Group Restructuring

Konami Corporation 06 January 2006 January 5, 2006 FOR IMMEDIATE RELEASE KONAMI CORPORATION Kagemasa Kozuki Chairman of the Board and CEO Ticker 9766 at TSE1 Konami Sports Life Corporation Fumiaki Tanaka Chairman of the Board Konami Sports Corporation Toshimitsu Oishi Representative Director and President Ticker 4643 at TSE1 Announcement of official agreement for group restructuring (merger between subsidiaries, share exchange with subsidiary) and shift to holding company structure by company separation KONAMI CORPORATION (hereafter referred as 'Konami'), Konami Sports Life Corporation (hereafter referred as 'Konami Sports Life') and Konami Sports Corporation (hereafter referred as 'Konami Sports') hereby announce that their respective Boards of Directors' officially decided through resolutions at meetings held today, January 5, 2006, to sign a merger agreement and a share exchange agreement and to prepare separation planning documents following the basic agreement concluded on November 7, 2005. This group restructuring is conditioned on the approval of the related proposal above at the extraordinary shareholdersf meeting to be held on January 26, 2006. I Group restructuring and shift to holding company structure The merger of Konami Sports Life and Konami Sports (hereafter referred as 'this merger') will be by absorption in which Konami Sports will be the surviving company and Konami Sports Life will be the dissolved company. The execution of share exchange (hereafter referred as 'this share exchange') between Konami and Konami Sports, in which Konami will become the complete parent company and Konami Sports will become the wholly owned subsidiary, is conditioned on the effectiveness of this merger. After this share exchange, Konami Sports will change its name to Konami Sports & Life Corporation (hereafter referred as 'Konami Sports & Life'). Konami will execute a company separation, in which a newly established wholly owned subsidiary, Konami Digital Entertainment Co., Ltd. (hereafter referred as 'Konami Digital Entertainment') will succeed to Konamifs digital entertainment business and Konami will shift to a holding company structure. II. Summary of group restructuring and shifting to a holding company structure (1) Outline of company separation 1. Summary of company separation Digital Entertainment Business of Konami will be separated from Konami in the process of shifting to a holding company structure. 2. Schedule of separation (planned) January 5, 2006 Boards of Directors' meeting for preparation of separation planning documents January 26, 2006 Extraordinary shareholders' meetings for approval of separation planning documents March 31, 2006 Date of separation 3. Method of separation The method to be used is a company separation, with Konami as the separating company and the newly established Konami Digital Entertainment as the succeeding company. 4. Number of shares to be allotted with respect to the company separation Konami Digital Entertainment will allot to Konami all 520,000 shares of its newly issued common stock. 5. Cash paid due to separation Cash will not to be paid for this separation. 6. Rights and duties to which the newly established company will succeed Rights and duties to which the newly established company will succeed will be based on all outstanding debts and credits, labor contracts and the other rights and duties in connection with the Digital Entertainment Business of Konami, unless otherwise specified in the separation planning documents. 7. Expectation for fulfillment of obligations a. Konami (separating company) The amount of assets will be larger than the amount of liabilities after the separation, and no changes are expected in Konamifs business activities which will affect Konamifs ability to fulfill its obligations. b. Konami Digital Entertainment (succeeding company) The amount of assets will be larger than the amount of liabilities after the separation, and no changes are expected in Konami Digital Entertainmentfs business activities which will affect Konami Digital Entertainmentfs ability to fulfill its obligations. 8. The amount of capital decrease, and cancellation of stock for separating company None. 9. Newly appointed board of directors a. Directors Fumiaki Tanaka, Akira Tamai, Notsu Naoyuki b. Corporate Auditor Nagahiro Morimoto, Noboru Onuma, Yasumasa Iwagaki 10. Contents of company separation a Business to be separated Digital Entertainment Business of Konami b Sales, Operating Income and Ordinary Income of separated business for the six months ended September 30, 2005 Digital Entertainment Sales Operating Income Ordinary Income business 50,523 Million yen 11,561 Million yen 11,236 Million yen c Assets and Liabilities of separated business segment as of October 1, 2005 Assets Liabilities Items Book Value Items Book Value Current Assets 50,412 million yen Current Liabilities 20,157 million yen Non Current Assets 22,531 million yen Non Current Liabilities 786 million yen Total Assets 72,943 million yen Total Liabilities 20,943 million yen . (2) Outline of the merger 1. Schedule of merger (planned) January 5, 2006 Board of Director's meeting to sign the merger agreement / Date of execution of the merger agreement January 26, 2006 Extraordinary shareholders' meeting for approval of the merger agreement February 28, 2006 Date of merger and registration 2. Method of merger Konami Sports will be the surviving company and Konami Sports Life will subsequently be dissolved. 3. Merger ratio a. Share allotment ratio 3.99 shares of Konami Sports will be allotted to 1 share of Konami Sports Life. b. Basis for the determination of merger ratio The calculation of the merger ratio was conducted by Nikko Cordial Securities Inc., ('Nikko') independently and reasonably based on each subject company's request. Nikko calculated the range of the merger ratio through a total consideration of the results of its analysis, using an adjusted net asset method for Konami Sports Life and the market share price method and the DCF method (Discounted Cash Flow method) for Konami Sports. The merger ratio was agreed after consideration and negotiation between the subject companies based on the above evaluations. However, this merger ratio may be changed after discussions between the subject companies in the event material changes in the basis of calculation occur. c. Number of shares to be allotted with respect to the merger As a substitute for issuing new shares, Konami Sports will allot 15,760,500 shares of its common stock held as treasury stock, which includes 15,457,741 shares that will be succeeded from Konami Sports Life, to Konami as a shareholder of Konami Sports Life. d. Cash paid due to merger Cash will not to be paid for this merger. (3) Outline of share exchange 1. Share exchange schedule (planned) January 5, 2006 Board of Director's meetings to sign the share exchange agreement / Date of execution of the share exchange agreement January 26, 2006 Extraordinary Shareholders' meetings for approval of the share exchange agreement February 23, 2006 Date of delisting of Konami Sports March 1, 2006 Date of share exchange April 20, 2006 Date of grant of share certificates 2. Share exchange ratio a. Share allotment ratio 0.79 shares of Konami will be allotted to 1 share of Konami Sports. However, there will be no share allotment for Konami Sports' shares that will be allotted to Konami upon the merger between Konami Sports and Konami Sports Life. b. Basis of calculation of share exchange ratio The calculation of share exchange ratio was conducted by Nikko independently and reasonably based on each subject company's request. Nikko calculated the range of the share exchange ratio through a total consideration of the results of its analysis, using the market share price method and the DCF method for both Konami Corporation and Konami Sports. The share exchange ratio was agreed after consideration and negotiation between the subject companies based on the above evaluations. However, this share exchange ratio may be changed after discussions between the subject companies in the event material changes in the basis of calculation occur. c. Number of shares to be allotted with respect to the share exchange Konami will allot a total of 9,898,911 shares of its common stock, including 4,024,078 shares of newly issued shares and 5,874,833 shares held as treasury stock. d. Cash paid due to share exchange Cash will not to be paid for share exchange e. Change of registered name After the share exchange has been executed, Konami Sports will change its registered name to Konami Sports & Life Corporation on March 31, 2006. III Outline concerning company (1) Registered name KONAMI Konami Sports Konami Sports Life Konami Digital CORPORATION Corporation Corporation Entertainment As of September 30, As of September 30, As of September 30, Co., Ltd 2005 2005 2005 Establishing on March 31, 2006 (2) Main business Planning, production, Operating fitness Developing, Planning, production, and distribution of clubs, swimming manufacturing and and distribution of online games, computer schools, gymnastic sales of fitness and online games, computer & video games, card schools and other care support machines & video games, games, toy contents related business. and fitness and care amusement machines, for amusement support goods. toys, card games, facilities, contents contents for mobile for mobile phone, phone, music, image music and image software, books, and software. magazines. (3) Date of March 19, 1973 March 14, 1973 December 16, 1975 March 31, 2006 incorporation (planned) (4) Head office 2-4-1, Marunouchi, 4-10-1, 4-10-27, 6-10-1,Roppongi, location Chiyoda-ku, Tokyo Higashi-shinagawa, Higashi-shinagawa, Shinagawa-ku, Tokyo Minatoku-ku, Tokyo Shinagawa-ku, Tokyo (5) Representative Kagemasa Kozuki, Toshimitsu Oishi, Fumiaki Tanaka, Fumiaki Tanaka, Chairman of the Board Representative and CEO Director and President Chairman of the Board Representative Director and President (6) Capital 47,399 million yen 5,040 million yen 15,050 million yen 26,000 million yen (7) Total number of 139,531,708 shares 28,290,768 shares 3,950,000 shares 520,000 shares shares issued (8) Shareholders' 149,486 million yen 11,368 million yen 30,630 million yen 52,000 million yen Equity (9) Total assets 203,217 million yen 48,719 million yen 32,329 million yen 72,943 million yen (10) Financial year March 31 March 31 March 31 March 31 end (11) Number of 1,960 employees 1,507 employees 80 employees 2,100 employees employees (approximate) (12) Major venders (Suppliers) (Suppliers) (Suppliers) (Suppliers) and customers Sony Computer Konami Sports Life Konami Corporation Sony Computer Entertainment Inc. Corporation Entertainment Inc. Japan Beverage Inc. Nintendo Co., Ltd. DESENTE, LTD. Nintendo Co., Ltd. (Purchasers) (Purchasers) (Purchasers) (Purchasers) Konami Sports Konami Digital Individual member, Corporation Konami Digital Entertainment, Inc. Corporate member Entertainment, Inc. (13) Major Kozuki Holding B.V. Konami Sports Life KONAMI CORPORATION KONAMI CORPORATION shareholder's Corporation and shareholding 9.69% 100.00% 100.00% ratios 54.64% Kozuki Foundation For Konami Sports Sports and Education Corporation 9.69% 14.70% The Master Trust Bank Japan Trustee Bank of of Japan, Ltd. Japan, Ltd. 7.46% 1.81% Japan Trustee Bank of Konami Sports Employee Japan, Ltd. Stock Purchase Association 7.46% KONAMI CORPORATION 1.43% 6.61% (14) Main banks Sumitomo Mitsui Bank of Sumitomo Mitsui Sumitomo Mitsui Banking Corporation Tokyo-Mitsubishi UFJ, Banking Corporation Banking Corporation Ltd. (15) Relationships among the companies concerned: Capital Konami owns 100% of the issued shares of Konami Sports Life. Konami Sports Life owns 54.64% of the issued shares of Konami Sports. Personnel The chairman of the board of Konami Sports also serves as director of Konami. The chairman of the board of Konami Sports Life also serves as executive corporate officer of Konami and director of Konami Sports. The president of Konami Sports also serves as President of Konami Sports Life. Transactions Konami Sports Life consigns the production of fitness machines to Konami. Konami Sports purchases fitness machines and health related goods from Konami Sports Life. (16) Results for the last three fiscal years (1) KONAMI CORPORATION (Unit: million yen) Non-consolidated Consolidated Fiscal Year March 31, March 31, March 31, September March 31, March 31, March 31, September 2003 2004 2005 30, 2005 2003 2004 2005 30, 2005 Net sales 130,186 146,654 134,117 51,016 253,657 273,412 260,691 111,870 Operating 11,577 13,303 4,261 5,179 (21,870) 40,713 28,136 7,462 income Ordinary 13,068 16,910 13,447 9,408 (22,096) 40,107 27,442 14,335 income Net income (11,284) 10,381 12,794 11,197 (28,519) 20,104 10,486 6,964 Net income (92.82) 83.71 105.33 85.93 (234.58) 166.86 87.41 53.45 per share Annual divided 54.00 54.00 54.00 27.00 - - - - per share (interim) Shareholders' 872.38 894.08 931.24 1,147.20 750.35 847.66 885.97 1,027.32 equity per share (2) Konami Sports Corporation (Unit: million yen) Non-consolidated Consolidated Fiscal Year March 31, March 31, March 31, September March 31, March 31, March 31, September 2003 2004 2005 30, 2005 2003 2004 2005 30, 2005 Net sales 66,682 76,486 77,380 39,946 75,149 77,511 78,026 40,115 Operating 2,944 5,023 4,412 963 3,220 5,063 4,451 960 Income Ordinary 2,791 4,738 3,965 833 3,002 4,771 4,003 827 income Net income 950 1,157 1,204 301 933 1,155 1,216 291 Net income 34.67 43.81 48.08 12.50 34.05 43.71 48.59 12.07 per share Annual dividend 45.60 30.00 30.00 15.00 - - - - per share (interim) Shareholders' 572.44 545.43 473.20 471.12 578.43 551.92 480.59 478.08 equity per share (3) Konami Sports Life Corporation (Unit: million yen) Non-consolidated Fiscal Year March 31, March 31, March 31, September 30, 2003 2004 2005 2005 Net sales 14,135 7,222 5,043 2,158 Operating 585 (157) (705) (42) income Ordinary 475 425 (242) 190 income Net income 239 223 (253) 152 Net income 101.24 56.60 (64.09) 38.45 per share Annual dividend per - - - - share Shareholders' 7,723.64 7,780.25 7,716.16 7,754.60 equity per share Note: There are no consolidated financial statements for Konami Sports Life Corporation IV Corporate profiles after shifting to holding company structure (planned) (1) KONAMI CORPORATION i Main Business Planning and execution of management strategies to improve the corporate value and shareholdersf value of the entire group, as well as the management of business execution within each subsidiaries. ii Head office location 2-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan iii Directors and Corporate Auditors Chairman of the Board and CEO Kagemasa Kozuki Representative Director Kagehiko Kozuki Representative Director and CFO Noriaki Yamaguchi Director and CHO Kimihiko Higashio Director Tsutomu Takeda Director Tomokazu Godai (Present Representative Director of Maya Tec Co., Ltd) Director Hiroyuki Mizuo (Present Director of Research Institute of Kochi University of Technology) Director Akira Gemma (Present Senior Advisor, Shiseido Co., Ltd) Corporate Auditor Noboru Onuma (Former Director, Sumitomo Mitsui Banking Corporation) Corporate Auditor Tetsuro Yamamoto (Former Director, Bank of Tokyo- Mitsubishi, Ltd.) Corporate Auditor Minoru Nagaoka (Present President, Capital Markets Research Institute) Corporate Auditor Masataka Imaizumi (Present Chairman, Police Association) iv Capital 47,399 million yen v Total Number of shared issued 139,531,708 shares vi Total Assets 195,285 million yen vii Stock Holders Equity 155,114 million yen viii Fiscal Accounting Period March 31 ix Number of employees 40 (approximate) (2) Konami Digital Entertainment Co., Ltd i Main Business Planning, production, manufacturing and distribution of online games, computer & video games, amusement machines, toys, card games, contents for mobile phone, music, image software, books, and magazines. ii Head office location 6-10-1, Roppongi, Minato-ku, Tokyo, Japan iii Directors and Corporate Auditors Representative Directors Fumiaki Tanaka (Present Executive Corporate Officer of Konami) Director Akira Tamai (Present Corporate Officer of Konami) Director Naoyuki Notsu (Present Corporate Officer of Konami) Corporate Auditor Nagahiro Morimoto (Present Corporate Auditor of Konami Sports Life) Corporate Auditor Noboru Onuma (Present Corporate Auditor of Konami) Corporate Auditor Yasumasa Iwagaki (Present Corporate Auditor of Konami Real Estate, Inc.) iv Capital 26,000 million yen v Total Number of shared issued 520,000 shares vi Total Assets 72,943 million yen vii Stock Holders Equity 52,000 million yen viii Fiscal Accounting Period March 31 ix Number of employees 2,100 (approximate) (3) Konami Sports & Life Corporation (Present Konami Sports Corporation) (planned) i Main Business Operating and management of sports clubs. Development, manufacturing and sales of health and care support machines, goods to support health and to provide health service with prevention and care ii Head office location 4-10-1, Higashi-Shinagawa, Shinagawa-ku, Tokyo, Japan iii Capital 5,040 million yen iv Total Number of shared issued 28,290,768 shares v Total Assets 50,454 million yen vi Stock Holders Equity 12,550 million yen vii Fiscal Accounting Period March 31 viii Number of employees 1,587 (approximate) V Schedule The holding company structure will take effect on March 31, 2006, following the resolution at the Boards of Directors' meeting approving the final contracts and preparation of separation planning documents on today, January 5, 2006, and approval resolution of extraordinary shareholders' meetings of each company will be held on January 26, 2006 approving the transaction. VI Future forecast after shifting to holding company structure Forecasts for non-consolidated and consolidated operating results after company separation, merger and share exchange will be released as soon as they are determined. Contact us KONAMI CORPORATION Konami Sports Corporation Konami Sports Life Corporation Chiaki Nakajima Yuri Matsumoto General Manager of Public Relations General Manager of Public Relations Department Department 03-4332-0573 03-6688-0573 This information is provided by RNS The company news service from the London Stock Exchange

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