To the Shareholders

Items Posted on Internet Concerning
Notice of the 15th Ordinary General Meeting of
Shareholders

May 29, 2019

SEGA SAMMY HOLDINGS INC.

1

Contents
1.

Company’s Share Subscription Rights ··················································· p. 3

2.

Independent Auditors ········································································· p. 4

3.

Outline of Resolutions Regarding Preparation of Internal Control Systemand so forth to Ensure Appropriate Business Execution ··························· p. 4

4.

Consolidated Statement of Changes in Net Assets ······································· p. 95.

Notes to Consolidated Financial Statements ·············································· p. 11

6.

Non-Consolidated Statement of Changes in Net Assets································· p. 21

7.

Notes to Non-Consolidated Financial Statements ······································· p. 22

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/).

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[English Translation of Convocation Notice Originally Issued in the Japanese Language]

1. Company’s Share Subscription Rights(1) Outline of Share Subscription Rights 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, 2019
Date of Resolutions of the Ordinary
General Meeting of Shareholders
Number of individuals with rights
Company Directors
Number of share subscription rights (Note 1)
Class of shares for share subscription rights
Number of shares for share subscription rights

August 2, 2016
3

Payment on exercise of share subscription rights
Capital contribution upon exercise of sharesubscription rights (per share)
Period for exercise of share subscription rights
Terms and conditions for exercise of sharesubscription rights

850
Common stock
85,000
There is no need of delivering payment toexchange with the share subscription rights.
¥1,413September 2, 2018 – September 1, 2020
(Note 2)

When transferring share subscription rights,
approval must be obtained from the Board of
Directors
Notes: 1. Number of shares of share subscription rights is 100 per the right.
2. Terms and conditions for exercise of share subscription rights are as follows:
The grantee shall be Director, Audit & Supervisory Board Member, Executive Officer,
Consultant, Counsel, or employee of the Company or any of its subsidiaries when he or
she exercises the rights. However, the following cases are treated as exceptions.
a. Where the loss of such position is due to expiration of the term of office or amendmentof law or Articles of Incorporation of the Company or any of its subsidiaries;
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 theCompany, the grantee becomes Director, Audit & Supervisory Board Member,
Executive Officer, Consultant, Counsel, or employee of the Company, any of its
Group companies, any of its business partners or any other company sanctioned by theCompany.

Matters concerning the transfer of sharesubscription rights(2) Outline of Share subscription rights 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, 2019
Not applicable.

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[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, etc.
¥137 million

Remuneration, etc., related to the fiscal year ended March 31, 2019
Total of cash and other profits that should be paid to independent¥366 million
auditors by the Company and its subsidiaries (together, the “Group”)
Notes: 1. The Company’s subsidiaries, Sega Europe Ltd., etc. are audited by auditors that differ fromthe Company’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 gaveconsent to the remuneration etc. for the independent auditor pursuant to Article 399,
Paragraph 1 of the Companies 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 areoutside the scope 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 aswell as the dismissal or non-reappointment of the independent auditor if it is deemed difficult for the
independent auditor to perform its duty appropriately.

3. Outline of Resolutions Regarding Preparation of Internal Control System and so forth
to Ensure Appropriate Business Execution
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,
Group Management Policies, and Guidelines (hereinafter, collectively referred to as “Group
Philosophy and Code”) and President (Representative Director) will repeatedly communicate thespirit of Group Philosophy and Code to employees in administrative post, in order to thoroughly
establish compliance with laws, etc., as a condition for all corporate activities. These efforts willreflect the Company’s fundamental policy of fulfilling its social responsibility as a member ofsociety and provide a basis for establishing a compliance system that comprises such policy.
In addition, in the interest of further strengthening corporate governance, the Board of Directors will
make efforts to build an effective internal controls system and to secure a system for compliancewith laws for the Company as a whole, based on the Group Management Policies stipulated for a
unified management of the entire Group and the Guidelines that show the standard for operation andmanagement of the entire Group so 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 Group4

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
will contain so-called “Bo-hi jyoko” (terms and clauses concerning exclusion of organized crimegroups) in contracts, establish a system to check whether or not our business partners correspond toanti-social forces, and establish a system to address systematically in corporation with outsideorganizations including the police and lawyers appropriately when anti-social forces approach theGroup.
(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 andmanagement of information related to execution of Directors’ duties. Information related to
execution of Directors’ duties will be recorded 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 such information 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 that they 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 will audit 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 themanagement including emergency responses, policies concerning risk management and crisis
management guidelines will be established as one of the Group Management Policies andGuidelines, 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 aboutcountermeasures for prompt and effective actions.
(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, aswell 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 systemshould also enable appropriate and efficient execution of duties under rules related to authorities anddecision-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 violationof laws, the Articles of Incorporation, Company regulations, or conduct in violation of social norms
that they learn. 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 to the report. Establish an internal reporting contact offices comprised of outside counsel, etc. as
recipients of an informant’s report other than the ordinary reporting line, as part of a system thatmaintains 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,
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[English Translation of Convocation Notice Originally Issued in the Japanese Language]
the Statutory Executive Officers, officers executing the duties, and people who should executethe 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 toreport and share information of the Group companies to and with the Company through suchofficers.
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 ofaccounting wrongdoings and errors based on the vertical chain of the Regulations ofManagement 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 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 theGroup as a whole, and efforts will be made to ensure to the extent possible that information isshared among members of the Group and 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 in consideration 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 andappropriately make decisions for the Group. The system should also enable appropriate andefficient execution of duties under rules related to authorities and decision-making based on theRegulations of the Board of Directors, etc. However, the system will be established inconsideration of scale, nature, business category, etc. of each of its Group companies.
④ System to ensure appropriate compliance with laws and the Articles of Incorporation concerning
execution of 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 compliancesystem in order to fulfill Group Philosophy and Code based on importance of compliance withlaws, 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 dedicatedemployees in principle and will not be directed or supervised by the Directors. However, underunavoidable circumstances, employees who serve concurrently in a position of the executive side
will be assigned. Concerning such concurrent employees, independence will be especiallyconsidered. Appointment, dismissal, personnel transfer, evaluation, disciplinary action, revision ofwages, etc. of the employees will require a prior 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 &6

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
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 execution of the duties or a fact that might cause conspicuous harm to the Company
that they learn. Decisions that materially affect the Company’s business or organization andresults of internal audits will be treated in the same 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 these people 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 the Group 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 fact of illegal conduct related to execution of the duties or a fact that mightcause conspicuous harm to the Company that they learn. Decisions that materially affect theCompany’s business or organization and results of internal audits will be treated in the sameway.
The Audit & Supervisory Board Members of the Company will make efforts to maintain systems
from the perspective of focusing on so-called group management so that the Audit &Supervisory Board Members of the Group companies are able to become receivers of reportfrom 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.
(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 outside advisors, 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 importantwork-related meetings to ensure that the Company’s business is executed properly.
The Audit & Supervisory Board will use attorneys, certified public accountants, and other outsideadvisors, 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. For Directors of the Company,
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[English Translation of Convocation Notice Originally Issued in the Japanese Language]
officer training is held (theme of labor laws, including long work hours was held during thecurrent fiscal year).
② As a place to share important issues and relevant measures for internal controls such ascompliance and risk management, the Group compliance liaison meeting is in place. The maincontents of the meeting are presented 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 compliancematters each fiscal year that are common across the Group, from among all social requirements
and issues affecting the Group, and implements group training. The Company also engages in“compliance promotion activities” on a continual basis for the purpose of boosting complianceawareness and knowledge among the Group employees.
④ As an initiative to eliminate anti-social forces, the Company has introduced a Group-widechecking 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 andregulations, the Company has established “Corporate Ethics Hot Line” as a whistle-blowing
system. The Company is actively involved in informing employees of the system.
⑥ The Company’s internal audit department conducts internal audits of the Company and theGroup companies and strives to further enhance the internal audit system by sharing audit
information and strengthening mutual cooperation with the internal audit departments of theGroup companies.
(2) Risk management
By identifying significant risks underlying inside and outside management and clarifying issues tobe addressed, the Company and the Group companies are committed to business executions andmitigating loss of management resources and recurrence thereof.
(3) Effectiveness of audits by Audit & Supervisory Board Members① In order to complement enhanced information provision to Audit & Supervisory Board
Members for internal control purposes, the meetings of “Holdings Audit Liaison Committee”
consisting of Audit & Supervisory Board Members and the Independent Auditor, “Audit &Supervisory Board Members and Internal Auditing Office Liaison Committee” where Audit &Supervisory Board Members and the internal audit department discuss progress in audits andexchange 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 theirduties.

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[English Translation of Convocation Notice Originally Issued in the Japanese Language]

4. Consolidated Statement of Changes in Net Assets(From April 1, 2018 To March 31, 2019)(Unit: millions of yen)
Shareholders’ equity

Balances as of April 1, 2018
Changes of items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Reversal of revaluation reserve forland
Total changes of items during the period
Balances as of March 31, 2019

Capitalstock

CapitalsurplusRetainedearnings

29,953

117,345

207,174

Treasurystock

Total shareholders’equity(54,781)299,691(11)624(9,377)
2,642
(11)
605

(9,377)
2,642
(18)
(184)

(184)
1,450

(203)
117,142

─

29,953(5,284)
201,8891,450
613(54,168)(4,874)
294,816

Accumulated other comprehensive income
Valuation
Deferred gains Revaluationdifference on
reserve foror losses onavailable - for land
hedgessale securities
Balances as of April 1, 2018
Changes of items during theperiodDividends from surplus
Profit attributable toowners of parent
Purchase of treasury stock
Disposal of treasury stock
Purchase of shares of
consolidated subsidiaries
Reversal of revaluation
reserve for land
Net changes of items otherthan shareholders’ equity
Total changes of items during
the period
Balances as of March 31, 2019

Total accumulated
Foreign
Remeasurements
othercurrencyof definedcomprehensive
translation
benefit plansincomeadjustment

10,52817340(2,147)

(479)

8,259

3,826

(17)

(1,450)(2,741)

(45)

(427)

3,826

(17)

(1,450)(2,741)

(45)

(427)

14,354

─(1,109)(4,,888)

(524)

7,832

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[English Translation of Convocation Notice Originally Issued in the Japanese Language](Unit: millions of yen)
Subscription Non-controllingrights to sharesinterests
Balances as of April 1, 2018
Changes of items during the period
Dividends from surplus
Profit attributable to owners ofparentPurchase of treasury stock
Disposal of treasury stock
Purchase of shares of consolidated
subsidiaries
Reversal of revaluation reserve forland
Net changes of items other thanshareholders’ equity
Total changes of items during theperiodBalances as of March 31, 2019

819

1,685

Total
net assets

310,456(9,377)
2,642
(11)
605
(184)
1,450

93

90

(244)

93

90

(5,119)912
1,776
305,337
Note: Figures shown in millions of yen have been rounded down to the nearest million.

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[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
74
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 withsubsidiaries”.
From the fiscal year ended March 31, 2019, the followings have been excluded from the scope of
consolidation because of liquidation; SEGA SAMMY BUSAN INC. and another company.
Number of non-consolidated subsidiaries
17
Major non-consolidated subsidiaries: GO GAME PTE. 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 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.
(2) Application of the Equity Method
Number of non-consolidated subsidiaries accounted for under the equity-method
6
Major non-consolidated subsidiaries accounted for under the equity-method: GO GAME PTE.
LTD. etc.
Number of affiliated companies accounted for under the equity method
12
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 forunder the equity method
12
Major non-consolidated subsidiaries and affiliated companies which are not accounted for underthe equity method: CHARA-WEB.CO., LTD. etc.
Some of the Company’s non-consolidated subsidiaries and affiliates are not accounted for underthe equity method because the combined amount of net income corresponding to the percentage ofequity interest held by 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 even if they are excluded from the scope of equity method, andhave no significance as 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 consolidatedbalance sheet date.
Consolidated subsidiary
Sega Amusements Taiwan Ltd.
Beijing SEGA Mobile Entertainment Technology Co., Ltd.
Dartslive China Ltd.
Sega Black Sea Ltd.
MPandC INC.

11

Fiscal year-end
December 31
December 31
December 31
December 31
December 31[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
Securities with fair value
Securities with fair value are stated at fair value. The difference between acquisition costand 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 areappraised by fair value, and unrealized gains or losses are reported as income or expenses
for the fiscal year ended March 31, 2019.
Securities without fair value
Securities without fair value 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 of the 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 (orat 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 (or at 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: 2-16 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
is amortized by the straight-line method based on the useful lives within the Company (lessthan 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 andequipment 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 aresidual value of zero.
③ Accounting for deferred assets
Bond issue cost: All expenses are expensed when incurred.
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 on a historical write-off of general receivables. Receivables with default possibility
12[English Translation of Convocation Notice Originally Issued in the Japanese Language]
and bankrupt receivables are calculated based on an individual assessment of the possibilityof collection.
b. Provision for bonuses
The estimated amount of bonuses was recorded to meet the payment of employee bonuses,
an amount corresponding 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 under the point system, theestimated future usage amount for the end of the fiscal year ended March 31, 2019 has beenrecorded.
e. Provision for dismantling of fixed assets
To provide for expenses for dismantling unused decrepit buildings, estimated future
expenses are recorded.
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, 2019.
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 inprinciple) within the average remaining years of service for the employees at the time ofaccrual, or are charged to income collectively at the time of accrual. Actuarial gains andlosses are amortized by the straight-line method over a certain number of years (10 years inprinciple) within average remaining years of service for the employees at the time of accrualin each fiscal year, commencing from the following fiscal year after the accrual for each
employee, or are charged to income collectively in the following fiscal year after the accrual.
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 andinterest 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 fluctuationsin the market 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 of hedging instruments and those for hedged items are
the same and these transactions are deemed to offset the market fluctuations. Evaluation ofhedge effectiveness at fiscal year-end is omitted also for interest rate swap transactions
applied to special treatment.
⑦ Amortization method and period of goodwill
If the duration of the effect of goodwill can be rationally estimated, amortization is made overthe estimated number of years by the straight-line method. In other cases, amortization is madeover a five-year-period by the straight-line method.
13

[English Translation of Convocation Notice Originally Issued in the Japanese Language]⑧ Accounting method for consumption taxes
Consumption taxes and local consumption taxes are accounted using the net-of-tax method,and non-deductible consumption taxes and local consumption taxes on assets are posted mainly
as expenses when incurred.
⑨ Application of the Consolidated Taxation System
The Company and certain domestic consolidated subsidiaries applied the Consolidated
Taxation System.
II

Note to Changes in Presentation(Consolidated Balance Sheet)
In line with the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28; February 16, 2018), the “Ministerial Order on Partial Revisions to theRegulation for Enforcement of the Companies Act and the Regulation on Corporate Accounting”(Ministry of Justice Order No. 5; March 26, 2018) has been applied from the fiscal year.
As a result, the Company and its subsidiaries changed the presentation of deferred tax assets anddeferred tax liabilities, such that deferred tax assets and deferred tax liabilities are classified aspart of ‘Investments and other assets’ and ‘Noncurrent liabilities’, respectively.

III Notes to Consolidated Balance Sheet(1) Accumulated depreciation of property, plant and equipment¥134,298 million(2) Assets pledged
Shares of affiliates (Note) ¥25,604 million(Note) For loans from financial institutions to the equity-method affiliate PARADISESEGASAMMY Co., Ltd. at the end of the current fiscal year ¥69,020 million(KR₩700,000 million), the shares of this company were provided as a pledge.
(3) Revaluation reserve for Land
Consolidated subsidiary SEGA Holdings Co., Ltd. has revalued land for business, pursuant toJapan’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
Holdings Co., Ltd. has recorded an item for the revaluation reserve for land under net assets.
Revaluation method
SEGA Holdings Co., Ltd. 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 realestate appraisers prescribed in Article 2-5 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 revaluationof revalued land¥(425) million(4) Outstanding balance of overdraft account:
Outstanding balance of commitment line:¥85,900 million¥55,000 million(5) Accounting treatment of notes expiring as of consolidated fiscal year-end
Notes matured at the end of the current fiscal year were settled as of the note exchange date.
Because the end of the current fiscal year ended March 31, 2019 was a holiday, the following notesthat matured on March 31, 2019 were included in the balances as of March 31, 2019;
Notes receivable-trade:¥1,693 million
Notes payable-trade:¥429 million

14

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
IV Notes to Consolidated Statement of Income(1) The book value devaluation of inventories held for normal sales purpose based on decline inprofitability.
Cost of sales¥5,131 million(2) R&D expenses included in general and administrative expenses and the manufacturing cost for thecurrent fiscal year
¥46,782 million(3) Breakdown of major extraordinary items① Breakdown of gain on sales of noncurrent assets
Buildings and structures¥(2,597) million
Machinery, equipment and vehicles¥52 million
Land¥7,769 million
Other property, plant and equipment¥0 million
Total¥5,225 million(Note) Loss on sales of buildings and structures and gain on sales of land, resulting from thesale of the same property, are offset against each other and are presented as gain on salesof noncurrent assets in the Consolidated Statement of Income.
② Breakdown of loss on sales of noncurrent assets
Buildings and structures¥7 million
Machinery, equipment and vehicles¥0 millionLand¥3 million
Other property, plant and equipment¥36 million
Total¥47 million③ Breakdown of impairment loss
Use

(Unit: millions of yen)Type
AmountBuildings and structures
46
Amusement machines and facilities
45
Other property, plant and equipment, etc.
26
Buildings and structures
603
Shinagawa -ward,
Amusement machines and facilities
145
Tokyo and 9 other
Other property, plant and equipment
655
locations
Other intangible assets
6,810
Total
8,334

Location
Zama-shi,Amusement facilities Kanagawa and 2other locations
Assets for businessFor 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 their recoverable value. The amount of this reduction isdeemed an impairment loss and is recorded under extraordinary loss.

15

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
V

Notes to Consolidated Statement of changes in Net Assets(1) Issued Stock
As of April 1,
2018
266,229,476

Type of stock
Common stock

Increase

Decrease──(Unit: shares)
As of March 31,
2019266,229,476(2) Treasury Stock
As of April 1,
Type of stock
Increase
2018
Common stock
31,850,504
6,509(Outline of Causes of Change)
The causes of the increase are as follows:
Increase due to purchase of odd-lot stock

Decrease
363,086(Unit: shares)
As of March 31,
201931,493,927

6,509 shares

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

286 shares

Decrease due to exercise of stock options

362,800 shares(3) Dividends① Dividend AmountResolution
Board of Directors’Meeting held on
May 11, 2018
Board of Directors’Meeting held on
November 1, 2018

Type of
Stock

Total
Dividend
dividend per share(¥ million)(¥)

Record date

Effective dateCommon
stock

4,687

20

March 31, 2018

June 1, 2018

Common
stock

4,689

20

September 30,
2018

December 3, 2018

② Dividends of which the record date is in the fiscal year ended March 31, 2019, but theeffective date is in the following fiscal year
Total
Dividend
RecordEffective
Type ofResource
dividend per share
Resolution
date
date
Stock
of dividend(¥ million)(¥)
Board of Directors’
March 31,
June 3,
Common Retained
4,694
20
Meeting held on May
2019
2019
Stock
Earnings
10, 2019(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, 2019
Common stock

3,564,200 shares

16

[English Translation of Convocation Notice Originally Issued in the Japanese Language]VI

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 CashManagement System for the purpose of the efficient utilization 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 tofinancial 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 accordance with the capital management rules etc. of each Group company.
Investment securities are mainly stocks and the relevant information such as fair values ofthese 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 isalso continually reviewed in view of the relationship with business partners that issue thesestocks. With certain compound financial instruments etc., the Group is exposed to risks
associated with fair value fluctuations etc. in the stock markets but periodically evaluates themon a mark-to-market basis.
Borrowings as well as bonds is intended to secure funds necessary for the purpose of working
capital and capital 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 the Company 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 operating receivables and debt as well as foreign currency-denominatedloans 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 made to theBoard of Directors at each company as appropriate.

17

[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 andthe difference between the two as of the end of the fiscal year ended March 31, 2019 are as
follows. Fair values of financial instruments named in Note 2 below are extremely difficult tograsp, thus are not included in the following list.
(Unit: millions of yen)
Consolidated balance
Fair values
Difference
sheet amount(1) Cash and deposits
137,425
137,425
─(2) Notes and accounts receivable - trade39,20939,200(8)(3) Short-term investment securities andinvestment securities
1) Held-to-maturity debt securities
1,411
1,418
7
2) Available-for-sale securities
45,96245,962
─3) Stocks of affiliates
818
831
12
(4) Notes and accounts payable - trade
24,75824,758─(5) Short-term loans payable
13,352
13,352
─(6) Long-term loans payable
40,33440,29340(7) Current portion of bonds
12,50012,500─(8) Bonds payable
10,00010,020(20)
Notes: 1. Matters regarding the methods to calculate the fair values of financial instruments andsecurities and derivative transactions(1) Cash and deposits; and (2) Notes and accounts receivable - trade
Of these, items that are settled in the short term (within a year) are recorded usingbook values, as their fair values approximate book values. In addition, of notes andaccounts receivable - trade, those which more than a year to the payment date fromthe end of the fiscal year ended March 31, 2019 are stated at the present values by
discounting the amount of claim for each receivable with the interest rate
calculated by the payment period and credit risk.
(3) Short-term investment securities and investment securities
The fair values of stocks are determined using the quoted price at the stock
exchange, and those of debt securities are determined using the quoted price at thestock exchange or the quoted price obtained from the financial institutions. In
addition, negotiable certificates of deposit included in available-for-sale securities
are recorded using book values, as they are settled in the short term (within a year)
and their fair values approximate book values.
(4) Notes and accounts payable – trade; (5) Short-term loans payable; and (7) Current
portion of bonds
Of these, items that are settled in the short term (within a year) are recorded usingbook values, as their fair values approximate book values. Of the short-term loans
payable, fair values of the loans hedged by interest rate swap contracts meetingcertain conditions are calculated applying the special treatment by combining themwith the relevant interest rate swap.
(6) Long-term loans payable; and (8) Bonds payable
These are stated with the present values calculated by discounting the aggregatedvalues of the principal and interest using an assumed interest rate if loans are
newly made. Of the long-term loans payable, fair values of the loans hedged byinterest rate swap contracts with special treatment applied and by interest rate andcurrency swap contracts with combined treatment applied (subject to special
treatment and allocation hedge accounting) are calculated by combining them withthe relevant interest rate swap or interest rate and currency swap.
18

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
2. Financial instruments whose fair values are not readily determined
Consolidated balance sheet
Categoryamount(Millions of yen)
Investments in unlisted stocks, etc.
3,430
Investments in investment limited partnerships, etc.
8,432
Stocks of non-consolidated subsidiaries
350
Stocks of affiliates
26,499Investments in capital of subsidiaries and affiliates
1,073
Items above are not included in “(3) Short-term investment securities and investment
securities,” because there is no fair value, future cash flows cannot be estimated and it
is very difficult to identify fair values.
VII 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.
VIII Note Regarding Per Share Information
Net assets per share¥1,289.32
Net income per share¥11.27
IX

Note Regarding Significant Subsequent Events
The Company resolved at a Board of Directors’ meeting on March 29, 2019, to acquire all shares of
Two Point Studios Ltd. (Headquarters: Farnham, United Kingdom) through SEGA Games Co., Ltd.,a consolidated subsidiary of the Company. The Company acquired shares of said company as of
May 8, 2019 and made it a consolidated subsidiary.
(1) Outline of business combination① Name and business of acquired company
Name of acquired company
Two Point Studios Ltd.
Description of business
Development and sales of content for the PC market in
the U.S. and European regions② Reason for business combination
We believe that the outstanding content development capability and accumulated development
expertise of Two Point Studios Ltd. will contribute to the creation of new IPs in the SEGA
Group and further increase the presence of the Group in the global game market.
③ Date of business combination
May 8, 2019
④ Legal structure
Purchase of shares with cash
⑤ Name of company after the business combination
Unchanged⑥ Share of voting rights acquired
100%⑦ Main grounds for determining the acquired company
This was a share acquisition for cash consideration by SEGA Games Co., Ltd., a consolidated
subsidiary of the Company.

19

[English Translation of Convocation Notice Originally Issued in the Japanese Language](2) Acquisition costs of the acquired company and consideration by class
Consideration for acquisition (Note)
Cash£10 million(approximately ¥1,450 million)
Acquisition costs£10 million(approximately ¥1,450 million)
Note: Contingent consideration for acquisition is not included in the consideration for
acquisition. Contingent consideration for acquisition has yet to be determined at thistime because it is specified in the agreement that the contingent consideration for
acquisition shall be paid based on the future performance of the acquired company overa certain period of time. In the event where the payment of additional consideration for
acquisition is required, the Company shall adjust the acquisition costs by deeming such
additional amount has been paid at the time of the acquisition, and the amount of
goodwill and amortization thereof shall be revised accordingly.
(3) Description and amounts of major relevant costs for the acquisitionDue diligence costs¥22 million(4) Goodwill recognized, reason for recognition, and amortization method and period
Yet to be determined as the allocation of the acquisition cost has not been completed.
(5) Amount of assets acquired and liabilities assumed on the date of the business combination
Yet to be determined.

20

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

6. Non-Consolidated Statement of Changes in Net Assets(From April 1, 2018 To March 31, 2019)(Unit: millions of yen)
Shareholders’ equity
Capital surplus
Legal capital
Other capitalsurplussurplus29,945
162,299

Total capitalsurplus192,244(21)(21)
162,277(21)(21)
192,222

Shareholders’ equity
Retained earnings
Other retained
earnings
Total retained Treasury stock
Retainedearnings
earnings
brought
forward125,167
125,167(55,066)

Total
shareholders’equityCapital stock
Balances as of April 1, 2018
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, 2019

Balances as of April 1, 2018
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, 201929,953──

29,95329,945(9,377)196(9,180)115,987(9,377)196(9,180)115,987

(11)
627
616
(54,450)

Valuation andtranslation adjustments
Subscription
Valuation
Total
rightsto shares
difference on valuation andavailable - for - translation
sale securities adjustments
Balances as of April 1, 2018
7,209
7,209
819
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
4,322
4,322
93
shareholders’ equity
Total changes of items during the period
4,322
4,322
93
Balances as of March 31, 201911,531
11,531912
Note: Figures shown in millions of yen have been rounded down to the nearest million.

21292,298(9,377)
196
(11)
605
(8,585)
283,712Total
net assets
300,326(9,377)
196
(11)
605
4,415
(4,169)296,157

[English Translation of Convocation Notice Originally Issued in the Japanese Language]

7.
I

Notes to Non-Consolidated Financial Statements
Notes Regarding Material Matters Related to Accounting Policies

1. Valuation standards and accounting treatment for assets(1) Valuation standards and methods for securities① Shares of subsidiaries and affiliates are stated at moving-average cost.
② Available-for-sale securities
Securities with fair value are stated at fair value. The difference between acquisition cost andfair 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 andmeasured for each embedded derivative, the entire compound financial instruments areappraised by fair value, and unrealized gains or losses are reported as income or expenses forthe fiscal year ended March 31, 2019.
Securities without fair value 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 of the Financial Investment and Exchange Law of Japan, is calculated based on therelevant 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 assets(1) 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
Aircraft:
8 years
Tools, furniture and fixtures : 2 - 15 years(2) Intangible 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).
3. Accounting for deferred assets
Bond issue cost: All expenses are expensed when incurred.
4. Accounting for provisions(1) 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 ofcollection.
(2) Provision for bonuses
The estimated amount of bonuses was recorded to meet the payment of employee bonuses, anamount corresponding 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.

22

[English Translation of Convocation Notice Originally Issued in the Japanese Language](4) Provision 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, 2019.
b. 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
the accrual. Prior service costs are charged to income collectively at the time of accrual.
5. Accounting for hedge(1) Accounting for hedge
Allocation hedge accounting is used for qualifying currency swap transactions, while special
treatment is applied 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 interest(3) Hedge policy
The Company engages in currency swap transactions with the purpose to avoid risks associatedwith foreign exchange fluctuations of loans payable, along with interest rate swap transactions withthe purpose to avoid risks associated with interest rate fluctuations of loans payable. The Company
has a policy not to engage 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 and these transactions are deemed to offset the market fluctuations. Evaluation ofhedge effectiveness at fiscal year-end is omitted also for interest rate swap transactions as they
adopt special treatment.
6. Other material matters that form the basis of accounting documents(1) Accounting method for consumption taxes
Consumption taxes and local consumption taxes are accounted using the net-of-tax method, andnon-deductible consumption taxes and local consumption taxes on assets are posted mainly as
expenses when incurred.
(2) Application of the Consolidated Taxation System
The Company applied the Consolidated Taxation System.
II

Note to Changes in Presentation(Balance Sheet)
In line with the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28; February 16, 2018), the “Ministerial Order on Partial Revisions to theRegulation for Enforcement of the Companies Act and the Regulation on Corporate Accounting”(Ministry of Justice Order No. 5; March 26, 2018) has been applied from the fiscal year.
As a result, the Company changed the presentation of deferred tax assets and deferred tax liabilities,
such that deferred tax assets and deferred tax liabilities are classified as part of ‘Investments andother assets’ and ‘Noncurrent liabilities’, respectively.
The note related to tax effect accounting additionally included those described in notes 8(excluding total amount of valuation reserves), which is required in paragraphs 4 of Statement
No.28. In addition, the details stated in Note 8 (1) (Excluding total of valuation allowance) of the
explanatory notes to the “Accounting Standard for Tax Effect Accounting,” stipulated in Paragraph
4 of the Partial Amendments to Accounting Standard for Tax Effect Accounting, are added to Notes
Regarding Tax Effect Accounting.

23

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
III Notes to Balance Sheet(1) Accumulated depreciation of property, plant and equipment¥5,015 million(2) Assets pledged¥30,557 million
Shares of affiliates (Note)(Note) For loans from financial institutions to the affiliated company PARADISE SEGASAMMY
Co., Ltd. at the end of the current fiscal year ¥69,020 million (KR₩700,000 million), theshares 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
IV Notes to Statement of Income
Transactions with subsidiaries and affiliates
Consulting fee income
Dividends income (Operating revenue)
SG&A expenses
Non-operating transactions
Transfer of assets
V¥5,415 million¥17,277 million¥22,500 million¥7,713 million¥3,860 million¥731 million¥754 million¥4,427 million

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, 2019
Common stock
31,493,927 shares

24

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
VI 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
Provision for bonuses
Allowance for doubtful accountLoss on valuation of shares of subsidiaries and affiliates
Valuation difference on available-for-sale securities
Other
Subtotal deferred tax assets
Valuation allowance for tax loss carry forward
Valuation allowance for deductible temporary difference
Subtotal valuation allowance
Offset against deferred tax liabilities
Total deferred tax assets

1,407
40
2,332
6,772
32
831
11,417(1,393)(9,886)(11,279)(137)
─

Deferred tax liabilities
Valuation difference on available-for-sale securities
Other
Subtotal deferred tax liabilities
Offset against deferred tax assets
Total deferred tax liabilities
Deferred tax liabilities, net(5,239)(225)(5,465)137(5,327)(5,327)(2) Breakdown by major causes of the significant difference between the statutory tax rate and theeffective tax rate for financial statement purposes, if any, by item.
Statutory tax rate
(Reconciliation)
Permanently non-deductible expenses including
entertainment expenses
Tax credit for experimentation and research expenses
Changes in valuation allowance
Tax loss carry forward
Amount excluded from gross revenue such as dividend
incomeOther
Effective tax rate after tax effect accounting

25

30.6%
(84.5%)
12.5%(223.7%)(173.3%)640.5%
0.5%
202.5%

[English Translation of Convocation Notice Originally Issued in the Japanese Language]
VII 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)

Subsidiary

Sammy
Corporation

100.0

Management

Consolidated

guidance to thetaxation systemcompany,

Deposits received /interlocking

paid (Note 3)

Transaction(Note 4)
Consulting fee
income (Note 2)
Management
Subsidiary

SEGA Holdings
Co., Ltd.

guidance to the
100.0

company,
interlocking
directorate

Consolidated
taxation system
Reception ofinterests (Note 4)
Deposits received /paid (Note 3)
Payment of interests(Note 4)

Accounts(Note 1)end offiscal year

4,011

Accounts receivable - trade361

─

Accounts receivable - other

1,753

─

Deposits received

13,648Long-term deposits received

22,500directorate
Payment of interests

Balance atamount198

Current liabilities - other

63

3,702

Accounts receivable - trade333

─

Accounts receivable - other

923

17
─

─
Short-term loans receivablefrom subsidiaries and affiliates

4

─

─
4,271
─

Long-term loans receivable
Subsidiary

SEGA SAMMY
CREATION INC.

Lending of funds
100.0

1,600

from subsidiaries and affiliates

9,000(Note 5)

─
Reception ofinterests (Note 4)

26

118

Current liabilities - 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
Lending of funds
Collection of loans

PHOENIX
Subsidiary

RESORT CO.,

100.0

LTD.

Interlocking

receivabledirectorate

Debt forgiveness(Note 6)
Reception ofinterests (Note 4)
Fiduciary obligation(Note 7)

PARADISE
Affiliate

SEGASAMMY
Co., Ltd.

45.0

Interlocking
directorate

Transaction
amountBalance at
Accounts(Note 1)265
2,534

end offiscal year

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

800
4,415

20

─

─

100

─

─

166

Accounts receivable - other

25

4,436

─

─

30,557──

Underwriting of
capital increase(Note 8)Provision of security(Note 9)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. Cash management system transactions are used for the purpose of uniformly andefficiently procuring and managing funds within the Group. Lending and borrowing offunds is executed at any time between the Group companies, thus the transaction amount isomitted.
4. Interest is determined with consideration to market interest rates.
5. For long-term loans receivable from subsidiaries and affiliates from SEGA SAMMY
CREATION INC., the Company recorded provision of allowance for doubtful accounts of¥7,610 million while recorded allowance for doubtful accounts of ¥1,095 million for the
fiscal year ended March 31, 2019.
6. For ¥20 million of long-term loans receivable to PHOENIX RESORT CO., LTD., theCompany implemented debt forgiveness and recorded as “loss on support to subsidiaries
and affiliates” for the fiscal year ended March 31, 2019.
7. Transaction prices are determined in the same way as for general transactions and withreference to fair values.
8. The Company underwrote a capital increase through allotment to shareholders.
9. For part of the loans from financial institutions to PARADISE SEGASAMMY Co., Ltd.,the shares of the company were provided as a pledge.

27

[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

Director

Hajime Satomi

3.34

Director

Haruki Satomi

1.38

Relationship

Description of thetransactions

Director of the

Exercise of stock

Company

options (Note 2)

Director of the

Exercise of stock

Company

options (Note 2)

Transaction
Balance atamountAccounts
end of(Note 1)
fiscal year
105

─

─

127

─

─

Prepaid
expensesCompany inInsurance

which Directors

representativeor their relatives
own majority
voting rights

FSC Co., Ltd.
(Note 3)

Payment of insurance
premium (Note 4)8Long-term
prepaid

5.81

4

1

expensesLending ofRental income fromreal-estate andreal-estate andequipment1──

equipment (Note 3)

Notes: 1. Consumption taxes are not included in transaction amounts.
2. Stock options which were granted based on the resolution at the interim Board of
Directors meeting on August 2, 2016 and exercised for the fiscal year ended March 31,
2019 are listed. The transaction amount listed herein is calculated by multiplying thenumber of shares granted upon exercise of stock options for the fiscal year ended March
31, 2019 by the amount of payment upon exercise.
3. Hajime Satomi, Chairman and CEO (Representative Director), and Haruki Satomi,
President and COO (Representative Director), directly hold a majority of the shares of
FSC Co., Ltd.
4. Transaction prices are determined in the same way as for general transactions and withreference to fair values.
VIII

Note Regarding Per Share Information
Net assets per share¥1,257.78
Net income per share¥0.84

28