Universal Entertainment : Notice of Convocation of the 51th Annual Shareholders Meeting

(English Translation)

This English translation is an abridged version of the original document in Japanese. In the event of any discrepancy, the Ja panese version prevails.

Stock code: 6425 March 11, 2024

To Our Shareholders:

Jun Fujimoto, Representative Director and President Universal Entertainment Corporation

Ariake Frontier Building Tower A, 7-26, Ariake 3-chome,Koto-ku, Tokyo

Notice of Convocation of the 51st Annual Shareholders Meeting

We would like to take this opportunity to thank you for your support of Universal Entertainment Corporation ("Universal Entertainment" or the "Company"). We will hold the 51st Annual Shareholders Meeting as follows.

In accordance with the electronic provision measure as provided for in Article 325 -3 of the Companies Act, items provided electronically can be viewed using the internet on the following websites. Please use any of these websites to view this information.

Universal Entertainment website

https://www.universal-777.com

(After accessing this website, use the menu (or three-line icon on the upper right) to select, in order, Company/IR, Investor Information and IR Library. Reference documents are in the shareholders meeting column.)

Website for shareholders meeting reference documents

https://d.sokai.jp/6425/teiji/

Tokyo Stock Exchange website (Listed company information service)

https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show

(After accessing the Tokyo Stock Exchange website, enter Universal Entertainment in the company name box or 6425 in the securities code box and click search. On the Universal Entertainment page, select Basic Information and then Documents for public inspection/PR information. Notice of General Shareholders Meeting /Informational Materials for a General Shareholders Meeting are in the filed information available for public inspection section.)

As there is no proposal to be resolved at the meeting, an invitation card is enclosed instead of a voting rights exercise form. When you attend the meeting in person, please bring the invitation card with you.

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3. Meeting Agenda

Matters to be reported: 1. The Business Report, Consolidated Financial Statements and the results of audits

conducted by the Accounting Auditor and the Board of Auditors of the Consolidated Financial Statements for the Company's 51st Fiscal Year (January 1, 2023 - December 31, 2023)

• 2. Non-consolidated Financial Statements for the Company's 51st Fiscal Year (January 1, 2023 - December 31, 2023)

• When you attend the meeting in person, please submit the invitation card that is enclosed with this shareholders meeting notice at the reception desk.
• If there are revisions to the electronically distributed information, notification of the revisions and the information before and after revisions will be posted on the three websites listed at the beginning of this shareholders meeting notice.
• At this Annual Shareholders Meeting, regardless of whether or not a request for the delivery of a paper document is made, a paper document containing the above items excluded from the items to be provided electronically will be sent to all shareholders in a uniform manner. In accordance with laws and regulations and Article 25 of the Articles of Incorporation, the following three items, which are part of the information distributed electronically, are not included in the paper documents provided to shareholders.
• 1. Systems to ensure the propriety of business operation and its operational status in the Business Report
  2. Notes to the Consolidated Financial Statements
  3. Notes to the Non-consolidated Financial Statements

The System to Ensure the Propriety of Business Operations and its Operation Status in the Business Report is a part of the Business Report audited by Audit & Supervisory Board Members in preparing audit reports.

The Notes to Consolidated Financial Statements and the Notes to Non -consolidated Financial Statements are a part of the consolidated financial statements and non-consolidated financial statements audited by the Independent Auditor and Audit & Supervisory Board Members in preparing audit reports.

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Business Report

(January 1, 2023 to December 31, 2023)

1. Current Status of the Corporate Group

1. Results of Operations for the Fiscal Year Under Review (FY2023) i. Progress and achievements

In 2023, social and economic activity in Japan slowly returned to normal following the Japanese government's downgrade of COVID-19. The economy gradually recovered as a result. However, the outlook for the economy is still uncertain because of global monetary tightening in response to high prices of raw materials caused by turmoil in many places, the yen's depreciation and other events.

In the Amusement Equipments Business, demand is strong because of the large number of machines that comply with the 6.5 standard and of smart Pachislot machines that pachinko halls are beginning to use. Most significantly, more market share growth is anticipated for smart Pachislot machines, which offer a broad array of game playing characteristics. Overall, 2023 sales of Pachislot and Pachinko machines totaled 180,632 units. In the Integrated Resort Business, the number of visitors was high throughout the year and the volume of business increased in each category of this business. As a result, sales increased 35.1%.

Sales in 2023 totaled 178,995 million yen, up 26.9% from 2022. Operating profit increased 152.2% to 30,480 million yen. Higher personnel expenses caused by a larger scale of operations at OKADA MANILA due to more visitors were offset by a decline in litigation expenses at Universal Entertainment. There were gain on cancellation of leases following the cancellation of lease contracts and a foreign exchange gain because of the yen's depreciation. Interest payments on U.S. dollar-denominated bonds increased because the yen's depreciation raised yen translations of these payments. After these and other items, ordinary profit increased 173.3% to 38,080 million yen. In 2022, large losses on the retirement of non-current assets, losses associated with the illegal occupation of OKADA MANILA held down net income attributable to owners of parent. In 2023, a large amount of deferred tax assets was reversed. Due in part to the decline in extraordinary losses in 2023, this net income increased 147.2% to 28,439 million yen.

Business segment performance was as follows.

Amusement Equipments Business

In 2023, the Amusement Equipments Business posted net sales of 80,980 million yen (an increase of 18.6% year on year) and an operating profit of 24,082 million yen (an increase of 21.5% year on year).

Sales were strong in 2023 because of consistently high machine utilization rates at pachinko halls due to the large - scale installation of machines that comply with the 6.5 standard and smart Pachislot machines. In the Pachinko sector, the installation of smart Pachinko machines began in April 2023. The market share of smart Pachinko machines has been slowly increasing and there are expectations for these machines to continue invigorating the market for Pachinko machines.

There were several major new products: "ANOTHER GOD HADES: TOKIHANATARESHI SOUGEKI ver.," which is the first GOD Series Pachislot title based on standard 6; "SMART PACHISLOT Puella Magi Madoka Magica The Movie Part 1: Beginnings/Part 2: Eternal forte," which is the latest addition to the Madoka Magica Series; and "SMART PACHISLOT Basilisk: The Kouga Ninja Scrolls Kizuna 2 Tenzen BLACK EDITION," which is the latest addition to the Basilisk Series. Universal Entertainment had a large share of the Pachis lot market in 2023 based on the number of units sold.

Integrated Resort Business

The Integrated Resort Business posted net sales(1) of 96,947 million yen (an increase of 35.1% year on year) and an operating profit of 14,367 million yen (an increase of 280 .0% year on year) in 2023. Adjusted segment EBITDA(2) in the Integrated Resort Business was 29,981 million yen in 2023 (an increase of 54.9% year on year).

At OKADA MANILA, an integrated casino resort owned and operated by the Universal Entertainment Group , the number of visitors increased throughout 2023 and the volume of business increased in all categories. In the casino category, there was a big increase in revenue in the VIP, mass market table games and gaming machines sectors.

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Furthermore, there were many events for specific periods and measures to bring more restaurants and stores to the resort now that the impact of the pandemic has mostly ended. In the first quarter of 2023, OKADA MANILA received five stars from Forbes Travel Guide for the fourth consecutive year. In the third quarter, OKADA MANILA was selected by the World Travel Awards as Asia's Leading Casino Resort in 2023. These awards and other recognition raised the resort's profile among world travelers, resulting in more visitors from outsid e the Philippines. In the fourth quarter, there were activities at OKADA MANILA to reinforce internal administrative systems that include a reexamination of data management in response to a company-wide IT system problem.

Overall, EBITDA after adjustments rose to a record high in 2023 in the Integrated Resort Business despite a temporary downturn in revenues caused by an IT system problem.

1. Net sales are defined as gross revenues minus gaming taxes and jackpots.
2. Adjusted segment EBITDA= Operating profit/loss + Depreciation + Other adjustments

Others

Other Business posted net sales of 831 million yen (an increase of 5.9% year on year) and an operating profit of 285 million yen (an increase of 838.6% year on year) in 2023.

The Media Content Business has been performing very well. One highlight is the start of distributions to the App Store and Google Play the simulator apps of "OKIDOKI! GOLD," "ANOTHER GOD HADES: TOKIHANATARESHI SOUGEKI ver.," "PACHI SLOT Shin Onimusha 2" and "CRANKY CREST. " In addition, several titles ranked first in the app, game and casino category paid downloads. "Universal Kingdom," a smartphone app with a monthly fee, added three apps: "HANABI ZEKKEI," "OKIDOKI! GOLD" and "ANOTHER GOD HADES: TOKIHANATARESHI SOUGEKI ver." "Slots Street," a social casino game where basic play is free, added three video slot games with designs based on Pachislot machines, which raised the total number of games to 57. All services, including the addition of new titles, are aimed at attracting new users and increasing the satisfaction of current users. In the music distribution category, eight titles were distributed to 24 sites, including Apple Music, Spotify and YouTube Music.

Note: In the above sales composition of the Group, transactions between reportable segments are eliminated by offsets.

ii. Capital expenditures

In the current consolidated fiscal year, the Company invested 2,800 million yen for construction works, etc., of the casino resort project in the Philippines.

iii. Financing activities

There is no applicable information.

1. Transfer, absorption-type split, or incorporation-type split of businesses There is no applicable information.
2. Acquisition of businesses transferred from other companies

There is no applicable information.

1. Assumption of rights and obligations of other companies' businesses as a result of absorption -type merger or absorption-type split

There is no applicable information.

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1. Acquisition or disposal of shares and other ownership interests, or share acquisition rights held by other companies

There is no applicable information.

1. Parent and Significant Subsidiaries i. Status of parent

Note: The Company holds 2,704,096 treasury shares. The shareholding ratio is calculated excluding these shares.

ii. Transactions with parent company

The Company pays dividends to the parent company. With the oversight of the Company's Board of Directors, final decisions about dividends are made independently of the parent company and the Company believes that these dividend payments have no negative effect on earnings.

The Company's Outside Directors agree with the stance that there is no negative effect on earnings. iii. Significant subsidiaries

Notes: 1. The shareholding ratio in ARUZE Investment Co.,Ltd. is the investment ratio by Aruze USA, Inc., a subsidiary of the Company.

2. The shareholding ratios in TIGER RESORT, LEISURE AND ENTERTAINMENT, INC. and Brontia Limited are the investment ratio by Tiger Resort Asia Limited, a subsidiary of the Company.

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(4) Issues to Be Addressed

i. Amusement Equipments Business

The business climate for this business continues to be challenging because of the declining number of customers and operating rates at Pachinko halls due to the pandemic. Market conditions have been improving because of the strong performance of machines complying with the 6.5 standard and of smart Pachislot machines. However, the number of people who use Pachislot and Pachinko machines is decreasing because of the pandemic and increasing diversity of leisure activities. The Company will continue to supply amusement machines that make a big contribution to the operations of Pachinko halls by developing unique and appealing titles and leveraging its manufacturing capabilities . The goal is a larger share of the Pachislot and Pachinko market by invigorating the market by supplying machines that can make a significant contribution to Pachinko hall operations.

ii. Patent Strategy

The Group has long been aware of the importance of creating and protecting intellectual property, and has worked towards the establishment of a system that enables it to acquire patent rights for superior inventions through standardization of patent applications. Also, the Group has been working to improve the quality of its patent applications and improve the ratio of patent registrations to submitted applications, by establishing a structure wher eby individual inventions are categorized into different technical fields and applications for patents are filed for a group of inventions in each technical field. The technologies which the Company has acquired or applied for patents are considerably more effective and commercially viable than those of its competitors. The Company intends to fully apply these technologies in the development of its products to improve the value of said products, thereby differentiating them from the competition in terms of technology. The Company believes this will enable it to achieve a competitive advantage. Also, in order to secure license income from its patents, the Company will move forward vigorously with strategies for both patent utilization and the protection of its patent rights when said rights are violated.

iii. Integrated Resort Business

OKADA MANILA, a casino and resort operated by the Group, was created to meet the expectations of all customers, whether from the Philippines or other countries. This resort has a luxurious hotel, fine dining with cuisine of many countries, high-end shopping, The Fountain (a multi-color fountain that is the largest of its type in the world), Cove Manila, an all-weather dome that has a beach club and a night club. Everyone at this resort is dedicated to providing guests with exceptional hospitality and experiences of the highest quality. To attract an even larger number of casino and hotel guests, OKADA MANILA plans to expand the gaming area for serving different customer segments and open more stores and restaurants.

(5) Main Business (As of December 31, 2023)

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(6) Principal Business Place and Factories (As of December 31, 2023)

i. Universal Entertainment

• Head Office (Koto-ku, Tokyo)
• Business Place

1. Status of Employees (as of December 31, 2023) i. Status of employees of the Group

Note: Number of employees does not include directors/audit & supervisory board members, contract employees, temporary employees and part-time workers.

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ii. Status of employees of the Company

Note: Number of employees does not include directors/audit & supervisory board members, contract employees, temporary employees and part-time workers.

(8) Status of Principal Lenders (as of December 31, 2023)

1. Other Significant Matters Concerning the Corporate Group Liability of Mr. Kazuo Okada

In response to the results of the investigation performed by the Special Investigation Committee, which were announced on August 30, 2017, the Universal Entertainment Group decided to take legal action against Mr. Kazuo Okada concerning his civil and criminal responsibilities concerning the matters under investigation.

The purpose of the civil proceedings by Universal Entertainment and a subsidiary was to recover losses allegedly incurred by the Universal Entertainment Group due to fraudulent activity by Mr. Okada. Lawsuits demanding a payment by Mr. Okada to cover these losses were filed in Japan and other countries. In Japan and South Korea, the court ruled that Mr. Okada had to make this payment and this verdict has been confirmed. Civil proceedings are pending in Hong Kong.

Regarding alleged criminal activity, the Universal Entertainment Group has filed criminal accusations and complaints with the authorities in Hong Kong, South Korea and the Philippines.

The Universal Entertainment Group will continue to cooperate as necessary with prosecutors and other authorities in other countries and continue to relentlessly take legal actions against Mr. Okada.

Information concerning TRLEI

On April 27, 2022, the Supreme Court of the Philippines issued an order requiring the restoration of Mr. Kazuo Okada to his status in 2017 prior to his termination as a shareholder, chairman, director and CEO of Tiger Resort, Leisure and Entertainment, Inc. (TRLEI). This was a temporary, provisional order until the Supreme Court of the Philippines renders a decision on the main action under review, i.e., the action between Kazuo Okada and TRLEI. Subsequently, on November 13, 2023, the Supreme Court of the Philippines rejected Kazuo Okada's lawsuit and lifted the restorati on order with respect to the lawsuit between Kazuo Okada and TRLEI. This confirmed that Kazuo Okada was properly removed as a shareholder, director, chairman, and CEO of TRLEI.

On May 31, 2022, Mr. Okada forcibly entered OKADA MANILA, which is operated by TRLEI, and took over control of the facility and its operation. The case is still pending in the Philippine court as a criminal case.

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2. Summary of the Company

1. Status of Stock (as of December 31, 2023)

Notes: 1. The Company holds 2,704,096 treasury shares, which is excluded from the above table of major shareholders.

1. 2. Shareholding ratio is calculated after deducting 2,704,096 treasury shares.

2. Matters concerning Share Acquisition Rights

1. Status of share acquisition rights held by Directors and Audit & Supervisory Board Members of the Company awarded as compensation for performance of their duties as of the end of the current fiscal year

Notes: 1. Holders of the share acquisition rights shall be able to exercise all or part of the share acquisition rights only in the event that either of the two following conditions is met. In the event that there is a significant change in the concept of ordinary profit, etc. to be referred to due to the adoption of the IFRS or other reasons, any other indicator to be referred to shall be determined by the Board of Directors.

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1. 1. 1. In the event that ordinary profit for the fiscal years ended December 31, 2018 and December 31, 2019 (ordinary profit on the Company's audited consolidated or non -consolidated statements of income, same hereafter) meets all the conditions set forth below.
      2. 1. Ordinary profit for the fiscal year ended December 31, 2018 must exceed 30.0 billion yen.
         2. Ordinary profit for the fiscal year ended December 31, 2019 must exceed 32.0 billion yen.
      1. In the event that the cumulative amount of ordinary profit for the fiscal years ended December 31, 2018 and December 31, 2019 has exceeded 80.0 billion yen.
   2. In addition to 1 above, the holders of the share acquisition rights may exercise the share acquisition rights only after the time when the closing price of the Company's common stock for the regular trading session on the financial instrument exchange has become equal to or more than 130 % of the exercise price of the share acquisition rights even once during the period from the date of allotment of the share acquisition rights to the end of the exercise period of the share acquisition rights.
   3. At the time of exercising the share acquisition rights, each holder of the share acquisition rights shall have the position of director, Audit & Supervisory Board member or employee of the Company or any of its affiliates. Provided, however, that this clause shall not apply to cases where the Board of Directors finds a justifiable reason for leaving the Company before exercising the share acquisition rights, such as retirement from office due to expiry of tenure and mandatory age - limit retirement.
   4. The share acquisition rights may not be exercised by an heir to the holder of the share acquisition rights.
   5. If the total number of issued shares would exceed the number of then -authorized shares by the exercise of the share acquisition rights at the time of exercise thereof, or in other cases that would violate laws and regulations, said share acquisition rights cannot be exercised at that time.
   6. The partial exercise of a single share acquisition rights is not allowed.
2. Status of share acquisition rights awarded to employees as compensation for performance of their duties during the current fiscal year

There is no applicable information.

1. Other concerning share acquisition rights There is no applicable information.

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