CONSOLIDATED SIX-YEAR FINANCIAL SUMMARY
Bandai Namco Holdings Inc. and Consolidated Subsidiaries
For the Fiscal Years Ended March 31

Millions of yen, except per share data and main financial indicators

2018

2019

2020

2021

2022

2023

Net sales¥678,312¥732,347¥723,989¥740,903¥889,270¥990,089

Gross profit

241,581262,555

260,948

282,006

356,265

368,656

Selling, general and administrative expenses

166,557

178,510

182,172

197,352

230,769

252,183

Operating profit

75,024

84,04578,77584,654125,496

116,472

Recurring profit*1

75,38086,86379,797

87,612

133,608

128,006

Profit attributable to owners of parent

54,10963,383

57,66548,89492,752

90,345Comprehensive income

56,02469,95253,312

90,527

96,299116,064

Capital expenditures

60,50129,01633,40631,50736,55445,737

Depreciation and amortization

23,545

21,37023,23924,68425,726

28,671

Cash flows from operating activities

55,13879,811

43,13160,483

121,212

95,625

Total assets¥540,490¥612,955¥619,819¥732,782¥862,650¥926,358

Total current assets

350,618

397,951

383,662455,210577,206

592,637

Total current liabilities

136,202

163,893

142,506

175,920

243,362

247,323

Total net assets

387,354429,644454,684

511,433

584,233

652,133¥ 82.10¥ 96.13¥ 87.46¥ 74.19¥ 140.70¥ 136.88

123.00145.00132.00112.00212.00206.00For the Year:

FINANCIAL REPORTAt Year-End:

2

CONSOLIDATED SIX-YEAR FINANCIAL SUMMARY

3

FINANCIAL REVIEW

7

CONSOLIDATED BALANCE SHEETS

9 ONSOLIDATED STATEMENTS OF INCOME ANDCCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

10

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

11

CONSOLIDATED STATEMENTS OF CASH FLOWS

Return on equity (ROE)*2 (%)

14.7

15.5

13.1

10.2

16.9

14.6

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Return on assets (ROA)*3 (%)

14.7

15.1

12.9

13.0

16.7

14.3

39

INDEPENDENT AUDITOR’S REPORT

Selling, general and administrative expenses to
net sales (%)

24.6

24.4

25.2

26.6

26.0

25.5

Operating profit margin (%)

11.1

11.5

10.9

11.4

14.1

11.8

Profit attributable to owners of parent margin (%)

8.0

8.7

8.0

6.6

10.4

9.1

Shareholders’ equity ratio (%)

71.5

70.0

72.5

69.7

67.7

70.4

Debt/equity ratio (Times)

0.00

0.00

0.01

0.05

0.05

0.03

Per Share Data (Yen):
Basic earnings per share*4
Cash dividends*5

Main Financial Indicators:*1 Recurring profit is a Japanese accounting term denoting income before extraordinary items.
*2 ROE = Profit attributable to owners of parent / Average total shareholders’ equity (= Total net assets – Stock acquisition rights – Non-controlling interests)*3 ROA = Recurring profit / Average total assets*4 The Company conducted a share split with a ratio of three shares for every one share of common stock on April 1, 2023.
Basic earnings per share was calculated assuming that the share split was conducted at the beginning of the fiscal year ended March 31, 2018.
*5 The actual amount of dividends per share before the aforementioned share split is stated.

1

2

FINANCIAL REVIEW

Digital Business

Amusement Business

As for the Digital Business, in home video games, repeat sales were strong

As for the Amusement Business, despite the impact of the spread of COVID-19

on-year increase of 11.3%).

mainly overseas for existing titles such as ELDEN RING, a major title forcausing closures of facilities in certain regions and the impact of rising utility

worldwide distribution launched in the previous fiscal year, contributing tocosts caused by increased fuel prices, net sales for existing amusement facili-

variants, changes in the social situation, fluctuations in the prices of raw

Cost of Sales

results. In addition, the sales of multiple new titles launched during thisties in Japan increased to 114.9% of the prior fiscal year. In addition, wematerials and foreign currency exchange rates, and surging fuel prices,

Cost of sales was ¥621,433 million (year-on-year increase of 16. 6%), and thefiscal year were stable. In network content, sales were strong for key titles

stepped up store development through collaboration with the Group’s

among other factors, affected society and the economy as well as customer

ratio of cost of sales to net sales was 62.8%. As a result, gross profit wassuch as the DRAGON BALL series and ONE PIECE and for titles that

products and services for Bandai Namco Cross Stores and Gashapon

lifestyles and preferences.

¥368,656 million (year-on-year increase of 3.5%), and the gross profit

commenced service in the previous fiscal year as a result of collaboration

Department Stores. Moreover, sales of arcade game machines such as

margin was 37.2%.

with IP development in the media and ongoing measures targeting users.

CLENA3, a new product, were also strong. For the Amusement Business, weCompared with the previous fiscal year, changes in the product mix, inwill continue to promote initiatives that only the Bandai Namco Group canduction of a new logo, we began our new three-year Mid-term Plan. In the

SG&A Expenses

addition to differences in the composition of the titles of home video

offer, such as store development through collaboration with the Group’s

Mid-term Plan, in order to achieve the aims of the Bandai Namco Group

Selling, general and administrative (SG&A) expenses were ¥252,183 million

games, affected profits. Furthermore, in this business, given the intensifying

products and services, while also continuing to improve efficiency.

based on our Purpose, we have established a Mid-term Vision of “Connect(year-on-year increase of 9.3%), and the ratio of SG&A expenses to net sales

with Fans” that aims to constantly meet the needs of global IP fans, a wide

decreased to 25.5%, from 26.0% in the previous fiscal year. Principal items

range of business partners, Group employees, and communities aroundincluded advertising expenses of ¥56,798 million, directors’ remuneration

the world and to foster broad, deep, and multifaceted connections. As

and employees’ wages of ¥64,605 million, employees’ retirement andpriority strategies, we are promoting our IP axis strategy, personnel strategy,

severance benefits of ¥2,997 million, provision for directors’ bonuses ofand sustainability. By propelling the priority strategies, we will take advan-¥2,075 million, and research and development expenses of ¥30,363 million.

Overview of Performance in the
Fiscal Year Ended March 31, 2023

Net Sales
On a consolidated basis, the Group’s net sales were ¥990,089 million (year-

While restrictions on activities implemented due to the novel coronavirus
disease (COVID-19) were increasingly relaxed, the spread of COVID-19

Under such circumstances, from April 2022, with the introduction of our
Purpose as the ultimate definition of who we are as a Group and the intro-

Operating Profit

evolve the IP axis strategy that aims to maximize IP value through the provi-

Operating profit was ¥116,472 million (year-on-year decrease of 7.2%), andsion of the optimal products and services at the optimal times. We will also

the operating profit margin decreased to 11.8%, from 14.1% in the previous

strengthen the global development of the IP axis strategy and enhance ourfiscal year.

sense of unity and collective strength under the ALL BANDAI NAMCO
concept in order to achieve continuous growth.

million. On the other hand, foreign exchange gains were ¥5,010 million. Due

initiatives to foster broad, deep, and multifaceted connections with fansto these and other factors, net other income was ¥9,742 million.

through efforts such as strengthening collaboration among major IP development in the media and our products and services. Moreover, we stepped

Profit Attributable to Owners of Parent

up Group wide, ALL BANDAI NAMCO efforts, working together across

The Group recorded profit attributable to owners of parent of ¥90,345

regions and businesses. As a result, sales of products and services with highmillion (year-on-year decrease of 2.6%). The profit attributable to owners of

profit margins, such as major titles of network content and repeat sales ofparent margin was 9.1%, and basic earnings per share decreased tohome video games in the Digital Business, as well as products for the¥136.88, from ¥140.70 in the previous fiscal year.

mature fan base and card products in the Toys and Hobby Business,with the goal of providing titles focused on quality and, as a result, we(year-on-year increase of 49.0%).

recorded valuation losses, etc., on certain work in process of approximately

Other Businesses

As a result, net sales in the Digital Business were ¥385,681 million (year-

Other Businesses consist of companies that conduct businesses such as

on-year increase of 2.0%), and segment profit was ¥49,339 million (year-on-

logistics support and other kinds of administration and operational support

year decrease of 29.1%).

for each of the Group companies. We have been making efforts to manage
such operations related to Group support in an efficient manner.

Toys and Hobby BusinessNet sales in the Other Businesses were ¥31,313 million (year-on-year

As for the Toys and Hobby Business, while it was impacted by rising prices

increase of 13.2%), and segment profit was ¥1,165 million (year-on-year

for raw materials and fuel caused by the weakening of the yen, its overall

increase of 235.9%).

Financial Position

are doing well, advance global business development, and strengthen

In other income (loss), loss on impairment of fixed assets was ¥1,251

measures in response to environmental changes, we promoted various(year-on-year increase of 27.0%), and segment profit was ¥6,038 million

performance remained strong due to efforts to expand the categories that

Other Income (Loss)

In the fiscal year ended March 31, 2023, in addition to taking swift

As a result, net sales in the Amusement Business were ¥104,602 million

reviewed the status of the development of titles and our business plans¥13.0 billion.

tage of the worldview and unique characteristics of our IP (intellectual
property: meaning characters and other intellectual property) to further

competition in the market environment around the world, we thoroughly

production operations. Specifically, products for the mature fan base such

At the end of the fiscal year ended March 31, 2023, total assets stood at

as plastic models of the Gundam series, collectible figures, and character¥926,358 million, an increase of ¥63,707 million from the end of thelotteries continued to perform favorably around the world mainly due toprevious fiscal year. The main factors were increases of ¥27,973 million in

the successful outcomes produced by sales, marketing, and the expansion

inventories, ¥15,008 million in property, plant and equipment, and ¥27,444

of the product lineup. In addition, card products such as the ONE PIECE

million in investment securities, despite a decrease of ¥23,734 million in

trading card game and digital cards of the Gundam series, confectionery

trade receivables and contract assets.

products such as Charapaki, and capsule toys were popular. In the fourth

Total liabilities amounted to ¥274,224 million, a decrease of ¥4,192

quarter of the fiscal year ended March 31, 2023, the Business recorded

million from the end of the previous fiscal year. The main factors were an

valuation losses, etc., on inventories.

increase of ¥3,131 million in accrued income taxes and a decrease of ¥6,470

As a result, net sales in the Toys and Hobby Business were ¥447,491

contributed to performance around the world. Furthermore, live events inmillion in other long-term liabilities mainly due to a decrease in long-term

million (year-on-year increase of 19.8%), and segment profit was ¥59,538

the IP Production Business and facilities in the Amusement Businessborrowings.

million (year-on-year increase of 13.8%).

enjoyed strong customer visits as restrictions on activities were increasingly

Total net assets stood at ¥652,133 million, an increase of ¥67,900 million
from the end of the previous fiscal year. The main factors were increases ofrelaxed. Meanwhile, in the Digital Business, given the intensifying competition in the market environment around the world, we thoroughly reviewed
the status of the development of titles and our business plans with the goalof providing titles focused on quality and, as a result, we recorded valuation

IP Production Business¥41,775 million in retained earnings, ¥17,634 million in valuation difference

As for the IP Production Business, we changed our organizational structure

on available-for-sale securities, net of tax, and ¥9,163 million in foreign

to integrate resources and know-how related mainly to visuals, music, andcurrency translation adjustments.
As a result, the equity ratio became 70.4% compared with 67.7% at thelive events with the aim of reinforcing our IP creation. Under this new struc-

losses, etc., on certain work in process. We also recorded foreign exchange

end of the previous fiscal year. The current ratio*1 was 239.6% (comparedture, we produced and distributed video works, sold visual and music

gains related to foreign currency transactions in non-operating income dueto the weak yen.

package software, streamed videos, held live events, and conductedwith 237.2% at the end of the previous fiscal year); the quick ratio*2 waslicensing business in relation to IPs. As a result, the performance of activi-

153.3% (compared with 165.2%); and the interest coverage ratio*3 was 279.9

ties such as video streaming and licensing businesses related to video

times (compared with 321.0 times).

works, such as the Gundam series, the Love Live! series, That Time I Got

Results by Segment

DigitalMillions of yen

Millions of yen

Net sales

Segment profit

2023

2022

Year on year

2023

2022

Year on year

¥385,681¥378,173¥ 7,508¥49,339¥69,634¥(20,295)

Toys and Hobby

447,491

373,62573,86659,53852,3197,219

IP Production

81,74879,964

1,784

10,645

8,833

1,811

Amusement

104,60282,344

22,258

6,038

4,051

1,986

Other

31,313

27,667

3,646

1,165

347

818

3

*1 Current ratio = Total current assets / Total current liabilities*2 Quick ratio = (Cash and time deposits + Trade receivables) / Total current liabilities*3 Interest coverage ratio = Cash flows from operating activities / Interest paid

Reincarnated as a Slime, and BLUELOCK, were strong. Furthermore, with
COVID-19 restrictions in Japan being increasingly relaxed, the business forlive events and GUNDAM FACTORY YOKOHAMA exceeded that of theprevious fiscal year.
As a result, net sales in the IP Production Business were ¥81,748 million(year-on-year increase of 2.2%), and segment profit was ¥10,645 million(year-on-year increase of 20.5%).

4

FINANCIAL REVIEWCash Flows

working to build businesses as we work together under the ALL BANDAI

with fans to advance sustainability activities that focus on the social issues

global markets and diversification in lifestyles and preferences of

NAMCO concept in regions around the world.

that the Group should address.

customers, in line with our IP axis strategy, the Bandai Namco Group will•	IPxFans (connecting with fans through IP): New framework for

Under these circumstances, adapting to escalating competitiveness in

As of the end of the fiscal year, cash and cash equivalents (“funds”)
remaining on hand decreased by ¥1,602 million from the end of theenhance its sense of unity and collective strength under the ALL BANDAI

previous fiscal year, to ¥276,288 million. Below is the breakdown of cashconnecting with fans<Bandai Namco Group’s Material Issues>

flows by activities.

NAMCO concept, while utilizing the characteristics of each business. From

Based on the IP axis, Bandai Namco will develop a metaverse for each IP as a

- Harmonious coexistence with the natural environment

April 2022, with the introduction of our Purpose as the ultimate definition of

new framework for connecting with fans. In this IP Metaverse, we are antici-- Provision of appropriate products and services

Cash Flows from Operating Activities

who we are as a Group and the introduction of the new logo, to maintainpating virtual spaces that will enable customers to enjoy a wide range of- Appropriate utilization and protection of intellectual property

continuous growth over medium to long term for the aims under ourentertainment surrounding IP, as well as frameworks that leverage Bandai- Establishment of work environments that facilitate mutual respect

Purpose, the new three-year Mid-term Plan has started.

Namco’s distinctive strengths to fuse physical products and venues with- Harmonious coexistence with communities

The amount of funds provided by operating activities totaled ¥95,625
million (year-on-year decrease of 21.1%). As a breakdown of funds used,digital elements. We are aiming for open frameworks that provide venues forincome taxes paid were ¥49,464 million (compared with ¥16,182 million in1) Formulation of Bandai Namco’s Purpose and introduction of the new logo

the previous fiscal year). However, overall, there was a net increase in funds
due to profit before income taxes of ¥126,215 million (compared with
¥130,882 million in the previous fiscal year) and depreciation and amortization of ¥28,671 million (compared with ¥25,726 million in the previous fiscal

connections with and among fans and business partners. Through the IP5) System for promotion of the Mid-term Plan

Metaverse, we will establish communities among Bandai Namco and fans, as• Strengthening the governance system of Bandai Namco Holdings

well as among fans themselves. Through these communities and content, we

In order to further increase corporate value by strengthening our corporate

will build broad, deep, multifaceted connections that continue for longgovernance system and implementing rapid decision-making and businessyear).

In April 2022, we have established our new Purpose as the ultimate defini-

periods of time, and we will focus on the quality of those connections. In thisexecution, we have made the transition to a company with an audit andtion of who we are as a Group, conveying “the reason for our existence,”

way, we will work to maximize IP value over the medium to long term.

supervisory committee.

Cash Flows from Investing Activities

why we conduct our businesses and corporate activities, and the meaning-• IPxValue (enhancing IP value): Accelerating evolution in the IP axis strategy• Partial changes of the Unit structure

fulness we derive from working at the Bandai Namco Group. What we

We will leverage outlets for a wide range of products and services as well as

In April 2022, we restructured the IP Production Unit and also integrated thebelieve to be particularly important elements in our Purpose are the ideas

our strengths in facilitating collaboration among physical and digital elements,

Visual and Music Business and the Creation Business into the IP Productionof “connecting and working together to create things” and we will achieve

and we will redefine the optimal IP axis strategy for IP fans and for IP itself. In

Business. In the IP Production Unit, Bandai Namco Filmworks Inc. will serve“Fun for All into the Future” by the Bandai Namco Group and our fansthese ways, we will aim to accelerate evolution in the IP axis strategy.

as a business management company upon having combined three compa-

fiscal year).

connecting through dreams, fun and inspiration.

•	IPxWorld (connecting the world through IP): Building businesses under thenies that engage in the visual business within the IP Production Unit, namely

Cash Flows from Financing Activities

Purpose. All companies with “Bandai Namco” in their names will use thisTo work together and advance our strategies under the ALL BANDAI NAMCO

logo, and companies with and without “Bandai Namco” in their names willconcept in regions worldwide, we have implemented such initiatives as

display this new Group logo on all their products and services, in principle.

organizational restructuring and base consolidation around the world. Under

6) Numerical targets, shareholder return policy

This will enable us to bring together the value of all our products, services,

this ALL BANDAI NAMCO concept, we work to build businesses in each region.

• Fiscal year ending March 31, 2025: Numerical targets

and labels under one logo and elevate the brand value of the Bandai• Investment plan for accelerating evolution in the IP axis strategy

Consolidated net sales: ¥1,100.0 billion

Namco Group in the global market.

Over the three years of the Mid-term Plan, we will implement a total of ¥40.0

Consolidated operating profit: ¥125.0 billion

billion in strategic investment to accelerate evolution in the IP axis strategy.

ROE: 12% or more

The amount of funds used in investing activities totaled ¥40,878 million(year-on-year increase of 50.6%). The main breakdown of funds used waspurchases of property, plant and equipment and intangible assets
totaling ¥33,808 million (compared with ¥26,798 million in the previous

In April 2022, we introduced a new logo that expresses the spirit of our

The amount of funds used in financing activities totaled ¥59,524 million(year-on-year increase of 133.9%). The main breakdown of funds used was
cash dividends paid of ¥47,310 million (compared with ¥25,271 million in
the previous fiscal year).

Basic Policy on the Distribution of Profits

ALL BANDAI NAMCO concept

SUNRISE INC., the visual business of Bandai Namco Arts Inc., and Bandai
Namco Rights Marketing Inc.

Strategic investment to maximize IP value: ¥25.0 billion

The Bandai Namco Group ranks the return of profits to shareholders as one

Investment to develop the IP Metaverse: ¥15.0 billionof its highest priorities in its management. The Group aims to further

In the future, the Bandai Namco Group aims to always meet the needs of
IP fans, a wide range of business partners, Group employees, and communi-

2) Purpose-driven aims

strengthen its competitiveness and, while maintaining a sound financial
status, to achieve regular distributions of dividends and improvement in its
corporate value. Specifically, the Company follows a basic policy ofproviding a return to shareholders that targets a total payout ratio of 50% ormore based on stable dividend payments of 2% of DOE (dividends onequity). Under this policy, the Company strives to maintain long-term andstable dividends and be more aware of capital cost.
For the year-end dividend of the fiscal year ended March 31, 2023, basedon this basic policy and the performance in the fiscal year, a performancebased dividend of ¥152 will be added to a base dividend of ¥27, for a totalof ¥179 per share. Since the Company paid an interim dividend of ¥27 per

In accordance with the Purpose, the Bandai Namco Group aims to connect■ Personnel strategy: Developing diverse human resources

ties around the world and to foster broad, deep, multifaceted connections,with IP fans, a wide range of business partners, Group employees, andIn accordance with our Purpose, the Group strives to be a community of “sameand each business around the world will further work as one under the ALL

communities around the world. We will strive to connect more broadly withspirit, diverse talents,” where diverse companies and people with various

BANDAI NAMCO concept on the priority strategies, consisting of the IP axis

new fans and more deeply with current fans. In addition, we will aim totalents, personalities, and values can thrive. We will further focus on recruiting

strategy, personnel strategy, and sustainability, under the Mid-term Plan.

foster multifaceted connections among current fans and new fans as welland promoting human resources regardless of whether they are new graduates

as communities of fans. In fostering connections with and among various

or mid-career hires and regardless of gender, age, nationality, race, religion, orfans, our highest priority will be the quality of the connections. Under thesexual orientation. In addition, we will focus on developing systems andMid-term Plan, we will advance a variety of strategies and initiatives

environments that enable a diversity of people to thrive and work in a way that

focusing on broad, deep, and multifaceted connections with fans and on

Consolidated Plan for the Fiscal Year Ending March 31, 2024
Millions of yen
Net sales
Segment profit
Segments

is both physically and mentally healthy. Under the Mid-term Plan, we will

the quality of those connections.

promote initiatives to support challenges taken on by employees and the devel-

Entertainment Unit
• Digital Business

opment of human resources to promote the IP axis strategy on a global scale, as

share on December 9, 2022, the annual cash dividend will be ¥206 per share3) Mid-term Vision(total payout ratio of 50.2%).

Connect with Fans

The Company’s annual dividend forecast for the fiscal year ending March
31, 2024, is ¥20 per share, which is the base dividend set in accordance with
the Company’s basic policy on the distribution of profits. The year-end cash
dividend for the fiscal year ending March 31, 2024, will be considered by theCompany based on the basic policy on the distribution of profits. The
Company implemented a three-for-one common stock split, effective April 1,
2023. The annual dividend for the fiscal year ending March 31, 2024, based on
the number of shares before the stock split would be ¥60 per share.

Outlook for the Fiscal Year Ending March 31, 2024
Looking ahead, the Group expects uncertainty to continue in various

well as new and diverse ways to work. In addition, we will actively engage incooperation and collaboration with external human resources.

surrounding us, such as the market as well as customer lifestyles andpreferences, to become even more intense.

5¥ 58,000

450,000

63,000

IP Production Unit

83,00011,000

Amusement Unit

110,000

5,000

31,0001,000

In accordance with the Purpose, as we work toward what the Bandai Namco■ Sustainability: Connecting to a future of smiles

Other

Group aims to be, under the Mid-term Plan we will strive to always meet theUnder the Purpose and Bandai Namco Group Sustainability Policy, the Group

Adjustments(64,000)(13,000)needs of IP fans, a wide range of business partners, Group employees, andhas identified five themes that need to be addressed with particular impor-

Consolidated

communities around the world and to foster broad, deep, multifaceted

tance as materiality. We are promoting various specific action plans linked to¥1,000,000¥125,000connections.

our businesses, such as initiatives to eliminate petroleum-derived plastics
and the collection and recycling of plastic model runners and empty

Forward-Looking Statements

4) Main strategies and investment plancapsules. Furthermore, to respond to the natural environmental problems

Forecasts for the next fiscal year and other future projections in this report are■ IP axis strategy

that society is facing, we will set targets and steps for reducing energy-derived

based on information available to the Group at the time they were made and

The IP axis strategy, which is the Bandai Namco Group’s strength, is the corecarbon dioxide emissions and strive to advance efforts toward decarbonization.

are therefore subject to various risks and uncertainties. Actual results, therefore,
may differ materially from projections due to a variety of factors. Major factorsof the Mid-term Plan. We will aim for sustainable growth by implementing

regions around the world. We also expect the changes in the environment¥ 390,000• Toys and Hobby Business

new initiatives to foster broad, deep, and multifaceted connections with fans<Bandai Namco Group’s Sustainability Policy>

that could influence results include changes in the Company and the Group’s

around the world; by accelerating evolution in the IP axis strategy; and by

Based on the IP axis strategy, the Bandai Namco Group will work together

operating environment, market trends, and exchange rate fluctuations.

6

CONSOLIDATED BALANCE SHEETS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries
As of March 31, 2022 and 2023

Note

2022

Millions of yen

Thousands of
U.S. dollars (note 3)

2023

2023

AssetsLiabilities and net assets

Current assets:

Current liabilities:

Cash and time deposits

4, 12, 21

Trade receivables and contract assets

6, 12, 23

Allowance for doubtful receivables¥ 279,401¥ 280,226$ 2,098,603

122,742

99,007

741,460(2,001)(1,086)(8,134)

Trade payables
Short-term borrowings

Contract liabilities

7

124,250

152,223

1,139,996

Other current assets

452,81462,266466,311

Other current liabilities

577,206

592,637

4,438,238

		 Total current liabilities

		 Total current assets

Thousands of
U.S. dollars (note 3)

Note

2022

2023

2023

10

¥ 99,810¥ 99,244$ 743,239

9, 12

10,81010,77080,662

22,891

26,022

194,881

22,912

22,567

169,007

3,745

4,078

30,544

83,191

84,638633,857

243,362

247,323

1,852,192

249

118

891

5,261

3,710

27,787

Accrued income taxes

Inventories

Millions of yen

23

Provisions
9

Long-term liabilities:
Property, plant and equipment:

Provisions

Buildings and structures

8

40,41644,724

334,940

Net defined benefit liability

11

Amusement facilities and machines859,29859,443445,167

Deferred tax liabilities

13

4,148

5,457

40,868Other long-term liabilities

925,393

17,614

131,914

		 Total long-term liabilities

35,053

26,901

201,461		Total liabilities

278,416

274,224

2,053,653

10,000¥10,000

74,88952,57452,897396,149

Land
Other property, plant and equipment

8

		TotalLess accumulated depreciation
		 Net property, plant and equipment

42,86946,476

348,061

151,528

172,240

1,289,902

294,112322,885

2,418,072(201,662)(215,426)(1,613,322)

92,450107,458

804,749

Net assets:
Shareholders’ equity:
Common stock18

		 Authorized: 2,500,000,000 shares*

1

Intangible assets:		 Issued: 666,000,000 shares*1

Goodwill
Other intangible assets

8

		 Total intangible assets

14,887

14,561109,048

Capital surplus

19,54021,622

161,926

Retained earnings

16

482,147

523,923

3,923,635

270,975

Treasury stock, at cost; 6,069,618 shares in 2022, and 5,949,648 shares in 2023*1

18(2,140)(2,102)(15,742)

542,581584,718

4,378,932

45,03762,671

469,346

901

(656)

(4,913)(4,016)(4,016)(30,081)1,886

11,04982,750(2,394)(1,915)(14,347)

41,413

67,132502,752

237

282

2,114

34,42836,183

		Subtotal
Accumulated other comprehensive income:15

Valuation difference on available-for-sale securities, net of tax

Investments and other assets:
Investment securities

5, 12

113,261

140,706

1,053,741

Deferred tax assets

13

25,732

27,572

206,492

Net defined benefit asset

11

525

596

4,463

8, 21

19,831

21,860163,708

(784)

(656)

(4,916)

		 Total investments and other assets

158,565

190,078

1,423,490

		Total assets¥ 862,650¥ 926,358$ 6,937,453

Other investments and assets
Allowance for doubtful receivables

5

Deferred gains or losses on hedges, net of tax
Revaluation reserve for land, net of tax

17

Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax

11		Subtotal
Non-controlling interests
		 Total net assets

584,233

652,133

4,883,799

		 Total liabilities and net assets¥862,650¥926,358$6,937,453*1 T
 he Company made partial amendments to the Articles of Incorporation in conjunction with a share split on April 1, 2023. As a result, the total number of authorized shares increased by 1,500,000,000 shares to
2,500,000,000 shares. Total number of issued shares at the end of the period and number of shares of treasury stock at the end of the period have been presented assuming that the share split was conducted at
the beginning of the previous fiscal year.

See accompanying Notes to Consolidated Financial Statements.

7

8

CONSOLIDATED STATEMENTS OF INCOME ANDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMECONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2022 and 2023

Bandai Namco Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2022 and 2023

Consolidated Statements of Income

Year ended March 31, 2022
Millions of yen

Net sales
Cost of sales
		Gross profit
Selling, general and administrative expenses
		Operating profit

Note

2022

2023

2023

23
7

¥889,270
533,004
356,265
230,769
125,496¥990,089
621,433
368,656
252,183
116,472$7,414,733
4,653,883
2,760,850
1,888,591
872,258

14

Other income (loss):
Interest and dividend income
Interest expense
Foreign exchange gains (losses)
Loss on valuation of derivatives
Share of profit (loss) of entities accounted for using equity method
Loss on investments in deferred compensation plan
Loss on valuation of investment securities
Gain on sale of shares of subsidiaries and associates
Gain (loss) on sales and disposal of fixed assets, net
Loss on impairment of fixed assets
Extra retirement payments
Subsidies for employment adjustment and other related to COVID-19
Other

8

Profit before income taxes

1,454
(377)
5,519
(244)
618
—
—
2
2,310
(2,994)(1,257)
909
(554)
5,385
130,882

Income taxes

13

Profit38,29592,587

Profit (loss) attributable to non-controlling interests(165)

		 Profit attributable to owners of parent¥ 92,752

Note

Per share data:*1
Net assets at March 31
Earnings per share:
Basic
DilutedCash dividends applicable to period

26

16

2,639
(332)
5,010
—
2,323
(144)
(553)
510
(491)
(1,251)
—
132
1,900
9,742
126,215
35,87090,3450

19,764(2,490)37,523—
17,403(1,082)(4,144)
3,820(3,682)(9,370)—991
14,231
72,963
945,222
268,632
676,5900¥ 90,345$ 676,589

Yen

U.S. dollars (note 3)

2022

2023

2023

¥884.94¥987.58$7.40

140.70—212.00136.88—206.00

1.03
—
1.54

See accompanying Notes to Consolidated Financial Statements.
*1 The Company conducted a share split with a ratio of three shares for every one share of common stock on April 1, 2023. Net assets per share and basic earnings per share were calculated assuming that the share
split was conducted at the beginning of the previous fiscal year. Cash dividends applicable to period is based on the amount before the aforementioned share split.

Consolidated Statements of Comprehensive Income
Note

ProfitOther comprehensive income:
Valuation difference on available-for-sale securities, net of tax
Deferred gains or losses on hedges, net of tax
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

15
5

11

Millions of yen

Thousands of
U.S. dollars (note 3)

Millions of yen

Thousands of
U.S. dollars (note 3)

2022

2023

2023

¥92,587¥ 90,345$676,590(6,505)
(87)
9,323
1,025

17,688(1,554)9,164
478

132,468(11,638)
68,629
3,583

(44)

(57)

(433)

3,711
¥96,299

25,719¥116,064

192,608$869,199¥96,464(165)¥116,063
0$869,195
4

Shareholders’ equity

Commonstock

Note
Balance at beginning of year

CapitalsurplusRetainedearnings¥10,000¥52,232¥414,487

10,00052,232

414,666

18

16

Cumulative effects of changes
in accounting policies
Restated balance

Accumulated other comprehensive income

Total
shareholders’equityTreasurystock

18¥(3,905)¥472,814(3,905)472,993

179

Valuation
Foreigndifference on Deferred gains
currency
Revaluation
available-for- or losses onhedges,reserve for land, translation
sale securities,
adjustments
net of tax
net of tax
net of tax

Total net
assets atend of year

5, 15

15

15, 17

15¥51,587¥988¥(4,016)¥(7,438)¥(3,419)¥37,701¥ 917¥511,433

11, 1551,587988(4,016)(7,438)(3,419)37,701

917

511,612

179

179

Cash dividends(25,271)(25,271)(25,271)Profit attributable to owners of parent

92,752

92,752

92,752Change in scope of consolidation foreign currency translation adjustment—

Change in ownership interest ofparent due to transactions with
non-controlling interests

(108)

(482)

(8)

1,772

2,224

2,224

0

0

0

¥(2,140)¥542,581

Net changes of items other thanshareholders’ equity¥52,574¥482,147

(591)

(8)

451

¥10,000

160(8)Change in treasury stock accompanying
changes to holdings in companies towhich the equity method is applied

Balance at end of year

160

(108)

Purchase of treasury stock
Disposal of treasury stock160(6,549)

(87)

—

9,164

1,025

3,552

(197)

3,355

¥45,037¥901¥(4,016)¥ 1,886¥(2,394)¥41,413¥ 237¥584,233

Year ended March 31, 2023
Millions of yen
Shareholders’ equity

Commonstock

Note
Balance at beginning of year

CapitalsurplusRetainedearnings¥52,574¥482,147

18¥10,000

16

Accumulated other comprehensive income

Treasury stock

Total
shareholders'equity18¥(2,140)¥542,581

Cash dividends(47,310)(47,310)

Profit attributable to owners of parent

90,34590,345

Change in scope of consolidation(1,258)(1,258)Change in scope of consolidation foreign currency translation adjustment

5, 15

15

15, 1715¥45,037¥ 901¥(4,016)¥ 1,886

Disposal of treasury stock

323

Change in treasury stock accompanying
changes to holdings in companies
to which the equity method is applied¥52,897¥523,923

Total net
assets atend of year

11, 15¥(2,394)¥41,413¥237¥584,233
90,345

44
223

223

(1,214)
223

(4)

(4)

(4)

42

365

365

0

0

Net changes of items other thanshareholders’ equity¥10,000

Total
accumulated
otherRemeasurementsof defined benefit comprehensive Non-controlincome
ling interests
plans, net of tax(47,310)—Purchase of treasury stock

Balance at end of year

Valuation
Foreigndifference on Deferred gains
currency
Revaluation
available-for- or losses onhedges,reserve for land, translation
sale securities,
adjustments
net of tax
net of tax
net of tax¥(2,102)¥584,718

0
17,634(1,557)

—

8,940

478

25,495025,495¥62,671¥ (656)¥(4,016)¥11,049¥(1,915)¥67,132¥282¥652,133

Year ended March 31, 2023
Thousands of U.S. dollars (note 3)
Shareholders’ equity

Commonstock

Note
Balance at beginning of year

Capitalsurplus18

Retainedearnings

16$74,889 $393,730 $3,610,780

Accumulated other comprehensive income

Treasury stock

Total
shareholders'equity18$(16,028)$4,063,371

Cash dividends(354,306)(354,306)

Profit attributable to owners of parent

676,589

676,589

Change in scope of consolidation(9,427)(9,427)Change in scope of consolidation foreign currency translation adjustment
2,419

Change in treasury stock accompanying
changes to holdings in companies
to which the equity method is applied

5, 15

15

15, 1715

11, 15$ 6,752$(30,081)$14,124$(17,931)$74,889 $396,149 $3,923,635$310,147$1,780Total net
assets atend of year

$4,375,298(354,306)
676,589

329
1,672

1,672

(9,097)
1,672

(37)

(37)

(37)

320

2,739

2,739

2

2

2

$(15,742)$4,378,932

Net changes of items other thanshareholders’ equity
Balance at end of year

Total
accumulated
otherRemeasurementsof defined benefit comprehensive Non-controlincome
ling interests
plans, net of tax$337,283—

Purchase of treasury stock
Disposal of treasury stock

Valuation
Foreigndifference on Deferred gains
currency
Revaluation
available-for- or losses onhedges,reserve for land, translation
sale securities,
adjustments
net of tax
net of tax
net of tax

132,062(11,666)—

66,953

3,583

190,932

4

190,937$469,346$ (4,913)$(30,081)$82,750$(14,347)$502,752$2,114$4,883,799

See accompanying Notes to Consolidated Financial Statements.

See accompanying Notes to Consolidated Financial Statements.

9

Total
accumulated
otherRemeasurementsof defined benefit comprehensive Non-controlincome
ling interests
plans, net of tax

10

CONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Bandai Namco Holdings Inc. and Consolidated Subsidiaries
Years Ended March 31, 2022 and 2023

Bandai Namco Holdings Inc. and Consolidated Subsidiaries

Note

Cash flows from operating activities:
Profit before income taxes
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in other provision
Increase (decrease) in retirement benefit liability
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using equity method
Loss (gain) on valuation of derivatives
Loss (gain) on sales and disposal of fixed assets, net
Loss on disposal of amusement facilities and machines
Loss (gain) on sales of shares of subsidiaries and associates
Loss on valuation of investment securities
Decrease (increase) in trade receivables and contract assets
Decrease (increase) in inventories
Acquisition of amusement facilities and machines
Increase (decrease) in trade payables
Increase (decrease) in contract liabilities
Decrease (increase) in other current assets
Increase (decrease) in other current liabilities
Other
		Subtotal
Interest and dividends received
Interest paid
Income taxes paid
		 Net cash provided by operating activities
Cash flows from investing activities:
Decrease (increase) in time deposits, net
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales of investment securities
Proceeds from sales of shares of subsidiaries
Purchase of shares of subsidiaries and associatesPurchase of shares of subsidiaries resulting in change in scope of consolidationDecrease from sales of shares of subsidiaries resulting in change in scopeof consolidation
Other
		 Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Purchase of treasury stock
Proceeds from disposal of treasury stock
Proceeds from share issuance to non-controlling shareholders
Cash dividends paidPurchase of shares of subsidiaries not resulting in change in scopeof consolidation
Other
		 Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting from merger with
non-consolidated subsidiaries
Cash and cash equivalents at end of year

8

11

6
7
10

4
4

4

2022

¥130,882
25,726
2,994
2,218
610
134
187
(1,454)
377
(359)
(618)
244
(2,310)105(2)—(26,577)(15,534)(4,360)16,184
22,270(10,690)(1,380)(2,322)
136,3251,447(377)(16,182)
121,212

Millions of yen

Thousands of
U.S. dollars (note 3)

2023

2023

¥126,215
28,671
1,251
2,431(1,169)191
138(2,639)332(21)(2,323)
(309)
491
228
(510)
553
28,484(26,107)(5,180)(1,595)(894)(1,769)(2,013)(1,604)
142,852
2,579(341)(49,464)
95,625$ 945,222
214,722
9,370
18,212(8,761)
1,435
1,035(19,764)
2,490
(164)
(17,403)(2,318)3,682
1,710(3,820)4,144
213,322(195,515)(38,798)(11,947)(6,698)(13,250)(15,079)(12,014)
1,069,812
19,318(2,558)(370,437)
716,134(848)(19,228)
3,874(7,569)(1,604)
624
49
(984)

(2,386)(25,376)99(8,431)
(513)
2
—
(551)

(17,873)(190,042)
744(63,146)(3,842)
19—(4,126)—(2,019)(15,124)

—

(114)

(858)

(1,449)(27,136)(1,587)(40,878)(11,886)(306,137)

400
250
(223)
(8)
1,946
—
(25,271)(179)
180(10,382)(4)
0
9(47,310)(1,340)1,348(77,751)(37)2
73(354,306)

(591)

—

—

(1,952)(25,450)
5,328
73,954
203,698(1,837)(59,524)
3,174(1,602)
277,891(13,763)(445,775)
23,775(12,002)2,081,116

238

—

—

¥277,891¥276,288$2,069,113

1 Basis of Presentation
the Financial Instruments and Exchange Act.

Bandai Namco Holdings Inc. (“the Company”) and its consolidated subsid-

Some supplementary information included in the statutory Japanese-iaries have prepared their financial statements in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act andlanguage consolidated financial statements that is not required for fair

its related accounting regulations, and in conformity with accounting princi-presentation is not presented in the accompanying consolidated financial

ples generally accepted in Japan (Japanese GAAP), which are different instatements.
In preparing the accompanying consolidated financial statements, certain

certain respects as to application and disclosure requirements ofreclassifications have been made to the consolidated financial statements

International Financial Reporting Standards (IFRS).

issued in Japan in order to present them in a form that is more useful to

The accounts of foreign subsidiaries are based on their accounting records

readers outside Japan.

maintained principally in conformity with IFRS or accounting principles

Certain reclassifications have been made to the prior year’s consolidated

generally accepted in the United States (US GAAP).

financial statements to conform to the presentation used for the fiscal year

The accompanying consolidated financial statements have been prepared

ended March 31, 2023.

and translated into English from the consolidated financial statements of the

Figures in this report have been rounded down.

Company prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as required by

2 Summary of Significant Accounting Policies(a) Principles of Consolidation(d) Accounting Standards for Significant Income and Expenses

The accompanying consolidated financial statements include the accounts of(1) Revenue Recognition:

the Company and its significant subsidiaries. Consolidation of the remaining

The content of performance obligations and normal timing of revenue recog-

subsidiaries would have had no material effect on the accompanying consoli-

nition for major businesses are as follows:

dated financial statements. Investments in significant affiliates are accounted

a. Digital Businessfor using the equity method.

In the Digital Business, the Company mainly conducts the distribution of
network content and sales of home video games.

Investments in unconsolidated subsidiaries and certain affiliates otherthan those accounted for using the equity method are stated at cost. If the

For the distribution of network content (smartphone-based applications,

equity method had been applied to the investments in these companies,etc.), in many cases, games are provided for free to customers, while items,

there would have been no material effect on the accompanying consolidated

etc., used in the game are provided at charge. The Company deems thefinancial statements.

performance obligation to be satisfied when the customer uses said items,
etc., and estimates the customer’s usage period, recognizing revenue overAll significant intercompany accounts and transactions have been eliminated in consolidation.

such usage period.

(b) Cash and Cash Equivalents

obligation to be satisfied and recognizes revenue at the point in time when

In reporting cash flows, the Company considers cash on hand, demand

the product is transferred to the customer. However, if there are elements notdeposits, and all highly liquid investments with original maturities of three

yet delivered to the customer, such as additional free downloadable content,

months or less to be cash and cash equivalents.

the Company calculates the estimated sale value by referencing the selling

For sales of home video games, the Company deems the performance

price of similar paid downloadable content and recognizes revenue over thecourse of the customer’s average game-playing period.

(c) Foreign Currency Translation

Licensing of home video games under license agreements is a grant of

Foreign currency transactions are translated into yen at rates in effect at
the dates they are transacted, and the gains or losses arising from theusage rights, and the Company deems the performance obligation to besettlement of the related receivables or payables are included in “Foreignsatisfied and recognizes the minimum guarantee as revenue at the point inexchange gains (losses)” in the consolidated statements of income.

time when licensing starts. Royalties based on net sales are determinedbased on the sales, etc., of the contract partner, and revenue is recognized at

Receivables and payables denominated in foreign currencies at thebalance sheet date are translated at the rates in effect as of the balance sheet

the point in time when the performance obligation is deemed to be satisfied

date and the unrealized gains or losses are included in “Foreign exchange

while taking into consideration the time when the royalty is accrued.

gains (losses)” in the consolidated statements of income.

b. Toys and Hobby BusinessIn the Toys and Hobby Business, the Company mainly conducts sales of toys,

The assets and liabilities of foreign consolidated subsidiaries and affiliates
are translated into yen at the rates of exchange in effect at the balance sheet

capsule toys, cards, confectionery and foods, apparel, sundries, plastic

date. Revenue and expenses of foreign consolidated subsidiaries and affili-models, prizes, stationery, and other products.

ates are translated into yen at the average rates of exchange during the fiscal

For such sales of goods and products, the Company deems the perfor-

year. Gains and losses resulting from the translation of foreign currency finan-

mance obligation to be satisfied and recognizes revenue at the point in timecial statements are generally excluded from the consolidated statements ofwhen the good or product is transferred to the customer.

income and are included in “Foreign currency translation adjustments” inc. IP Production Business“Net assets” in the consolidated balance sheets.

In the IP Production Business, the Company mainly conducts the production and management of visual and music content such as animations
and the management and administration of copyrights and other rights.
For contracted animation production, the Company deems the performance obligation to be satisfied and recognizes revenue at the point intime when the product is delivered to the client.

See accompanying Notes to Consolidated Financial Statements.

11

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries(f) Allowance for Doubtful Receivables(j) Intangible Assets (Exclusive of Leased Assets and Right-of-Use Assets)(m) Retirement and Severance Benefits

deems the performance obligation to be satisfied and recognizes revenue at

The allowance for doubtful receivables is provided for possible losses on

Amortization of intangible assets is computed by the straight-line method

The Company and certain domestic consolidated subsidiaries have establishedthe point in time when the product is transferred to the customer.

unrecoverable receivables. For ordinary receivables, the amount of the allow-

based on estimated useful lives. Software for internal use is amortized overa defined benefit corporate pension plan, a defined benefit retirement

ance is based on the historical rate of loss. For receivables from debtors at risk

1–5 years.

lump-sum benefit system plan, and a defined contribution pension plan.

Regarding the sales of visual and music content and the like, the Company

Licensing of animation and visual and music content under license

Goodwill is amortized using the straight-line method over the period

Retirement benefits trusts have been established for certain defined benefit

zation, the amount of the allowance is based on individually estimatedwithin 10 years. The Company reasonably estimates the period for which thecorporate pension plans. Other domestic consolidated subsidiaries (excluding

unrecoverable amounts.

effects of goodwill are expected to emerge.

domestic consolidated subsidiaries with no retirement benefit system) havecontract partner, and revenue is recognized at the point in time when the(g) Inventories(k) Leased Assets and Right-of-Use Assets

retirement lump-sum benefit system. Certain consolidated subsidiaries have

performance obligation is deemed to be satisfied while taking into

Domestic Consolidated Subsidiaries:

Depreciation of leased assets is computed by the straight-line method overestablished a defined contribution pension plan and a defined contribution

consideration the time when the royalty is accrued.

Generally, inventories are stated using the cost method based on the average

the period of the lease with a residual value of zero.

smaller corporate retirement allowance mutual aid system. Certain foreignd. Amusement Businessmethod. The value stated in the consolidated balance sheets is calculated by

In the Amusement Business, the Company mainly conducts the sales ofwriting down the carrying amount based on declining profitability.

method over the shorter of the useful life or the lease period of assets.

Foreign Consolidated Subsidiaries:(l) Derivatives and Hedging Activities

obligation to be satisfied and recognizes revenue at the point in time when

Generally, inventories are stated using the lower cost or market method

The Company and its consolidated subsidiaries use derivative instruments,

is principally used to attribute expected benefit payments to the period

the product is transferred to the customer.

based on the average method.

such as forward foreign exchange contracts, to reduce market risks arisingextending up to the end of the current fiscal year. Prior service costs arefrom fluctuations in foreign exchange rates and interest rates. The Company

amortized from the time they are incurred by the straight-line method for aagreements is a grant of usage rights, and the Company deems theof bankruptcy and receivables from debtors in bankruptcy or under reorgani-performance obligation to be satisfied and recognizes the minimum
guarantee as revenue at the point in time when licensing starts. Royalties

established a defined benefit corporate pension plan and a defined benefit

based on net sales are determined based on the sales, etc., of theconsolidated subsidiaries have established defined benefit pension plans,

Depreciation of right-of-use assets is computed by the straight-line

retirement lump-sum benefit systems, and defined contribution pension plans.
Moreover, additional benefits may be paid at retirement.

amusement machines and operation of amusement facilities.
For sales of amusement machines, the Company deems the performance

Revenue from the operation of amusement facilities mainly arises from

In calculating the retirement benefit obligations, the benefit formula basis

charges to customers to play with amusement machines, and the Company

Both domestic and foreign consolidated subsidiaries state game software as

and its consolidated subsidiaries use these derivative instruments solely forcertain number of years (10 years) within employees’ average remaining years

deems the performance obligation to be satisfied and recognizes revenue atwork in process by the specific-cost method. The value stated in the consoli-

the purpose of reducing the risks resulting from such fluctuations to whichof service. Actuarial gains or losses are amortized from the consolidated fiscal

the point in time when the customer starts playing.

dated balance sheets is calculated by writing down the carrying amountthey are exposed in the course of their ordinary business activities.

year following the year in which the gain or loss is incurred by the straight-line

based on declining profitability.

Accordingly, the Company and its consolidated subsidiaries do not use deriv-

method for a certain number of years (7–14 years) not longer than

ative instruments or other financial instruments for speculative purposes.

employees’ average remaining years of service. The Company and certain

Regarding the domestic sales of goods and products in each business, theconsolidated subsidiaries use a simplified method in calculating net defined

The Company and its consolidated subsidiaries’ counterparties for deriva-

Company applies the alternative treatment prescribed in paragraph 98 of the(h) Income Taxes“Implementation Guidance on Accounting Standard for Revenue

Current income taxes are accounted for based on income. Deferred income

tive instruments are all highly creditworthy financial institutions and, there-

benefit asset, net defined benefit liability, and periodic pension cost under

Recognition,” and if the period from the time of shipment to the time whentaxes are accounted for under the asset and liability method. Deferred tax

fore, the Company believes that it is exposed to almost no counterparty risk.

which retirement benefit obligations are principally based on accrued

control of such goods or products is transferred to the customer is a normal

assets and liabilities are recognized for future tax consequences attributable

Derivative transactions are conducted in accordance with internal rules that

benefits at the end of the year.

period of time, the Company recognizes revenue at the time of shipment.

to differences between the financial statement carrying amounts of existing

specify transaction authority and transaction amount limits.

assets and liabilities and their respective tax bases and operating loss and tax(n) Appropriation of Retained Earnings

As a general rule, derivative instruments are stated at fair value. For deriva-(2) Accounting for Video Game Content Production Costs:

credit carryforwards. Deferred tax assets and liabilities are measured using

tive instruments that meet the criteria for hedge accounting, recognition of

Retained earnings with respect to a given financial period are appropriatedA distinctive characteristic of video game content is the process throughenacted tax rates expected to apply to taxable income in the years in which

unrealized gains or losses is deferred. In cases where forward foreign

by resolution of the shareholders at a general meeting to be held subsequent

which the software is highly combined with the content that cannot be

those temporary differences are expected to be recovered or settled. The

exchange contracts meet certain hedging criteria, the hedged receivables andto the close of such financial period. The accounts for that period do not,separated into identifiable components.

effect on deferred tax assets and liabilities of a change in the tax rate is recog-

payables are translated at the corresponding forward foreign exchange

therefore, reflect such appropriations.

nized in income in the period that includes the enactment date.

contract rate (the “allocation method”).

(i) P roperty, Plant and Equipment (Exclusive of Leased Assets andhedging transactions from the start of the transaction to the point at which

In computing basic earnings per share, the average number of shareseffectiveness is assessed by comparing the cumulative changes in the fairoutstanding during each year has been used. Diluted earnings per share

The Company and Its Domestic Consolidated Subsidiaries:

value or the cumulative changes in the cash flows of the hedged item withassumes the dilution that could occur if securities or other contracts to issue

The capitalized production costs are amortized to cost of sales based on

Depreciation of property, plant and equipment is principally computed by

the cumulative changes in the fair value or the cumulative changes in thecommon stock were exercised or converted into common stock, or resulted

projected sales revenue for home video games and are amortized to cost of

the declining-balance method based on estimated useful lives. The straight-

cash flows of the hedging instrument. In the event that critical terms are thein issuance of common stock.

sales over the minimum operating period for smartphone-basedline method is used for buildings (except for building fixtures) acquired sincesame for the hedging instrument and the hedged assets, liabilities, or sched-applications.

April 1, 1998, and for part of the amusement facilities and machines, etc. The

uled transaction, it is assumed that the hedge is 100% effective, so the assess-estimated useful lives for Buildings and structures and Amusement facilities

ment of effectiveness is not performed.

The content is considered to be an important component of each video(o) Per Share Data

The Company and its consolidated subsidiaries assess the effectiveness ofgame title, which includes the game content and visual/music data.
Once management makes a decision to go forward in distributing a title,

Right-of-Use Assets)

the Company records the video game content development costs as work inprocess.

and machines are 2–50 years and 3–15 years, respectively.

(e) Marketable Securities and Investment Securities
Available-for-sale securities other than shares, etc., that do not have a fairvalue are principally carried at fair value. The difference, net of tax, between

Foreign Consolidated Subsidiaries:

the acquisition cost and the carrying amount of available-for-sale securities

Depreciation of property, plant and equipment is principally computed bywith market quotations is recognized in “Valuation difference on available-

the straight-line method based on estimated useful lives. The estimatedfor-sale securities, net of tax” in “Net assets” in the consolidated balance

useful lives for Buildings and structures and Amusement facilities andsheets until realized. Available-for-sale shares, etc., that do not have a fairmachines are 3–50 years and 4–25 years, respectively.

Cash dividends per common share are computed based on dividends
declared with respect to income for the fiscal year.
(p) Significant Accounting Estimates

In the event that a hedge becomes ineffective, hedge accounting is nolonger applied and the recognition of the gains or losses on the hedge trans-

Valuation of Work in Process for Home Video Games before Launch at Major

action is no longer deferred.

Domestic Development Bases(1) A mount recorded in the consolidated financial statements
Millions of yen

Work inprocessvalue are principally carried at cost. The cost of available-for-sale securities
sold is principally computed based on the moving-average method.
Investments in investment limited partnerships or similar associations(investments that are deemed to be securities under the Financial
Instruments and Exchange Act, Article 2, Clause 2) are carried at the net
amount proportionate to the Company’s ownership interests, based on themost recent financial statements available in accordance with the financial
reporting date specified in the partnership agreement.

13

14

Thousands of
U.S. dollars

2022

2023

2023

¥47,090¥60,956$456,501NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries(Application of Implementation Guidance on Accounting Standard for Fair(2) Information concerning the contents of significant accounting estimates

Value Measurement)

for the identified items
The value of work in process for home video games before launch in the

The Company has applied the “Implementation Guidance on Accounting

Digital Business stated on the consolidated balance sheets is stated at anStandard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021;

amount calculated by writing down the carrying amount based on thehereinafter the “Fair Value Measurement Implementation Guidance”) fromdeclining profitability and is evaluated to be the lower of the net realizable

the beginning of the fiscal year ended March 31, 2023, and, in accordancevalue or the book value of work in process.

with the transitional treatment provided for in paragraph 27-2 of the Fair

4 Cash and Cash Equivalents
Reconciliations of cash and cash equivalents as of March 31, 2022 and 2023, between the amounts shown in the consolidated balance sheets and the consolidated
statements of cash flows are as follows:

2022

2023

2023

¥279,401¥280,226$2,098,603

Time deposits with maturities in excess of three months(1,509)(4,036)(30,227)

Deposits paid (“Other current assets” in Current assets)

—

98

737

¥277,891¥276,288$2,069,113

The Group considers that the profitability of work in process has not

Value Measurement Implementation Guidance, it has decided to apply the

Cash and time deposits

declined when there has been no change in market demand from the initial

new accounting policy set out therein prospectively. There is no impact onforecast and the production has been proceeding as planned.

the consolidated financial statements.

On the other hand, the Group individually assesses the work in process
whose profitability may have declined. In particular, for products that are near(r) New Accounting Standards Not Yet Applied

launch, for which market demand is more predictable, the Group individually

Following accounting standards and guidance are those issued but not yetassesses the work in process considering the sales results of similar game

adopted.

titles and sales potential based on future demand forecasts.

• “Accounting Standard for Current Income Taxes” (ASBJ Statement No. 27,
October 28, 2022, ASBJ)

Estimates involving such determinations and assumptions may beaffected by future demand trends and other factors; if such change in circum-• “Accounting Standard for Presentation of Comprehensive Income” (ASBJ

stances occurs, these estimates may possibly have a significant effect on theStatement No. 25, October 28, 2022, ASBJ)

amount of work in process in the consolidated financial statements in the• “Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ

following consolidated fiscal year and onwards.

Guidance No. 28, October 28, 2022, ASBJ)(q) Changes in Accounting Policy(1) Overview(Application of US GAAP Accounting Standards Update (ASU) No. 2016-02

Transfer of the JICPA’s practical guidelines on tax effect accounting to the“Leases”)

ASBJ was completed with the issuance of standards and guidance including

Effective from the beginning of the fiscal year ended March 31, 2023, the

ASBJ Statement No. 28, “Partial Amendments to Accounting Standard for Tax

Companyʼs consolidated subsidiaries in the United States have applied US

Effect Accounting” (hereinafter collectively referred to as “ASBJ Statement No.

GAAP ASU No. 2016-02 “Leases.”

28, etc.”) in February 2018. During their deliberations, it had been determined

ASU No. 2016-02 requires the lessee to recognize both right-of-use assets,that the following two issues would be further discussed subsequent to thewhich is the right to use the underlying assets, and lease liabilities, which isissuance of ASBJ Statement No. 28, etc. The above standards and guidance

the obligation to make lease payments, for all leases in principle. In applying

were issued as a result of the discussions on the two issues below:

this update, the Company used the method in which it recognizes the• Categories in which income tax expense should be recorded (taxes on othercumulative effect of retrospective adjustments as of the commencement

comprehensive income)date of application.

• Tax effects associated with sales of shares of subsidiaries, etc. (i.e., shares ofsubsidiaries or affiliates) when the group taxation regime is applied

As a result of this change, in the consolidated balance sheets for the fiscal
year ended March 31, 2023, property, plant and equipment increased by

Cash and cash equivalents

The breakdown of major assets and liabilities of companies that became newly consolidated subsidiaries due to the acquisition of shares is as follows:
Fiscal year ended March 31, 2022
None
Fiscal year ended March 31, 2023
The information has been omitted because the amounts are insignificant.
The breakdown of major assets and liabilities of subsidiaries that are excluded from the scope of consolidation due to the sales of shares is as follows:
Fiscal year ended March 31, 2022
None
Fiscal year ended March 31, 2023
The information has been omitted because the amounts are insignificant.

5 Marketable Securities and Investment Securities
Marketable securities and investment securities as of March 31, 2022 and 2023, are summarized as follows:

Securities with market quotations

6,028

45,14816,344122,406

The standards and guidance will be effective from the beginning of the fiscal

Contributions to investment partnerships

a minimal effect on operating profit, recurring profit, and profit before income

year ending March 31, 2025.

The effects of application of “Accounting Standard for Current Income Taxes,"

assets for the fiscal year ended March 31, 2023.

etc., on the consolidated financial statements are currently under evaluation.

2023$ 883,983

6,081(2) Effective date(3) Effects of application of the standards and guidance

2023¥118,038

14,178liabilities increased by ¥2,073 million. The application of the update had only

balance of retained earnings in the consolidated statement of changes in net

2022¥ 92,414

Securities without market quotations¥2,755 million, current liabilities increased by ¥681 million, and long-term

March 31, 2023. Moreover, the application had no impact on the opening

Thousands of
U.S. dollars

Millions of yen

Investments in non-consolidated subsidiaries and affiliated companies

taxes in the consolidated statements of income for the fiscal year ended

Thousands of
U.S. dollars

Millions of yen

Total

586

294

2,202

¥113,261¥140,706$1,053,741

The original cost, carrying amount (fair value), and gross unrealized gain (loss) for securities with market quotations as of March 31, 2022 and 2023, are summarized as follows:
Millions of yen

2022

3 Financial Statement Translation
The consolidated financial statements are expressed in yen. However, solely for the convenience of the reader, the consolidated financial statements as of and forthe fiscal year ended March 31, 2023, have been translated into U.S. dollars at the rate of ¥133.53=U.S.$1, the approximate exchange rate on the Tokyo Foreign
Exchange Market on March 31, 2023.
This translation should not be construed as an indication that the amounts shown could be converted into U.S. dollars at such rate.

Original cost

Gross unrealized
gain

Gross unrealized
loss

Carrying amount(fair value)¥29,533¥63,185¥(304)¥92,414

—

—

—

—

¥29,533¥63,185¥(304)¥92,414

Securities with market quotations:
Equity securities
Other		TotalMillions of yen

2023
Original cost

Gross unrealized
gain

Gross unrealized
loss

Carrying amount(fair value)¥29,533¥88,872¥(454)¥117,952

86

—

—

86

¥29,620¥88,872¥(454)¥118,038

Securities with market quotations:
Equity securities
Other		Total15

16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

Thousands of U.S. dollars

2023
Original cost

Gross unrealized
gain

Gross unrealized
loss

Carrying amount(fair value)$221,177$665,561$(3,400)$883,337

645

—

—

645

$221,823$665,561$(3,400)$883,983

Securities with market quotations:

8 Loss on Impairment of Fixed Assets
For the Company and its consolidated subsidiaries, evaluation of impairment is performed by grouping assets according to management accounting classifications based on Units, excluding significant idle assets, assets scheduled for disposal, and assets for lease. In the amusement facility operations of the Amusement
Business, the individual facility is the smallest unit used in management accounting and is the basic unit for evaluating impairment.

Equity securities
Other		TotalThe book value of the following assets was reduced to the recoverable amount and the amount of reduction was recorded in “Other income (loss)” as a loss on
impairment. Also, the classifications of reportable segments were changed from this fiscal year. Accordingly, the classification by segment in the table below isbased on the classification for this fiscal year.
Millions of yen

The following is a summary of the carrying amount of securities without market quotations as of March 31, 2022 and 2023:
Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

Carrying amount

Carrying amount

Carrying amountUnlisted securities
		Total¥6,081¥6,028$45,148¥6,081¥6,028$45,148

Equity securities

Thousands of
U.S. dollars

2022

2023

2023

¥515

¥2

$19

100

—

—

¥615

¥2

$19

Gross realized gains from the sales of securities

100

0

3

Gross realized losses from the sales of securities

8

—

—

Corporate bond securities

Classification

Assets for business use

Other intangible assets

Toys and Hobby

Chiyoda-ku, Tokyo, and others

3

Assets for business use

Buildings and structures

360

—

—

Other property, plant and equipment

118

—

—

Other intangible assets

111

—

—

Buildings and structures

8

—

—

Urasoe-shi, Okinawa, and others

4

Assets for business use

Yokohama-shi, Kanagawa, and others

1

Assets for business use

Amusement

Millions of yen

2023

2023

Notes receivable¥ 3,410¥ 4,726$ 35,393

Accounts receivable–trade119,331

94,281

706,067¥122,742¥99,007$741,460

Total

2023

2023

¥ 33,051¥ 41,324$ 309,475

Work in process

86,292

104,835

785,108

Raw materials and supplies

4,905

6,063

45,411Finished goods and merchandise¥124,250

Total¥152,223

Millions of yen

Valuation loss on inventories

17

Thousands of
U.S. dollars

2022

2023

2023

¥5,944¥11,140$83,433

0

—

—

139

—

—

Other property, plant and equipment

27

—

—

Other intangible assets

38

—

—

—

—

Sagamihara-shi, Kanagawa, andothers4

Amusement operation
facilities

Amusement facilities and machines

12

—

—

Taito-ku, Tokyo, and others

1

Amusement operation
facilities

Amusement facilities and machines

1,854

—

—

Other intangible assets

72

—

—

Other investments and assets

3

—

—

Amusement operation
facilities

Amusement facilities and machines

2

—

—

Assets for business use

Other property, plant and equipment

62

—

—

Amusement operation
facilities

Amusement facilities and machines

41

—

—

Minato-ku, Tokyo

2

Tyne and Wear, U.K., and others

5

Assets for business use

Other property, plant and equipment

72

—

—

Other

Ota-ku, Tokyo

1

Assets for business use

Buildings and structures

0

—

—

Other property, plant and equipment

15

—

—

Toys and Hobby

Inukami-gun, Shiga, and others

1

Assets for business use

Buildings and structures

—

36

270

Other property, plant and equipment

—

15

113

Other intangible assets

—

7

57

IP Production

Mitaka-shi, Tokyo

1

Assets for business use

Other property, plant and equipment

—

3

25

Amusement

Shanghai, China, and others

1

Amusement operation
facilities

Amusement facilities and machines

—

242

1,817

Other property, plant and equipment

—

1

8

Other intangible assets

—

195

1,465

Other investments and assets

—

128

961

Fukuoka-shi, Fukuoka, and others

2

Amusement operation
facilities

Amusement facilities and machines

—

489

3,664

Toshima-ku, Tokyo, and others

3

Amusement operation
facilities

Amusement facilities and machines

—

25

188

Shanghai, China, and others

4

Amusement operation
facilities

Amusement facilities and machines

—

47

357

Other property, plant and equipment

—

8

61

Other investments and assets

—

50

379

¥2,994¥1,251$9,370Total

valuation loss on inventories included in cost of sales is as follows:—1$1,139,996

The value of inventories stated in the consolidated balance sheets is calculated by writing down the carrying amount based on declining profitability, and the$Amusement facilities and machines

Assets for business use

Inventories as of March 31, 2022 and 2023, are summarized as follows:

2022

—

Amusement operation
facilities

Assets for business use

Thousands of
U.S. dollars¥

3

7 Inventories

Millions of yen

51

Minato-ku, Tokyo

Trade receivables and contract assets as of March 31, 2022 and 2023, are summarized as follows:

2022

¥

Buildings and structures

Other property, plant and equipment
IP Production

6 Trade Receivables and Contract Assets
Thousands of
U.S. dollars

2023

Items

3

Debt securities
Proceeds from the sales of securities

2023

Location

Minato-ku, Tokyo

Proceeds and gross realized gains and losses from the sales of securities in the fiscal years ended March 31, 2022 and 2023, are as follows:
Millions of yen

2022

Business

DigitalSecurities without market quotations:

Note

Thousands of
U.S. dollars

Notes: 1. The Group recorded losses on impairment as the book value of the fixed assets is unlikely to be recoverable due to declines in the profitability of business. The recoverable amount is calculated bydeeming the value in use as zero.
2. The Group recorded losses on impairment as the book value of the fixed assets is unlikely to be recoverable due to declines in the profitability of business. The recoverable amount is calculated based on
the net realizable value, which was evaluated based on reasonably estimated selling prices.
3. The Group recorded losses on impairment of assets, which are not expected to be used in the future. The recoverable amount is calculated by deeming the value in use as zero.
4. The Group recorded losses on impairment as it judged that the recoverable amounts of the fixed assets significantly decreased due to its decision to close locations. The recoverable amount is calculated
by deeming the value in use as zero.
5. The Group recorded losses on impairment as the book value of the fixed assets is unlikely to be recoverable due to declines in the profitability of business. The recoverable amount is calculated by value in
use and calculated by discounting the future cash flows at 6.8% in the fiscal year ended March 2022.

18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

9 Borrowings, Lease Obligations and Bonds

11 Retirement and Severance Benefits

Borrowings and lease obligations as of March 31, 2022 and 2023, are summarized as follows:

1. Defined benefit plans
Millions of yen

Thousands of
U.S. dollars

2023

2023

Weighted averageinterest rate (%)

Carrying
amount556

0.23$ 4,1642022
Carrying
amountShort-term borrowings¥

Weighted averageinterest rate (%)

Carrying
amount600

0.31

Current portion of long-term borrowings

10,2100.33

10,2140.33

76,498Current portion of lease obligations

1,308

2.11

2,667

1.99

19,979Long-term borrowings (less current portion)

10,236

0.33

195

0.25

1,462

5,955

1.85

7,880

1.88

59,016¥28,311—¥21,514—$161,121

Lease obligations (less current portion)
Total

¥

Millions of yen

Thousands of
U.S. dollars

More than one year, within two years¥2,754$20,627

More than two years, within three years

1,702

12,747More than three years, within four years

1,175

8,805

More than four years, within five years

1,320

9,891

More than five years

1,122

8,407

¥8,075$60,479

Bonds as of March 31, 2023, are summarized as follows:

Name

Reflector
Entertainment Ltd.

Issue

Date of issue

Convertible bonds* October 22, 2020
1

Balance asof April 1, 2022
(Millions of yen)

¥1,018

Balance asof March 31,2023(Millions of yen)

¥1,085

Balance asof March 31, 2023
(Thousands of
U.S. dollars)$8,127

Interest rate(%)

Pledged asset

Redemption date

None

December 31,
2025

5.0

(excluding plans for which the simplified method is applied):
Millions of yen

2022

2023

2023

¥30,488$228,329

Service cost

2,072

2,072

15,517

Interest cost

42

41

311

Actuarial gains or losses incurred

237

310

2,327

Retirement benefits paid

(1,409)(2,142)(16,042)

Prior service costs incurred(353)(1,270)(9,512)

—

1,095

8,203

Other
Ending balance of retirement benefit obligations

Within one year
More than one year, within two years

Millions of yen

Thousands of
U.S. dollars

¥

$

—

—

—

—

More than two years, within three years

1,085

8,127

More than three years, within four years——

More than four years, within five years——

More than five years——¥1,085$8,127Total*1 The agreement calls for redemption in accordance with results for each fiscal year. However, due to the difficulty of the calculations, the planned redemption amounts listed have been calculated as if all bonds
were redeemed on their maturity date.

10 Trade Payables

Beginning balance of plan assets

2022

2023

2023

¥15,015$112,447

Accounts payable–trade87,326

84,229630,791¥99,810¥99,244$743,239

Total

19

Thousands of
U.S. dollars

2022

2023

2023

¥24,705¥26,972$201,994

Expected return on assets

414

486

3,639

Actuarial gains or losses incurred

462

(832)

(6,234)Contributions to plan from employer

2,353

2,360

17,680Retirement benefits paid

(931)

(1,640)(12,285)

Increase resulting from changes from the simplified method to the principle method

—

1,177

8,816

Other

(33)

(18)

(141)

¥26,972¥28,504$213,469(c) F or the fiscal years ended March 31, 2022 and 2023, the reconciliation of the beginning and ending balances of net defined benefit liability and net defined
benefit asset for plans using the simplified method is as follows:
Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

¥1,454¥1,220$ 9,139Retirement benefit expenses

267

495

3,709

Retirement benefits paid

(160)

(87)

(658)

Contributions to plan from employer

(308)

(423)

(3,174)

Decrease resulting from changes from the simplified method to the principle method

—

81

613

Effect of business combinations

(50)

—

—

Other

17

8

62

¥1,220¥1,294$ 9,692

Beginning balance of net defined benefit liability and net defined benefit asset, net

Thousands of
U.S. dollars¥12,483(2,033)$227,100Millions of yen

Trade payables as of March 31, 2022 and 2023, are summarized as follows:

Notes payable(271)¥30,324

which the simplified method is applied):

Ending balance of net defined benefit liability and net defined benefit asset, net

Millions of yen(156)¥30,488(b) For the fiscal years ended March 31, 2022 and 2023, the reconciliation of the beginning and ending balances of plan assets is as follows (excluding plans forEnding balance of plan assets

As of March 31, 2023, the planned redemption amounts of bonds were as follows:

Thousands of
U.S. dollars¥30,056

Beginning balance of retirement benefit obligations

Increase resulting from changes from the simplified method to the principle method

The aggregate maturities of long-term borrowings and lease obligations (less current portion) outstanding as of March 31, 2023, are as follows:

Total(a) For the fiscal years ended March 31, 2022 and 2023, the reconciliation of the beginning and ending balances of retirement benefit obligations is as follows

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries(d) As of March 31, 2022 and 2023, the reconciliation of the ending balances of retirement benefit obligations and plan assets with the net defined benefit liability(i) For the fiscal years ended March 31, 2022 and 2023, the principal actuarial assumptions are as follows:

and net defined benefit asset recorded on the consolidated balance sheet is as follows:

2022

2023

Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

Retirement benefit obligations of funded plans¥ 28,566¥ 28,752$ 215,324

Salary increase rate

Plan assets(29,813)(30,459)(228,111)(1,247)(1,707)(12,786)

Method of determining long-term expected rate of return on assets
Note: To determine the long-term expected rate of return on plan assets, reference was made to the current and expected future allocations of plan assets and to the current and expected future long-term rate of
returns on the various assets that make up plan assets.

Retirement benefit obligations of non-funded plans

5,983

4,821

36,109Net amount of liabilities and assets recorded on consolidated balance sheet

4,736

3,114

23,323Net defined benefit liability

5,261

3,710

27,787

Net defined benefit asset

(525)

(596)

(4,463)¥ 4,736¥ 3,114$ 23,323

Net amount of liabilities and assets recorded on consolidated balance sheet

Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

¥2,072¥2,072$15,517

42

41

311

Expected return on assets

(414)

(486)

(3,639)Amortization of actuarial gains or losses

915

736

Amortization of prior service costs

(0)

(139)

Retirement benefit expenses calculated using the simplified method

267

495

3,709

Retirement benefit expenses related to defined benefit plans

2,883

2,719

20,365

Other*1

1,267

(44)

(333)

Total retirement benefit expenses¥4,151¥2,674$20,032

Interest cost

0.00%~0.60%

0.00%~0.60%

Long-term expected rate of return on assets

1.60%~3.63%

1.91%~4.66%

1.90%~5.12%

1.65%~5.12%

2. Defined contribution plans
For the fiscal years ended March 31, 2022 and 2023, the required contribution to defined contributions plans for the Company and its consolidated subsidiaries
were as follows:
Millions of yen

Required contributions to defined contribution plans(e) For the fiscal years ended March 31, 2022 and 2023, the breakdown of retirement benefit expenses is as follows:

Service cost

Discount rate

All trade payables substantially have due dates within one year. Certain

1. Financial instruments

5,514

The Company and its consolidated subsidiaries manage funds by meansrisk of fluctuations in foreign exchange rates. In the same manner as receiv-(1,047)of highly secure financial instruments only and procures funds throughables, the Company and its consolidated subsidiaries manage balances byborrowing from banks and other methods, such as issuing corporate bonds.

counterparty and currency, and in addition the Company and its consoli-

The Company and its consolidated subsidiaries utilize derivatives to hedge

dated subsidiaries track market trends and, as necessary, utilize forward

the risks noted below and do not engage in speculative transactions.

foreign exchange contracts and currency option contracts for hedging.

(2) Types of financial instruments and related risks

dated subsidiaries manage this risk through the formulation and revision ofWith regard to credit risk posed by customers with respect to trade receiv-

monthly funding plans for the Company and its consolidated subsidiaries.

Trade payables are exposed to liquidity risk. The Company and its consoli-

ables, the Company and its consolidated subsidiaries manage balance byDerivative transactions are used for hedging purposes. With regard tocounterparty and due date, and credit information on major customers is

hedging methods and hedged items, hedging policies, and methods of

updated at least once a year to minimize such credit risk. The Company andassessing the effectiveness of hedging transactions, for which hedge

its consolidated subsidiaries have a system for immediately sharing within

accounting is applied, please refer to Note “2 Summary of Significant

the Company and its consolidated subsidiaries adverse credit and otherAccounting Policies—(l) Derivatives and Hedging Activities.”

Millions of yen

2022

2023

2023

Prior service costs¥ 352¥1,129$ 8,461Actuarial gains or losses

1,141

(423)

(3,173)

13.0% of trade receivables. Receivables denominated in foreign currencies¥1,494¥ 706$ 5,287

arising as a result of the fact that the Company and its consolidated subsidiaries

Derivative transactions are executed and managed according to internal

information regarding counterparties in the event that such information

rules that determine trading authority and limits on amounts traded.

is received.

Derivatives are used in ways that minimize credit risk, and thus transactions

As of March 31, 2023, designated large customers were counterparties forare carried out only with highly creditworthy financial institutions.
(3) Supplementary explanation on the fair value of

conduct business on a global basis are subject to foreign exchange rate fluctua-

financial instrumentstion risk. The Company and its consolidated subsidiaries manage balances by(g) As of March 31, 2022 and 2023, the breakdown of items recorded in cumulative remeasurements of defined benefit plans (before tax effect) is as follows:

Total

Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

¥ 645

¥ 1,775$ 13,295(4,107)(4,531)(33,936)¥(3,462)¥(2,756)$(20,640)

counterparty and currency, and in addition the Company and its consolidated

As certain variables are used for calculations of the fair value of financial

subsidiaries track market trends and, as necessary, utilize forward foreign

instruments, the result of such calculations may vary if different assumptions

exchange contracts for hedging.

are used.
The contract amounts of derivative transactions in Note “20 Foreign

Marketable securities and investment securities are principally the sharesof companies with which the Company has a business relationship. These

Exchange Risk Management and Interest Rate Risk Management” should notinvestments are exposed to the risk of fluctuations in market prices. The

be considered indicative of the market risk associated with the derivative

market price is confirmed at least once per quarter, and the holdings arefinancial instruments.

reevaluated once per year with consideration of market conditions andrelationships with counterparties.

(h) As of March 31, 2022 and 2023, the major categories of plan assets as a percentage of total plan assets are as follows:
Bonds

2022

2023

38%

35%

Equities

16

12Life insurance general account

13

17

Other
Total

33

36

100%

100%

Note: 1. The “Other” category mainly includes cash and alternative investments.
2. The total of plan assets includes 20% and 18% representing assets contributed to a retirement benefit trust for the corporate pension plan as of March 31, 2022 and 2023, respectively.

21

2023

$8,80012 Financial Instruments

Thousands of
U.S. dollars

Unrecognized actuarial gains or losses

2023¥1,175

trade payables are denominated in foreign currencies and are exposed to the(f) For the fiscal years ended March 31, 2022 and 2023, the breakdown of items recorded in remeasurements of defined benefit plans (before tax effect) is as follows:

Unrecognized prior service costs

2022

¥822

(1) Policy for financial instruments*1 In the fiscal year ended March 31, 2022, the following extra retirement payments were recorded: ¥60 million in “Selling, general and administrative expenses,” gain on termination of retirement benefit plan wasrecorded: ¥49 million in “Other income (loss),” and extra retirement payments were recorded: ¥1,257 million in “Other income (loss).”
In the fiscal year ended March 31, 2023, the following extra retirement payments were recorded: ¥23 million ($175 thousand) in “Selling, general and administrative expenses,” and gain on termination ofretirement benefit plan was recorded: ¥67 million ($509 thousand) in “Other income (loss).”

Total

Thousands of
U.S. dollars

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

2. Fair value of financial instruments		 (1) Financial assets and liabilities stated at fair value in the consolidated balance sheet

The carrying amounts of financial instruments as stated in the consolidated balance sheets, their fair values as of March 31, 2022 and 2023, and the differences

Millions of yen

between carrying amounts and fair values are as follows:
Millions of yen

Thousands of U.S. dollars

2023

2023

2022

Marketable securities andinvestment securities*2
Total assetsDerivative financial
instruments*3

Carrying
amountFair value

Difference

Carrying
amountFair value

Difference

Carrying
amountFair value

Difference¥102,974¥105,323¥2,349¥128,745¥134,383¥5,638$964,166$1,006,390$42,224¥102,974¥105,323¥2,349¥128,745¥134,383¥5,638$964,166$1,006,390$42,224¥¥¥¥ (1,033)¥ (1,033)¥$ (7,739) $

939

939

—

—

(7,739)$Level 1Marketable securities andinvestment securities
Available-for-sale securities  Stocks¥92,414  Other—
Derivative transactions
Currency related  —  Total assets¥92,414
Derivative transactions
Currency related  —  Total liabilities
¥   —

  —

*1 Notes regarding “cash” are omitted, and notes regarding “time deposits,” “trade receivables,” “trade payables,” “short-term borrowings” and “accrued income taxes” are omitted due to the fair value approximating
the book value as they are settled in a short period of time.
*2 Shares, etc., that do not have a market price and investments in partnerships for which the net amount of the Company’s equity share in the partnerships is recorded on the balance sheet are not included in“Marketable securities and investment securities.” The carrying amounts of these financial instruments are as follows:

Level 2Thousands of U.S. dollars

2022

2023

2023

Fair value
Level 3
Total

Fair value
Level 3
Total

Level 1

Fair value
Level 3
Total

  —
  —

¥ — ¥117,952
86
86$883,337   —Level 1

Level 2¥ ——¥— ¥92,414 ¥117,952
—
—
  —

939
¥939

—
939
—
¥— ¥93,354 ¥117,952

¥

—
  —

—
—
¥86 ¥118,038—$883,337

—
¥ —

—
¥— ¥

1,033
¥ 1,033—
1,033¥ — ¥   1,033

$

  —
  — ¥

—
  —

¥

—
   —

Level 2$—  —

$ — $883,337
645
645

—
—

—
—
$645 $883,983

7,739$ 7,739—7,739$ — $    7,739$

Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

Carrying amount

Carrying amount

Carrying amount

2022

2023

2023

Unlisted stocks¥6,081¥6,028$45,148

Stocks of affiliated companies (unlisted stocks)

3,619

5,638

42,223

Fair value
Level 3
Total

Level 1

Level 2

Fair value
Level 3
Total

Contributions to investment partnerships

586

294

2,202

$122,406$122,406$—$—$— $122,406$— $122,406(2) Financial assets and liabilities not stated at fair value in the consolidated balance sheet
Millions of yen

Marketable securities andinvestment securities
Stock of affiliatedcompanies  Stocks   Total assets*3 Assets and liabilities derived from derivative transactions are stated on a net basis. Items for which the total is a net liability are shown in parentheses.
Notes: 1. Maturity analysis of financial assets
Millions of yen

Thousands of U.S. dollars

2022

2023

2023

More than More than
one year, five years,
Withinwithinwithin More than
one year five years ten years ten years

More than More than
one year, five years,
Withinwithinwithin More than
one year five years ten years ten years

More than More than
one year, five years,
Withinwithinwithin More than
one year five years ten years ten years

Cash and time deposits ¥273,106
Trade receivables
121,412
Total¥394,519

¥   —
1,329
¥1,329¥——¥—¥— ¥274,829—
97,400¥— ¥372,229

¥   —
1,607
¥1,607

¥—
—
¥—

¥—
—
¥—

$2,058,183 $—
729,424 12,036$2,787,607 $12,036

$—
—
$—

$—
—
$—

2. Maturity analysis of long-term borrowings
Millions of yen

2022
More
than oneyear,
Withinwithinone year two years

More
than
two
years,
within
three
years

More
than
three
years,
within
four
years

More
than
four
years,
within
five
years

More
than
five
years

Long-termborrowings ¥10,210 ¥10,140
Total¥10,210 ¥10,140

¥43
¥43

¥9
¥9

¥9
¥9

¥32
¥32

Thousands of U.S. dollars

2023

Withinone year

More
than
one
year,
within
two
years

More
than
two
years,
within
three
years

More
than
three
years,
within
four
years

More
than
four
years,
within
five
years

More
than
five
years

¥10,214¥10,214

¥103
¥103

¥49
¥49

¥9
¥9

¥9
¥9

¥22
¥22

2023

Withinone year

More
than
one
year,
within
two
years

More
than
two
years,
within
three
years

More
than
three
years,
within
four
years

More
than
four
years,
within
five
years

More
than
five
years

$76,498$76,498

$773
$773

$370
$370

$74
$74

$74
$74

$168
$168

3. Matters relating to the breakdown of the fair value of financial instruments by appropriate classification, etc.
The fair value of financial instruments is classified into the following three levels according to the observability and materiality of inputs used to measure fair value.
Level 1 fair value: Fair value measured using observable inputs such as quoted prices in active markets for the assets or liabilities that are the subject of the measurement.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs.
If multiple inputs are used that have a significant impact to the fair value measurement, such fair value is categorized in its entirety at the level with the lowest priority in the fair value measurement
among levels to which each input belongs.

Level 1

Level 2

¥12,908¥12,908¥—¥—

Level 1

Level 2

Fair value
Level 3Total¥— ¥12,908 ¥16,344¥— ¥12,908 ¥16,344¥—¥—¥— ¥16,344¥— ¥16,344

Thousands of U.S. dollars

Notes: 1. Description of the valuation techniques and inputs used to measure fair value:
Marketable securities and investment securities
Listed shares are valued using quoted prices. As listed shares are traded in active markets, their fair value is classified as Level 1.
Others are SAFE investments. Their latest fair value is estimated by taking into consideration events affecting the value of the financial instruments and is classified as Level 3.
Derivative transactions
The fair value of forward exchange contracts is measured using observable inputs, such as exchange rates, and is classified as Level 2.
		
2. Information regarding the fair value of financial instruments carried at fair value in the consolidated balance sheet that is classified as level 3(1) Changes in net valuation gain/loss recognized in gain/loss for the fiscal year ended March 31, 2023
Millions of yen

Thousands of
U.S. dollars

2023

2023

—
—
¥86
¥86

—
—
$645
$645

Balance at beginning of year
Net income (loss) and other comprehensive income (loss) for the year
Purchase, sale, or redemption
Balance at end of year			  (2) E xplanation of the fair value valuation process
The fair value of financial assets classified as Level 3 is calculated in accordance with accounting methods, etc., pertaining to the calculation of fair value. When calculating fair value, theCompany considers the appropriateness of the classified level of fair value and the valuation techniques used to calculate fair value, in accordance with the nature, characteristics, and risks ofidentified assets.

13 Income Taxes
The Company and its domestic consolidated subsidiaries are subject to Japanese corporate, inhabitant, and enterprise taxes based on income which, in the aggregate, resulted in a normal tax rate of 30.6% for the years ended March 31, 2022 and 2023, respectively.
Income tax expenses reflected in the accompanying consolidated statements of income for the fiscal years ended March 31, 2022 and 2023, consist of the following:
As a result of the tax examination for the tax years from the fiscal year ended March 31, 2018 to the fiscal year ended March 31, 2020 by the Tokyo Regional Taxation
Bureau, the Group received indication that there were issues, mainly regarding the treatment of the tax credit for research and development expenses related to theDigital Business. Due to a tax reassessment, the Group has recorded an additional tax amount for prior periods. In addition, based on the contents of this tax reassessment, the Group has also recorded an estimated amount for the amount of taxes corresponding to the fiscal year ended March 31, 2021.
Millions of yen

Income taxes—current

2022

2023

2023

¥38,216¥42,669$319,551

Income taxes for prior periods

6,792

—

—

Income taxes—deferred(6,713)(6,799)(50,919)¥38,295¥35,870$268,632

Total

23

Thousands of
U.S. dollars

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

Reconciliation of the normal tax rate and the effective tax rate as a percentage of profit before income taxes for the fiscal years ended March 31, 2022 and 2023,

Millions of yen

is as follows:

2023

Normal tax rate

2022

2023

30.6%

30.6%
Tax loss carryforward*
Valuation allowance
Deferred tax assets*2

Within one year

¥ 628
(621)
7

1

More than
one year, within
two years

¥ 102
(102)
—

More than
two years, within
three years

¥ 48
(48)
—

More than
three years, withinfour years

More thanfour years, within
five years

¥ 50
(50)
—

¥—
—
—

More than
five years¥ 9,744(6,486)
3,257

Total

¥10,573(7,308)3,264Entertainment expenses not deductible for tax purposes

0.1

0.2

Corporate inhabitant tax on per capita basis

0.2

0.2

Directors’ bonuses

0.4

0.5

Change in valuation allowance for deferred tax assets

(5.3)

(0.5)

Differences in tax rates of foreign consolidated subsidiaries

(1.9)

(0.8)

*1 The tax loss carryforward were calculated using the normal tax rate.
*2 T he Group recorded deferred tax assets of ¥3,264 million for tax loss carryforward of ¥10,573 million (calculated using the normal tax rate). The deferred tax assets of ¥3,264 million were recognized mainly for tax
loss carryforward of ¥3,101 million (calculated using the normal tax rate) of foreign subsidiaries. The Group judged that the deferred tax assets for the tax loss carryforward were recoverable due to projected
future taxable income, and did not recognize valuation allowance.

Tax credit for research and development expenses

(1.1)

(1.4)

Thousands of U.S. dollars

Tax credit under wage increase promotion tax system

—

(1.0)

Amortization of goodwill

0.5

0.5

Other

5.8

0.1

29.3%

28.4%

Effective tax rateSignificant components of deferred tax assets and liabilities as of March 31, 2022 and 2023, are as follows:

2023

Tax loss carryforward*1
Valuation allowance
Deferred tax assets*2$ 4,708(4,654)
54

$ 766
(766)
—

More than
two years, within
three years

$ 359
(359)
—

More than
three years, withinfour years

More thanfour years, within
five years

$ 376
(376)
—

$—
—
—

More than
five years$ 72,972(48,577)
24,395

Total$ 79,183(54,734)
24,449*1 The tax loss carryforward were calculated using the normal tax rate.
*2 T he Group recorded deferred tax assets of $24,449 thousand for tax loss carryforward of $79,183 thousand (calculated using the normal tax rate). The deferred tax assets of $24,449 thousand were recognized
mainly for tax loss carryforward of $23,224 thousand (calculated using the normal tax rate) of foreign subsidiaries. The Group judged that the deferred tax assets for the tax loss carryforward were recoverable due
to projected future taxable income, and did not recognize valuation allowance.

Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

¥ 13,612¥ 10,573$ 79,183

Excess depreciation of fixed assets

20,12520,558

153,960

Accrued employee bonuses

4,919

5,364

40,175Inventory valuation losses

2,352

5,413

40,540Net defined benefit liability

3,295

2,948

22,077

Unrealized profit

2,389

3,133

23,464

Loss on valuation of advance payments

1,122

1,521

11,391

Accrued enterprise taxes and others

1,339

1,470

11,010Research and development expenses

408

1,303

9,763

Revaluation reserve for land

1,367

1,367

10,241

Other

5,941

11,54786,479Advertising expenses

Deferred tax assets:
Tax loss carryforward*2

Within one year

More than
one year, within
two years

Accounting for Corporation Tax and Local Corporation Tax and Tax Effect Accounting
The Company and some of its domestic consolidated subsidiaries have adopted the group tax sharing system from the fiscal year ended March 31, 2023. In
addition, corporation tax and local corporation tax, as well as their tax effects, are accounted for and disclosed under “Practical Solution on the Accounting andDisclosure under the Group Tax Sharing System” (PITF No. 42, August 12, 2021).

14 Selling, General and Administrative Expenses
Significant components of selling, general and administrative expenses for the fiscal years ended March 31, 2022 and 2023, are as follows:
Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

¥ 53,554¥ 56,798$ 425,358

56,87465,200488,286

Directors’ remuneration and employees’ wages

57,78964,605483,826

Valuation allowance for tax loss carryforward*2(7,545)(7,308)(54,734)(7,568)(56,681)

2,891

2,997

22,447

Valuation allowance for total deductible temporary differences(7,713)

Employees’ retirement and severance benefits   Total valuation allowance*1(15,258)(14,877)(111,415)

Total deferred tax assets

41,61550,323376,871   Total gross deferred tax assets

Deferred tax liabilities:
Retained earnings of foreign consolidated subsidiaries(1,243)(1,619)(12,128)

Valuation difference on available-for-sale securities(18,123)(25,906)(194,014)

(199)

(199)

(1,492)

Revaluation reserve for land

Provision for directors’ bonuses

2,097

2,075

15,542

Research and development expenses

29,49430,363

227,388

Provision of allowance for doubtful receivables
Other
Total

406

3

26

84,533

95,340714,001¥230,769¥252,183$1,888,591

(466)

(482)

(3,610)Total deferred tax liabilities(20,032)(28,207)(211,246)

15 Other Comprehensive Income

Net deferred tax assets¥ 21,583¥ 22,115$ 165,624

The components of other comprehensive income for the fiscal years ended March 31, 2022 and 2023, are as follows:

Other*1 The valuation allowance decreased by ¥381 million ($2,856 thousand). The principal content of this decrease was a decrease in valuation allowance for tax loss carryforward at consolidated subsidiaries.
*2 Amounts of tax loss carryforward and related deferred tax assets by carryforward period

Millions of yen

2022

Millions of yen

Amountsarising

Reclassification
adjustments

Beforetax effectTax effect

Net oftax effect

Valuation difference on available-for-sale securities, net of tax¥(9,352)¥ (56)¥(9,408)¥2,903¥(6,505)

Deferred gains or losses on hedges, net of tax

689

(831)

(142)

54

(87)

Foreign currency translation adjustments

9,163

160

9,323

—

9,323

579

915

1,494

(469)

1,025

2022

Tax loss carryforward*
Valuation allowance
Deferred tax assets*2

1Within one year

¥ 226
(222)
3

More than
one year, within
two years

¥ 652
(646)
6

More than
two years, within
three years

¥ 159
(159)
—

More than
three years, withinfour years

¥ 79
(71)
7

More thanfour years, within
five years

¥ 35
(31)
3

More than
five years¥12,460(6,413)
6,046

Total

¥13,612(7,545)
6,067*1 The tax loss carryforward were calculated using the normal tax rate.
*2 The Group recorded deferred tax assets of ¥6,067 million for tax loss carryforward of ¥13,612 million (calculated using the normal tax rate). The deferred tax assets of ¥6,067 million were recognized mainly for tax
loss carryforward of ¥5,944 million (calculated using the normal tax rate) of foreign subsidiaries. The Group judged that the deferred tax assets for the tax loss carryforward were recoverable due to projected
future taxable income, and did not recognize valuation allowance.

25

Remeasurements of defined benefit plans, netof taxShare of other comprehensive income ofassociates accounted for using equity method
Total

(72)

28

(44)

—

(44)

¥ 1,007¥ 215¥ 1,222¥2,489¥ 3,71126

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

Millions of yen

Thousands of U.S. dollars

2023

2023

Amountsarising

Reclassification
adjustments

Beforetax effectTax effect

Net oftax effectAmountsarising

Valuation difference on available-for-sale securities, netof tax¥25,471¥—¥25,471¥(7,782)¥17,688$190,753

Deferred gains or losses onhedges, net of tax

2,422(4,315)(1,892)338(1,554)

18,142(32,318)(14,175)

2,536(11,638)

Foreign currency translation
adjustments

8,940

223

9,164

—

9,164

66,956

1,672

68,629—68,629Remeasurements of defined
benefit plans, net of tax

126

579

706

(227)

478

950

4,336

5,287

(1,704)

3,583

(172)

(433)

—

(433)

Share of other comprehensive
income of associates accounted for using equity
method
Total

(34)

(23)

(57)

—

(57)

(260)

¥36,926¥(3,536)¥33,390¥(7,671)¥25,719$276,542

Reclassification
adjustments$—

Beforetax effectTax effect

Net oftax effect$190,753 $(58,284) $132,468$(26,481) $250,061 $(57,452) $192,608

19 Leases
As lessee
The Company and its consolidated subsidiaries occupy offices and other facilities and use various assets under operating lease arrangements.
Operating leases
Future minimum payments required under non-cancelable operating leases as of March 31, 2022 and 2023, are as follows:
Thousands of
U.S. dollars

Millions of yen

Within one year

2022

2023

2023

¥1,451¥ 891$6,678Over one year

3,096

284

2,128

Total

¥4,548¥1,176$8,807

20 Foreign Exchange Risk Management and Interest Rate Risk Management
Derivative financial instruments are comprised principally of forward foreign exchange contracts and currency option contracts. These instruments are used toreduce the risk of changes in foreign exchange rates, but are not used for speculation.
The Company is exposed to credit risk related to non-performance by the counterparties to forward foreign exchange contracts and currency option contracts,

16 Retained Earnings and Dividends

but the Company does not expect any instances of non-performance due to the high credit ratings of the counterparties.
The Company’s retained earnings includes legal reserves of ¥1,645 million

In Japan, in the event a dividend distribution of surplus is made, the lesser ofan amount equal to 10% of the dividend or the excess, if any, of 25% ofand ¥1,645 million ($12,322 thousand) at March 31, 2022 and 2023, respec-

common stock over the total of additional paid-in capital and legal earnings

tively. Proposed appropriations of retained earnings have not been reflected

reserve must be set aside as a legal reserve until the aggregate amount ofin the consolidated financial statements at the end of the fiscal year. The

capital surplus and the legal reserve equals 25% of stated capital.

Company’s approved appropriations of retained earnings for the fiscal year

Contract amounts, fair values, and gains or losses from valuation of forward foreign exchange contracts outstanding as of March 31, 2022 and 2023, are as
follows. The contract amounts in themselves should not be considered indicative of the market risk associated with the derivative financial instruments.
(1) Derivative transactions not qualifying for hedge accounting
Millions of yen

ended March 31, 2023, were cash dividends of ¥39,394 million ($295,026

Certain foreign consolidated subsidiaries are also required toappropriate their earnings to legal reserves under the laws of the respec-

thousand). In addition, a mid-year dividend may be paid based on approval

tive countries.

by the Board of Directors, which is subject to limitations. The mid-year

2022

2023

Contract
amountEstimated
fair value

Unrealized
gain (loss)

Contract
amountEstimated
fair value

Unrealized
gain (loss)

Contract
amountEstimated
fair value

Unrealized
gain (loss)

Yen¥2,570

¥ 159

¥ 159

¥3,558¥(223)¥(223)$26,650$(1,673)$(1,673)

U.S. dollars

6,127

(331)

(331)

4,308

14

14

32,267

108

108

520

(23)

(23)

428

(3)

(3)

3,206

(28)

(28)

U.S. dollars

486

51

51

410

(6)

(6)

3,077

(49)

(49)

H.K. dollars

27

1

1

24

(0)

(0)

180

(1)

(1)

Hedging method

dividend for the fiscal year ended March 31, 2023, was ¥5,942 million ($44,501

Forward foreign exchange contracts

thousand).

Sold:

17 Revaluation Reserve for Land

Thousands of U.S. dollars

2023

Euro
Purchased:

In accordance with the Law Concerning Land Revaluation (Law No. 34,

the National Tax Agency. The Com­missioner assesses and publishes thepromulgated on March 31, 1998), the land used for business purposes was

method to calculate land value that forms the foundation for calculating

revalued and “Revaluation reserve for land, net of tax” was reported in “Nettaxable value for land value tax prescribed in Article 16 of the Land Value Tax

assets” in the consolidated balance sheets.

Law (Law No. 69, promulgated on May 2, 1991), as stipulated in Article 2-4 of
the Ordinance Implementing the Law Con­cerning Land Revaluation (Cabinet

Revaluation method

Order No. 119, promulgated on March 31, 1998). Reasonable adjustments are

The fair value of land is determined based on official notice prices that are

made to the official notice prices.

Chinese yuan
		Total

33

1

1

42

(0)

(0)

321

(1)

(1)

¥9,766¥(141)¥(141)¥8,773¥(219)¥(219)$65,703$(1,646)$(1,646)

Note:	For certain of the above forward foreign exchange contracts, hedge accounting is applied mainly for the transactions between consolidated subsidiaries in each financial statement, but these transactions havebeen eliminated in the consolidated financial statements. As a result, these transactions are not treated as effective hedges of the hedged assets and/or liabilities in the consolidated financial statements.

calculated by the method assessed and published by the Commissioner of(2) Derivative transactions qualifying for hedge accounting

18 Common Stock and Treasury StockMillions of yen

2022

The changes in the number of common stock and treasury stock for the fiscal years ended March 31, 2022 and 2023, are as follows:
SharesCommon stock (number of shares)
Number of shares at beginning of year
Number of shares at end of year

2022

2023

222,000,000
222,000,000

222,000,000
222,000,000

Hedge accounting
methodNumber of shares at beginning of year
Purchases and other
Number of shares at end of year

2022

2023

2,326,752(303,546)
2,023,206

2,023,206(39,990)
1,983,216

Note: The Company conducted a share split with a ratio of three shares for every one share of common stock on April 1, 2023. The above represents the number of shares before the share split.

Hedged items

2023

Contract
amountEstimated fairvalue

Contract
amountEstimated fairvalue

Contract
amountEstimated fairvalue

Forward foreign exchange contracts
Sold:
Deferred

SharesTreasury stock (number of shares)

Hedging method

Thousands of U.S. dollars

2023

Yen

Accounts receivable–trade¥ 7,796¥ 453¥14,368¥(423)$107,601$(3,174)

U.S. dollars

Accounts receivable–trade

1,186

(36)

1,091

(8)

8,172

(61)

Purchased:
Yen

Accounts payable–trade

—

—

428

(8)

3,206

(65)

U.S. dollars

Accounts payable–trade

10,238663

25,076(372)

187,794(2,790)Forward foreign exchange contracts
Foreign exchange
Purchased:
allocation method
U.S. dollars
Accounts payable–trade		Total14(note)

105(note)

788(note)¥19,236¥1,080¥41,069¥(813)$307,564$(6,093)

Note:	Forward foreign exchange contracts and other contracts for which the allocation method is applied are accounted for together with the accounts payable–trade that are the hedged items, and as a result thefair values of those contracts are included in the fair values of the accounts payable–trade.

27

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

21 Commitments and Contingent Liabilities

23 Revenue Recognition

1. Pledged assets

1. Disaggregation of revenue from contracts with customers

As of March 31, 2022 and 2023, details of pledged assets are as follows:

Millions of yen

Cash and time deposits

Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

¥30

¥—

$—

As of March 31, 2022 and 2023, there were no claims relating to pledged assets.
In addition to the above, there were assets deposited as a security deposit for issuance under the Payment Services Act of ¥2,169 million and ¥2,417 million($18,100 thousand) in “Other investments and assets” at March 31, 2022 and 2023, respectively.

2. Commitments

2022
DigitalJapan
Americas
EuropeAsia
Revenue from contracts with customersRevenue from other sourcesNet sales to external customers¥224,452
73,91356,881
18,262¥373,509—¥373,509

Reportable Segment
Toys and Hobby
IP Production¥260,109
24,51816,301
60,955¥361,884—¥361,884¥66,498——278¥66,776—¥66,776

Amusement¥68,466
772
9,360
2,566
¥81,165—¥81,165

Subtotal¥619,526
99,20382,54482,062¥883,336—¥883,336

Other¥5,933———¥5,933—¥5,933

Commitments as of March 31, 2022 and 2023, are summarized as follows:

Total¥625,459
99,20382,54482,062¥889,270—¥889,270

Millions of yen
Millions of yen

2022

Bandai Namco Will Inc.

¥ 26

2023

¥

49

2023

$

369

BANDAI LOGIPAL AMERICA, INC.

—

5,144

38,524

Transferee of amusement facilities business in North America

367

245

1,838

¥393

¥5,439$40,733

Total

2023

Thousands of
U.S. dollars

DigitalJapan
Americas
EuropeAsia
Revenue from contracts with customers
Revenue from other sources
Net sales to external customers¥244,350
62,17355,715
18,906¥381,146—¥381,146

Reportable Segment
Toys and Hobby
IP Production¥306,662
36,351
23,447
66,244¥432,705—¥432,705¥66,102——
197¥66,300—¥66,300

Amusement¥ 83,651
819
15,294
3,407¥103,172—¥103,172

Subtotal¥700,766
99,343
94,45788,756¥983,324—¥983,324

Other¥6,764———¥6,764—¥6,76422 Real Estate for Lease

Total¥707,531
99,343
94,45788,756¥990,089—¥990,089

Thousands of U.S. dollars

2023

The Company and certain consolidated subsidiaries own real estate for lease (including land) in Tokyo and other regions. Lease income or loss associated with thisreal estate for lease in the previous fiscal year was ¥195 million (major lease revenues recorded in “Other income (loss)”; major lease expenses recorded in “Selling,
general and administrative expenses”); and gain on sale was ¥2,854 million (recorded in “Other income (loss)”).
In this fiscal year, lease income or loss associated with this real estate for lease was ¥127 million ($953 thousand) (major lease revenues recorded in “Other
income (loss)”; major lease expenses recorded in “Selling, general and administrative expenses”).
Also, the book value stated in the consolidated balance sheet, change during the period, and fair value at end of year are as follows:

2022

Millions of yen

Thousands of
U.S. dollars

2023

2023

Consolidated balance sheet
Balance at beginning of year

¥33,872¥33,981$254,487

Changes during the period

109

593

4,447

Balance at end of year

33,981

34,575258,934

Fair value at end of year

¥32,693¥33,372$249,927

Notes: 1. T he book value stated in the consolidated balance sheet is calculated by deducting accumulated depreciation from acquisition cost.
2. A mong the changes during the year, the principal increase in the previous fiscal year was acquisition of real estate—¥463 million—and the principal decrease in the previous fiscal year was sale of realestate—¥311 million. The principal increase in this fiscal year was acquisition of real estate—¥808 million ($6,057 thousand)—and the principal decrease in this fiscal year was depreciation andamortization—¥255 million ($1,915 thousand).
3. The fair value as of the end of this fiscal year is the amount calculated based mainly on “real property appraisal reports” prepared by external real property appraisers. However, if there is no significant
fluctuation for a certain valuation or an index that is considered to appropriately reflect the fair value since the most recent evaluation, the fair value is based on the most recent evaluation.

29

Japan
Americas
EuropeAsia
Revenue from contracts with customersRevenue from other sourcesNet sales to external customers

Digital$1,829,929
465,612417,254
141,589$2,854,386—$2,854,386

Reportable Segment
Toys and Hobby
IP Production$2,296,581
272,231
175,596
496,102$3,240,511—$3,240,511$495,037——
1,482$496,519—$496,519

Amusement$626,462
6,135
114,537
25,521$772,657—$772,657

Subtotal$5,248,011
743,979
707,388664,696$7,364,074—$7,364,074

Other$50,658———$50,658—$50,658

Total$5,298,669
743,979
707,388664,696$7,414,733—$7,414,733

Notes: 1. The “Other” category is a business segment not included in reportable segments that includes operations such as logistics services.
2. Net sales to external customers are based on the location of the Company or its consolidated subsidiaries and are recorded by country or region.
3. Changes in reportable segments, etc.
The classifications of reportable segments were changed from this fiscal year. Details are as stated in Note “24 Segment Information.”
Disaggregation of revenue from contracts with customers of the prior fiscal year is prepared and disclosed based on the reportable segment classifications after the change.

2. Information for understanding revenue from contracts with customers
Useful information in understanding revenue from contracts with customers is as stated in Note “2 Summary of Significant Accounting Policies—(d) AccountingStandards for Significant Income and Expenses.”

3. Information for understanding amounts of revenue in this fiscal year and onwards(1) Balance of contract assets and liabilities, etc.
Millions of yen

Thousands of
U.S. dollars

2022

2023

2023

Receivables from contracts with customers (beginning balance)¥ 91,765¥122,742$919,210

Receivables from contracts with customers (ending balance)

122,742

99,007

741,460

Contract assets (beginning balance)

57

—

—

Contract assets (ending balance)

—

—

—

Contract liabilities (beginning balance)

15,741

22,912

171,592

Contract liabilities (ending balance)

22,912

22,567

169,007

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

Contract liabilities are mainly related to the following and are reversed upon recognition of revenue:

Millions of yen· Advances received as consideration paid by customers for content of the Digital Business, which are recognized as revenue when the Group’s performance obliga-

2023

tion is satisfied by the acquisition and use of such paid-for items by the customer;

Reportable Segment· Advances received for which, if there are elements not yet delivered to the customer, such as additional free downloadable content in the Digital Business, theCompany calculates the estimated sale value by referencing the selling price of similar paid downloadable content and recognizes revenue over the course of thecustomer’s average game-playing period; andDigitalThe amount of revenue that was recognized in the previous fiscal year that was included in the contract liability balance at the beginning of the period is ¥14,703
million. The amount of revenue that was recognized in the current fiscal year that was included in the contract liability balance at the beginning of the period is¥21,239 million ($159,063 thousand).

Amusement

Subtotal

Other

Total

Adjustments

Inter-segment sales and transfers
Total¥381,146¥432,705¥66,300

4,535

14,786

15,448¥385,681¥447,491¥81,748¥103,172 ¥ 983,324
1,429¥ 6,764 ¥ 990,089¥

24,54860,748(60,748)—¥31,313 ¥1,050,837¥(60,748)¥990,089

36,199¥104,602 ¥1,019,524—

Segment profit

49,33959,538

10,645

6,038

125,561

1,165

126,726(10,254)

116,472

Segment assets

263,030

217,095

82,49364,775627,395

27,835655,231

271,127

926,358¥ 4,640¥ 16,562¥ 1,220¥ 3,652 ¥

26,074772 ¥

26,846¥ 1,825¥ 28,671

168

396

1,866

—

2,431

—

2,431

—

2,431

—

58

3

1,188

1,251

—

1,251

—

1,251

—

3,008

—

—

3,008

10,25013,259—13,2597,570

27,000

1,992

7,210

43,773741

44,514

1,223

45,737

Depreciation and amortization

As there were no material contracts with original expected terms of over one year, descriptions in regard thereto are omitted.

Amortization of goodwill
Loss on impairment of fixed assets

24 Segment Information

	Investments in associates accounted forusing equity method	Increase in property, plant and equipment
and intangible assets

The reportable segments of the Company are components of the Group whose separate financial information is available and that are periodically evaluated by
the Board of Directors in deciding how to allocate management resources and in assessing the performance.

¥

The Group is made up of (1) three Units, one for each business domain, namely the Entertainment Unit (Digital Business, Toys and Hobby Business), the IP

Thousands of U.S. dollars

Production Unit, and the Amusement Unit, and (2) the affiliated business companies that mainly serve a supporting role for these Units. The business manage-2023

ment company of each business leads the planning and promotion of the business strategies of the business for Japan and overseas.

Reportable Segment

Accordingly, the Group has the following four reportable segments: the Digital Business, the Toys and Hobby Business, the IP Production Business, and theDigitalAmusement Business.
Toys and Hobby Business conducts planning, development, production, and sales of toys, capsule toys, cards, confectionery and foods, apparel, sundries, plastic
models, prizes, stationery, and other products. The IP Production Business conducts planning, production, and operation of visual and music content such asanimation, operation, and management of copyrights, artist discovery and development, and live entertainment operations. The Amusement Business conducts
planning, development, production, and sales of amusement machines, and planning and operation of amusement facilities, etc.
From April 2022, the Visual and Music Business and the Creation Business of the IP Production Unit have been integrated into the IP Production Business.

the Amusement Business. Segment information of the prior fiscal year is prepared and disclosed based on the reportable segment classifications after the change.
The accounting method used for the business segments reported is the same as the accounting method stated in Note “2 Summary of Significant Accounting
Policies.” Segment profit or loss in the segment information below is measured by operating profit, and segment assets are measured by total assets. Amounts ofinter-segment transactions are based on the prevailing market prices.
Millions of yen

2022
Reportable Segment
Subtotal

Other

Total

Adjustments

Consolidated
total

Net sales
To external customers
Total

¥

—

¥373,509¥361,884¥66,776¥81,165¥883,336¥ 5,933¥889,270

4,663

11,74013,187

1,178

30,77021,73352,504(52,504)¥889,270—¥378,173¥373,625¥79,964¥82,344¥914,107¥27,667¥941,774¥(52,504)¥889,270

Segment profit

69,63452,319

8,833

4,051

134,839347

135,186(9,689)125,496

Segment assets

265,662

185,166

86,06254,052590,944

26,463

617,408245,241

862,650¥ 25,726

Other items:¥ 3,096¥ 13,866¥ 1,864¥ 3,125¥ 21,952

586¥ 22,539¥ 3,187

Amortization of goodwill

—

344

1,874

—

2,218

—

2,218

—

2,218

Loss on impairment of fixed assets

51

600

204

2,122

2,979

15

2,994

—

2,994

—

1,384

—

—

1,384

10,106

11,490—11,4907,180

16,117

2,683

6,414

32,396

1,650

34,0462,507

36,554

Depreciation and amortization

	Investments in associates accounted forusing equity method	Increase in property, plant and equipment
and intangible assets

31¥

To external customers$2,854,386 $3,240,511
33,966

Total$496,519

110,735

115,691$2,888,353 $3,351,246$612,211

Inter-segment sales and transfers

Subtotal

Other$772,657 $7,364,074
10,703271,098

Total

Adjustments$783,361 $7,635,172$ 50,658 $7,414,733 $
183,845

Consolidated
total

454,943— $7,414,733(454,943)—$234,503 $7,869,676 $ (454,943) $7,414,733

Segment profit

369,499445,877

79,72245,221

940,320

8,730

Segment assets

1,969,825

1,625,821

617,786

485,1024,698,535

208,458

34,749 $ 124,032$ 9,138$ 27,351 $ 195,272

Depreciation and amortizationand Music Business, the Creation Business, and the Amusement Business to the Digital Business, the Toys and Hobby Business, the IP Production Business, andAmusement

Amusement(76,792)

872,258

4,906,994 2,030,458

949,051

6,937,453

Other items:

In conjunction with this organizational restructure, the reportable segments were changed from the Digital Business, the Toys and Hobby Business, the Visual

Toys and
Hobby IP Production

Toys and
Hobby IP Production

Net sales

The Digital Business conducts planning, development, and distribution of network content, and planning, development, and sales of home video games. The

Inter-segment sales and transfers¥990,089

Other items:(2) Transaction price allocated to the remaining performance obligations

DigitalConsolidated
total

Net sales
To external customers· Advances received from customers before the transfer of goods and products in the Toys and Hobby Business.

Toys and
Hobby IP Production

Amortization of goodwill
Loss on impairment of fixed assets
	Investments in associates accounted forusing equity method	Increase in property, plant and equipment
and intangible assets$$ 5,782 $ 201,054 $ 13,668 $ 214,722

1,262

2,968

13,981—

18,212—

18,212—

18,212

—

441

25

8,904

9,370

—

9,370

—

9,370

—

22,531——

22,53176,76699,297—

99,29756,692

202,201

14,921

53,999327,8145,550

333,365

9,160

342,526

Notes: 1. The “Other” category is a business segment not included in reportable segments under which operations such as logistics services for each of the Group companies are classified.
2. The details of adjustment amounts are as follows:		 (1) T he adjustment to segment profit of -¥9,689 million for the fiscal year ended March 31, 2022, includes elimination of inter-segment transactions of ¥346 million and corporate expenses not allocated toreportable segments of -¥10,035 million. The adjustment to segment profit of -¥10,254 million (-$76,792 thousand) for the fiscal year ended March 31, 2023, includes elimination of inter-segment
transactions of ¥872 million ($6,531 thousand) and corporate expenses not allocated to reportable segments of -¥11,126 million (-$83,323 thousand). Principal corporate expenses are expenses related
to administrative divisions not belonging to reportable segments.
		 (2) T he adjustment to segment assets of ¥245,241 million as of March 31, 2022, includes elimination of inter-segment transactions of -¥50,958 million and corporate assets not allocated to reportablesegments of ¥296,200 million. The adjustment to segment assets of ¥271,127 million ($2,030,458 thousand) as of March 31, 2023, includes elimination of inter-segment transactions of -¥32,587 million(-$244,046 thousand) and corporate assets not allocated to reportable segments of ¥303,714 million ($2,274,505 thousand). Principal corporate assets are cash and deposits, investment securities, andassets related to administrative divisions not belonging to reportable segments.
		 (3) T he adjustment to depreciation and amortization expense of ¥3,187 million for the fiscal year ended March 31, 2022, includes elimination of inter-segment transactions of -¥27 million and depreciation
and amortization expense not allocated to reportable segments of ¥3,214 million. The adjustment to depreciation and amortization expense of ¥1,825 million ($13,668 thousand) for the fiscal year
ended March 31, 2023, includes elimination of inter-segment transactions of -¥35 million (-$268 thousand) and depreciation and amortization expense not allocated to reportable segments of ¥1,860
million ($13,936 thousand).
		 (4) T he adjustment to increase in property, plant and equipment and intangible assets of ¥2,507 million for the fiscal year ended March 31, 2022, is related to corporate assets not allocated to reportablesegments. The adjustment to increase in property, plant and equipment and intangible assets of ¥1,223 million ($9,160 thousand) for the fiscal year ended March 31, 2023, is related to corporate assets
not allocated to reportable segments.
3. Segment profit is adjusted with operating profit in the consolidated statements of income.

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

25 Related-Party Disclosures

Additional segment information as of and for the fiscal years ended March 31, 2022 and 2023, is as follows:
1. Information by product and service

Fiscal year ended March 31, 2022

This information is included in the segment information above.

(1)Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company
2. Information by geographic region
Net sales and property, plant and equipment
Millions of yen

2022

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total¥514,739¥158,596¥102,824¥113,109¥889,270

73,535

1,845

8,727

8,341

92,450Property, plant and equipment

Type

Company

Address

Affiliatedcompany

Happinet
Corporation

Taito-ku,
Tokyo

Capital orcontribution
to capital¥2,751 million

Ratio ofvoting rights
ownership

Content of business

Wholesaler ofHoldingtoys, video games,
directly 26.6%
and amusement products indirectly 0.3%

Relationshipwith related
party
Sales agency

Transaction
amountContent

Sales of products,¥61,031 million
and others

Account items
Accounts
receivable–
trade

Balance
as of March 31,
2022¥11,123 million

Note: Transaction terms and policy for determining transaction terms.
For the transaction stated above, the products were sold on the same terms as general transactions with third parties in the ordinary course of business.

(2) Transactions between the Company and related parties
Millions of yen

2023

Net sales
Property, plant and equipment

Japan

Americas

EuropeAsia, excluding Japan

Total¥577,998¥172,517¥117,526¥122,047¥990,089

85,557

5,021

8,377

8,500

107,458

Directors, Audit & Supervisory Board members, major shareholders (limited to individuals), etc.

Type

Name

Address

Capital orcontribution
to capital

Officer

MasaruKawaguchi——

President andRepresentative Directorof the Company

Ownership
directly 0.0%—

Officer

Yuji
Asako

—

—

Director of theCompany

Ownership
directly 0.0%

Officer

Mitsuaki
Taguchi——

Director of theCompany

Officer

Shuji
Ohtsu

—

—

Officer

Yasuo
Miyakawa—

Officer

MakotoAsanuma

Officer

Officer

Transaction
amountAccount
items

Balance asof March 31,2022

Disposal of treasury stock
accompanying contribution inkind of the monetarycompensation claims¥21 million

—

—

—

Disposal of treasury stock
accompanying contribution inkind of the monetarycompensation claims¥13 million——

Ownership
directly 0.0%—

Disposal of treasury stock
accompanying contribution inkind of the monetarycompensation claims¥25 million——

Director of theCompany

Ownership
directly 0.0%—

Disposal of treasury stock
accompanying contribution inkind of the monetarycompensation claims¥13 million

—

—

—

Director of theCompany

Ownership
directly 0.0%—

Disposal of treasury stock
accompanying contribution inkind of the monetarycompensation claims¥23 million

—

—

—

—

Director of theCompany

Ownership
directly 0.0%—

Disposal of treasury stock
accompanying contribution inkind of the monetarycompensation claims¥13 million——

HitoshiHagiwara*2——

Director of theCompany

Ownership
directly 0.0%—

Disposal of treasury stock
accompanying contribution inkind of the monetarycompensation claims¥13 million——

Kazumi
Kawashiro*2——

Director of theCompany

Ownership
directly 0.0%—

Disposal of treasury stock
accompanying contribution inkind of the monetarycompensation claims¥17 million——

Content of business

Ratio of voting
rights ownership

Relationshipwith related
party

Thousands of U.S. dollars

2023

Net salesJapan

Americas

EuropeAsia, excluding Japan

Total$4,328,600$1,291,971$880,149$914,011$7,414,733

640,739

37,60862,74063,661

804,749

Property, plant and equipment

Note: Net sales are classified by country and region based on customer location.

3. Information by major customer
Fiscal year ended March, 2022

Net sales(Millions of yen)

Name

Apple Inc.

Name of related segment

Digital Business, Toys and Hobby Business,¥99,579

and IP Production BusinessNote: Apple Inc. is a platform-provision company. The actual result of sales to this company is usage fees, etc., for users (ordinary users) of game services provided by the Group.

Fiscal year ended March, 2023

Net sales(Millions of yen)

Name

Apple Inc.

Net sales(Thousands of U.S. dollars)¥113,099

Name of related segment

Digital Business and Toys and$847,000

Hobby BusinessNote: Apple Inc. is a platform-provision company. The actual result of sales to this company is usage fees, etc., for users (ordinary users) of game services provided by the Group.

4. By reportable segment, information regarding the amount of amortization of goodwill for the fiscal years ended March 31, 2022 and 2023, andthe unamortized balance of goodwill as of March 31, 2022 and 2023, is as follows:
Millions of yen

2022
IP Production

Amusement

Other

Corporate andeliminations

Amortization of goodwill

¥—

¥344

¥ 1,874

¥—

¥—

¥—

¥ 2,218

Unamortized balance of goodwill—

792

14,094———

14,887

Digital Toys and Hobby

Total

Millions of yen

2023
Digital Toys and Hobby

IP Production

Amusement

Other

Corporate andeliminations

Total

Amortization of goodwill

¥ 168

¥396

¥ 1,866

¥—

¥—

¥—

¥ 2,431

Unamortized balance of goodwill

1,565

767

12,227———

14,561*1 T
 hese items are due to contribution in kind of monetary compensation claims accompanying the performance-based stock compensation plan. The disposal price of treasury stock is determined based on theclosing price of common stock of the Company on the First Section of the Tokyo Stock Exchange on June 18, 2021 (the business day immediately preceding the date of the resolution at the Board of Directors’
meeting).
*2 Mr. Hitoshi Hagiwara and Mr. Kazumi Kawashiro retired from office as directors of the Company on June 21, 2021, and the above-stated transactions are those during their term of office.

Fiscal year ended March 31, 2023
(1) Transactions by consolidated subsidiaries of the Company with non-consolidated subsidiaries and affiliated companies of the Company

Type

Company

Address

Affiliatedcompany

Happinet
Corporation

Taito-ku,
Tokyo

Capital orcontribution
to capitalContent of business

Ratio ofvoting rights
ownership¥2,751 million($20,603
thousand)

Wholesaler oftoys, video games,
and amusement products

Holding
directly 25.9%
indirectly 0.3%

2023
IP Production

Amusement

Other

Amortization of goodwill$ 1,262$2,968$13,981

$—

$—

$—

$ 18,212

Unamortized balance of goodwill

11,725

5,748

91,574———

109,048

Digital Toys and Hobby

33

Total

Relationshipwith related
party
Sales agency

Content

Transaction
amountSales ofproducts, andothers¥73,048 million($547,054
thousand)Note:	Transaction terms and policy for determining transaction terms.
For the transaction stated above, the products were sold on the same terms as general transactions with third parties in the ordinary course of business.

Thousands of U.S. dollars

Corporate andeliminations

Content*1

34

Account items
Accounts
receivable–
trade

Balance
as of March 31,
2023¥12,848 million($96,223
thousand)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

27 Business Combinations(2) Transactions between the Company and related parties
Directors, Audit & Supervisory Board members, major shareholders (limited to individuals), etc.

Type

Name

Address

Capital orcontribution
to capitalContent of business

Ratio of voting
rights ownership

Relationshipwith related
partyContent*1

Transaction
amountOfficer

MasaruKawaguchi——

President andRepresentative Directorof the Company

Ownership
directly 0.0%—

Disposal of treasury stock
accompanying contribution in¥30 million
kind of the monetary($225 thousand)compensation claims

Officer

Yuji
Asako

—

—

Director of theCompany

Ownership
directly 0.0%—

Disposal of treasury stock
accompanying contribution in¥15 million
kind of the monetary($116 thousand)compensation claims

Officer

Officer

Officer

Officer

Officer

Officer

Officer

Officer

Nobuhiko
Momoi

Yasuo
Miyakawa

Kazuhiro
Takenaka

MakotoAsanuma

HiroshiKawasaki

Shuji
Ohtsu

Mitsuaki
Taguchi*2

Satoshi
Kono*2

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Director of theCompany

Director of theCompany

Director of theCompany

Director of theCompany

Director of theCompany

Director of theCompany

Director of theCompany

Director of theCompany

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%

Ownership
directly 0.0%—

Disposal of treasury stock
accompanying contribution in¥10 million
kind of the monetary($75 thousand)compensation claims

Account
items

Balance asof March 31,
2023

—

—

—

—

—

—

—

—

Disposal of treasury stock
accompanying contribution in¥15 million
kind of the monetary($116 thousand)compensation claims

—

—

—

(4) Company name after combination

1. Overview of business combination

		 Bandai Namco Toys & Collectibles America Inc.
		 (Company name changed from BANDAI AMERICA INC. on April 1, 2022)

combination(5) Other matters related to overview of transaction
		With the aim of improving efficiency of business operations and		 Name: Bandai Namco Holdings France S.A.S.

—

expanding the IP axis strategy of the Toys and Hobby Business in North		Description of business: Regional holding company in Continental

America, the Company conducted a merger between BANDAI AMERICA—

		 Merged company (disappearing company)

INC., which focused mainly on toys for mass distribution, and Bandai

		 Name: Bandai Namco Entertainment Europe S.A.S.

Namco Collectibles LLC, which focused on collectible items for the		Description of business: Planning, development, and sales of homemature fan base.

video games; planning, development, and distribution of network—

2. Overview of accounting processcontent; and shared-service functions

	The accounting process was carried out as transactions conducted by(2) Date of business combinationcommonly controlled entities, in accordance with the “Accounting		 September 30, 2021—

Standard for Business Combinations” and the “Guidance on the(3) Legal form of business combination

Disposal of treasury stock
accompanying contribution in¥13 million
kind of the monetary($102 thousand)compensation claims—

Disposal of treasury stock
accompanying contribution in¥15 million
kind of the monetary($116 thousand)compensation claims—

Disposal of treasury stock
accompanying contribution in¥21 million
kind of the monetary($157 thousand)compensation claims—

Disposal of treasury stock
accompanying contribution in¥21 million
kind of the monetary($157 thousand)compensation claims

company

subsidiary in Continental Europe)

EuropeDisposal of treasury stock
accompanying contribution in¥24 million
kind of the monetary($184 thousand)compensation claims—

company and Bandai Namco Collectibles LLC as the disappearing(Absorption-type merger between subsidiaries and change in trade name of		 Merging company (surviving company)——

		Absorption-type merger with BANDAI AMERICA INC. as the surviving

Transactions conducted by commonly controlled entities(1) Name and description of business of the company involved in the

Disposal of treasury stock
accompanying contribution in¥27 million
kind of the monetary($205 thousand)compensation claims—(3) Legal form of business combination

Fiscal year ended March 31, 2022

Accounting Standard for Business Combinations and the Accounting		Absorption-type merger between Bandai Namco Holdings France S.A.S.

—

Standard for Business Divestitures.”as the surviving company and Bandai Namco Entertainment Europe
S.A.S. as the disappearing company

Fiscal year ended March 31, 2023

(4) Company name after combination—

		 Bandai Namco Europe S.A.S.

Transactions conducted by commonly controlled entities		(Company name changed from Bandai Namco Holdings France S.A.S.

(Absorption-type company split, absorption-type merger between subsidiaries and change in trade name of subsidiary of the IP Production Unit)

on September 30, 2021)—

1. Reorganization in the visual business(5) Other matters related to overview of transaction(1) Overview of transaction

		With the aim of improving efficiency of business operations in the—		 (i) Overview of absorption-type company split with SUNRISE INC. as theadministration division, etc., and strengthening governance of the—*1 These items are due to contribution in kind of monetary compensation claims accompanying the performance-based stock compensation plan. The disposal price of treasury stock is determined based on theclosing price of common stock of the Tokyo Stock Exchange Prime Market on June 17, 2022 (the business day immediately preceding the date of the resolution at the Board of Directors’ meeting).
*2 Mr. Mitsuaki Taguchi and Mr. Satoshi Kono retired from office as Director of the Company on June 20, 2022, and the above-stated transactions are those during their term of office.

26 Per-Share Data

successor company

subsidiaries in Continental Europe by concentrating resources of that			 a. Name and description of business involved in absorption-type

area, the Company conducted a merger between Bandai Namco
Holdings France S.A.S., the holding company in Continental Europe

company split

and Bandai Namco Entertainment Europe S.A.S., the company that

Name of business: Visual business of Bandai Namco Arts Inc.

conducted the Digital Business.

Description of business: Planning, production, management, etc.,
of visual content
			 b. Date of business combination

2. Overview of accounting process

Net assets per share
Basic earnings per share

U.S. dollars

2023

2023

commonly controlled entities, in accordance with the “Accounting¥884.94¥987.58$7.40

Standard for Business Combinations” and the “Guidance on the

1.03

Accounting Standard for Business Combinations and the Accounting

140.70136.88Notes: 1. Diluted earnings per share is not presented since no potentially dilutive shares exist.
2. T he Company conducted a share split with a ratio of three shares for every one share of common stock on April 1, 2023. Net assets per share and basic earnings per share were calculated assuming that theshare split was conducted at the beginning of prior fiscal year.
3. The basis of calculating basic earnings per share is as follows:

2022

Millions of yen

Thousands of
U.S. dollars

2023

2023

Basic earnings per share
Profit attributable to owners of parent
Amount not applicable to common stockholders
Profit attributable to owners of parent available to common stock
Average number of common stock outstanding (shares)¥92,752¥90,345$676,589———

92,752

90,345676,589

659,230,755

660,013,710

April 1, 2022

	The accounting process was carried out as transactions conducted by

Yen

2022

			 c. Legal form of business combination
Absorption-type company split with Bandai Namco Arts Inc. as the
splitting company and SUNRISE INC. as the successor company
			 d. C ompany name after combination

Standard for Business Divestitures.”

Bandai Namco Filmworks Inc.
		 (ii) Overview of absorption-type merger with SUNRISE INC. as the(Absorption-type merger between subsidiaries and change in trade name ofsurviving company

subsidiary in North America)

			 a. Name and description of business of the company involved in

1. Overview of business combination

combination(1) Name and description of business of the company involved in the

Merging company (surviving company)

combination
		 Merging company (surviving company)

Name: SUNRISE INC.

		 Name: BANDAI AMERICA INC.

Description of business: Planning and production of animation;

		 Description of business: Sales of toy-related products

management and administration of copyrights

		 Merged company (disappearing company)

Merged company (disappearing company)

		 Name: Bandai Namco Collectibles LLC

Name: Bandai Namco Rights Marketing Inc.

		Description of business: Sales, promotion, event sales, and

Description of business: Development, operation, and sales of
online video distribution platform services; development, opera-

e-commerce business for products for the mature fan basetion, and sales of various community services and related tools(2) Date of business combination
		 March 31, 2022

35

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bandai Namco Holdings Inc. and Consolidated Subsidiaries

3. Other matters related to overview of transaction

			 b. Date of business combination

The IP Production Unit, whose most important mission is to create IP,

April 1, 2022

28 Significant Subsequent Events

produces and develops worldviews for IP through coordination among the(Share Split and Partial Amendments to the Articles of Incorporation in

Absorption-type merger with SUNRISE INC. as the surviving

visual, music, and live event businesses. Furthermore, the Company aims to

Conjunction with Share Split)

company and Bandai Namco Rights Marketing Inc. as the disap-

maximize the value of IP by coordinating with each Unit in the Group.

The Company conducted a share split and made partial amendments to its

By combining the companies in the visual, music, and live event

Articles of Incorporation as of April 1, 2023, pursuant to the resolution at the			 c. Legal form of business combination

pearing company

4. Other(1) Change in the amount of capital		There was no change to the Company’s capital as a result of the share
split.

businesses of the IP Production Unit, the companies will be able to share themeeting of the Board of Directors held on February 7, 2023.

different expertise, strengths, and external partner networks, etc., of each

1. Purpose of share split

company engaged in creating and developing IP, and effectively utilize the	In accordance with the purpose of “Fun for All into the Future,” the Bandai

dividends for the fiscal year ended March 31, 2023, the record date for		The accounting process was carried out as transactions conducted byCompany’s IP and music. In addition, through personnel exchanges, etc., theNamco Group (the “Group”) aims to foster broad, deep, multifacetedwhich is March 31, 2023, are based on the number of shares before thecommonly controlled entities, in accordance with the “Accounting

Company will strengthen the development of human resources involved in IP

connections with society and all stakeholders, such as IP fans around theStandard for Business Combinations” and “Guidance on thecreation and production. With these initiatives, the Company aims to further

world, all business partners, and Group employees. The Company aims to		  There is no change to the Company’s basic policy for shareholder

Accounting Standard for Business Combinations and the Accounting

strengthen its IP creation and production capabilities, which are at the core offurther increase the liquidity of its shares and broaden its shareholder basereturns. The Company continues to rank the return of profits to share-

Standard for Business Divestitures.”the IP axis strategy.

in addition to connecting with shareholders in an even broader manner byholders as one of its highest priorities in its management. The

lowering the price per investment unit through this share split.

Company aims to further strengthen the Group’s competitiveness and,			 d. Company name after combination
Bandai Namco Filmworks Inc.
(2) Overview of accounting process

2. Reorganization in the music and live event businesses(Business transfer between subsidiaries and change in trade name of subsid-(1) Overview of transaction

iary in Europe)

		 (i) Name and description of business of the company involved in

1. Overview of transaction

combination(1) Name and description of business involved in reorganization

Merging company (surviving company)

		 Sales, maintenance, etc., of amusement machines in Europe, etc.

Name: Bandai Namco Arts Inc.

(2) Date of business combination

Description of business: Planning, production, and management of		 October 1, 2022

visual and music content, artist discovery, and development and(3) Legal form of business combination

production of live events, etc.

		Business transfer with Bandai Namco Amusement Europe Ltd. as the

Merged company (disappearing company)

transferor and NAMCO UK LTD. as the transferee

Name: Bandai Namco Live Creative Inc.
Description of business: Planning and production of live perfor-(4) Company name after combination

mances and events; ticket sales; planning, production, and sales of		 Bandai Namco Amusement Europe Ltd.
(5) Other matters related to overview of transaction

goods; and management of live viewings, etc.

		All businesses of Bandai Namco Amusement Europe Ltd., which

Merged company (disappearing company)(2) Dividends		As the effective date for this share split was April 1, 2023, the year-end

share split.

2. Overview of share split

while maintaining a sound financial status, to achieve regular distribu-(1) Method of share split

tions of dividends and improvement in the Company’s corporate value.

		The Company conducted a share split at a ratio of three shares forSpecifically, the Company follows a basic policy of providing a return toevery one share of common stock held by shareholders listed or

shareholders that targets a total return ratio of 50% or more based onrecorded on the final shareholder register on March 31, 2023, the record

stable dividend payments of 2% of DOE (dividends on equity). Under

date.

this policy, the Company strives to maintain long-term and stable(2) Number of shares increased by share split

dividends and be more aware of capital cost.

		Total number of issued shares before the share split(including shares of treasury stock): 222,000,000 shares(Disposal of Treasury Stock as Stock Compensation)		Number of shares increased by the share split

Based on a resolution at the Board of Directors’ meeting held on June 19,(including shares of treasury stock) 444,000,000 shares2023, a disposal of treasury stock as stock compensation has been imple-

		Total number of issued shares after the share split

mented, as follows:(including shares of treasury stock): 666,000,000 shares		Total number of shares authorized to be issued after the share split:

1. Overview of disposal

Name: SUNRISE Music INC.

engages in sales of amusement machines, etc., were transferred to

Description of business: Production of music related to animations

NAMCO UK LTD., which engages in operation of amusement facilities,

and planning and use of music and masters, centered on SUNRISE

etc. The two companies are being combined with the aim of strength-		 Date of public notice of record date: March 13, 2023

INC. and Bandai Namco Pictures Inc.

ening the amusement business in the U.K. and elsewhere in Europe by		 Record date: March 31, 2023

(3) Disposal value¥3,479 per share

integrating the value chain in a manner that involves bringing together

		 Effective date: April 1, 2023

(4) Total disposal value¥472 million

both companies’ know-how relating to amusement machine sales and(4) Effect on per-share data		 (ii) Date of business combination
April 1, 2022

amusement facility operations. Bandai Namco Amusement Europe Ltd.

		 (iii) Legal form of business combination

is to be liquidated in December 2023, subsequent to having completedAbsorption-type merger with Bandai Namco Arts Inc. as thetransfer of its entire business.

surviving company and Bandai Namco Live Creative Inc. and2. Overview of accounting process

SUNRISE Music INC. as the disappearing companies		The accounting process was carried out as transactions conducted by		 (iv) Company name after combinationcommonly controlled entities, in accordance with the “Accounting

Bandai Namco Music Live Inc.

		

2,500,000,000 shares(1) Date of disposal(3) Timetable of share split

Company’s common stock(5) Method of offering or disposal 	Stock compensation

		The effect of the share split on per-share data is stated in “26 Per-Shareallotment method

Data.”(6) People eligible for allotment, number of eligible people, number of

3. Partial amendments to the Articles of Incorporation in conjunction withshares to be allottedshare split

		 Directors of the Company*1(1) Reason for the amendments
		As a result of this share split, pursuant to the provisions of Article 184,
paragraph 2 of the Companies Act, the total number of shares autho-

The accounting process was carried out as transactions conducted by

Accounting Standard for Business Combinations and the Accounting

rized to be issued in Article 5 of the Company’s Articles of Incorporationcommonly controlled entities, in accordance with the “AccountingStandard for Business Divestitures.”

was amended effective April 1, 2023.

				

Accounting Standard for Business Combinations and the Accounting

		 The amendments are as follows:Standard for Business Divestitures.”		accordance with the Financial Instruments and Exchange Act isa condition for this disposal of treasury stock.

*1. C ompany directors (excluding those serving concurrently as president and representative directorof Bandai Namco Entertainment Inc., BANDAI CO., LTD., Bandai Namco Filmworks Inc., Bandai
Namco Amusement Inc., and Bandai Namco Business Arc Inc., director (Audit & Supervisory
Committee member) and outside directors)*2 D irectors (excluding non-executive directors) of Bandai Namco Entertainment Inc., BANDAI CO.,LTD., Bandai Namco Filmworks Inc., Bandai Namco Amusement Inc., BANDAI SPIRITS CO., LTD.,
Bandai Namco Music Live Inc., and Bandai Namco Business Arc Inc.

(Amendments shown by underlines.)

Before amendments

After amendments(Total number of shares authorized
to be issued)
Article 5
The total number of shares authorized to be issued by the Company
shall be 1,000,000,000 shares.

(Total number of shares authorized
to be issued)
Article 5
The total number of shares authorized to be issued by the Company
shall be 2,500,000,000 shares.

2. Objective of and reasons for the disposal
As performance-based remuneration related to this fiscal year, monetarycompensation claims from the Company and subsidiaries are granted to thedirectors of the Company and subsidiaries (“eligible directors”). Eligible directors pay in the monetary compensation claims as property contributed in(3) Timetable for the amendments to the Articles of Incorporation
		 Date of resolution of the Board of Directors:

kind to receive delivery of the Company’s common stock.

February 7, 2023

		Effective date of the amendments to the Articles of Incorporation:

37

30 individuals, 109,500 shares(7) Other The taking effect of the securities registration statement filed in(2) Detail of the amendments

Standard for Business Combinations” and “Guidance on the

3 individuals, 26,200 shares

		 Directors of subsidiaries of the Company*2Standard for Business Combinations” and “Guidance on the(2) Overview of accounting process

July 7, 2023

(2) Class and number of shares to be disposed 135,700 shares of theApril 1, 2023

38

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report

Reasonableness of the valuation of work in process for home video games before launch in main domestic development bases
The key audit matterTo the Board of Directors of Bandai Namco Holdings Inc.:
OpinionWe have audited the accompanying consolidated financial statements of Bandai Namco Holdings Inc. (“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”), which comprise the consolidated balance sheets as at March 31, 2023 and 2022, the consolidated statements of income andconsolidated statements of comprehensive income, consolidated statements of changes in net assets, consolidated statements of cash flows for the years thenended, and the notes to consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at
March 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with accounting
principles generally accepted in Japan.

How the matter was addressed in our audit

In the consolidated balance sheets, Bandai Namco Holdings Inc. and its

The primary procedures we performed to assess the reasonableness of theconsolidated subsidiaries (collectively referred to as the “Group”) recognizedvaluation of work in process for home video games before launch in main

work in process inventories of ¥104,835 million as of March 31, 2023. As

domestic development bases included the following:

described in Note 2 “Summary of Significant Accounting Policies, (p)Significant Accounting Estimates, Valuation of Work in Process for Home(1) Internal control testingVideo Games before Launch at Major Domestic Development Bases” to the

We tested the design and operating effectiveness of certain of the Group’s

consolidated financial statements, the amount included ¥60,956 million ofinternal controls relevant to the valuation of work in process for home video

work in process for home video games before launch in main domestic

games before launch in main domestic development bases. In this assess-development bases that belonged to the Digital Business segment, repre-

ment, we focused our testing on the following controls:

senting 6.6% of total assets in the consolidated financial statements.

• controls to evaluate the appropriateness of the projected sales volume ofgame titles subject to individual assessment.

At the main domestic development bases, work in process recognized in

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in thethe consolidated balance sheets is stated at an amount calculated by writing
down the carrying amount based on the declining profitability, if any.

(2) Assessment of the reasonableness of the estimated sales volume

The Group considers that the profitability of work in process has not

We assessed the appropriateness of key assumptions used in the estimate ofaccordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

declined when there has been no change in market demand from the initialsales volume of home video game titles before launch subject to individual

forecast and the production has been proceeding as planned. On the otherassessment, by performing the following procedures, among others:

Key Audit Matters

hand, the Group individually assesses the work in process whose profitability• assessed the appropriateness of similar game titles determined to be themay have declined. In particular, for products that are near launch, for whichbenchmarks in terms of similarities, such as game concepts and popularity

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of thecurrent period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.

market demand is more predictable, the Group individually assesses theof IP (Intellectual Property: including characters in the game); andwork in process considering the sales results of similar game titles and sales• assessed the appropriateness of the estimated sales volume of game titles

potential based on future demand forecasts.

subject to individual assessment by comparing them with the sales resultsof similar game titles determined to be the benchmarks.

In writing down the carrying amount based on the declining profitability,
the Group compares the carrying amount of work in process with its net
selling value. When the carrying amount exceeds the net selling value, theexcess is written down. In calculating the net selling value, similar game titles
sold in the past were used as benchmarks and the Group estimates sales
volumes considering sales potential based on demand forecasts. Theseestimates involved a high degree of uncertainty as they were highly dependent upon subjective judgement by the management of main domestic
development bases.
We, therefore, determined that our assessment of the reasonableness ofthe valuation of work in process for home video games before launch in main
domestic development bases was of most significance in our audit of theconsolidated financial statements for this fiscal year, and accordingly, a key
audit matter.

39

40

INDEPENDENT AUDITOR’S REPORT

Other Information

Convenience Translation

The other information comprises the information included in the Financial Report, but does not include the consolidated financial statements and our auditor’s

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2023 are presented solely for conve-

reports thereon. Management is responsible for the preparation and presentation of the other information. The audit and supervisory committee is responsible fornience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis describedoverseeing the directors’ performance of their duties with regard to the design, implementation and maintenance of the reporting process for the otherin Note 3 to the consolidated financial statements.

information.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether theInterest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally
accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, asapplicable, matters related to going concern in accordance with accounting principles generally accepted in Japan.
The audit and supervisory committee is responsible for overseeing the directors’ performance of their duties with regard to the design, implementation andNaoki Matsumoto
Designated Engagement Partner
Certified Public Accountant

maintenance of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Mayuka Katsuki

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether

Designated Engagement Partner

due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

Certified Public Accountant

audit conducted in accordance with auditing standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Yasuko Kawamata
Designated Engagement Partner
Certified Public Accountant• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or

KPMG AZSA LLC

the override of internal control.

Tokyo Office, Japan• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the objec-

August 9, 2023

tive of the audit is not to express an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with accounting standards generally accepted inJapan, the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our
audit opinion.
We communicate with the audit and supervisory committee regarding, among other matters, the planned scope and timing of the audit, significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the audit and supervisory committee with a statement that we have complied with relevant ethical requirements regarding independence, andcommunicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the audit and supervisory committee, we determine those matters that were of most significance in the audit of theconsolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

41

42