To the Shareholders

Items Posted on Internet Concerning
Notice of the 18th Ordinary General Meeting of
Shareholders

May 31, 2022

SEGA SAMMY HOLDINGS INC.

1

Contents
1.

Company’s Subscription Rights to Shares ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ p. 3

2.

Independent Auditors ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ p. 4

3.

Outline of Resolutions Regarding Preparation of Internal Control Systemand so forth to Ensure Appropriate Business Execution ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ p. 5

4.

Consolidated Statement of Changes in Net Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ p. 10

5.

Notes to Consolidated Financial Statements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ p. 12

6.

Non-Consolidated Statement of Changes in Net Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ p. 30

7.

Notes to Non-Consolidated Financial Statements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ p. 31

Pursuant to the provisions of laws and regulations and the Article 16 of the Articles of Incorporation, theabove information shall be deemed to be provided to all shareholders by posting it on the website of
SEGA SAMMY HOLDINGS INC. (the “Company”):(https://www.segasammy.co.jp/japanese/ir/stock/meeting/).
Information in English will be posted on our English website(https://www.segasammy.co.jp/english/ir/stock/meeting/).

2

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
1. Company’s Subscription Rights to Shares(1) Outline of Subscription Rights to Shares Issued to the Company’s Directors and Audit & Supervisory
Board Members as Remuneration for Their Services as of the End of the Fiscal Year Ended March 31,
2022
Not applicable.
(2) Outline of Subscription Rights to Shares Issued to Company Employees or Subsidiary Directors, Audit& Supervisory Board Members, or Employees as Remuneration for Their Services During the Fiscal
Year Ended March 31, 2022
Date of resolution of Bord ofAugust 2, 2021
Directors meeting
Number of subscription rights toshares (Note 1)

28,845 rights

Type of shares underlying
subscription rights to shares

Common stock

Number of shares underlying
subscription rights to shares

2,884,500 shares

Amount paid for subscription rights
to shares

No money needs to be paid in exchange for subscription rights tosharesPrice of assets invested during
exercise of subscription rights toshares (per share)¥1,500Period for exercising subscription
rights to shares

From July 1, 2024 to June 30, 2026

Primary conditions for exercising
subscription rights to shares(Note 2)Matters pertaining to transfer ofsubscription rights to shares

Approval of Board Directors meeting of the Company must be
obtained when transferring subscription rights to shares.

Delivery status to employees, etc.

(1) Employees of the Company
Number of subscription rights to shares
Number of underlying shares
Number of recipients of delivery

3,510 rights
351,000 shares
168(2) Directors and employees of the subsidiaries
Number of subscription rights to shares
25,335 rights
Number of underlying shares
2,533,500 shares
Number of recipients of delivery
1,448
Notes: 1. The number of shares underlying each subscription right to shares is 100 per the right.
2. The grantee shall be Director, Audit & Supervisory Board Member, Executive Officer, Consultant,Counsel, or employee of the Group when he or she exercises the rights. However, the following cases
are treated as exceptions.
subscription rights to shares(a) Where the loss of such position is due to expiration of the term of officeor amendment of laws and regulations or Articles of Incorporation of the Group.
(b) Where the loss of such position is due to company regulations, including mandatory retirement or
termination on account of business contraction.
(c) Where, immediately after the loss of such position due to the reasons held by the Company, thegrantee becomes Director, Audit & Supervisory Board Member, Executive Officer, Consultant,Counsel, or employee of the Group, any of its business partners or any other company sanctionedby the Company.

3[English Translation of Convocation Notice Originally Issued in the Japanese Language]
2. Independent Auditors(1) Name
KPMG AZSA LLC(2) Liability Limitation Agreement with Independent Auditors
Although, the Company amended its articles of incorporation and established regulations regarding liability
limitation agreements with independent auditors at the Second Ordinary General Meeting of Shareholders on
June 20, 2006, the Company has not entered into the liability limitation agreement with KPMG AZSA LLC.
(3) Remuneration, etc.
Remuneration
Remuneration, etc., related to the fiscal year ended March 31, 2022

¥137 million

Total of cash and other profits that should be paid to independent auditors
by the Company and its subsidiaries (together, the “Group”)¥242 million

Notes: 1. The Company’s subsidiaries, Sega Europe Ltd., etc. are audited by auditors that differ from theCompany’s.
2. As a result of checking and reviewing the independent auditor’s audit plan and record of
remuneration for the last year, the Audit & Supervisory Board of the Company gave consent to the
remuneration etc. for the independent auditor pursuant to Article 399, Paragraph 1 of theCompanies Act.
3. The non-audit services for which the Company paid remuneration to auditing certified public
accountants and other accountants include contracted business research, which are outside thescope of the services stipulated in Article 2, Paragraph 1 of the Certified Public Accountants Law.
(4) Policy Regarding Determination of Termination or Not Reappointing
The Company will include in objectives of the General Meeting of Shareholders the dismissal of the
independent auditor prescribed in any clause within Article 340, Section 1 of the Companies Act as well as
the dismissal or non-reappointment of the independent auditor if it is deemed difficult for the independent
auditor to perform its duty appropriately.

4

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
3. Outline of Resolutions Regarding Preparation of Internal Control System and so forth to Ensure
Appropriate Business Execution(Outline of Resolutions Regarding Preparation of Internal Control System)
Based on the Companies Act, the Company made the following resolutions regarding the “Basic Policy on
Preparation of Internal Controls System” and has worked to prepare this system.
(1) System to Ensure the Efficient Implementation of the Duties of the Company’s Directors andCompliance with Laws and the Articles of Incorporation
In accordance with the Group Mission, establish a Group CSR Charter, Group Code of Conduct, GroupManagement Policies, and Guidelines (hereinafter, collectively referred to as “Group Philosophy and Code”)
and President (Representative Director) will repeatedly communicate the spirit of Group Philosophy and
Code to employees in administrative post, in order to thoroughly establish compliance with laws, etc., as acondition for all corporate activities. These efforts will reflect the Company’s fundamental policy offulfilling its social responsibility as a member of society and provide a basis for establishing a compliancesystem that comprises such policy.
In addition, in the interest of further strengthening corporate governance, the Board of Directors will makeefforts to build an effective internal controls system and to secure a system for compliance with laws for theCompany as a whole, based on the Group Management Policies stipulated for a unified management of theentire Group and the Guidelines that show the standard for operation and management of the entire Groupso that the Company’s business execution is appropriate and sound.
Also, the Audit & Supervisory Board will audit the effectiveness and functionality of this internal controls
system, and make efforts to identify and correct issues early through regular inspection.
In order to prevent participation in management by anti-social forces, it will be specified that all relations
with anti-social forces are removed in the Group Code of Conduct. Moreover, the Group will contain socalled “Bo-hi jyoko” (terms and clauses concerning exclusion of organized crime groups) in contracts,
establish a system to check whether or not our business partners correspond to anti-social forces, andestablish a system to address systematically in corporation with outside organizations including the police
and lawyers appropriately when anti-social forces approach the Group.
(2) System Related to the Retention and Management of Information Related to the Implementation of
the Duties of the Company’s Directors
President (Representative Director) will appoint the Director in charge of the Administrative Division as
the person in charge of the entire Company with respect to preservation and management of information
related to execution of Directors’ duties. Information related to execution of Directors’ duties will berecorded in writing or electronic media based on the Company regulations etc., and preserved and managed
so that the Directors and Audit & Supervisory Board Members are able to appropriately view suchinformation and also so that such information is easy to search.
In order to manage trade secrets and other information, etc., properly, policies concerning information
management and IT security, as well as guidelines for IT security will be established, and it is planned thatthey will be fully informed of and complied with.
(3) Regulations and Other Systems Regarding Risk Management for Losses of the Company
With respect to risks related to the Company’s business, each relevant division and department will analyze
and identify anticipated risks and clarify the risk management system. The Internal Audit Department willaudit each division’s and department’s risk management and report the results regularly to the management
decision-making body and executive and supervisory management organization.
In order to capture and manage properly important risks underlying inside and outside the management
including emergency responses, policies concerning risk management and crisis management guidelines willbe established as one of the Group Management Policies and Guidelines, and in the event of a situation likely
to have a severe impact on the Group, crisis management teams of the Company and the Group companies
shall cooperate to discuss about countermeasures for prompt and effective actions.

5[English Translation of Convocation Notice Originally Issued in the Japanese Language](4) System to Ensure that the Duties of the Company’s Directors are Implemented Efficiently
Adopt an Audit & Supervisory Board Member system for efficient execution of Directors’ duties, as well
as for Company Directors and Audit & Supervisory Board Members to be well-informed about the Group’sbusinesses and promptly and appropriately make decisions for the Group. The system should also enableappropriate and efficient execution of duties under rules related to authorities and decision-making based on
the Regulations of the Board of Directors, etc.
(5) System to Ensure Appropriate Compliance with Laws and the Articles of Incorporation Concerning
the Implementation of the Duties of the Company’s Employees
The Company will promote the group compliance measures for employees to act appropriately incompliance with laws, the Articles of Incorporation, Company regulations, and social norms. These
measures must be based on the Group Philosophy and Code as code of conduct.
Establish a “Hot Line” system that enables an employee to report as a whistle-blowing any violation oflaws, the Articles of Incorporation, Company regulations, or conduct in violation of social norms that theylearn. Also establish a system that enables the person in charge promptly to report any material matters to
the Board of Directors and the Audit & Supervisory Board.
Such a whistle-blower will be kept in secret, and will not receive any disadvantageous treatments due tothe report. Establish an internal reporting contact office comprised of outside counsel, etc. as recipients ofan informant’s report other than the ordinary reporting line, as part of a system that maintains transparency
and accurately addresses relevant issues.
(6) System Shown Below and Other Systems to Ensure that the Businesses of the Group, Comprised of
the Company, its Parent, and its Subsidiaries, are Implemented Properly① System to report to the Company matters related to the execution of the duties by the directors, the Statutory
Executive Officers, officers executing the duties, and people who should execute the duties of Article 598,
Section 1 of the Companies Act of the Company’s subsidiaries (referred to as “the directors, etc.” in ③
and ④ below)
By having the Company’s employees in administrative post concurrently serve as the directors or the Audit& Supervisory Board members of its Group companies, a system will be established to report and share
information of the Group companies to and with the Company through such officers.
At the same time, a system will be established to communicate important matters, report, share information
on matters of whistle-blowing, report and share information on matters of accounting wrongdoings anderrors based on the vertical chain of the Regulations of Management of Related Companies between the
Company and its Group companies. However, the whistle-blower will be kept in secret, and will not receive
any disadvantageous treatments due to the report.
Hold meetings, etc. for the Group’s Compliance & Risk and the Group’s Audit & Supervisory Board
Members, where various problems in the Group or governance matters with material risks are addressed.
The Company’s internal audit department will conduct audits for the benefit of the Group as a whole, andefforts will be made to ensure to the extent possible that information is shared among members of the Groupand businesses are properly executed.
② System regarding risk management for losses of the Company’s subsidiaries
Regarding common priority items and measures of the Group that the Company has stipulated, while they
will be addressed by each of its Group companies, specific risks of each subsidiary will be managed inconsideration of scale, nature, business category, etc. of each of its Group companies.
③ System to ensure that the duties of the directors, etc. of the Company’s subsidiaries are executed efficiently
As with the Company, in its Group companies, adopt an Audit & Supervisory Board member system for
efficient execution of directors’ duties, as well as for Company Directors and Audit & Supervisory Board
members to be well-informed about the Group’s businesses and promptly and appropriately make decisions
for the Group. The system should also enable appropriate and efficient execution of duties under rules related
to authorities and decision-making based on the Regulations of the Board of Directors, etc. However, thesystem will be established in consideration of scale, nature, business category, etc. of each of its Group
companies.

6

[English Translation of Convocation Notice Originally Issued in the Japanese Language]④ System to ensure appropriate compliance with laws and the Articles of Incorporation concerning executionof the duties of the directors, etc. and employees of the Company’s subsidiaries
As with the Company, the Board of Directors of its Group companies will establish a compliance system
in order to fulfill Group Philosophy and Code based on importance of compliance with laws, etc. and of
fundamental policy of fulfilling social responsibilities as a member of a society.
(7) Matters Regarding Employees whom Audit & Supervisory Board Members of the Company with
Audit & Supervisory Board Members Request to Assist Them in Their Duties, Matters Related to the
Independence of the Employees from the Directors of the Company with Audit & Supervisory Board
Members, and Matters Related to Ensuring Effectiveness of Instructions to the Employees by Audit& Supervisory Board Members of the Company with Audit & Supervisory Board Members
Establish an Audit & Supervisory Board Member’s Office as an organization that reports directly to the
Audit & Supervisory Board and employees in such office will assist the Audit & Supervisory Board
Members’ duties under their direction and order.
Employees who assist the Audit & Supervisory Board Members in their duties will be dedicated employees
in principle and will not be directed or supervised by the Directors. However, under unavoidable
circumstances, employees who serve concurrently in a position of the executive side will be assigned.
Concerning such concurrent employees, independence will be especially considered. Appointment, dismissal,
personnel transfer, evaluation, disciplinary action, revision of wages, etc. of the employees will require aprior agreement of the Audit & Supervisory Board.
(8) System Shown Below and Other Systems Related to Reporting to Audit & Supervisory Board
Members of the Company with Audit & Supervisory Board Members① System to enable Directors, Accounting Advisors, and employees of the Company with Audit &Supervisory Board Members to report to Audit & Supervisory Board Members of the Company with Audit& Supervisory Board Members
The Directors and employees of the Company must report promptly to the Audit & Supervisory Board on
material violations of laws and the Articles of Incorporation or a fact of illegal conduct related to executionof the duties or a fact that might cause conspicuous harm to the Company that they learn. Decisions thatmaterially affect the Company’s business or organization and results of internal audits will be treated in thesame way.
② System to enable directors, Accounting Advisors, Audit & Supervisory Board members, Statutory
Executive Officers, officers executing the duties, people who should execute the duties of Article 598,
Section 1 of the Companies Act of subsidiaries of the Company with Audit & Supervisory Board members
and other people equivalent to these people and employees or people who received reports from thesepeople to report to the Audit & Supervisory Board Members of the Company with Audit & Supervisory
Board Members
The directors, the Audit & Supervisory Board members, the Executive Officers, employees, etc. of theGroup companies or people who received reports from these people must report promptly to the Audit &Supervisory Board of the Company on material violations of laws and the Articles of Incorporation or a factof illegal conduct related to execution of the duties or a fact that might cause conspicuous harm to theCompany that they learn. Decisions that materially affect the Company’s business or organization and resultsof internal audits will be treated in the same way.
The Audit & Supervisory Board Members of the Company will make efforts to maintain systems from theperspective of focusing on so-called group management so that the Audit & Supervisory Board Members of
the Group companies are able to become receivers of report from the business execution side and to become
mediators.
(9) System to Ensure that People Who Made the Report Described in the Previous Clause Will Not
Receive Disadvantageous Treatments Because of Making Such Report
The reporter described in the previous clause will not receive disadvantageous treatments because of
making such report. Such disadvantageous treatments will be subject to punitive action.

7

[English Translation of Convocation Notice Originally Issued in the Japanese Language](10) Matters Concerning Policies Related to Procedures of Prepayment or Reimbursement of Expenses
Arising from Implementation of the Duties of the Audit & Supervisory Board Members of theCompany with Audit & Supervisory Board Members and Other Treatments of Expenses or Liabilities
Arising from Implementation of Such Duties
The Company will bear expenses arising from the execution of the duties of the Audit & Supervisory Board
Members in accordance with the Company regulations, responding to requests from the Audit & Supervisory
Board or Standing Audit & Supervisory Board Members. This includes expenses incurred in using outsideadvisors, etc., as prescribed in the clause (11).
(11) Systems Established to Ensure the Efficacious Performance of Auditing Responsibilities by Audit &Supervisory Board Members of the Company with Audit & Supervisory Board Members
Representative Directors regularly will meet with Audit & Supervisory Board Members, exchange
opinions related to Company management, in addition to business reports, and otherwise communicate
effectively with them.
The Board of Directors will ensure Audit & Supervisory Board Members’ participation in important workrelated meetings to ensure that the Company’s business is executed properly.
The Audit & Supervisory Board will use attorneys, certified public accountants, and other outside advisors,
as necessary for itself, and its opportunities to receive advice related to audit work will be guaranteed.
(Outline of Implementation Status of Internal Control System to Ensure Appropriate Business Execution)
The implementation status of the foregoing Basic Policy of the Company is as outlined below:(1) Compliance① Compliance training is held every fiscal year for the officers of the Company and the Group, divided into
separate groups of new officers and existing officers.
② As a place to share important issues and relevant measures for internal controls such as compliance andrisk management, the Group compliance liaison meeting is in place. The main contents of the meeting arepresented as feedback to the Board of Directors, etc. of major Group companies.
③ In an effort to enhance the compliance system, the Company designates priority compliance matters eachfiscal year that are common across the Group, from among all social requirements and issues affecting theGroup, and implements group training. The Company also engages in “compliance promotion activities” ona continual basis for the purpose of boosting compliance awareness and knowledge among the Group
employees.
④ As an initiative to eliminate anti-social forces, the Company has introduced a Group-wide checking system
to detect if business partners apply as anti-social forces and supports its implementation.
⑤ For the purpose of early detection and preventing misconduct such as violations of laws and regulations,the Company has established “Corporate Ethics Hot Line” as a whistle-blowing system. The Company isactively involved in informing employees of the system.
⑥ The Company’s internal audit department conducts internal audits of the Company and the Group
companies and strives to further enhance the internal audit system by sharing audit information andstrengthening mutual cooperation with the internal audit departments of the Group companies.
(2) Sustainability① The Group has formulated its sustainability vision and key performance indicators (KPI).
② The Group issues comprehensive annual reports on non-financial information in the form of asustainability action report.
(3) Risk Management
By identifying significant risks underlying inside and outside management and clarifying issues to beaddressed, the Company and the Group companies are committed to business executions and mitigating lossof management resources and recurrence thereof.

8

[English Translation of Convocation Notice Originally Issued in the Japanese Language](4) Effectiveness of Audits by Audit & Supervisory Board Members① In order to complement enhanced information provision to Audit & Supervisory Board Members forinternal control purposes, the meetings of “Holdings Audit Liaison Committee” consisting of Audit &Supervisory Board Members and the Independent Auditor, “Audit & Supervisory Board Members andInternal Auditing Office Liaison Committee” where Audit & Supervisory Board Members and the internal
audit department discuss progress in audits and exchange information, and “Group Audit Liaison Committee”
consisting of all Standing Audit & Supervisory Board Members of the Group are held.
② The Company assigns employees dedicatedly serving as an assistant to Audit & Supervisory Board
Members to provide support for Audit & Supervisory Board Members in executing their duties.

9[English Translation of Convocation Notice Originally Issued in the Japanese Language]
4. Consolidated Statement of Changes in Net Assets(From April 1, 2021 To March 31, 2022)(Unit: millions of yen)
Shareholders’ equity
Capitalstock
Balances as of April 1, 2021

Capitalsurplus29,953Retainedearnings

118,048

200,551

Cumulative effects of changes inaccounting policies
Restated balance

Treasury
stock

Total
shareholders’equity(53,561)

294,991(2,067)
29,953

118,048

198,484(2,067)(53,561)

292,924

Changes of items during the period
Dividends from surplus(9,411)(9,411)

Profit attributable to owners ofparent37,02737,027(25,036)

Purchase of treasury stock(90)

Disposal of treasury stock

711

Change in scope of consolidation
Change in scope of use of equity
method(186)

Change in ownership interest ofparent due to transactions with
non-controlling interests(82)

Total changes of items during theperiodBalances as of March 31, 2022

(25,036)621(1,317)(1,317)

(97)

(284)
(82)

-

(358)

26,200(24,325)

1,515

29,953

117,689

224,684(77,886)

294,440

Accumulated other comprehensive income
Valuationdifference on Deferred gains Revaluation
available-for- or losses onreserve forsalehedgeslandsecurities
Balances as of April 1, 2021

1,930

(725)

(1,109)Foreigncurrencytranslation
adjustment(3,867)

Total
Remeasuremen accumulated
ts of definedotherbenefit plans comprehensive
income(459)

Cumulative effects of changes inaccounting policies

1,930

(725)

Net changes of items other thanshareholders’ equity

340

692

Total changes of items during theperiod340

692

Balances as of March 31, 2022

2,270

(33)

Restated balance(4,231)(1,109)(3,867)(459)(4,231)

3,909(2,739)

2,203

-

3,909

(2,739)2,203(1,109)41(3,199)(2,028)Changes of items during the period
Dividends from surplus
Profit attributable to owners ofparentPurchase of treasury stock
Disposal of treasury stock
Change in scope of consolidation
Change in scope of use of equity
methodChange in ownership interest ofparent due to transactions with
non-controlling interests

10[English Translation of Convocation Notice Originally Issued in the Japanese Language](Unit: millions of yen)
Subscription
rightsto shares
Balances as of April 1, 2021

Non-controllinginterests-

496

Cumulative effects of changes inaccounting policies
Restated balance

Total
net assets
291,256(2,067)-496

289,189

Changes of items during the period
Dividends from surplus(9,411)

Profit attributable to owners ofparent37,027Purchase of treasury stock(25,036)

Disposal of treasury stock

621

Change in scope of
consolidation(1,317)

Change in scope of use of equity
method(284)

Change in ownership interest ofparent due to transactions with
non-controlling interests(82)

Net changes of items other thanshareholders’ equity

176

(447)

1,932

Total changes of items during theperiod

176

(447)

3,448

Balances as of March 31, 2022

176

49

292,637

Note: Figures shown in millions of yen have been rounded down to the nearest million.

11

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
5. Notes to Consolidated Financial Statements
I Significant Accounting Policies Used in Preparation of Consolidated Financial Statements(1) Scope of Consolidation
Number of consolidated subsidiaries
58
For a complete list of major consolidated subsidiaries, refer to the section “I Outline of the Group’s
Business” under “7. Material Parent Company and Subsidiaries” of “(2) Relationships with subsidiaries”.
Number of non-consolidated subsidiaries
10
Major non-consolidated subsidiaries: SEGA (SHANGHAI) SOFTWARE CO., LTD. etc.
Non-consolidated subsidiaries are excluded from the scope of consolidation because the combined
amount of each of assets, net sales and net income corresponding to the percentage of equity interest heldby the Company, and the combined amount of retained earnings corresponding to the percentage of equity
interest held by the Company, do not have significant effect on the consolidated financial statements.
(2) Application of the Equity Method
Number of non-consolidated subsidiaries accounted for under the equity-method Number of affiliated companies accounted for under the equity method
9
Major equity-method affiliates: PARADISE SEGASAMMY Co., Ltd. and INTERLIFE HOLDINGS CO.,LTD. etc.
Number of non-consolidated subsidiaries and affiliated companies which are not accounted for under theequity method
12
Major non-consolidated subsidiaries and affiliated companies which are not accounted for under theequity method: CHARA-WEB.CO., LTD. etc.
Some of the Company’s non-consolidated subsidiaries and affiliates are not accounted for under theequity method because the combined amount of net income corresponding to the percentage of equity
interest held by the Company, and the combined amount of retained earnings corresponding to thepercentage of equity interest held by the Company do not have significant effect on the consolidated
financial statements even if they are excluded from the scope of equity method, and have no significanceas a whole.
(3) Fiscal Year for Consolidated Subsidiaries
Consolidated subsidiaries whose fiscal year-ends differ from the consolidated balance sheet date are listed
below. Necessary adjustments are made on consolidation for material transactions that occurred between
the end of the fiscal years of these subsidiaries and the end of the consolidated balance sheet date.
Consolidated subsidiary
Fiscal year-end
Sega Amusements Taiwan Ltd.
December 31
Sega Black Sea Ltd.
December 31

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[English Translation of Convocation Notice Originally Issued in the Japanese Language](4) Accounting Policies① Valuation standards and accounting treatment for important assets
a. Held-to-maturity debt securities
Held-to-maturity debt securities are stated at amortized cost (the straight - line method).
b. Available-for-sale securities
Items other than shares, etc. without a market price
Items other than shares, etc. without a market price are stated at fair value. The difference between
acquisition cost and fair value is accounted for as valuation difference on available-for-sale securities
in net assets, with cost of sales determined by the moving-average method.
With respect to compound financial instruments whose fair values cannot be categorized and measured
for each embedded derivative, the entire compound financial instruments are appraised by fair value,
and unrealized gains or losses are reported as income or expenses for the fiscal year ended March 31,
2022.
Shares etc. without a market price
Shares etc. without a market price are carried at cost, which is determined by the moving-averagemethod.
The net amount of equity included in the Company’s financial statements from limited liability
investment partnerships and similar investments, regarded as marketable securities under Article 2-2 ofthe Financial Investment and Exchange Law of Japan, is calculated based on the relevant financial
statements for the partnership available as of the reporting date stipulated in the partnership agreement.
c. Derivatives
Derivatives are stated at fair value.
d. Inventories
Inventories are stated at cost, cost being determined mainly by the gross-average method (or at the net
realizable value (NRV) calculated by writing down the book value to reflect a decrease in the NRV).
Work in process is also stated at cost, cost being determined by the specific identification method (orat the NRV calculated by writing down the book value to reflect a decrease in the NRV).
② Depreciation and amortization for important assets
a. Property, plant and equipment (excluding lease assets):
Depreciation is calculated primarily using the straight-line method.
Range of useful life for the assets is as follows:
Buildings and Structures: 2 - 50 years
Machinery, equipment and vehicles: 2 - 12 years
Amusement machines and facilities: 2 - 5 years
b. Intangible assets (excluding lease assets):
Amortization is calculated using the straight-line method. The software used in the Company isamortized by the straight-line method based on the useful lives within the Company (less than 5 years).
c. Lease assets
Finance leases which transfer ownership:
Depreciation method for such assets is the same as that which applies to property, plant and equipment
owned by the Company.
Finance leases which do not transfer ownership:
Depreciated, using the straight-line method over a useful life equal to the lease period with a residual
value of zero.
d. Right-of-use assets
The lease period or the useful life of the asset, whichever is shorter, is used as the useful life, and theresidual value is calculated as zero.
③ Accounting for deferred assets
Bond issue cost: All expenses are expensed when incurred.

13

[English Translation of Convocation Notice Originally Issued in the Japanese Language]④ Accounting for allowances and provisions
a. Allowance for doubtful accounts
Allowance for doubtful accounts is provided in the amount sufficient to cover possible losses based ona historical write-off of general receivables. Receivables with default possibility and bankrupt receivables
are calculated based on an individual assessment of the possibility of collection.
b. Provision for bonuses
The estimated amount of bonuses was recorded to meet the payment of employee bonuses, an amountcorresponding to the current fiscal year.
c. Provision for directors’ bonuses
The estimated amount of bonuses was recorded to meet the payment of Directors and Audit &Supervisory Board Members bonuses, an amount corresponding to the current fiscal year.
d. Provision for point card certificatesIn order to provide for the usage of points granted to customers, the estimated future usage amount for
the end of the fiscal year ended March 31, 2022 has been recorded.
e. Provision for dismantling of fixed assets
To provide for expenses for dismantling unused decrepit buildings, estimated future expenses arerecorded.
⑤ Accounting method for retirement benefitsa. Attribution method for projected retirement benefits
In calculating retirement benefits obligations, benefit formula attribution is adopted for the purpose of
attributing projected retirement benefits to the period up to the end of the fiscal year ended March 31,
2022.
b. Treatment of actuarial gains and losses and prior service costs
Prior service costs are amortized equally over a certain number of years (10 years in principle) within
the average remaining years of service for the employees at the time of accrual, or are charged to income
collectively at the time of accrual. Actuarial gains and losses are amortized by the straight-line method
over a certain number of years (10 years in principle) within average remaining years of service for theemployees at the time of accrual in each fiscal year, commencing from the following fiscal year after theaccrual for each employee, or are charged to income collectively in the following fiscal year after theaccrual.
⑥ Accounting for significant hedge
a. Hedge accounting
The Group adopts deferred hedge accounting. However, special treatment is used for qualifying interest
rate swap transactions. Moreover, allocation hedge accounting is applied to qualifying currency swap
transactions and forward exchange contracts.
b. Hedging instruments and hedged items
Hedging instrument: Currency swaps, interest rate swaps, and forward exchange contracts
Hedged item: Interest on loans payable, receivables and payables denominated in foreign currencies
c. Hedge policy
Derivative instruments are used to mitigate risks associated with foreign exchange and interest rate
fluctuations.
As a rule, hedging is only used for items in which actual demand exists, and not for speculative purposes.
d. Evaluation of hedge effectivenessHedge effectiveness is evaluated through comparative analysis of the cumulative fluctuations in themarket between the hedged item and the hedging instrument. Evaluation of hedge effectiveness at fiscal
year-end is omitted for currency swap transactions, as material conditions for the notional principal ofhedging instruments and those for hedged items are the same and these transactions are deemed to offset
the market fluctuations. Evaluation of hedge effectiveness at fiscal year-end is omitted also for interest
rate swap transactions applied to special treatment.

14

[English Translation of Convocation Notice Originally Issued in the Japanese Language]⑦ Recognition criteria for significant revenue and expenses
The recognition criteria for significant revenue are as detailed below. The considerations for performanceof each of the obligations shall be received within approximately 2 months of the obligation being
performed and shall not include significant financing components.
a. Digital content sales
With regard to revenue from the granting of game distribution rights in the Entertainment Contents
Business, the Group provide game content primarily to platform operators along with distribution rights,
and the Group’s performance obligation is to provide game content. The Group determines that theperformance obligation is satisfied by said provision of game content to the platform operators, and if
the contract is one in which usage fees are collected based upon the sales of the platform operator, therevenue is recognized at the point at which the sales of the platform operators are recorded, or at the pointthat the game content is provided for other cases.
With regard to revenue from sales from game downloads in the Entertainment Contents Business, theGroup’s performance obligation is to provide game content to customers. The Group determines that theperformance obligation is satisfied by the provision of the game content to the customer, and recognizes
the revenue at the point that the game content is provided.
With regard to revenue from F2P items in the Entertainment Contents Business, and Pachislot andPachinko Machines Business, the Group’s performance obligation is to provide the services specified foreach item to the customer. Depending on the nature of the item, the Group determines that theperformance obligation will be satisfied at the point at which the item is used by the customer or over thecourse of the estimated usage period as calculated based on past usage data for similar items, whereupon
the revenue is then recognized.
With regard to the annual update service for amusement machines in the Entertainment Contents
Business, the Group’s performance obligation is to consistently provide updates to content throughout
the contract period. Therefore, the Group determines that the performance obligation is satisfied over thecourse of the contract period, with the revenue recognized over the period of the contract.
b. Product sales
Revenue from sales of products and merchandise in the Entertainment Contents Business and Pachislot
and Pachinko Machines Business is primarily from sales through manufacturing or wholesale, with theGroup’s performance obligation to deliver finished goods or merchandise in accordance with the sales
contract entered with the customer. The Group determines that the performance obligation is satisfied
when it delivers the finished goods or merchandise and the customer assumes control over said finishedgood or merchandise, with the revenue recognized at the point of delivery. With regard to revenue fromsales from consignment type sales of certain goods, if, after the roles (the principal or agent) in theprovision of goods or services is determined, the Group is involved in the sale of merchandise as an agent,
the revenue is recognized using the net amount after deducting the amount paid to the supplier from theamount received from the customer.
c. Resort facility sales
Revenue of resort facilities in the Resort Business is from the operation of hotels and golf courses, with
the Group’s performance obligation to provide accommodation, eating and drinking, and space to playon the golf course at each facility. The Group determines that the performance obligation is satisfied upon
the completion of the provision of the various services to the customers, with the revenue recognized at
the point at which the service is provided.
⑧ Amortization method and period of goodwill
If the duration of the effect of goodwill can be rationally estimated, amortization is made over theestimated number of years by the straight-line method. In other cases, amortization is made over a fiveyear-period by the straight-line method.
⑨ Accounting method for consumption taxes
Consumption taxes and local consumption taxes are accounted using the net-of-tax method, and nondeductible consumption taxes and local consumption taxes on assets are posted mainly as expenses whenincurred.

15

[English Translation of Convocation Notice Originally Issued in the Japanese Language]⑩ Application of the consolidated taxation system
The Company and certain domestic consolidated subsidiaries applied the consolidated taxation system.
⑪ Application of tax effect accounting for the transition from the consolidated taxation system to the grouptax sharing system
The Company and certain domestic consolidated subsidiaries will shift from the consolidated tax return
filing system to the group tax sharing system from the following fiscal year.
With respect to the transition to the group tax sharing system created under the Act for Partial Revisionof the Income Tax Act and Other Acts (Act No. 8 of 2020) and the items on which non-consolidated
taxation system was revised in conjunction with the transition to the group tax sharing system, due to thetreatment prescribed in Paragraph 3 of the Practical Solution on the Treatment of Tax Effect Accounting
for the Transition from the Consolidated Taxation System to the Group Tax Sharing System (PITF No. 39,
March 31, 2020), the Company will not apply the provisions under Paragraph 44 of the Implementation
Guidance on Tax Effect Accounting (ASBJ Guidance No. 28, February 16, 2018), and the amount ofdeferred tax assets and deferred tax liabilities are based on the provisions of the Income Tax Act prior to
the amendment.
From the beginning of the following fiscal year, the Group intends to apply the Practical Solution on the
Accounting and Disclosure Under the Group Tax Sharing System (Practical Solution No.42, August 12,2021) in which the procedures for accounting and disclosure of corporation income tax, local corporation
income tax, and tax effect accounting when applying the group tax sharing system are stipulated.

16

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
II Notes to Changes in Accounting Policies(1) Application of Accounting Standard for Revenue Recognition)
Effective from the beginning of the fiscal year ended March 31, 2022, the Group applied "AccountingStandard for Revenue Recognition" (ASBJ Statement No. 29, issued by the Accounting Standards Board ofJapan on March 31, 2020), etc. Under the accounting standard, revenue is recognized when control overpromised goods or services is transferred to customers, at an amount that the Group is expected to receive in
exchange for the said goods or services. The Group previously recognized revenue from the sale of content
update rights for some products at a point when the sale took place, but as a result of the adoption of theaccounting standard, revenue is now recognized over a certain period of time when control over goods orservices is transferred to customers over a certain period of time. Additionally, revenue pertaining to the salesof some products through consignment arrangements was previously recognized at a total amount, but revenue
is now recognized at a net amount as a result of the Group’s judgement on the roles (principal or agent) inproviding goods or services to customers.
In adopting the Accounting Standard for Revenue Recognition, etc., the Group followed the transitional
treatment stipulated in the provision of Paragraph 84 of the Accounting Standard for Revenue Recognition.
The cumulative effect of retrospectively applying the new accounting policy to periods prior to the beginningof the fiscal year ended March 31, 2022 has been added to or subtracted from retained earnings at the beginningof the fiscal year ended March 31, 2022, and the new accounting policy has been applied effective from thesaid beginning balance of retained earnings. The impact on profit and loss, and retained earnings for the fiscal
year ended March 31, 2022 was immaterial.
Due to the application of the Accounting Standards for Revenue Recognition, etc., from the fiscal year ended
March31, 2022, "notes and accounts receivable - trade", which was included in the consolidated balance sheetsof the previous fiscal year, have been included in "notes and accounts receivable - trade and contract assets".
(2) Accounting Standard for Fair Value Measurement
Effective from the beginning of the fiscal year ended March 31, 2022, the Group applied "AccountingStandard for Fair Value Measurement" (ASBJ Statement No. 30, issued by the Accounting Standards Boardof Japan on July 4, 2019), etc. In accordance with the transitional treatment stipulated in Paragraph 19 of the
Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the “Accounting Standard for
Financial Instruments” (Accounting Standards Board of Japan, July 4, 2019, ASBJ Statement No. 10), theGroup has decided to adopt the new accounting policy stipulated by the Accounting Standard for Fair Value
Measurement, etc. prospectively from the date of the change. The impact on profit and loss for the fiscal year
ended March 31, 2022 was immaterial.
In addition, the Company will include notes on fair value information by level within the fair value hierarchyin the notes on financial instruments. However, in accordance with the transitional treatment provided in
Paragraph 7-4 of the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, July 4, 2019), notes pertaining to the previous period are not presented.

17

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
III Notes to Accounting Estimates(1) Valuation for inventories in the Entertainment Contents Businessa. Amounts posted to the consolidated financial statements in the fiscal year ended March 31, 2022
Work in process¥39,098 million“Other” under intangible assets¥5,801 million
b. Calculation method of the amounts posted to the consolidated financial statements in the current fiscal
year
Work in process and software amounts etc. posted on account of production of game contents in theEntertainment Contents Business are stated at acquisition cost, and are routinely treated as cost inaccordance with anticipated sales volumes and service schedule periods. However, in the event that the
future recoverable value falls below that of the book value of work in process and software, the amount of
said difference is posted to cost of sales.
c. Key assumptions used in the calculation of amount posted to the consolidated financial statements in thefiscal year ended March 31, 2022
The future recoverable value is an estimate based on sales forecasts for the following fiscal years.
d. Impact on the consolidated financial statements in the following fiscal year
In case of possible discrepancy between the forecasts and actual results due to the timing of release of
new products from rival companies in the same market and the nature of hit businesses, there may be an
impact to profit and loss.
(2) Valuation of Raw Materials in the Pachislot and Pachinko Machines Businessa. Amount posted to the consolidated financial statements in the fiscal year ended March 31, 2022
Raw materials¥10,594 million
b. Calculation method of the amounts posted to the consolidated financial statements in the fiscal year ended
March 31, 2022
Raw materials are posted using the acquisition cost, although in the event that anticipated future raw
material usage falls below stock, the surplus is posted to cost of sales.
c. Key assumptions used in the calculation of amount posted to the consolidated financial statements in thefiscal year ended March 31, 2022
Raw material usage forecasts are estimated based on the projected volume of pachinko and pachislot
machine sales for the following fiscal years, and replacement demand is projected based on the arrival of
the withdrawal deadline for formerly compliant machines.
d. Impact on the consolidated financial statements in the following fiscal year
In case of possible discrepancy between the forecasts and actual results due to the timing of release of
new products from rival companies in the same market and the nature of hit businesses, there may be an
impact to profit and loss.

18

[English Translation of Convocation Notice Originally Issued in the Japanese Language](3) Valuation of Noncurrent Assets Held by PHOENIX RESORT CO., LTD.
a. Amounts posted to the consolidated financial statements in the fiscal year ended March 31, 2022
Property, plant and equipment¥9,902 million
Intangible assets¥259 million
b. Key assumptions used in the calculation of amount posted to the consolidated financial statements in thefiscal year ended March 31, 2022
Operating income and loss generated by operating activities continues to be negative, and indicators of
impairment in the asset group are becoming apparent. Given this, the Company has calculated
undiscounted future cash flow, and made a determination on whether or not to recognize an impairment
loss.
Business plans and the medium-term management plan, which are fundamental to future cash flow under
this determination, are formulated based on room occupancy rates, average room prices, numbers of golfrounds, and golf round unit prices that assume the easing of restrictions implemented to prevent the spreadof COVID-19.
Accordingly, the Company have determined that it is not necessary to recognize impairment loss as thepre-discounted future cash flow exceeds the book value of noncurrent assets.
c. Impact on the consolidated financial statements in the following fiscal year
Estimates of future cash flows are made based on best estimates from management. However, in the eventthat COVID-19 impacts demand trends which cause estimates to differ from actual results, there may be
an impact on profit and loss.
(4) Valuation of Shares of Affiliates with Regard to PARADISE SEGASAMMY Co., Ltd.
a. Shares of subsidiaries and affiliates¥18,542 million
b. Calculation method of the amounts posted to the consolidated financial statements in the fiscal year ended
March 31, 2022
PARADISE SEGASAMMY Co., Ltd. (PSS) is an affiliate of the Company accounted for using the equity
method. Investments into PSS are treated under equity method accounting.
PSS applies IFRS, and in addition to when there appears to be indicators of impairment in its cash
generating unit groups, such as goodwill, it conducts impairment tests on a monthly basis. As a result of
its impairment tests, in the event that the recoverable value declines below book value, the book value in
the PSS financial statement is reduced to the recoverable value, and together with recognizing an
impairment loss, this exerts an impact on the shares of affiliates of the Company through equity-method
accounting.
PSS has posted ¥126,415 million in property, plant and equipment, including goodwill of ¥8,173 million.
c. Key assumptions used in the calculation of amount posted to the consolidated financial statements in thefiscal year ended March 31, 2022
PSS conducts impairment tests on its cash generating unit groups, such as goodwill, and its cash
generating unit groups that show indicators of impairment, and makes calculations for recoverable value
based on value in use or on fair value after deducting disposal costs.
Key assumptions that utilize measurements of value in use are the business plans which are fundamental
to calculations of future cash flow, as well as growth rates and discount rates. Business plans, theformulations have been made based on the number of casino users and the drop amount (the amount ofchips purchased at tables), premised on the relaxation of behavioral restrictions associated with COVID19. In addition, the discount rate is calculated using weighted average cost of capital as a basis and byreflecting the risk associated with businesses, which is determined based on external and internal
information.
Fair value following the deduction of disposal costs uses the real estate appraisal value (depreciatedreplacement cost) of external experts who take into consideration the repurchase cost of the relevant asset
and such related cost factors.
d. Impact on the consolidated financial statements in the following fiscal year
Estimates of future cash flows are made based on best estimates from management. However, in the eventthat COVID-19 impacts trends in the number of users which cause estimates to vary from actual results,
there may be an impact on profit and loss.

19

[English Translation of Convocation Notice Originally Issued in the Japanese Language](5) Accounting Estimates Associated with the Spread of COVID-19
Buffeted by the expanding rate of COVID-19 infections, in the fiscal year ended March 31, 2022, theGroup experienced delays to parts’ procurement and decreases of operating rate at various facilities.
In the following fiscal year, assuming that the impact of COVID-19 will continue to some extent, theGroup’s accounting estimates are based on the determination of the recoverability of deferred tax assets andthe determination on impairment losses, etc.
There is a high degree of uncertainty in these assumptions, and in the event of a change in the impact that
COVID-19 has on the economic environment, there may be an impact on future financial position andmanagement results.
IV Notes to Consolidated Balance Sheet(1) Accumulated depreciation of property, plant and equipment¥98,041 million(2) Assets pledged
Shares of affiliates (Note)¥18,542 million(Note) For loans from financial institutions to the equity-method affiliate PARADISE SEGASAMMY
Co., Ltd. at the end of the current fiscal year ¥70,107 million (KR₩725,000 million), the sharesof this company were provided as a pledge.
(3) Revaluation reserve for Land
Consolidated subsidiary SEGA CORPORATION has revalued land for business, pursuant to Japan’s
Law Concerning Revaluation of Land (Law No. 34, March 31, 1998) and Amendments to the Law
Concerning Revaluation of Land (Law No. 19, March 31, 2001). Accordingly, SEGA CORPORATION
has recorded an item for the revaluation reserve for land under net assets.
Revaluation method
SEGA CORPORATION computed the value of land based on the methodology regarding rational
adjustments to valuation of fixed assets stipulated in Article 2-3, and appraisals by licensed real estateappraisers prescribed in Article 2-3 of the Enforcement Ordinance No. 119 (March 31, 1998) pertaining to
the Law Concerning Revaluation of Land.
Date of the revaluation
March 31, 2002
Difference between the fair value at the end of the fiscal year and the book value after revaluation ofrevalued land¥(425) million(4) Outstanding balance of overdraft account:
Outstanding balance of commitment line:¥161,068 million¥78,000 million

20

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
V Notes to Consolidated Statement of Income(1) The book value devaluation of inventories held for normal sales purpose based on decline in profitability.
Cost of sales¥6,636 million(2) R&D expenses included in general and administrative expenses and the manufacturing cost for the current
fiscal year
¥47,127 million(3) Breakdown of major extraordinary items① Breakdown of gain on sales of noncurrent assets
Machinery, equipment and vehicles¥2 million
Other property, plant and equipment¥1,985 million
Total¥1,988 million② Breakdown of loss on sales of noncurrent assets
Building and structures¥14 million
Machinery, equipment and vehicles¥0 million
Amusement machines and facilities¥33 million
Other property, plant and equipment¥2 million
Total¥50 million③ Breakdown of impairment loss
(Unit: millions of yen)Type
AmountBuildings and structures
11
Shinagawa -ku,
Amusement machines and facilities
11
Assets for business
Tokyo
Other property, plant and equipment320and 2 other locations
Other intangible assets
86
Total
430
For each business segment, the Group classifies assets or asset groups based on whether their cash flows
can be estimated independently. The book values of assets or asset groups whose fair values declined
significantly or that are projected to consistently generate negative cash flows are reduced to theirrecoverable value. The amount of this reduction is deemed an impairment loss and is recorded under
extraordinary loss.
Use

Location21

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
VI Notes to Consolidated Statement of changes in Net Assets(1) Issued Stock
Type of stock
Common stock-

Decrease-(Unit: shares)
As of March 31, 2022
266,229,476

Increase
12,578,815

Decrease
413,466(Unit: shares)
As of March 31, 2022
43,307,930

As of April 1, 2021
266,229,476

Increase

Type of stock
As of April 1, 2021
Common stock
31,142,581(Outline of Causes of Change)
The causes of the increase are as follows:
Increase due to purchase of market buying(2) Treasury Stock

12,560,300 shares

Increase due to purchase of odd-lot stock

7,215 shares

Increases due to free acquisition as a result of retirement of
persons eligible for the stock compensation with restriction oftransfer system

11,300 shares

The causes of the decrease are as follows:
Decrease due to sales of odd-lot stock

166 shares

Decrease due to stock compensation with restriction of transfer

413,300 shares(3) Dividends① Dividend AmountResolution

Type of
Stock

Board of Directors’ Meeting
held on May 13, 2021
Board of Directors’ Meeting
held on November 8, 2021

Commonstock
Commonstock

Total
dividend(¥ million)

Dividend
per share(¥)

Record date

Effective date

4,701

20

March 31, 2021

June 4, 2021

4,709

20

September 30,
2021

December 1, 2021

② Dividends of which the record date is in the fiscal year ended March 31, 2022, but the effective date is in
the following fiscal year
Total
Dividend
Type of Resource ofRecordEffective
Resolution (plan)
dividend per shareStock
dividenddatedate(¥ million)(¥)
Board of Directors’ Meeting
Common Retained
March 31, June 2,
4,458
20
held on May 13, 2022
Stock
Earnings
2022
2022(4) Number and type of shares to be issued upon exercise of subscription rights to shares (except for the ones
before the first day of the exercisable period) as of the end of the fiscal year ended March 31, 2022
Not Applicable.

22

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
VII Notes on the Financial Instruments(1) Matters regarding the current status of financial instruments
The Group’s signed an agreement concerning commitment lines with financial institutions, such as
securing medium- to long-term fund liquidity with the Company as a holding company, as a safety net for
the entire Group. In addition, capital for each business is financed based on the financial plan as needed,through bank borrowing or bond issue applying Cash Management System for the purpose of the efficientutilization of the Group funds. Most funds are invested primarily in low-risk and high-liquidity financial
assets, while some are invested in compound financial instruments such as bonds etc. for the purpose of
efficiently managing funds. Derivatives are mainly used, not for speculative purposes, but to manage
exposure to financial risks as described later.
Credit risks of the clients in terms of notes and accounts receivable - trade are mitigated under the credit
management rules, etc. at each Group company.
Short-term investment securities are mainly negotiable certificates of deposit. The Group’s credit risk
exposure is minimal as these transactions are restricted to highly rated financial institutions in accordancewith the capital management rules etc. of each Group company. Investment securities are mainly stocks andthe relevant information such as fair values of these stocks and financial conditions of the issuers (business
partners) is reviewed and reported to the Board of Directors of each Group company, etc. on a regular basis.
Shareholding status is also continually reviewed in view of the relationship with business partners that issue
these stocks. With certain compound financial instruments etc., the Group is exposed to risks associated withfair value fluctuations etc. in the stock markets but periodically evaluates them on a mark-to-market basis.
Borrowings as well as bonds is intended to secure funds necessary for the purpose of working capital andcapital expenditures etc. and diversify means for procuring funds. Each Group company reviews its own
actual and projected cash position on a monthly basis, which is eventually verified collectively by theCompany as part of the Group’s liquidity risk management.
The Group’s derivative transactions are restricted to forward exchange contracts and currency swap
transactions as hedges against currency fluctuation risks on its foreign currency-denominated operatingreceivables and debt as well as foreign currency-denominated loans payable, and interest rate swap
transactions etc. to mitigate interest rate risks on some of the Group’s variable interest rate loans payable.
These transactions are executed and managed mainly by the financial department or the accounting
department upon obtaining internal approvals in compliance with the derivative transactions management
rules, etc. of each Group company. Furthermore, reports on the status of the derivative transactions are madeto Board of Directors meeting at each company as appropriate.

23

[English Translation of Convocation Notice Originally Issued in the Japanese Language](2) Matters regarding the fair value etc. of financial instruments
Consolidated balance sheet amounts and fair values of the Group’s financial instruments and the difference
between the two as of the end of the fiscal year ended March 31, 2022 are as follows. Fair values of financial
instruments named in Note 2 below are extremely difficult to grasp, thus are not included in the following
list. Since cash and deposits are settled in a short period of time and the fair valuation is close to the bookvalue, notes are omitted on them.
(Unit: millions of yen)
Consolidated balance
Fair values
Difference
sheet amount(1) Notes and accounts receivable - trade34,95834,958(2) Short-term investment securities andinvestment securities
1) Held-to-maturity debt securities
106
106
0
2) Available-for-sale securities
2,936
2,936
3) Stocks of affiliates
813
690
(122)
(3) Notes and accounts payable - trade24,45524,455(4) Short-term loans payable
10,00010,000(5) Long-term loans payable
32,00031,95544(6) Bonds payable
10,0009,929
70(7) Derivative transactions (Note 1)
1) Hedge accounting is not applied2) Hedge accounting is applied
(33)
(33)
Note: 1. Net receivables and payables resulting from derivative transactions are presented on a net basis,
and items for total net obligations are presented in ( ).
2. Shares, etc. without a market priceConsolidated balance sheet
Categoryamount (millions of yen)
Investments in unlisted stocks, etc.
3,849
Investments in investment limited partnerships, etc.
11,962
Stocks of non-consolidated subsidiaries
809
Stocks of affiliates
19,243
Investments in capital of subsidiaries and affiliates
97824

[English Translation of Convocation Notice Originally Issued in the Japanese Language](3) Fair value information by level within the fair value hierarchy
The fair value of financial instruments is classified into the following three levels according to theobservability and materiality of inputs used to measure fair value.
Level 1 fair value: Fair value measured using (unadjusted) quoted prices in active markets for the sameassets or liabilities
Level 2 fair value: Fair value measured using directly or indirectly observable inputs other than Level 1
inputsLevel 3 fair value: Fair value measured using significant unobservable inputs
If multiple inputs are used that are significant to the fair value measurement, the fair value measurement iscategorized in its entirety in the level of the lowest level input that is significant to the entire measurement.
① Financial assets and financial liabilities measured at fair value(Unit: millions of yen)
Category

Consolidatedbalance sheet
amountFair value
Level 1

Level 2

Level 3

Total

Short-term investment
securities and investment
securities
Available-for-salesecurities
Stocks
1,958
1,958
1,958
Bonds
537
537
537
Others439
439
439
Total assets
2,936
1,958
977
2,936
Derivative transaction(Note)
Currency-relatedInterest rate-related
(33)
(33)
(33)
Total derivative transaction
(33)
(33)
(33)
Note: Net receivables and payables resulting from derivative transactions are presented on a net basis, anditems for total net obligations are presented in ( ).
② Financial assets and financial liabilities not to be measured at fair value(Unit: millions of yen)
Category
Notes and accounts
receivable - trade
Short-term investment
securities and investment
securities
Held-to-maturity debt
securities
Bonds receivable
Stocks of affiliates
Total assets
Notes and accounts
payable - trade
Short-term loans payable
Long-term loans payable
Bonds payable
Total liabilities

Consolidatedbalance sheet
amountFair value
Level 1

Level 2

Level 3

Total

34,958-34,958-34,958106813
35,878

690
690

106
35,065-106690
35,75624,455-24,455-24,455

10,00032,00010,00076,455-

10,00031,955
9,929
76,341-

10,00031,955
9,929
76,34125

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
Notes: A description of the valuation technique(s) and inputs used in the fair value measurements
Securities and investment securities
Listed shares, bonds and corporate bonds are valued using quoted prices. As listed shares are tradedin active markets, their fair value is classified as Level 1. On the other hand, the fair value of bonds andcorporate bonds held by the Group are classified as Level 2, because they are not traded frequently inthe public market and not considered to have quoted prices in active markets.
Derivative transactions
The fair value of interest rate swaps and forward exchange contracts is measured using the discounted
cash flow method based on observable inputs, such as interest rates and exchange rates, and is classified
as Level 2.
Notes and accounts receivable - trade
The fair value of these items is measured using the discounted cash flow method based on the amountof receivables, period to maturity and an interest rate reflecting credit risk, for each receivable
categorized by a specified period, and is classified as Level 2.
Notes and accounts payable - trade
The fair value of these items is measured using the discounted cash flow method based on future cash
flows, period to repayment and an interest rate reflecting credit risk, for each liability categorized by aspecified period, and is classified as Level 2.
Short-term loans payable and long-term loans payable
The fair values of short-term loans payable and long-term loans payable are measured using thediscounted cash flow method based on the sum of principal and interest, remaining maturities and aninterest rate reflecting credit risk, and are classified as Level 2.
Bonds payable
The fair value of bonds payable issued by the Company is measured using the discounted cash flow
method based on the sum of principal and interest, remaining maturities of these bonds payable, and aninterest rate reflecting credit risk, and is classified as Level 2.

26

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
VIII Note on Revenue Recognition(1) Disaggregation of revenue from contracts with customers
The Group operates an Entertainment Contents Business, Pachislot and Pachinko Machines Business, anda Resort Business. The principal types of goods or services of these businesses are digital content, products
and merchandise, and resort facilities. The sales by goods or service for each business are as follows:(Unit: millions of yen)
Reporting segment
Pachislot
Other
Total
Entertainment
Pachinko
ResortSubtotalContents
Machines
Digital content sales
129,773
3,799
133,572
133,572
Product sales
74,67370,156
144,829
144,829
Resort facility sales
8,663
8,663
8,663
Other sales
31,491
1,912
33,403480
33,884
Revenue fromcontracts with
235,937
75,868
8,663
320,469480
320,949
customers
Sales to third parties
235,937
75,868
8,663
320,469480
320,949(2) Useful information in understanding revenue from contracts with customers① Information on contracts, performance obligations, and the when performance obligations are satisfied
Information on contracts, performance obligations, and when performance obligations are satisfied is aspresented in "I Significant Bases for Presenting Consolidated Balance Sheets, (4) Accounting Policies, ⑦
Recognition criteria for significant revenue and expenses”.
② Information on calculating allocation amounts for performance obligations
When selling multiple pieces of game content as a set as part of granting game distribution rights or
download sales in the Entertainment Content Business, each piece of content is considered to have its own
performance obligation, and is distributed separately. When selling amusement machines or annual content
update services as a set in the Entertainment Contents Business, the amusement machine sales and theannual content update services are considered to have their own performance obligations and are
distributed separately.
In cases such as these, the transaction day stand-alone selling prices in the contract of the individual
goods or services that serve as the bases for each performance obligation are calculated, and the transaction
prices are then allocated based on the ratio of said stand-alone selling prices.

27

[English Translation of Convocation Notice Originally Issued in the Japanese Language](3) Information of revenue of the fiscal year ended March 31, 2022 and the following fiscal years① Receivables from contracts with customers, and the balance of contract assets and contract liabilities
The breakdown of receivables from contracts with customers, and the balance of contract assets andcontract liabilities are as follows.
(Unit: millions of yen)
Current fiscal year
Beginning balanceEnding balance
Receivables from contracts with customers
Notes and accounts receivables - trade38,176
34,958Contract assets
3,993
Contract liabilities
9,333
10,257
Contract liabilities are included under “Other” in current liabilities in the consolidated balance sheet. Of
the revenue recognized in the fiscal year ended March 31, 2022, the amount included in the contract
liability balance at the beginning of the period is ¥8,135 million.
② Transaction price allocated to remaining performance obligations
The total transaction price allocated to the remaining performance obligations and the time frame theCompany expects to recognize the amount as revenue are as follows.
(Unit: millions of yen)
Current fiscal year
Within 1 year
8,877
Over 1 year and within 2 years
915
Over 2 years
465
Total
10,257IX Note Regarding Investment and Rental Property
Status and fair value of investment and rental property
This disclosure is omitted due to the immateriality of the total amount of the investment and rental property.
X Note Regarding Per Share Information
Net assets per share¥1,311.72
Net income per share¥158.85
XI Note Regarding Business Combination(Transaction under common control)(1) Purpose of company split and absorption-type merger
The Group has been working on structural reform to transform its business structure to adapt to the external
environment. Furthermore, the Company resolved to restructure the organization of the Company and theGroup in order to build an even more efficient structure at Board of Directors meeting held on January 29,
2021, and implemented the split and absorption-type merger with an effective date of April 1, 2021.

28

[English Translation of Convocation Notice Originally Issued in the Japanese Language](2) Overview of the company of the split① Details of business to be split
SEGA GROUP CORPORATION : Corporate functions and other administrative functions
Sammy Corporation: Corporate functions and other administrative functions② Legal form of business combination
This was an absorption-type company split in which SEGA GROUP CORPORATION and Sammy
Corporation were made into the splitting company in absorption-type split and the Company was the
successor of absorption-type company split.
③ Overview of the companies of the split (As of March 31, 2021)
Split company
in absorption-typemergerSucceeding company

Split company
in absorption-typemergerName

SEGA SAMMYHOLDINGS INC.

Details of
business

Business management andincidental operations of theGroup as a holding
Business management andcompany for aincidental operations ofcomprehensive
SEGA Group
entertainment corporate
group

Development,
manufacturing, and salesof pachinko, pachislot,
arrange-ball, and jankyu
machines, etc.

Location

Sumitomo Fudosan Osaki
Garden Tower,
1-1-1, Nishi-Shinagawa,Shinagawa-ku, Tokyo

Sumitomo Fudosan Osaki
Garden Tower,
1-1-1, Nishi-Shinagawa,Shinagawa-ku, Tokyo

Sumitomo Fudosan Osaki
Garden Tower,
1-1-1, Nishi-Shinagawa,Shinagawa-ku, Tokyo¥29,953 million¥44,092 million¥18,221 million

Capital stock

SEGA GROUPCORPORATIONSammy Corporation(3) Overview of the absorption-type merger① Legal form of business combination
SEGA GROUP CORPORATION was disappeared through an absorption-type merger with SEGACORPORATION as the surviving company.
② Overview of the companies involved in the merger (As of March 31, 2021)
Surviving company

Disappearing company

Name

SEGA CORPORATIONSEGA GROUP CORPORATION

Details of
business

Planning, development, and sales ofgame-related contents for mobile
phones, PCs, smart devices, and home
video game consoles, and development
and sales of Amusement Machines

Business management and incidental
operations of SEGA Group

Location

Sumitomo Fudosan Osaki Garden
Tower,
1-1-1, Nishi-Shinagawa, Shinagawa-ku,
Tokyo

Sumitomo Fudosan Osaki Garden
Tower,
1-1-1, Nishi-Shinagawa, Shinagawa-ku,
Tokyo¥100 million¥44,092 million

Capital stock(4) Overview of the accounting treatment adoption
The merger was treated as a transaction under common control in accordance with the “AccountingStandard for Business Combinations” (ASBJ Statement No. 21, January 16, 2019), and “Implementation
Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No. 10, January 16, 2019).

29

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
6. Non-Consolidated Statement of Changes in Net Assets(From April 1, 2021 To March 31, 2022)

Capital stock
Balances as of April 1, 2021
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balances as of March 31, 2022

Balances as of April 1, 2021
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balances as of March 31, 2022

29,953(Unit: millions of yen)
Shareholders’ equity
Capital surplus
Legal capital
Other capital
Total capitalsurplussurplussurplus29,945
162,234
192,179(93)(93)
162,140(93)(93)
192,085

Shareholders’ equity
Retained earnings
Other retained
earnings
Total retained Treasury stock
Retainedearnings
earnings
brought
forward114,589
114,589(53,839)

Total
shareholders’equity--29,95329,945(9,411)
9,947

535
115,124(9,411)
9,947

535
115,124(25,036)714(24,321)(78,161)

Valuation andtranslation adjustments
Subscription
Valuation
Total
difference on valuation and rights to sharesavailable-fortranslation
sale securities adjustments
Balances as of April 1, 2021
83
83
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other than
299
299
176
shareholders’ equity
Total changes of items during the period
299
299
176
Balances as of March 31, 2022
383
383
176
Note: Figures shown in millions of yen have been rounded down to the nearest million.

30

282,881(9,411)
9,947(25,036)621(23,880)
259,001

Total
net assets
282,965(9,411)
9,947(25,036)621
475(23,404)
259,560

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
7. Notes to Non-Consolidated Financial Statements
I Notes Regarding Material Matters Related to Accounting Policies(1). Valuation standards and accounting treatment for assets① Valuation standards and methods for securities
Shares of subsidiaries and affiliates
Shares of subsidiaries and affiliates are stated at moving-average cost.
Available-for-sale securities
Items other than shares, etc. without a market price
Items other than shares, etc. without a market price are stated at fair value. The difference between
acquisition cost and fair value is accounted for as valuation difference on available-for-sale securities,
with cost of sales determined by the moving average method.
With respect to compound financial instruments whose fair values cannot be categorized and measured
for each embedded derivative, the entire compound financial instruments are appraised by fair value, andunrealized gains or losses are reported as income or expenses for the fiscal year ended March 31, 2022.
Shares, etc. without a market price
Shares, etc. without a market price are stated at moving-average cost.
The net amount of equity included in the Company’s financial statements from limited liability
investment partnerships and similar investments, regarded as marketable securities under Article 2-2 ofthe Financial Investment and Exchange Law of Japan, is calculated based on the relevant financial
statements for the partnership available as of the reporting date stipulated in the partnership agreement.
② Derivatives
Derivatives are stated at fair value.
(2) Depreciation and amortization of noncurrent assets① Property, plant and equipment
Depreciation is calculated by the straight-line method.
Range of useful life for the assets is as follows:
Buildings: 2 - 50 years
Structures: 2 - 47 years
Tools, furniture and fixtures: 2 - 15 years② Intangible assets
Amortization is calculated using the straight-line method. The software used in the Company is amortizedby the straight-line method based on the useful lives within the Company (less than 5 years).
(3) Accounting for deferred assets
Bond issue cost: All expenses are expensed when incurred.
(4) Accounting for provisions① Allowance for doubtful accounts
The reserve for doubtful accounts is provided in amount sufficient to cover possible losses. Allowance for
doubtful accounts is calculated on an individual assessment of the possibility of collection.
② Provision for bonuses
The estimated amount of bonuses was recorded to meet the payment of employee bonuses, an amountcorresponding to the current fiscal year.
③ Provision for directors’ bonuses
The estimated amount of bonuses was recorded to meet the payment of Directors and Audit & Supervisory
Board Members bonuses, an amount corresponding to the current fiscal year.

31

[English Translation of Convocation Notice Originally Issued in the Japanese Language]④ Provision for retirement benefits
Attribution method for projected retirement benefits
In calculating retirement benefits obligations, benefit formula attribution is adopted for the purpose of
attributing projected retirement benefits to the period up to the end of the fiscal year ended March 31,
2022.
Treatment of actuarial gains and losses and prior service costs
Actuarial gains and losses are charged to income collectively in the following fiscal year after theaccrual. Prior service costs are charged to income collectively at the time of accrual.
(5) Accounting for hedge① Accounting for hedge
Allocation hedge accounting is used for qualifying currency swap transactions, while special treatment isapplied to qualifying interest rate swap transactions.
② Hedging instruments and hedged items
Hedging instrument: Currency swaps, Interest rate swaps
Hedged item: Foreign currency-denominated loans payable and associated interest③ Hedge policy
The Company engages in currency swap transactions with the purpose to avoid risks associated withforeign exchange fluctuations of loans payable, along with interest rate swap transactions with the purposeto avoid risks associated with interest rate fluctuations of loans payable. The Company has a policy not toengage in speculative derivative transactions.
④ Evaluation of hedge effectivenessEvaluation of hedge effectiveness at fiscal year-end is omitted for currency swap transactions, as material
conditions for the notional principal of hedging instruments and those for hedged items are the same andthese transactions are deemed to offset the market fluctuations. Evaluation of hedge effectiveness at fiscal
year-end is omitted also for interest rate swap transactions as they adopt special treatment.
(6) Recognition criteria for significant revenue and expenses
Revenues from consulting are from management and planning consulting services provided to subsidiariesof the Company, with the Company’s performance obligation to provide consulting over the course of thecontract as stated in the contract with the subsidiary. Therefore, the Company determines that theperformance obligation is satisfied over the course of the contract, with revenue recognized over the courseof the contract.
Revenue from shared services is from the provision of services such as general affairs, legal affairs,
personnel affairs, and accounting affairs to subsidiaries of the Company, with the Company’s performanceobligation to provide services over the course of the contract as stated in the contract with the subsidiary.
Therefore, the Company determines that the obligation is satisfied over the course of the contract, withrevenue recognized over the course of the contract.
Dividends income is recognized as revenue on the effective date of the dividend income.
(7) Other material matters that form the basis of accounting documents① Accounting method for consumption taxes
Consumption taxes and local consumption taxes are accounted using the net-of-tax method, and nondeductible consumption taxes and local consumption taxes on assets are posted mainly as expenses whenincurred.
② Application of the Consolidated Taxation System
The Company applied the Consolidated Taxation System.

32

[English Translation of Convocation Notice Originally Issued in the Japanese Language]③ Application of Tax Effect Accounting for the Transition from the Consolidated Taxation System to theGroup Tax Sharing System
The Company will shift from the consolidated tax return filing system to the group tax sharing system fromthe next fiscal year. With respect to the transition to the group tax sharing system created under the Act for
Partial Revision of the Income Tax Act and Other Acts (Act No. 8 of 2020) and the items on which nonconsolidated taxation system was revised in conjunction with the transition to the group tax sharing system,
due to the treatment prescribed in Paragraph 3 of the Practical Solution on the Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System(PITF No. 39, March 31, 2020), the Company will not apply the provisions under Paragraph 44 of the
Implementation Guidance on Tax Effect Accounting (ASBJ Guidance No. 28, February 16, 2018), and theamount of deferred tax assets and deferred tax liabilities are based on the provisions of the Income Tax Act
prior to the amendment.
From the beginning of the next fiscal year, the Company intends to apply the Practical Solution on the
Accounting and Disclosure Under the Group Tax Sharing System (Practical Solution No.42, August 12,2021) in which the procedures for accounting and disclosure of corporation income tax, local corporation
income tax, and tax effect accounting when applying the group tax sharing system are stipulated.
II Notes on Changes in Accounting Policies(1) Application of Accounting Standard for Revenue Recognition
The Company applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, issued by
the Accounting Standards Board of Japan on March 31, 2020), etc. Under the accounting standard, revenue isrecognized when control over promised goods or services is transferred to customers, at an amount that theGroup is expected to receive in exchange for the said goods or services.
In adopting the Accounting Standard for Revenue Recognition, etc., the Company followed the transitional
treatment stipulated in the provision of Paragraph 84 of the Accounting Standard for Revenue Recognition,
but there was no impact on profit and loss, and the beginning balance of retained earnings for the fiscal year
ended March 31, 2022.
(2) Accounting Standard for Fair Value Measurement
Effective from the beginning of the fiscal year ended March 31, 2022, the Group applied "AccountingStandard for Fair Value Measurement" (ASBJ Statement No. 30, issued by the Accounting Standards Boardof Japan on July 4, 2019), etc. In accordance with the transitional treatment stipulated in Paragraph 19 of the
Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the “Accounting Standard for
Financial Instruments” (Accounting Standards Board of Japan, July 4, 2019, ASBJ Statement No. 10), theGroup has decided to adopt the new accounting policy stipulated by the Accounting Standard for Fair Value
Measurement, etc. prospectively from the date of the change. The impact on profit and loss, and retained
earnings for the fiscal year ended March 31, 2022 was immaterial.

33

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
III Notes to Accounting Estimates(1) Valuation of Shares of Affiliates with Regard to PARADISE SEGASAMMY Co., Ltd.
① Shares of subsidiaries and affiliates¥34,872 million② Calculation method of the amounts posted to the non-consolidated financial statements in the fiscal year
ended March 31, 2022
PARADISE SEGASAMMY Co., Ltd. (PSS) is an affiliate of the Company, and its acquisition cost isrecorded as the value in the balance sheet, because its market value is deemed extremely difficult toascertain.
In the valuation of shares of subsidiaries and affiliates, the acquisition cost is compared with the actual
value reflecting excess earning power, and if the actual value declines significantly due to deterioration in
the financial position of PSS, unless the possibility of recovery is supported by sufficient evidence, asubstantial reduction is made and treated as a loss in the current fiscal year, which affects the valuation ofshares of subsidiaries and affiliates of the Company.
③ Key assumptions used in the calculation of amount posted to the non-consolidated financial statementsin the fiscal year ended March 31, 2022
PSS conducts impairment tests on its cash generating unit groups, such as goodwill, and its cash
generating unit groups that show indicators of impairment, and makes calculations for recoverable value
based on value in use or on fair value after deducting disposal costs.
Key assumptions that utilize measurements of value in use are the business plans which are fundamental
to calculations of future cash flow, as well as growth rates and discount rates. Business plans, theformulations have been made based on the number of casino users and the drop amount (the amount ofchips purchased at tables), premised on the relaxation of behavioral restrictions associated with COVID19. In addition, the discount rate is calculated using weighted average cost of capital as a basis and byreflecting the risk associated with businesses, which is determined based on external and internal
information.
Fair value following the deduction of disposal costs uses the real estate appraisal value of external experts
who take into consideration the repurchase cost of the relevant asset and such related cost factors.
As a result of the above impairment test, the Company does not recognize a loss on valuation of sharesof subsidiaries and affiliates, because its actual value did not decline significantly during the fiscal year
ended March 31, 2022.
④ Impact on the non-consolidated financial statements in the following fiscal year
Estimates of future cash flows are made based on best estimates from management. However, in the eventthat COVID-19 impacts trends in the number of users which cause estimates to vary from actual results,
there may be an impact on profit and loss.
(2) Accounting Estimates Associated with the Spread of COVID-19
The Group's business was also impacted during the current fiscal year by COVID-19.
The Group assumes that the impact of COVID-19 will continue to some extent in the following fiscal year
and, accordingly, has made accounting estimates such as making determinations of the recoverability ofdeferred tax assets and determinations of impairment losses.
However, there are many uncertainties, which could affect the Group’s financial position and operating
results in the future, in the case of changing the impact for the economic environment from the spread of
COVID-19.

34

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
IV Notes to Balance Sheet(1) Accumulated depreciation of property, plant and equipment¥4,503 million(2) Assets pledged¥34,872 million
Shares of affiliates (Note)(Note) For loans from financial institutions to the affiliated company PARADISE SEGASAMMY Co.,
Ltd. at the end of the fiscal year ended March 31, 2022 ¥70,107 million (KR₩725,000 million),
the shares of this company were provided as a pledge.
(3) Receivables from and payables to subsidiaries and affiliates
Short-term receivables from subsidiaries and affiliates
Short-term payables to subsidiaries and affiliates
Long-term payables to subsidiaries and affiliates¥4,388 million¥58,571 million¥12,775 million

V Notes to Statement of Income
Transactions with subsidiaries and affiliates
Consulting fee income
Shared service fee income
Dividends income (Operating revenue)
SG&A expenses
Non-operating transactions¥8,354 million¥3,966 million¥9,394 million¥1,144 million¥362 million

VI Notes to Statement of Changes in Net Assets
Number and type of Treasury stock as of the end of the fiscal year ended March 31, 2022
Common stock
43,307,930 shares

35

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
VII Notes Regarding Tax Effect Accounting(1) Significant components of deferred tax assets and deferred tax liabilities(Unit: millions of yen)
Deferred tax assets
Tax loss carry forward
742
Provision for bonuses
209
Allowance for doubtful account
2,987
Loss on valuation of shares of subsidiaries and affiliates
7,627
Valuation difference on available-for-sale securities
27
Other
985
Subtotal deferred tax assets
12,580
Valuation allowance for tax loss carry forward(742)
Valuation allowance for deductible temporary difference(11,241)
Subtotal valuation allowance(11,984)
Offset against deferred tax liabilities(596)
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities
Gain (loss) on valuation of investments in partnerships
Asset retirement obligations
Income taxes receivable
Subtotal deferred tax liabilities
Offset against deferred tax assets
Total deferred tax liabilities
Deferred tax liabilities, net

207
491
192
5
896
(596)
300
(300)

(2) Breakdown by major causes of the significant difference between the statutory tax rate and the effective
tax rate for financial statement purposes, if any, by item.
30.6%
Statutory tax rate
Provision for directors’ bonuses
1.5%
Permanently non-deductible expenses including
1.4%
entertainment expenses
Changes in valuation allowance(3.1%)
Amount excluded from gross revenue such as dividend(28.2%)
incomeOther
0.7%
Effective tax rate after tax effect accounting
2.9%

36

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
VIII Notes Regarding Transactions with Related Parties(1) Subsidiaries and Affiliates(Unit: millions of yen)Type

Name of the

Votingcompany

rights (%)

Relationship

Description of thetransactions
Consulting fee
income (Note 2)

Management
Subsidiary

Sammy
Corporation

guidance to the
100.0

company,
Interlocking
directorate

Shared service fee
Consolidated
taxation system
Deposits received /paid (Note 4)(Note 5)

Subsidiary

RODEO Co.,Ltd.
TAIYO ELEC
Co., Ltd.

100%

-

100%

-

Deposits received /paid (Note 4)
Deposits received /paid (Note 4)
Consulting fee
income (Note 2)
Shared service fee

Accounts(Note 1)
3,425
964

139

SubsidiarySEGA
CORPORATION

guidance to the
100.0

Consolidated
taxation systemcompany,

Deposits received /Interlocking

paid (Note 4)

directorate

Payment of interests(Note 5)
Collection of loans
receivable
Reception ofinterests (Note 5)

end offiscal year

Accounts receivable - trade
Accounts receivable - trade
Accounts payable - other

313
87

541

Deposits received

8,444

Long-term deposit received

7,500

Current liabilities - other34-

Deposits received

4,730

-

Deposits received

9,932

4,928
2,853

income (Note 3)
Management

Balance atamountincome (Note 3)

Payment of interests

Subsidiary

Transaction

Accounts receivable - trade

Accounts receivable - trade

451
259

-

Accounts receivable - other-

Deposits received

29,754

14

-

-

1,000
34

Short-term loans receivablefrom subsidiaries and affiliates
Long-term loans receivablefrom subsidiaries and affiliates

130

1,000
3,265

Long-term loans receivable
Subsidiary

SEGA SAMMY
CREATION INC.

Lending of funds
100.0

1,350

from subsidiaries and affiliates

13,100(Note 6)

Reception ofinterests (Note 5)

37

77

Accounts receivable - other0[English Translation of Convocation Notice Originally Issued in the Japanese Language](Unit: millions of yen)Type

Name of the

Votingcompany

rights (%)

Relationship

Description of thetransactions
Consolidated
taxation system
Deposits received /paid (Note 4)
Lending of funds

PHOENIX
Subsidiary

RESORT CO.,

100.0

LTD.

Interlocking
directorate

Collection of loans
receivable
Reception ofinterests (Note 5)

Transaction
amountBalance at
Accounts(Note 1)end offiscal year-

Accounts payables - other357-

Deposits received

54

164
1,201

Short-term loans receivablefrom subsidiaries and affiliates
Long-term loans receivablefrom subsidiaries and affiliates

30

-

800
3,650
-

Underwriting of
capital increase

601

-

-

34

Accounts receivable - trade3-

Accounts payables - other346

Deposits received

1,953

Long-term deposits received

5,275(Note 7)
Shared service fee
income (Note 3)
Consolidated
Sammy
Subsidiary

Networks Co.,

100.0

Ltd.

Interlocking

taxation system

directorate

Deposits received /paid (Note 4)
Payment of interests(Note 5)-

14

Current liabilities - other

5

4,315

-

-

34,872--

Underwriting of
PARADISE
Affiliate

SEGASAMMY
Co., Ltd.

45.0

Interlocking
directorate

capital increase(Note 7)
Provision of security(Note 8)Notes: 1. Consumption taxes are not included in transaction amounts.
2. The amount of the consulting fee income is decided based on the Company’s necessary
expenses.
3. The amount of the shared service fee is determined based on the necessary expenses for the
relevant business.
4. Cash management system transactions are used for the purpose of uniformly and efficiently
procuring and managing funds within the Group. Lending and borrowing of funds are
executed at any time between the Group companies, thus the transaction amount is omitted.
5. Interest is determined with consideration to market interest rates.
6. For long-term loans receivable from subsidiaries and affiliates from SEGA SAMMY
CREATION INC., the Company recorded provision of allowance for doubtful accounts of¥9,709 million while recorded allowance for doubtful accounts of ¥93 million for the fiscal
year ended March 31, 2022.
7. The underwriting of capital increase is underwritten through shareholder allocation.
8. For part of the loans from financial institutions to PARADISE SEGASAMMY Co., Ltd., theshares of the company were provided as a pledge.

38

[English Translation of Convocation Notice Originally Issued in the Japanese Language](2) Directors, Key Individual Shareholders, etc.
(Unit: millions of yen)Type

Name of
Votingrelatedrightsindividual and(%)
company

Relationship
Chairman of SEGA

Director

Haruki Satomi

1.75

SAMMY ARTSFOUNDATION

Description of thetransactions
Payment of donation(Note 2)

Transaction
Balance atamountAccounts
end of(Note 1)
fiscal year
107

Prepaid

Company inwhich Directors
or their relatives
own majority-

expenses
FSC Co., Ltd.
(Note 4)

6.17

Insurance
representative

Payment of insurance
premium (Note 3)11Long-term
prepaidvoting rights

-

10

0

expenses

Notes: 1. Consumption taxes are not included in transaction amounts.
2. The contribution amount of donations to the Foundation has been decided based on
approval by Board of Directors meeting.
3. Transaction prices are determined in the same way as for general transactions and withreference to fair values.
4. Hajime Satomi, Chairman, Representative Director, and Haruki Satomi, President andGroup CEO, Representative Director, directly hold a majority of the shares of FSC Co.,Ltd.
IX Note Regarding Per Share Information
Net assets per share
Net income per share¥1,163.57¥42,6739

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
X Note Regarding Significant Subsequent Events(Transaction under common control)(1) Purpose of company split and absorption-type merger
The Group has been working on structural reform to transform its business structure to adapt to the external
environment. Furthermore, the Company resolved to restructure the organization of the Company and theGroup in order to build an even more efficient structure at Board of Directors meeting held on January 29,
2021, and implemented the split and absorption-type merger with an effective date of April 1, 2021.
(2) Overview of the company of the split① Details of business to be split
Sammy Corporation: Corporate functions and other administrative functions
SEGA GROUP CORPORATION : Corporate functions and other administrative functions② Legal form of business combination
This was an absorption-type company split in which Sammy Corporation and SEGA GROUPCORPORATION were made into the splitting company in absorption-type split and the Company was the
successor of absorption-type company split.
③ Overview of the companies of the split (As of March 31, 2021)
Split company
in absorption-typemergerSucceeding company
Name

SEGA SAMMYHOLDINGS INC.

Details of
business

Business management andincidental operations of theGroup as a holding
Business management andcompany for aincidental operations ofcomprehensive
SEGA Group
entertainment corporate
group

Development,
manufacturing, and salesof pachinko, pachislot,
arrange-ball, and jankyu
machines, etc.

Location

Sumitomo Fudosan Osaki
Garden Tower,
1-1-1, Nishi-Shinagawa,Shinagawa-ku, Tokyo

Sumitomo Fudosan Osaki
Garden Tower,
1-1-1, Nishi-Shinagawa,Shinagawa-ku, Tokyo

Sumitomo Fudosan Osaki
Garden Tower,
1-1-1, Nishi-Shinagawa,Shinagawa-ku, Tokyo¥29,953 million¥44,092 million¥18,221 million

Capital stock

SEGA GROUPCORPORATION

Split company
in absorption-typemergerSammy Corporation(3) Overview of the accounting treatment adoption
The merger was treated as a transaction under common control in accordance with the “AccountingStandard for Business Combinations” (ASBJ Statement No. 21, January 16, 2019), and “Implementation
Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No. 10, January 16, 2019).
As a result, the Company recorded ¥50 million of gain on extinguishment of tie-in shares as extraordinary
income following the absorption-type demerger of Sammy Corporation, and ¥138 million of loss on
extinguishment of tie-in shares as extraordinary losses following the absorption-type demerger of SEGAGROUP CORPORATION.

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