Annual Report 2019

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

CONTENTS
Profile............................................................. 1
Top Message................................................. 2
Financial Information................................... 3
Corporate Data............................................... 291

TOP MESSAGE

ChairmanKeiko Erikawa
President & CEO

Yoichi Erikawa
In FY2018, our major titles, as well as royalty income from collaborative titles and IP licenses, have achieved favorable
results. Accordingly, we achieved the highest sales and profit since the merger of Koei and Tecmo, and net income has
increased for the ninth consecutive year.
For our 3-year medium-term management plan that started in FY2018, we are aiming for ¥51 billion in sales, ¥17 billion
in operating income, and ¥21 billion in income before income taxes in FY2020. For the global market, we will work toachieve sales that exceed 5 million copies for a console title and ¥1 billion per month for a smartphone game.
For FY2019, the second year of the medium term management plan, we will continuously adhere to the policies of “creating and expanding global IPs” and “advancement of global business”.
Also, in an ever-expanding game market, we will achieve both growth potential and profitability by focusing on our IPs.
In addition, to achieve the medium-term plan, we will proactively invest in our major titles. Based in our new office andlive-house-type hall that will be completed in January 2020, we will create new global IPs and develop entertainment in awide range of fields such as eSports and live events.
We thank you for your support and ask for your continued cooperation in our present and future endeavors.

2

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

Millions of yen

2019

ASSETS
Current assets:
Cash and deposits (Notes 4 and 6)
Notes and accounts receivable (Note 6)
Securities (Notes 6 and 9)
Merchandise and Finished goods
Work in process(Note 14)
Raw materials and supplies
Other current assets
Allowance for doubtful accounts (Note 6)
Total current assets

2018¥ 7,056
8,359
126
78
59
46
4,051
(5)
19,773¥6,626
8,978
115
30
45
2,885
(11)
18,671$63,578
75,321
1,137
707
538
417
36,502(50)
178,151

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

10,156
14,6153,524
467
28,764

10,746
14,6153,531
520
29,41391,511
131,682
31,7584,208
259,161

144
144

190
190

1,306
1,306

76,355
2,220
948
16
969
80,510¥ 129,192

78,938473
906
80,317¥ 128,594

687,946
20,008
8,546
149
8,734
725,384$ 1,164,003

Intangible assets:
Other
Total intangible assets
Investments and other assets:
Investment securities (Notes 6 and 9)
Deferred tax assets (Notes 3 and 12)
Deferred tax assets for land revaluation
Retirement benefit asset (Notes 11)
Other
Total investments and other assets
Total assets
The accompanying notes are an integral part of these statements.

3

Thousands of U.S. dollars

2019Millions of yen

2019

LIABILITIESCurrent liabilities:
Notes and accounts payable – trade
Accounts payable – other
Income taxes payable
Provision for bonuses
Provision for bonuses for directors
Provision for sales returns
Provision for sales discount
Provision for point card certificates
Provision for loss on order received(Note 14)
Other current liabilities
Total current liabilities

2018

¥ 565
1,269
2,240
1,089
176
0
269
11
118
3,216
8,957

¥843
1,185
3,426
1,043
168
0
475
19
595
3,268
11,027$5,095
11,433
20,183
9,813
1,587
1
2,430
107
1,071
28,98180,705Long-term liabilities:
Retirement benefit liability (Note 11)
Deferred tax liabilities (Note 3 and 12)
Other long-term liabilities
Total long-term liabilities
Total liabilities

157
792
950
9,908

57
429
836
1,324
12,351

1,420
7,144
8,564
89,270

NET ASSETS (Note 15)
Shareholders' equity:
Capital stock
Authorized: 350,000,000 shares in 2019 and 2018
Issued : 129,268,048 shares in 2019 and 2018

15,00015,000135,147

26,38980,404

26,17573,269237,762
724,428(2,588)119,204(1,266)113,178(23,324)
1,074,013

1,355(2,166)
703
(226)
(333)

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

12,215(19,519)
6,341(2,040)(3,003)

413
119,284¥ 129,192

345
116,242¥128,594

3,722
1,074,733$1,164,003

Capital surplus
Retained earnings
Treasury shares: 2,864,167 shares at March 31, 2019 and
2,317,094 shares at March 31, 2018
Total shareholders' equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Revaluation reserve for land (Note 13)
Foreign currency translation adjustment
Remeasurements of defined benefit plans (Note 11)
Total accumulated other comprehensive income
Share subscription rights: (Note 16)
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these statements.

4

Thousands of U.S. dollars

2019

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

Millions of yen

Thousands of U.S. dollars

2019$ 351,097

Net sales（Note 20）

2019¥ 38,968

2018¥ 38,926

Cost of sales（Note 14）
Gross profit

19,052
19,915

19,566
19,360171,663
179,433

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

7,823
12,092

7,649
11,711

70,486108,947

Non-operating income (expenses):
Interest income
Dividend income
Gain on sales of investment securities (Note 9)
Gain on redemption of securities
Loss on valuation of investment securities (Note 9)
Loss on sales of investment securities (Note 9)
Loss on redemption of securities
Foreign exchange gains (losses), net
Other, net
Profit before income taxes

1,748
2,243
3,936
(1,645)
(67)
(432)
145
286
18,307

2,081
1,374
4,299
25
(492)
(130)
(728)
(177)
330
18,29315,753
20,21635,470(14,821)(611)(3,897)
1,310
2,581
164,949

Income taxes:
Income taxes - current
Income taxes - deferred
Total income tax (Note 12)
Net profit
Profit attributable to owners of the parent:

5,006
(393)
4,613
13,694
13,694

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

45,108(3,543)
41,565
123,384
123,384

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

Yen¥ 108.00
107.7755.00¥102.70
102.43
62.00

U.S. dollars

$0.97
0.97
0.49

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

Millions of yen

2019$ 123,384

Net profit:2018¥ 13,017

Other comprehensive income
Valuation difference on available-for-sale securities
Revaluation reserve for Land
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax (Note 11)
Total other comprehensive income (Note 19)(3,529)948(293)(178 )(3,052)

1,754
300
41
2,096

(31,798 )8,546(2,644)(1,604)(27,501)

Comprehensive income :10,642

15,114

95,882¥ 10,642¥15,114$ 95,882

Comprehensive income attributable to owners of the parent:

The accompanying notes are an integral part of these statements.

5

Thousands of U.S. dollars

2019¥ 13,694

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

Millions of yen
Commonstock¥ 15,000

Balance at April 1, 2017
Cash dividends paid
Net income
attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Net changes of items other thanshareholder’s equity
Total changes of items
during period
Balance at March 31,¥ 15,000and April 1, 2018
Cash dividends paid
Net income
attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Net changes of items other thanshareholder’s equity
Total changes of items
during period
Balance at March 31, 2019
¥ 15,000

Capitalsurplus¥ 25,937

Retainedearnings¥ 66,159(5,907)

Valuation Revaluation
Foreign Accumulated
reservedifference on
currency adjustments
Share
Treasury available-forfor translation for retirement subscription
shares sale securities
land adjustments
benefits
rights(¥ 1,456) ¥ 3,130 (¥ 3,115)(¥ 90)¥ 697¥ 254

13,017

Net assets¥ 106,516(5,907)13,017

(7)
197

238

(7)
436
1,754

-

300

41

90

2,187

238

7,109

190

1,754

-

300

41

90

9,726

¥ 26,175¥ 73,269(¥ 1,266)¥ 4,885(¥ 3,115)¥ 997(¥ 48)¥ 345¥ 116,242(6,559)(6,559)13,694

13,694(1,555)446(1,555)233

213(3,529)

948

(293)

(178)

68

(2,984)

213

7,135

(1,322)(3,529)

948

(293)

(178)

68

3,041

¥ 26,389¥ 80,404(¥ 2,588)¥ 1,355(¥ 2,166)¥ 703(¥ 226)¥ 413¥ 119,284

Thousands of U.S. dollars
Valuation Revaluation
Foreign Accumulated
Share
difference on
reservecurrency adjustments
Capital Retained Treasury available-forCommon
for translation for retirement subscription
rights Net assets
surplus earnings
stock sale securities
benefits
stock
land adjustments$3,109 $1,047,326$ 135,147 $235,840 $660,140 ($11,409) $44,013 ($28,065)$8,986($435)(59,096)(59,096)

Balance at April 1, 2018
Cash dividends paid
Net income
123,384
attributable to owners of parent(14,017)
Purchase of treasury shares
1,921
2,102
Disposal of treasury shares
Net changes of items other thanshareholder’s equity
Total changes of items
1,921
64,287 (11,914)
during period$135,147 $237,762 $724,428 ($23,324)
Balance at March 31, 2019
The accompanying notes are an integral part of these statements.

6

123,384(14,017)
4,024(31,798)

8,546(2,644)(1,604)613(26,887)(31,798)

8,546(2,644)(1,604)613

27,406$12,215 ($19,519)$6,341($2,040)$3,722 $1,074,733

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

Millions of yen

2018¥ 18,307
734
(476)
(5)
7
51
(3,992)
1,645(3,869)
432
(0)
(161)
632
7
(280)
(341)
12,691
3,353
(0)
1,273
(7,719)9,597¥18,293
701
595
(12)
(74)
90
(3,455)492(4,169)
703
(1)
141
(836)
(48)
359
(539)
12,238
2,667
(0)
1,377
(5,894)
10,389$164,949
6,614(4,291)(52)
66
461(35,970)
14,821(34,859)
3,897(3)(1,453)5,699
67(2,525)(3,072)
114,347
30,213(2)
11,469(69,554)
86,475(89)
84(16,158)
14,996(84)122(30,397)
24,272(810)
761(145,588)
135,118

(236)
(7)
1
(86)
(1,496)(3,729)
(14)
1
(155)
(9,984)(2,128)
(70)
15
(779)
(13,480)

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

1,500(1,500)377(1,556)(6,551)(7,730)5,500(5,500)374(7)(5,900)(5,533)

13,514(13,514)3,396(14,022)(59,023)(69,649)

Effect of exchange rate changes on cash andcash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 4)

56
428
6,540
¥ 6,968(76)(5,204)
11,745¥6,540512
3,858
58,929$62,787

Cash flows from operating activities:
Profit before income taxes
Depreciation
Increase (decrease) in provision for loss on order received
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses for directors
Increase (decrease) in provision for bonuses
Interest and dividend income
Loss(gain) on valuation of securities
Loss(gain) on sales of investment securities
Loss(gain) on redemption of securities
Loss(gain) on sales of property, plant and equipment
Foreign exchange losses (gains)
Decrease(increase) in notes and accounts receivable
Decrease(increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Other, net
Sub totalInterest and dividend income received
Interest paid
Income taxes refund
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of short-term and long-term investment securities
Proceeds from sales and redemption of short-term and longterm investment securities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sales of property, plant and equipment
Other, net
Net cash used in investing activities

The accompanying notes are an integral part of these statements.

7

Thousands of U.S. dollars

2019

2019

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

1. Summary of significant accounting policies:(1) Basis of presentation of consolidated financial statements The accompanying consolidated financial statements of KOEI TECMO HOLDINGS CO., LTD. (“the Company”) have been prepared inaccordance with the provisions set forth in the Financial Instruments and Exchange Act of Japan and its related accounting regulations, andin conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as toapplication and disclosure requirements of International Financial Reporting Standards.
The accounts of consolidated overseas subsidiaries for the years ended March 31, 2019 and 2018 are prepared in accordance with either
International Financial Reporting Standards or U.S. generally accepted accounting principles, with adjustments for the specified five items asapplicable. The accompanying consolidated financial statements have been restructured and translated into English from the consolidated
financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the
Ministry of Finance as required by the Financial Instruments and Exchange Act of Japan. Some supplementary information included in thestatutory Japanese language consolidated financial statements, but not considered necessary for fair presentation, is not presented in theaccompanying consolidated financial statements.
As permitted by the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen have been omitted. Consequently, the totals shown in the accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily agree withthe sum of the individual amounts. Certain amounts in the prior year’s financial statements have been reclassified to conform to the current
year’s presentation.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using theprevailing exchange rate at March 31, 2019, which was ¥110.99 to U.S. $1. The convenience translations should not be construed as
representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any
other rate of exchange.
(2) Basis of consolidation and investments in affiliated companies The consolidated financial statements include the accounts of the Company and its subsidiaries, including KOEI TECMO GAMES CO.,LTD., KOEI TECMO NET CO., LTD., KOEI TECMO WAVE CO., LTD., CWS BRAINS, LTD., KOEI TECMO CAPITAL CO., LTD.,
KOEI TECMO AMERICA CORPORATION, KOEI TECMO EUROPE LIMITED, KOEI TECMO TAIWAN CO., LTD., KOEI TECMOTIANJIN SOFTWARE CO., LTD., KOEI TECMO BEIJING SOFTWARE CO., LTD., KOEI TECMO SINGAPORE PTE. LTD., and KOEITECMO LIV CO., LTD. Some small-scale subsidiaries whose total assets, net sales, net income or loss, retained earnings or other items
would have no material effect on the financial statements have not been consolidated. All significant intercompany transactions and accounts
have been eliminated in consolidation.
The fiscal year end of KOEI TECMO TAIWAN CO., LTD. is December 31, which differs from that of the Company and as such, the subsidiary is consolidated based on its provisional closing balances as of the Company’s fiscal year end. The fiscal year end of KOEI TECMO TIANJIN SOFTWARE CO., LTD. and KOEI TECMO BEIJING SOFTWARE CO., LTD. is also December 31 and the Company used theirfinancial statements as of their own fiscal year end in the preparation of the consolidated financial statements, making adjustments, if
necessary, for significant transactions that occurred during the period from their fiscal year end to the consolidated fiscal year end.
(3) Translation of foreign currency All the assets and liabilities of foreign subsidiaries are translated into Japanese yen at the appropriate year-end rate and all income andexpense accounts are translated at the average rate of exchange for the year. The translation of net assets is made using historical rates. The
resulting translation differences are presented as “Foreign currency translation adjustment” in the accompanying consolidated balance sheets.
Foreign currency receivables and payables are translated at year-end rates and the resulting translation gains and losses are included inincome currently.
(4) Cash and cash equivalents For the purpose of the consolidated statements of cash flows, the Company and its consolidated subsidiaries have classified time deposits
and other highly liquid investments as cash equivalents if the original maturities of such investments are three months or less.
(5) Financial instruments (a) Derivatives
All derivatives are stated at fair value, with changes in fair value being included in the net income or loss for the period in which theyarise.
(b) Securities and investment securities
Trading securities, held for the purpose of generating profits on short-term differences in prices, are stated at fair value, with changes infair value being included in the net income or loss for the period in which they arise.
Held-to-maturity securities are stated at amortized cost method (straight line method).
Available-for-sale securities for which quoted market price is available are stated at fair value. Net unrealized gains or losses on thesesecurities are reported as a separate component of net assets, net of applicable taxes.
Available-for-sale securities for which quoted market price is not available are stated at cost or at amortized cost, except as stated in thefollowing paragraph:
In cases where the fair value of equity securities issued by unconsolidated subsidiaries, or available-for-sale securities has declined
significantly and such impairment in value is not deemed temporary, those securities are reduced to fair value and the resulting losses areincluded in the net income or loss for the period.
The net amount of equity included in the Company’s financial statements from investment partnerships and similar investments, iscalculated based on the relevant financial statements for the partnership available as of the reporting date.

8(6) Inventories Inventories of the Company and its consolidated subsidiaries are determined using the moving-average method for merchandise,finished goods and raw materials, the specific identification method for work-in-process (unless market value of inventories declines
significantly and is not expected to recover to cost, in such cases costs are reduced to net realizable values) and the last purchase cost
method for supplies.
(7) Property, plant and equipment The declining balance method is used for calculating depreciation, except for buildings (excluding facilities attached to buildings), whichwere acquired since April 1, 1998 and facilities attached to buildings and structures, which were acquired since April 1, 2016 that the straightline method is used.
The property, plant and equipment held by foreign consolidated subsidiaries is being depreciated by the straight-line basis, based on theestimated useful lives of the assets.
The range of useful lives for “Buildings and structures” is principally from 3 to 50 years.
(8) Intangible assets Software costs for internal use are capitalized and amortized over their estimated useful lives on a straight-line basis.
Goodwill is amortized over its estimated useful lives on a straight-line basis. When the amounts are immaterial, the goodwill is amortized as
incurred.
(9) Provision for bonuses Provision for bonuses are stated at the estimated amount of the bonuses to be paid to employees based on their services provided during the
fiscal year.
(10) Provision for bonuses for directors Provision for bonuses are stated at the estimated amount of the bonuses to be paid to directors based on their services for the current fiscal year.
(11) Allowance for doubtful accounts An allowance for doubtful accounts is established at an amount considered to be appropriate based primarily on the past credit loss
experience of the Company and its consolidated subsidiaries, plus an additional amount deemed necessary to cover possible losses
estimated on an individual account basis.
(12) Provision for sales returns An allowance for sales returns is provided for losses due to the return of products in the future at an amount calculated based on historicalexperience.
(13) Provision for sales discount An allowance for sales discount is provided for losses incurred on estimated sales discount of products in the future.
(14) Provision for point card certificates A provision for point card certificates is provided for the accumulation of points granted to online shopping users. The amount of provision
is determined based on the past usage of points.
(15) Provision for loss on order received A provision for loss on order received is provided for the estimated loss of the order. An allowance for loss is recognized when it is probable that the expected revenue to be derived from an order is lower than the unavoidable cost of meeting the obligations.
(16) Revenue for software development contract When the outcome of the software development contract can be reliably estimated, contract revenue is recognized based on the stage ofcompletion by applying the percentage of completion method. The stage of completion is primarily determined using the cost-to-cost
method.
If the outcome of the software development contract cannot be reliably estimated, the completed contract method is applied.
(17) Finance leases For finance lease transactions other than those which transfer ownership to the lessee, the straight-line method is adopted with a residual
value of zero, with the lease period deemed equal to the service life of the asset.

9(18) Retirement benefits (a) Method for attributing projected benefits to periods
The retirement benefit obligation is calculated by attributing projected benefits to periods until the end of the current fiscal year on abenefit formula basis.
(b) Amortization of prior service cost and actuarial gain or loss
Prior service cost is amortized on a straight-line basis over certain periods (from 9 to 12 years), which are shorter than the averageremaining years of service of the eligible employees. Net actuarial gain or loss is amortized from the following year on a straight-line
basis over certain periods (from 9 to 12 years), which are shorter than the average remaining years of service of the eligible employees.
(19) Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial statements The Company has applied “Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial
statements” (ASBJ Practical Issues Task Force No. 18, June 28, 2019), and necessary modifications have been made for consolidation.
(20) Net income per share Net income per share of capital stock (“Basic EPS”) is computed based on the weighted average number of shares of capital stock outstanding during each year. Diluted net income per share of capital stock (“Diluted EPS”) further assumes the dilutive effect of warrants.
The basic information for net income per share computations for the years ended March 31, 2019 and 2018 were as follows:

For the year ended March 31, 2019
Basic EPS
Net income
Other
Net income attributable to owners of parent
Effect of Diluted stock shareholders
Warrants
Diluted EPS
Net income attributable to owners of parent
For the year ended March 31, 2018
Basic EPS
Net income
Other
Net income attributable to owners of parent
Effect of Diluted stock shareholders
Warrants
Diluted EPS
Net income attributable to owners of parent

Millions of yen

Thousands of U.S. dollars

Net income

Thousands of shares
Weighted average number of shares

Yen¥ 108.00$0.97¥ 107.77$0.97¥ 13,694¥ 13,694$123,384$123,384

126,796--279¥ 13,694$123,384

127,075

Millions of yen

Net income¥13,017¥13,017

U.S. dollars

EPS

Thousands of shares
Weighted average number of shares

EPS

126,756¥102.70-333¥13,017

127,089

Yen¥102.43

The Company implemented a 1.2-for-1 stock split on October 1, 2018. Net income per share and diluted net income per share are calculated
by assuming this stock split was executed at the beginning of the fiscal year ended March 31, 2019.

10

2. Unapplied Accounting Standards, etc.

The Company and its domestic consolidated subsidiaries have not applied the following revised and newly-established accounting standards
published by March 31, 2019.
“Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30, March 30, 2018)(1) Outline
Those accounting standards were issued to show the accounting treatment and the disclosure on revenue from contracts with customers.
Those accounting standards were prepared by applying basic principles of IFRS 15 “Revenue from Contracts with Customers” which has
applied on or after January 1, 2018,while adding alternative accounting treatments within a range not to impair the comparability if there
have been some practical accounting treatments for our country to consider.
(2)Effective dateT he Company and its consolidated subsidiaries plan to apply those accounting standards from the beginning of the fiscal year beginning on
April 1, 2021.
(3)The impact of the application
The impact of the application is under evaluation at the time of the preparation of these consolidated financial statements.

3. Changes in presentation:(Consolidated balance sheet)
Effective beginning the fiscal year ended March 31, 2019, the Company has adopted the “Partial Amendments to Accounting Standard forTax Effect Accounting” (ASBJ Statement No.28, February 16, 2018). As a result of the adoption, “Deferred tax assets” have been classified
under “Investments and other assets”, and “Deferred tax liabilities” have been classified in the section of “Long-term liabilities”.
As a result of this change, deferred tax assets and deferred tax liabilities in the consolidated balance sheet for the previous year have been
reclassified that, deferred tax assets (after offsetting deferred tax liabilities) under “investments and other assets” have been increased by¥186 million and deferred tax assets under “current asset”, deferred tax liabilities under “current liabilities” and deferred tax liabilities under“long-term liabilities” have been decreased by ¥959 million, ¥1 million and ¥771 million, respectively.
“Accrued bonuses to employees”, “Accrued bonuses to directors”, “Allowance for sales returns”, “Allowance for sales discount”, “Allowance for customer-discount points” and “Allowance for loss on order received” under current liabilities were changed its presentation to“Provision for bonuses”, “Provision for bonuses for directors”, “Provision for sales returns”, “Provision for sales discount”, “Provision forpoint card certificates” and “Provision for loss on order received”, respectively, to be in line with the taxonomy for Electric Disclosure forInvestors’ NETwork (“EDINET”).

4. Cash flow information:

Reconciliation of cash and cash equivalents
Cash and deposits at March 31, 2019 and 2018 reconciled to cash and cash equivalents were as follows:
Millions of yen

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

2019¥ 7,056(88)¥ 6,968

2018¥6,626(86)¥6,540Thousands of U.S. dollars

2019$63,578(790)$62,787

5. Accumulated depreciation of property, plant and equipment:

Accumulated depreciation of property, plant and equipment as of March 31, 2019 and 2018 were as follows:
Millions of yen

Accumulated depreciation of property, plant and equipment

11

2019
¥ 11,947

2018¥11,521

Thousands of U.S. dollars

2019$107,642

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

12(2) Fair values of financial information
Fair values of financial instruments as of March 31, 2019 and 2018 were summarized as follows:
The financial instruments whose fair values were not available were not included below and were summarized in (b).
(a) Fair values of financial instruments

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

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

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

Book value¥ 7,056
8,359
(5)
8,354

Millions of yen
March 31, 201970,263¥ 85,674

Book value¥6,626
8,978
(10)
8,968

Difference
-

8,354

-

70,263¥ 85,674-

Millions of yen
March 31, 2018

74,484¥90,078

Book value$63,578
75,321(50)
75,275

Fair value¥ 7,056

Fair value¥6,626

Difference
-

8,968

-

74,484¥90,078-

Thousands of U.S.dollars
March 31, 2019

633,059$771,912

Fair value$63,578

Difference-

75,275-633,059$771,912-* The allowance is calculated by applying a percentage based on collection experience to the remaining accounts are included.
Note: Fair values of financial instruments, and matters pertaining to securities and derivative transactions
AssetsCash and deposits, and notes and accounts receivable:
The book values approximate the fair values because of short-term maturities of these instruments.
Marketable and investment securities:
The fair value is based on the market prices or the prices quoted by financial institutions.
These securities are described in the Note on "9. Securities and investment securities".
(b) Financial instruments whose fair values were not available
The financial instruments for which the fair values were not available as of March 31, 2019 and 2018 were summarized as follows:
Millions of yen

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

2019
¥ 20
98
302
5,895
¥ 6,316

2018
¥20
268
4,165
¥4,453Thousands of U.S. dollars

2019
$180
884
2,724
53,119$56,909

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

13(c) Maturities of financial instruments
The maturities of the financial instruments at March 31, 2019 and 2018 were as follows:

Within 1 year

Cash and deposits
Notes and accounts receivable
Marketable and investment securities
Available-for-sale securities(1)Government bonds and local government bonds(2)Corporate bonds(3)Other
Total

¥ 965
8,359
130
¥ 9,456

Within 1 year

Cash and deposits
Notes and accounts receivable
Marketable and investment securities
Available-for-sale securities(1)Government bonds and local government bonds(2)Corporate bonds(3)Other
Total¥1,632
8,978¥10,611Within 1 year

Cash and deposits
Notes and accounts receivable
Marketable and investment securities
Available-for-sale securities(1)Government bonds and local government bonds(2)Corporate bonds(3)OtherTotal

14$8,70275,321
1,177$85,200

Millions of yen
At March 31, 2019
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

2,759
1,515
¥ 4,274

4,456
3,484
¥ 7,940

5,037
4,949
¥ 9,987

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

Over 10 years

-

-

-

1,803
1,209
¥3,012

6,224
4,471¥10,696

5,504
5,280
¥10,784

Thousands of U.S. dollars
At March 31, 2019
Over 1 year
Over 5 years
within 5 years
within 10 years

Over 10 years

-

-

-

24,85813,657$38,516

40,15031,394$71,544

45,38944,593$89,983

7. Rental property:

The Company and its consolidated subsidiaries own buildings (including land) for leasing in Kanagawa prefecture, other domestic areas,
and foreign countries. The rental income included in net sales was ¥321 million ($2,892 thousand) and ¥387 million for the years ended
March 31, 2019 and 2018, respectively.
Information about fair value of rental property included in the consolidated financial statements at March 31, 2019 and 2018 were as follows:

Millions of yen
Thousands of U.S dollars

Millions of yen

March 31, 2018
¥ 15,595$140,508

March 31, 2017¥15,700

At March 31, 2019
Book value (net of depreciation)

Decrease¥ 354$3,197

March 31, 2019
¥ 15,240$137,311

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

Decrease¥105

March 31, 2018¥15,595

Fair value

March 31, 2019
¥ 17,474$157,437

Fair value

March 31, 2018¥17,222

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

8. Lease:

The future minimum lease receipts for only non-cancelable operating lease contracts as of March 31, 2019 and 2018 were as follows:
Millions of yen

2019
¥ 211
606
¥ 817

Due within one year
Due after one year
Total

2018
¥217
839
¥1,056

Thousands of U.S. dollars

2019$1,905
5,463$7,368

9. Securities and investment securities:

Comparisons of the acquisition costs and fair values of available-for-sale securities for which quoted market price is available at March 31,
2019 and 2018 were as follows:

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

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

15

Millions of yen
At March 31, 2019

Acquisition cost

Gross unrealized gains

Gross unrealized losses

Book value¥ 47,933
18,7991,963¥ 68,696¥ 5,680725
527¥ 6,933¥ 2,4702,876
19¥ 5,366¥ 51,142
16,6482,471¥ 70,263

Millions of yen
At March 31, 2018

Acquisition cost

Gross unrealized gains

Gross unrealized losses

Book value¥46,142
19,462
1,991¥67,595¥8,903930
595¥10,429¥1,0132,526
1¥3,540¥54,032
17,866
2,585¥74,484

Acquisition cost
Available-for-sale securities for which market prices
are available $ 431,868(1)Equity securities
169,384(2)Debt securities
17,690(3)Other$ 618,942
Total

Thousands of U.S. dollars
At March 31, 2019

Gross unrealized gains

Gross unrealized losses

Book value$ 51,176
6,536
4,756
$ 62,469$ 22,258
25,917176$ 48,353$ 460,786
150,002
22,269$ 633,059

Impairment loss of ¥1,645 million ($14,821 thousand) and ¥492 million was recognized for the years ended March 31, 2019 and 2018, respectively.

Available-for-sale securities sold for the years ended March 31, 2019 and 2018 were as follows:
Millions of yen

Sales amountGross realized gains
Gross realized losses

2019¥ 14,288
3,936
67

2018
¥16,874
4,299
130

Thousands of U.S. dollars

2019$128,735
35,470611

10. Research and development expenses:

Research and development expenses included in selling, general and administrative expenses for the years ended March 31, 2019 and 2018
were ¥780 million ($7,032 thousand) and ¥962 million, respectively.

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

Retirement benefit obligation at the beginning of the period
Service cost
Interest cost
Actuarial loss
Benefits paid
Other
Retirement benefit obligation at the end of the period(b) The reconciliation of plan assets at fair value was as follows:
Plan assets at fair value at the beginning of the period
Expected return on plan assets
Actuarial gain(loss)
Contributions by the employer
Benefits paid
Other
Plan assets at fair value at the end of the period

16

2019
¥ 5,313
435
26
85
(160)
(5)
¥ 5,694

Millions of yen

2019¥ 5,255
235
(161)
540
(160)
1
¥ 5,7112018¥4,954
410
24
19
(95)
¥5,3132018¥4,658
208
95
386
(93)
¥5,255

Thousands of U.S. dollars

2019$47,873
3,922
237
768
(1,446)(47)$51,308

Thousands of U.S. dollars

2019$47,353
2,124(1,454)
4,867(1,446)
12$51,457

(c) The reconciliation related to retirement benefit obligation and plan assets at fair value at the end of the period and defined
benefit liability and defined asset recorded on the consolidated balance sheets were as follows:
Millions of yen

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

2019¥ 5,694(5,711)
(16)
(16)
16
¥ 16

2018
¥5,313(5,255)
57
57
57
¥57

Millions of yen

2019
¥ 435
26
(235)
(20)
10
¥ 215

2018
¥410
24
(208)
(24)
10
¥213

Thousands of U.S. dollars

2019$51,308(51,457)
(149)
(149)
149
$149

Thousands of U.S. dollars

2019$3,922237(2,124)(184)
93$1,944(e) The breakdown of prior service cost and actuarial gain (loss) recognized in other comprehensive income before deduction of tax
benefit were as follows:
Millions of yen

Prior service costs
Actuarial gain(loss)
Total

2019
¥ 10
(267)
¥ (257)

2018
¥10
50
¥60

Thousands of U.S. dollars

2019
$ 93
(2,411)$ (2,317)(f) The breakdown of prior service cost and actuarial gain (loss) recognized in accumulated other comprehensive income before
deduction of tax benefit were as follows:
Millions of yen

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

2019
¥ 122
205
¥ 327

2018
¥132
(61)
¥70

2019
47.0%
50.0%
3.0%
100.0%

Thousands of U.S. dollars

2019$1,1001,853$2,954

2018
50.2%
47.4%
2.4%
100.0%The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation at present andin the future, and long-term rate expected to earn the profit from multiple plan assets at present and in the future.
(h) The assumptions used in accounting for the above plans were as follows:
Discount rate
Expected rate of return on plan assets

2019
0.5%
4.5%

2018
0.5%
4.5%

(3)Defined contribution plan
The required contributions to the defined contribution plans of one of the foreign consolidated subsidiaries are ¥1 million ($9thousand) and ¥2 million for the years ended March 31, 2019 and 2018, respectively.

1712. Income taxes:
The reconciliation of differences between the statutory tax rate and the effective tax rate for the year ended March 31, 2019 and 2018 wereas follows:
Statutory tax rate
Increase (decrease) in taxes resulting from:
Permanent difference of exclusion from expenses
Permanent difference of exclusion from gross revenue
Special tax credit for research and development expenses and otherTax rate difference in certain subsidiaries
Valuation allowance
Changes in allowance for bad debt
Adjustment on deferred tax assets due to change in income tax rate
Reserved profit of foreign subsidiaries
Other, net
Effective tax rate

2019
30.6%

2018
30.8%

0.9
(0.2)
(3.2)
(0.7)
(0.2)
(0.8)
(0.1)
(1.1)
25.2%

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

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

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

2019

2018

¥ 167
297
36
67
172
62
1,181
229
22
106
948
469
3,761
(198)
¥ 3,563

¥183
281
182
80
188
115
324
227
24
14
948
594
3,165
(1,325)¥1,840Millions of yen

Deferred tax liabilities:
Unrealized losses on securities
Reserved profit of foreign subsidiaries
Other
Net deferred tax liabilities

18

2019

2018

¥ (293)(147)(110)¥ (551)¥(1,478)(306)(11)¥(1,796)

Thousands of U.S. dollars

2019$1,506
2,676
327
609
1,555
564
10,647
2,068
202
960
8,546
4,225
33,891(1,788)$32,102
Thousands of U.S. dollars

2019$(2,641)(1,328)(998)$(4,968)13. Assets pledged and revaluation of the land:(1) Assets pledged
Buildings and structures
Land
Total

Millions of yen

2019
¥ 241
306
¥ 547

2018
¥247
306
¥553

Thousands of U.S. dollars

2019$2,172
2,757$4,930(2) Revaluation of the land
The subsidiary, KOEI TECMO LIV CO., LTD., revalued land for its business in accordance with the Land Revaluation Law. The Company
recorded the entire difference between the carrying amount and revalued amount as revaluation reserve for land as a separate component of
net assets.
Revaluation of land was performed by making a reasonable adjustment to the land based on the market value estimated in accordance with
relevant provisions of the Land Revaluation Law.
Date of revaluation: March 31, 2000.
Fair value of the revalued land as of March 31, 2019 and 2018 were ¥69 million ($628 thousand) more than the book value and ¥53 million
less than the book value, respectively.

14. Provision for loss on order received:

Inventories and provision for loss on order received related to the project which is probable to incur losses are presented as is and are notoffset.
The provision for loss on order received included in inventories related to projects which are probable to incur losses as of March 31, 2019and 2018 were as follows:
Millions of yen

Work in process
Total

2019
¥ 59
¥ 59

2018
¥28
¥28

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

Cost of sales
Total

2019
¥ 118
¥ 118

2018
¥595
¥595

Thousands of U.S. dollars

2019
$538
$538

Thousands of U.S. dollars

2019$1,071$1,071

15. Net assets:
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as capital stock. However, acompany may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares asadditional paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (“the Law”), in cases where a dividend distribution of surplus is made, the smaller of an amountequal to 10% of the dividend or the excess, if any, of 25% of capital stock over the total of additional paid-in capital and legal
earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained
earnings in the accompanying consolidated balance sheets.
Under the Law, legal earning reserve and additional paid-in capital could be used to eliminate or reduce a deficit or could becapitalized by resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, all additional paid-in capital andall legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentiallyavailable for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statementsof the Company in accordance with the Law.
At the annual shareholders’ meeting held on June 19, 2019, the shareholders resolved cash dividends amounting to ¥6,952 million($62,638 thousand). Such appropriations have not been accrued in the consolidated financial statements as of March 31, 2019. Suchappropriations will be recognized in the period when they are resolved.
Note: The Company implemented a one point two-for-one stock split on October 1, 2018. Number of increase in shares by stock split
is as follows:
Issued share:(1)Total number of issued shares before stock split
107,723,374 shares(2)Number of increase in shares by stock split
21,544,674 shares(3)Total number of issued shares after stock split
129,268,048 shares
Treasury shares:(1)Total number of treasury shares before stock split
1,930,912 shares(2)Number of increase in shares by stock split
386,182 shares(3)Total number of treasury shares after stock split
2,317,094 shares
1916. Share subscription rights:
The summarized contents of share subscription rights as of March 31, 2019 were as follows:
Share subscription rights #7
June 25, 2014
7 directors and21 employees of the Company and
380 executive officer or
employees of thesubsidiaries

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

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

September 22, 2014

September 26, 2016

September 25, 2018

Capital stock
1,153,008

Capital stock
999,840

Capital stock
911,400

Date of the annual shareholders' meeting
Position and number of grantee

Date of grantClass and number of stock
Exercised period

From September 23, 2016 From September 27, 2018 From September 11, 2020
to September 20, 2019
to September 24, 2021
to September 8, 2023

The Company implemented a 1.2-for-1 stock split on October 1, 2018 and the number of stock is adjusted after the stock split.
The following table summarizes scale and movement of share subscription rights for the year ended March 31, 2019
Non‐exercisable (number of shares)
Outstanding at April 1, 2018
GrantedForfeited
VestedOutstanding at March 31, 2019
Exercisable (number of shares)
Outstanding at April 1, 2018
VestedExercised
Forfeited
Outstanding at March 31, 2019
Exercise price

Average stock price at exercise
Fair value price at grant date

Share subscription rights #7

Share subscription rights #8

Share subscription rights #9-964,200
28,080936,120-

911,400
14,400897,000

556,560
196,128
7,344
353,088¥1,224$11.02¥1,936$17.44¥290$2.61

936,120
81,6008,400
846,120¥1,668$15.02¥1,962$17.67¥384$3.45¥2,033$18.31¥364$3.27

The Company implemented a 1.2-for-1 stock split on October 1, 2018 and the exercise price is adjusted amount after the stock split. Average stock
price at exercise has been calculated by assuming this stock split was executed at the beginning of the fiscal year ended March 31, 2019.

17. Asset retirement obligations:(1) Summary of applicable asset retirement obligations include the duty of restoration arising from contractual requirements set forthin real estate leases for amusement facility arcades.
(2) Instead of posting liabilities for asset retirement obligations, the Company and its consolidated subsidiaries use the method of
estimating the reasonable amount that cannot be finally recovered from the deposit related to a real estate lease contract and posting
the part of that amount belonging to the current fiscal year under costs.
(3) Changes to aggregate asset retirement obligations applicable to the fiscal years ended March 31, 2019 and 2018 were as follows:
Millions of yen

Beginning balance
Expenses belonging to the consolidated fiscal year
Decrease due to settlement of asset retirement obligations
Ending balance

20

2019
¥ 53
5
¥ 59

2018
¥54
1
(2)
¥53

Thousands of U.S. dollars

2019

$486
53
$539

18. Related party transactions:(1) Related party transactions between the Company and its related parties.
Principal transactions between the Company’s consolidated subsidiaries and its related parties were as follows:
For the year ended March 31, 2019
Type

Name

Location

Capital orinvestments

Business or
profession

Voting rights
held(%)

Relationshipwith therelated parties

Transactions

AmountAccount
nameBalance

Executive

Keiko
Erikawa--

Executive
Chairman

2.10[4.66](Note1)-The exercise ofstock option(Note2)¥11 million($107 thousand)--Executive

YoichiErikawa--

Executive
President

2.17[4.59](Note1)-The exercise ofstock option(Note2)¥11 million($104 thousand)--Executive

Yasuharu
Kakihara--

Director

0.36[0.27](Note1)-The exercise ofstock option(Note3)¥11 million($104 thousand)--Note 1: The figures contained in parentheses represent the ownership ratio of the voting right which close persons or assentors have.
Note 2: The exercise of stock options granted by resolution at the Board of Director's meeting held on September 5, 2016.
Note 3: The exercise of stock options granted by resolution at the Board of Director's meeting held on September 1, 2014.
Note 4: The amount is calculated by multiplying the number of shares issued as a result of exercise of the stock option by the amount paid.

For the year ended March 31, 2018
Type

Name

Location

Capital orinvestments

Business or
profession

Voting rights
held(%)

Relationshipwith therelated parties

Transactions

AmountAccount
nameBalance

Executive

Keiko
Erikawa--

Executive
Chairman

2.09[4.63](Note1)-The exercise ofstock option(Note2)¥10 million($103 thousand)--Executive

YoichiErikawa--

Executive
President

2.16[4.56](Note1)-The exercise ofstock option(Note2)¥11 million($95 thousand)--Executive

Hisashi
Koinuma--Director

0.03(Note1)-The exercise ofstock option(Note2)¥21 million($192 thousand)--Note 1: The figures contained in parentheses represent the ownership ratio of the voting right which close persons or assentors have.
Note 2: The exercise of stock options granted by resolution at the Board of Director's meeting held on September 1, 2014.
Note 3: The amount is calculated by multiplying the number of shares issued as a result of exercise of the stock option by the amount paid.

21

(2) Related party transactions between the Company’s consolidated subsidiaries and its related parties.
Principal transactions between the Company’s consolidated subsidiaries and its related parties are as follows:
For the year ended March 31, 2019
Type

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

Name

KANKYOKAGAKU
CO., LTD.
(Note 1)

Location

Chiyoda-ku,
TokyoCompany
with a majorityof theMY PROPERTY
Yokohama-shi,
voting rights
CO., LTD.
Kanagawa
held by an(Note 4)
executive or
close relative
Company
with a majorityof theAK FORTUNE
Yokohama-shi,
voting rights
CO., LTD.
Kanagawa
held by an(Note 4)
executive or
close relative

Capital orinvestments¥40 million($360 thousand)¥14 million($126 thousand)¥14 million($126 thousand)Business or
profession

Voting rights
held(%)

Real estateleasing

Real estateleasing

Real estateleasing

Relationshipwith therelated parties

Transactions

AmountReal estateleasing

Real estateleasing(Note 2)¥151 million($1,365
thousand)

Pledge ofcollateral

Pledge ofcollateral(Note 3)¥547 million($4,930
thousand)--Election of

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

7.68

-

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

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

Account
nameDeposit
Prepaid
expenseBalance¥146 million($1,320
thousand)¥12 million($114
thousand)

Note 1: Yasuharu Kakihara, who is a director & advisor of the Company, and his close relatives own 100 percent of the voting rights.
Note 2: The subsidiary, KOEI TECMO GAMES CO., LTD., leases a joint ownership building of the related party, KANKYOKAGAKU CO., LTD., and the subsidiary, KOEI TECMO LIV CO., LTD.
The lease fee and other transaction terms are determined by price negotiations based on the current status of transactions in theneighborhood.
Note 3: A Land and building which the subsidiary, KOEI TECMO LIV CO., LTD., owns are pledged as collateral for the borrowing
the related party, KANKYOKAGAKU CO., LTD., required for a construction expense.
The amount is equal to book value of the land and building which our subsidiary, KOEI TECMO LIV CO., LTD., owns.
Note 4: Yoichi Erikawa, who is a President & CEO of the Company, and his close relatives own 100 percent of the voting rights.
Note 5: The subsidiary, KOEI TECMO GAMES CO., LTD.(hereinafter, “KTG”) and MY PROPERTY CO., LTD. and AK FORTUNE
CO., LTD. (hereinafter, “these two companies”) are jointly planning to acquire composite facilities.
KTG and these two companies entered into building sale and purchase agreement on the composite facilities on December 1, 2017,and are planning to acquire after completion in January 2020.
The acquisition cost of the composite facilities by KTG and these two companies is ¥21,933 million ($197,612 thousand).
KTG is planning to acquire office floor and live house type halls among the composite facilities, and the value is ¥16,306 million($146,914 thousand).
KTG paid ¥3,522 million ($31,734 thousand) as an interim payment at December 27, 2017, it is recorded as construction in progress.
KTG has received an opinion for external experts that allocation method of the acquisition cost in composite facilities is appropriate.
Note that there are no claims or debts as a result of the acquisition of the land and the composite facilities between KTG and these twocompanies and they have no plans to increase the amount of them.
Notes for the parent company and important affiliated companies(1) Information on the parent company
KOYU HOLDINGS CO., LTD. (as an unlisted company)(2) Condensed financial statements for the important affiliated companies
Not applicable22For the year ended March 31, 2018
Type

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

Name

KANKYOKAGAKU
CO., LTD.
(Note 1)

Location

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

Capital orinvestments¥ 40 million($360 thousand)¥ 14 million($126 thousand)¥ 14 million($126 thousand)Business or
profession

Voting rights
held(%)

Real estateleasing

Real estateleasing

Real estateleasing

Relationshipwith therelated parties

Transactions

AmountReal estateleasing

Real estateleasing(Note 2)

¥ 151 million($1,365
thousand)

Pledge ofcollateral

Pledge ofcollateral(Note 3)

¥ 553 million($4,982
thousand)--Election of

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

7.40

-

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

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

Account
nameDeposit
Prepaid
expenseBalance¥146 million($1,320
thousand)¥12 million($114
thousand)

Note 1: Yasuharu Kakihara, who is a director & advisor of the Company, and his close relatives own 100 percent of the voting rights.
Note 2: The subsidiary, KOEI TECMO GAMES CO., LTD., leases a joint ownership building of the related party, KANKYOKAGAKU CO., LTD., and the subsidiary, KOEI TECMO LIV CO., LTD.
The lease fee and other transaction terms are determined by price negotiations based on the current status of transactions in theneighborhood.
Note 3: A Land and building which the subsidiary, KOEI TECMO LIV CO., LTD., owns are pledged as collateral for the borrowing
the related party, KANKYOKAGAKU CO., LTD., required for a construction expense.
The amount is equal to book value of the land and building which our subsidiary, KOEI TECMO LIV CO., LTD., owns.
Note 4: Yoichi Erikawa, who is a President & CEO of the Company, and his close relatives own 100 percent of the voting rights.
Note 5: The subsidiary, KOEI TECMO GAMES CO., LTD. (hereinafter, “KTG”) and MY PROPERTY CO., LTD. and AK FORTUNE
CO., LTD. (hereinafter, “these two companies”) are jointly planning to acquire composite facilities.
KTG and these two companies concluded building sale and purchase agreement on the composite facilities on December 1, 2017,and are planning to acquire after completion in January 2020.
The acquisition cost of the composite facilities by KTG and these two companies is ¥21,933 million ($197,612 thousand).
KTG is planning to acquire office floor and live house type halls among the composite facilities, and the value is ¥16,306 million($146,914 thousand).
KTG paid ¥3,522 million ($31,734 thousand) as interim at December 27, 2017, and it is recorded as “Construction in progress”.
KTG has received an opinion for external experts that allocation method of the acquisition cost in composite facilities is appropriate.
Note that there are no claims or debts as a result of the acquisition of the land and the composite facilities between KTG and these twocompanies and they have no plans to increase the amount of them.
Notes for the parent company and important affiliated companies(1) Information on the parent company
KOYU CO., LTD. (as an unlisted company)(2) Condensed financial statements for the important affiliated companies
Not applicable23

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

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

24

Thousands of U.S. dollars

2019

2018

2019

¥ (2,831)(2,232)(5,064)
1,535(3,529)¥6,021(3,510)
2,510
(756)
1,754

$(25,514)(20,116)(45,631)
13,833(31,798)

948
948

-

8,546
8,546

(293)
(293)
(293)

300
300
300

(2,644)(2,644)(2,644)

(246)
(10)
(257)
79
(178)

75
(14)
60
(18)
41

(2,223)(94)(2,317)712(1,604)¥ (3,052)¥2,096$(27,501)20. Segment information:(1) Outline of reportable segment
Reportable segments the Company reports are the business unit for which the Company is able to obtain individual financial
information separately in order for the board of directors to conduct periodic review to determine the distribution of management
resource and evaluate their business performance.
The Company operates principally in the following reportable segments:(a) Entertainment: Development and sale of entertainment contents.
(b) SP: Entrusted development of commercial amusement.
(c) Amusement Facilities: Management of amusement arcade.
(d) Real estate: Operation and management of real estate for leasing.
(2)Method of calculating sales and income (loss), and other items by reportable segment
Income (loss) of the reportable segment is operating profit. Transfers among segments are based on market prices.
(3)Information on sales and income (loss), and other items by reportable segment

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

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

25

Millions of yen
For the year ended March 31, 2019
Reportable segment

Entertain
ment

SP

Amusement
Facilities

Realestate

Sub
Total

Other

Total

¥ 34,979
140
35,120¥ 11,078¥ 1,638
0
1,639
¥ 587

¥ 1,516
1,516
¥ 99

¥ 768
768
¥ 273

¥ 38,903
141
39,044¥ 12,039

¥ 64
119
184
¥ 52

¥ 38,968260
39,228¥ 12,092

¥ 320

¥2

¥ 149

¥ 231

¥ 702

¥ 31

¥ 734

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

Entertain
ment

SP

Amusement
Facilities

Realestate

Sub
Total

Other

Total

¥35,180
208
35,389¥10,938

¥944
0
945
¥289

¥1,5361,536¥(362)

¥784
784
¥348

¥38,446
209
38,655¥11,214

¥480
104
584
¥496

¥38,926
313
39,240¥11,711

¥324

¥2

¥97

¥237

¥661

¥40

¥701

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

Thousands of U.S. dollars
For the year ended March 31, 2019
Reportable segment

Entertain
ment

SP

Amusement
Facilities

Realestate

Sub
Total

Other

Total

$315,158
1,266
316,424$99,819$14,765
5
14,770$5,289$13,661
13,661$898$6,9286,928$2,463$350,512
1,272
351,785$108,471

$584
1,076
1,660
$475

$351,097
2,348
353,446$108,947$2,886$18$1,344$2,084$6,333$281$6,614Note 1: ”Other” is an operating segment not included in reportable segment, which is venture capital, etc.
Note 2: The Company’s administrative expenses for the Company’s indirect departments which do not belong to the reportable segment
are allocated to each reportable segment in accordance with reasonable allocation standards.
(4) Reconciliation between the reportable segments above and the corresponding amount reported in the consolidated financial statements
was as follows:(a) Reconciliation of net sales
Reportable segment Total
Sales of Other segment
Elimination of intersegment transactions
Total(b) Reconciliation of segment income
Reportable segment Total
Profit of Other segment
Total

Millions of yen

2019¥ 39,044
184(260)¥ 38,968

Millions of yen

2019¥ 12,03952¥ 12,092

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

26

2018
¥38,655584(313)¥38,9262018¥11,214496¥11,711

Thousands of U.S. dollars

2019$351,785
1,660(2,348)$351,097

Thousands of U.S. dollars

2019$108,471
475$108,947

(Segment related information)
Information by country or region
The following tables present sales and assets information by geographic area for the years ended March 31, 2019 and 2018.
(1) Sales

Millions of yen
For the year ended March 31, 2019Japan
Net sales to external customers:¥ 26,540

North
America¥ 3,926

EuropeAsia, etc.

¥ 2,074¥ 6,427

Millions of yen
For the year ended March 31, 2018

Japan
Net sales to external customers:¥26,000

North
America¥4,419EuropeAsia, etc.

¥3,333¥5,172Thousands of U.S. dollars
For the year ended March 31, 2019Japan
Net sales to external customers:$239,128

North
America$35,373

Note: The sales amounts are classified by country or region where customers are located.
(2) Tangible fixed assets
Millions of yen
For the year ended March 31, 2019

Japan

Asia

UK

Other

¥ 24,911¥ 1,347¥ 2,504¥0

Millions of yen
For the year ended March 31, 2018

Japan

Asia

UK

Other

¥25,226¥1,497¥2,689¥0Thousands of U.S. dollars
For the year ended March 31, 2019

Japan

Asia

UK

Other

$224,447$12,144$22,565$0

21. Subsequent events:
Not applicable.

27

Consolidated
Total¥ 28,764

Consolidated
Total¥29,413

Consolidated
Total$259,161

EuropeAsia, etc.

$18,688$57,906

Consolidated
Total¥ 38,968

Consolidated
Total¥38,926

Consolidated
Total$351,097

28

BOARD OF DIRECTORS AND
AUDIT & SUPERVISORY
BOARD MEMBERSCORPORATE DATA

Chairman

KOEI TECMO HOLDINGS CO., LTD.

Keiko Erikawa*
President & CEO

Yoichi Erikawa*Executive Vice-president

Hisashi Koinuma*
Director, Senior Executive Officer & CFO

Kenjiro Asano
Director

Yosuke Hayashi
Director

Kazuyoshi Sakaguchi
Director

Mei Erikawa
Director & Advisor

Yasuharu Kakihara
Director(Outside)

Masao Tejima
Director(Outside)

Hiroshi Kobayashi
Director(Outside)

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

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

Masaki Kimura
Audit & Supervisory Board Member

Satoru Morishima

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

Date Established :April 1, 2009

Paid-in Capital :¥15 Billion ( As of March 31, 2019)

Number of Employees :1,757(As of March 31, 2019: Consolidated Basis)

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

Independent Auditor :KPMG AZSA LLC

MAJOR SUBSIDIARIESKOEI TECMO GAMES CO., LTD.
1-18-12 Minowa-cho, Kouhoku-ku,
Yokohama, Kanagawa 223-8503 Japan
Tel : +81-45-561-6888
https://www.gamecity.ne.jp/

KOEI TECMO WAVE CO., LTD.
KUDANMEIZENDO Bldg.
4-1-34 Kudankita, Chiyoda-ku,
Tokyo 102-0073 Japan
Tel : +81-3-3222-8333
http://www.wave.koeitecmo.co.jp/

KOEI TECMO NET CO., LTD.

Toshikazu Kitamura

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

Executive Officer

CWS Brains, LTD.

Audit & Supervisory Board Member (Outside)

Tomotoshi Nishimura*Representative Director（As of July 23, 2019）29

Head Office

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

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

KOEI TECMO EUROPE LIMITED
Unit 209A The Spirella Building, Bridge
Road, Letchworth Garden City,
Hertfordshire, SG6 4ET, UK
Tel : +44-1462-476130
http://www.koeitecmoeurope.com/

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

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

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

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

KOEI TECMO SOFTWAREVIETNAM CO., LTD.
12th,12Ath Floor, Ladeco Building, No.266,
Doi Can Street, Lieu Giai Ward,
Ba Dinh District, Hanoi, Vietnam
Tel : +84-4-3232-1284