥ 4,572
392
22
16
(92)
42
¥ 4,9542017¥ 4,191
188
(19)
373
(92)
16
¥ 4,658

Thousands of U.S. dollars

2018$ 46,633
3,865
232
187
(903)
$ 50,014

Thousands of U.S. dollars

2018$ 43,853
1,958
894
3,639
(875)
$ 49,470

(c) The reconciliation of 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
Liability for retirement benefits
Asset for retirement benefits
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 differences
Amortization of prior service costs
Other
Retirement benefit expenses

2018¥ 5,313(5,255)
57
57
57
¥ 57

2017
¥ 4,954(4,658)
295
295
295
¥ 295

Millions of yen

2018
¥ 410
24
(208)
(24)
10
¥ 213

2017
¥ 392
22
(188)
(25)
10
24
¥ 235

Thousands of U.S. dollars

2018$ 50,014(49,470)
543
543
543
$ 543

Thousands of U.S. dollars

2018$ 3,865232(1,958)(231)
97$ 2,007(e) The breakdown of prior service cost and actuarial gain recognized in other comprehensive income before deduction of tax benefit
were as follows:
Millions of yen

Prior service costs
Actuarial gain(loss)
Total

2018
¥ 10
50
¥ 60

2017
¥ 10
(61)
¥ (51)

Thousands of U.S. dollars

2018
$ 97
471
$ 568

(f) The breakdown of prior service cost and actuarial gain recognized in accumulated other comprehensive income before
deduction of tax benefit were as follows:
Millions of yen

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

2018
¥ 132
(61)
¥ 70

2017
¥ 142
(11)
¥ 131

2018
50.2%
47.4%
2.4%
100.0%

Thousands of U.S. dollars

2018$ 1,247
(582)
$ 665

2017
47.4%
50.0%
2.6%
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

2018
0.5%
4.5%

2017
0.5%
4.5%

(3)Defined contribution plan
The required contributions to the defined contribution plans of one of the foreign consolidated subsidiaries are ¥2 million ($17thousand) and ¥2 million for the years ended March 31, 2018 and 2017, respectively.
1712. Income taxes:
The reconciliation of differences between the statutory tax rate and the effective tax rate for the year ended March 31, 2018 and 2017 wereas follows:
Statutory tax rate
Increase (decrease) in taxes resulting from:
Permanent difference of exclusion from expenses
Permanent difference of exclusion from gross revenue
Amortization of goodwill
Special tax credit for research and development expenses and otherTax rate difference in certain subsidiaries
Valuation allowance
Adjustment on deferred tax assets due to change in income tax rate
Reserved profit of foreign subsidiaries
Other, net
Effective tax rate

2018
30.8%

2017
30.8%

0.3
(0.2)
(2.1)
(0.7)
0.1
0.2
0.6
(0.2)
28.8%

0.7
(0.2)
0.6
(6.0)
(0.3)
(0.3)
(1.9)
(0.3)
23.1%

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

Deferred tax :(1) Current assets
Tax loss carryforwards
Accrued bonuses to employees
Allowance for loss on order received
Unrealized loss on inventory valuation
Provision for enterprise tax
Allowance for sales discountUnrealized losses on securities
Other
Valuation allowance
Offset to deferred tax liabilities (current)
Net deferred tax current assets

2017

¥ 11
281
182
80
188
115
104
(4)
¥ 959

¥ 31
260
55
188
88
220
103
(10)
(0)
¥ 939

$ 107
2,651
1,713
761
1,770
1,088
983
(42)
$ 9,032(2) Non-current assets
Loss on investment securities
Tax loss carryforwards
Software development expense depreciation
Impairment loss on fixed assets
Net defined benefit liability
Revaluation reserve for land
Other
Valuation allowance
Offset to deferred tax liabilities (non-current)
Net deferred tax non-current assets

¥ 324
43
227
24
14
948
489
(1,196)
(589)
¥ 287

¥ 680
88
194
52
99
948
295
(1,176)(1,040)¥ 142$ 3,057
414
2,140
228
137
8,928
4,609
(11,265)(5,546)$ 2,703

Millions of yen

Deferred tax :(1) Current liabilities
Unrealized gains on securities
Other
Offset to deferred tax assets (current)
Net deferred tax current liabilities(2) Non-current liabilities
Unrealized losses on securities
Reserved profit of foreign subsidiaries
Other
Offset to deferred tax assets (non-current)
Net deferred tax non-current liabilities
18

Thousands of U.S. dollars

2018

2018

Thousands of U.S. dollars

2018

2017

(5)
4
¥ (1)

¥ (0)
0
¥ (0)

(52)
42
$ (9)

¥ (1,478)
(306)
(6)
589
¥ (1,201)¥ (1,122)
(198)
(45)
1,040
¥ (326)$ (13,916)(2,883)(56)
5,546$ (11,310)

2018

Adjustment on deferred tax assets and deferred tax liabilities due to change in income tax rate
The Tax Cuts and Jobs Act, which reduces the federal corporate income tax rate from 35% to 21% in the U.S. effective January 1,
2018, was enacted on December 22, 2017.
In line with this, the deferred tax assets and liabilities of U.S. subsidiaries were calculated in accordance with the revised statutory tax rate.
The effect on profit-and-loss during the period as a result of this change was immaterial.

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

Millions of yen

2018
¥ 247
306
¥ 553

2017
¥ 252
306
¥ 558

Thousands of U.S. dollars

2018$ 2,3252,880$ 5,205(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 unrealized losses on revaluation of the 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, 2018 are ¥53 million ($508 thousand) and ¥149 million less than the book value as of March
31, 2018 and 2017, respectively.

14. Allowance for loss on order received:

Inventories and allowance for loss on order received related to the project which is probable to incur losses are presented as is and are not offset.
The amount equivalent to allowance for loss on order received included in inventories related to projects which are likely to incur losses at
the years ended March 31, 2018 was as follows:
Millions of yen

Work in process
Total

2018
¥ 28
¥ 28

2017
-

Thousands of U.S. dollars

2018
$267
$267

Allowance for loss on order received included in the cost of sales at the years ended March 31, 2018 was as follows:
Millions of yen

Cost of sales
Total

2018
¥ 595
¥ 595

2017
-

Thousands of U.S. dollars

2018$5,602$5,602

15. Net assets:
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However,a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new sharesas additional 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 smaller of an amountequal to 10% of the dividend or the excess, if any, of 25% of common 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 of the shareholders’ meeting.
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 20, 2018, the shareholders resolved cash dividends amounting to ¥6,559 million($61,738 thousand). Such appropriations have not been accrued in the consolidated financial statements as of March 31, 2018. Suchappropriations will be recognized in the period when they are resolved.
1916. Share subscription rights:
The summarized contents of share subscription rights as of March 31, 2018 are 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 #6
June 26, 2012

Share subscription rights #7
June 25, 2014

Share subscription rights #8
June 22, 2016

6 directors and24 employees of the Company and349 executive officer or
employees of thesubsidiaries

7 directors and21 employees of theCompany and
380 executive officer or
employees of thesubsidiaries

9 directors and
17 employees of theCompany and394 executive officer or
employees of thesubsidiaries

October 22, 2012

September 22, 2014

September 26, 2016

Common Stock871,560

Common Stock960,840

Common Stock833,200

From October 23, 2014 From September 23, 2016 From September 27, 2018
to October 20, 2017
to September 20, 2019
to September 24, 2021

The Company implemented a one point two-for-one stock split on October 1, 2015. Number of stock is adjusted amounts after the stock split.
The following table summarizes scale and movement of share subscription rights as of March 31, 2018
Non‐exercisable (number of shares)
Outstanding at April 1, 2017
GrantedForfeited
VestedOutstanding at March 31, 2018
Exercisable (number of shares)
Outstanding at April 1, 2017
VestedExercised
Forfeited
Outstanding at March 31, 2018
Exercise price

Average stock price at exercise
Fair value price at grant date

Share subscription rights #6

Share subscription rights #7

Share subscription rights #8--

819,500
16,000803,500

75,12072,480
2,640
¥547
$5.14
¥2,276$21.42¥74$0.69

699,960
229,080
7,080
463,800¥1,468$13.81¥2,226$20.95¥290$2.72¥2,001$18.83¥384$3.61

The Company implemented a one point two-for-one stock split on October 1, 2015. Exercise price is adjusted amounts after the stock split. Averagestock price at exercise has been calculated by assuming this stock split was executed at the beginning of the fiscal year ended March 31, 2017.

17. 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 term under costs.
(3) Changes to aggregate asset retirement obligations applicable to the fiscal years ended March 31, 2018 and 2017 were as follows:
Millions of yen

Beginning balance
Expense belonging to the burden of thisconsolidated fiscal year
Decrease due to fulfillment of asset retirement
obligations
Ending balance
20

Thousands of U.S. dollars

2018

2018

2017
¥ 63

$ 510

1

3

16

(2)

(12)

(19)

¥ 53

¥ 54

$ 507

¥ 54

18. Related party transactions:(1) Related party transactions between the Company 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, 2018
Type

Name

Location

Capital orinvestments

Business or
profession

Voting rights
held(%)

Relationshipwith therelated parties

Transactions(Note2)

AmountAccount
nameBalance

Executive

Keiko
Erikawa--

Executive
Chairman

2.09[4.63](Note1)-The exerciseof stock
option¥ 10 million($ 94 thousand)--Executive

YoichiErikawa--

Executive
President

2.16[4.56](Note1)-The exerciseof stock
option¥ 11 million($ 103 thousand)--Executive

Hisashi
Koinuma--Director

0.03[Note1]-The exerciseof stock
option¥ 21 million($ 197 thousand)--Note 1: The figures contained in parentheses represent the ownership ratio of the voting right which close persons or assentors have.
Note 2: The exercise of stock options granted by resolution at the Board of Director's meeting held on September 1, 2014.
Note 3: The amount is calculated by multiplying the number of shares issued as a result of exercise of the option by the amount paid.
(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, 2018
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($ 376 thousand)Company
with a majorityof theMY PROPERTY¥ 14 million
Yokohama-shi,
voting rights
CO., LTD.
($ 131 thousand)Kanagawa
held by an(Note 4)
executive or
close relative
Company
with a majorityof thevoting rights
held by an
executive or
close relative

21

AK
FORTUNE
CO., LTD.
(Note 4)

¥ 14 million
Yokohama-shi,($ 131 thousand)Kanagawa

Business or
profession

Real estateleasing

Real estateleasing

Real estateleasing

Voting rights
held(%)

Relationshipwith therelated parties

Transactions

AmountReal estateleasing

Real estateleasing(Note 2)

¥ 151 million($ 1,426
thousand)

Pledge ofcollateral

Pledge ofcollateral(Note 3)

¥ 553 million($ 5,205
thousand)--Election of

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

7.40

-

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

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

Account
nameDeposit
Prepaid
expenseBalance¥ 146 million($ 1,379
thousand)¥ 12 million($ 119thousand)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
the related party, KANKYOKAGAKU CO., LTD., required for a construction expense.
The amount is equal to book value 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: The subsidiary, KOEI TECMO GAMES CO., LTD.(hereinafter, “KTG”) and MY PROPERTY CO., LTD. and AK FORTUNE
CO., LTD. (hereinafter, “these two companies”) are jointly planning to acquire composite facilities.
KTG and these two companies concluded building sale and purchase agreement on the composite facilities on December 1, 2017, andare planning to acquire after completion in January 2020.
The acquisition cost of the composite facilities by KTG and these two companies is ¥21,933 million ($206,447 thousand).
KTG is planning to acquire office floor and live house type halls among the composite facilities, and the value is ¥16,306 million($151,482 thousand).
KTG paid ¥3,522 million ($33,151 thousand) as interim at December 27, 2017, and it is recorded as “Construction in progress”.
KTG have obtained an opinion by outside experts that allocation method of the acquisition cost in composite facilities is appropriate.
Note that there are no credits or debts as a result of the acquisition of the land and the composite facilities between KTG and these twocompanies and they have no plans to increase amount of them.
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, 2017
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($ 376 thousand)Company
with a majority
MY PROPERTY
of the¥ 14 million
Yokohama-shi,
voting rights
CO., LTD.
($ 131 thousand)Kanagawa
held by an(Note 4)
executive or
close relative
Company
with a majority
AK FORTUNEof the¥ 14 million
Yokohama-shi,
voting rights
CO., LTD.
($ 131 thousand)Kanagawa
held by an(Note 4)
executive or
close relative

22

Business or
profession

Real estateleasing

Real estateleasing

Real estateleasing

Voting rights
held(%)

Relationshipwith therelated parties

Account
nameDeposit

Balance¥ 146 million($ 1,379
thousand)Real estateleasing(Note 2)

¥ 151 million($ 1,426
thousand)

Pledge ofcollateral

Pledge ofcollateral(Note 3)¥ 558 million($ 5,260
thousand)--Election of

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Joint acquisition
Joint acquisitionof fixed assetsof fixed assets(Note 5)
Election of-AmountReal estateleasing
7.43-

Transactions-

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

Prepaid
expense¥ 12 million($ 119thousand)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
the related party, KANKYOKAGAKU CO., LTD., required for a construction expense.
The amount is equal to book value 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: The subsidiary, KOEI TECMO GAMES CO., LTD.(hereinafter, “KTG”) and MY PROPERTY CO., LTD. and AK FORTUNE
CO., LTD. (hereinafter, “these two companies”) have jointly acquired land of 8,670 square meters and the acquisition ratio of KTG in
the land is 7,437 / 8,670 square meters valued at 8,324 million yen. They are also jointly planning to build composite facilities
includes a new head office of KTG on the land.
Unit purchase price acquired by KTG was equal to the price acquired by these two companies. In addition, KTG have obtained an
opinion by outside experts that the setting of the acquisition ratio in the land is appropriate. Note that there are no credits or debts as aresult of the acquisition of the land and the composite facilities between KTG and these two companies and they have no plans toincrease amount of them.
Notes for the parent company and important affiliated companies(1) Information on the parent company
KOYU CO., LTD. (as an unlisted company)(2) Condensed financial statements for the important affiliated companies
Not applicable

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

Unrealized gains or losses on securities:
Increase during the year
Reclassification adjustments
Amount before income tax effect
Income tax effectTotal unrealized gains on securities
Foreign currency translation adjustments:
Increase during the year
RecyclingTax effectForeign currency translation adjustments
Adjustments for retirement benefits:
Increase during the year
Reclassification adjustments
Amount before income tax effect
Income tax effectTotal changes in adjustments for retirement benefits
Total other comprehensive income

23

Thousands of U.S. dollars

2018

2017

2018

¥ 6,021(3,510)
2,510
(756)
1,754

¥ 6,490(3,436)
3,054
(932)
2,121

$ 56,677(33,046)
23,631(7,117)
16,513

300
300

(886)
(55)
2
(939)

2,826
2,826

75
(14)
60
(18)
41

(36)
(15)
(51)
15
(35)

706
(137)
568
(175)
393

¥ 2,096¥ 1,146$ 19,733

20. 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 ofmanagement resource and evaluate their business performance.
The Company operates principally in the following reportable segments:(a) Entertainment: Development and sale of entertainment contents.
(b) SP: Entrusted development of commercial amusement.
(c) Amusement Facilities: Management of amusement arcade.
(d) 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 income. Transfers among segments are based on market prices.
(3)Information on sales and income (loss), and other items by reportable segment

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

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

24

Millions of yen
For the year ended March 31, 2018
Reportable segment

Enter
tainment

SP

Amusement
Facilities

Realestate

Sub
Total

Other

Total

¥ 35,180
208
35,389¥ 10,938

¥ 944
0
945
¥ 289

¥ 1,5361,536¥ (362)

¥ 784
784
¥ 348

¥ 38,446
209
38,655¥ 11,214

¥ 480
104
584
¥ 496

¥ 38,926
313
39,240¥ 11,711

¥ 324

¥2

¥ 97

¥ 237

¥ 661

¥ 40

¥ 701

Millions of yen
For the year ended March 31, 2017
Reportable segment

Enter
tainment

SP

Amusement
Facilities

Realestate

Sub
Total

Other

Total

¥ 32,749
275
33,025¥ 7,815¥1,991
1
1,992
¥ 736

¥ 1,266
1,266
¥ 27

¥ 788
788
¥ 248

¥ 36,796
276
37,073¥ 8,827

¥ 237
99
336
¥ 243

¥ 37,034
376
37,410¥ 9,071

¥ 344

¥2

¥ 86

¥ 239

¥ 673

¥ 40

¥ 714

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

Thousands of U.S. dollars
For the year ended March 31, 2018
Reportable segment

Enter
tainment

SP

Amusement
Facilities

Realestate

Sub
Total

Other

Total

$ 331,143
1,964
333,107$ 102,963$ 8,8897
8,896$ 2,721$ 14,464
14,464$ (3,409)$ 7,384
7, 384$ 3,280$ 361,881
1,972
363,853$ 105,555$ 4,520982
5, 503$ 4,677$ 366,402
2,954
369,356$ 110,233$ 3,053

$ 19

$ 917

$ 2,233$ 6,224$ 379$ 6,604

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
are allocated 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
Profit of Other segment
Amortization of goodwill
Total

Millions of yen

2018¥ 38,655
584(313)¥ 38,926

Millions of yen

2018¥ 11,214496¥ 11,711

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

25

2017
¥ 37,073
336(376)¥ 37,0342017¥ 8,827243(290)¥ 8,781

Thousands of U.S. dollars

2018$ 363,853
5,503(2,954)$ 366,402

Thousands of U.S. dollars

2018$ 105,555
4,677$ 110,233

(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, 2018 and 2017.
(1) Sales

Millions of yen
For the year ended March 31, 2018

Japan
Net sales to outside customers:¥ 26,000

North
America¥ 4,419

EuropeAsia, etc.

¥ 3,333¥ 5,172

Millions of yen
For the year ended March 31, 2017

Japan
Net sales to outside customers:¥ 27,089

North
America¥ 4,411

EuropeAsia, etc.

¥ 2,159¥ 3,374

Thousands of U.S. dollars
For the year ended March 31, 2018

Japan
Net sales to outside customers:$ 244,738

North
America$ 41,596

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, 2018

Japan

Asia

UK

Other

¥ 25,226¥ 1,497¥ 2,689¥ 0Millions of yen
For the year ended March 31, 2017

Japan

Asia

UK

Other

¥ 21,977¥ 1,493¥ 2,654¥0Thousands of U.S. dollars
For the year ended March 31, 2018

26

Japan

Asia

UK

Other

$ 237,446$ 14,098$ 25,314$2

Consolidated
Total¥ 29,413

Consolidated
Total¥ 26,126

Consolidated
Total$ 276,861

EuropeAsia, etc.

$ 31,381$ 48,685

Consolidated
Total¥ 38,926

Consolidated
Total¥ 37,034

Consolidated
Total$ 366,402

21. Subsequent events:
At the meeting of the Board of Directors held on July 23, 2018, the Company resolved to conduct a stock split. The details are as
follows:(1) Purpose of Stock Split
The stock split will be conducted with the aim of increasing the liquidity of the Company's stock and expanding its investor base by
reducing the price of share-trading units.
(2) Outline of Stock Split(a) Method of Stock Split
The stock split shall have a record date of September 30, 2018(effectively as of September 28, 2018 considering the fact that
September 30, 2018 is a non-business day of Koei Tecmo Group’s shareholder register manager) and shall involve the splitting ofcommon stocks held by shareholders whose names are recorded in the latest Registry of Shareholders on the record date at a ratioof 1:1.2. If, as a result of the stock split, a fraction of less than one share of the common stock of the Company arises, the Company
will pay the shareholders the amount corresponding to such fraction.
(b) Number of increase in shares by Stock Split①Total number of issued shares before stock split②Number of increase in shares by stock split③Total number of issued shares after stock split④Total number of authorized shares before stock split

107,723,374 shares
21,544,674 shares
129,268,048 shares
350,000,000 shares

Note: Total number of authorized shares after stock split is equal to total number of authorized shares before stock split.
The article of incorporation is not amended upon stock split.
(3) Schedule of stock split(a) Public notice date of the record date(b) Record date(c) Effective date

September 14, 2018
September 30, 2018(effectively as of September 28, 2018)
October 1, 2018(4) Information on the impact to the net income per share
Net income per share on the assumption that stock split was executed at the beginning of this consolidated fiscal year are¥102.70/$0.96(Basic EPS) and ¥102.43/$0.96(Diluted EPS) respectively.

27

28

BOARD OF DIRECTORS AND
AUDIT & SUPERVISORY
BOARD MEMBERSCORPORATE DATA

Chairman

KOEI TECMO HOLDINGS CO., LTD.

Keiko Erikawa*
President & CEO

Yoichi Erikawa*Vice-president

Hisashi Koinuma*
Director, Senior Executive Officer & CFO

Kenjiro Asano
Director

Yosuke Hayashi
Director

Kazuyoshi Sakaguchi
Director

Mei Erikawa
Director & Advisor

Yasuharu Kakihara
Director(Outside)

Masao Tejima
Director(Outside)

Hiroshi Kobayashi
Director(Outside)

Tatsuo Sato
Audit & Supervisory Board Member (Full-time)

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

Masaki Kimura
Audit & Supervisory Board Member

Satoru Morishima

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

Date Established :April 1, 2009

Paid-in Capital :¥15 Billion ( As of March 31, 2018)

Number of Employees :1,737(As of March 31, 2018: 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

MAJOR SUBSIDIARIESKOEI TECMO GAMES CO., LTD.
1-18-12 Minowa-cho, Kouhoku-ku,
Yokohama, Kanagawa 223-8503 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 102-0073 Japan
Tel : +81-3-3222-8333
http://www.wave.koeitecmo.co.jp/

KOEI TECMO NET CO., LTD.

Toshikazu Kitamura

1-23-3 Minowa-cho, Kouhoku-ku,
Yokohama, Kanagawa 223-8527 Japan
Tel : +81-45-565-3123
https://shop.gamecity.ne.jp/

Executive Officer

CWS Brains, LTD.

Audit & Supervisory Board Member (Outside)

Takeshi Hara
Executive Officer

Tomotoshi Nishimura*Representative Director（As of June 20, 2018）29

Head Office

KUDANMEIZENDO Bldg.
4-1-34 Kudankita, Chiyoda-ku,
Tokyo 102-8230 Japan
Tel : +81-3-3222-7605
http://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 209A 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.
12th,12Ath Floor, Ladeco Building, No.266,
Doi Can Street, Lieu Giai Ward, Ba Dinh
District, Hanoi, Vietnam
Tel : +84-4-3232-1284