SKY Perfect JSAT : Presentation (Script) at video conference for FY2023

Presentation (Script) at video conference for the 4Q of FY2023

Date	April 26, 2024 4:30 pm - 5:30 pm
Speakers	SKY Perfect JSAT Holdings Inc.:
	Eiichi Yonekura (Representative Director, President)
	Masato Ogawa (Board Director, in charge of Space Business)
	Koichi Matsutani (Board Director, CFO, in charge of Media Business)

p.3: Summary

Firstly, I would like to convey the points of the full-year financial results. Earnings achieved record highs. In the current fiscal year, we aim to achieve record-high profits.

In the Space Business, domestic and overseas sales remained solid, and the expansion of satellite images sales also contributed to results. In terms of initiatives for future growth, we decided to procure the new large-capacity satellite, strengthening initiatives in the national security field, and accelerating collaboration with space-related startups.

In the Media Business, operating income increased due to the success of measures to improve profitability. We are advancing into new areas, such as launching initiatives for connected TV and establishing SKY Perfect Pictures Inc., which conducts businesses focused on animation.

In terms of ESG, we have steadily improved our external evaluations, such as being selected as a component of four of six ESG indices for domestic equities adopted by GPIF and obtained [A-] rating in "CDP Climate-Change Response Survey".

We also decided to strengthen shareholder returns and increase dividends.

p.5: Consolidated Earnings Results for FY2023

For fiscal 2023, consolidated operating revenues increased by 0.6% to ¥121.9 billion, operating income increased by 18.9% to ¥26.5 billion, and net income increased by 12.2% to ¥17.7 billion.

In the Space Business, in addition to the Global & Mobile business Fields, the expansion of satellite images sales drove sales growth. In the Media Business, the results exceeded the earnings forecast that was upwardly revised in February due to the success of measures to improve profitability.

p.6: Earnings Overview: Space Business

Operating revenue amounted to ¥64.7 billion, an increase of ¥2.6 billion compared with the previous fiscal year. This was mainly due to expanded use of JCSAT-1C and Horizons 3e in

mobility communications field, increased sales of satellite images, and expanded capacity usage in Domestic Satellite Business Field, besides the positive impact of exchange rate movements.

In terms of profits, a decrease in depreciation expenses also contributed to a ¥3.6 billion year- on-year increase in operating income to ¥22.8 billion. Segment profit was ¥15.5 billion, a year- on-year increase of ¥2 billion.

p.7: Earnings Overview: Media Business

Operating revenue amounted to ¥66.5 billion, a year-on-year decline of ¥2.2 billion. Although there was a decrease in sales due to a decrease in the cumulative number of subscribers, revenues from FTTH business increased.

In terms of expenses, due to the decrease in costs related to the closure of "BS SKY PerfecTV!" at the end of October 2022, as well as reductions in advertising and promotional expenses, operating profit increased by ¥500 million compared to the previous period, reaching ¥4.4 billion. Segment profit was ¥2.5 billion, a year-on-yeardecrease of ¥200 million, due to the impact of the valuation loss on investment securities recorded in the second quarter.

p9: Financial Forecast for FY2024

We forecast operating revenue of ¥123.3 billion, operating income of ¥25.8 billion, and net income of ¥18 billion.

We aim to achieve record-high net profit for the current period by making advance investments for growth towards 2030, while improving the profitability and productivity of our core businesses.

p10: Financial Forecast by Segment for FY2024

In the Space Business, we plan to generate operating revenues of ¥65 billion, or ¥300

million, and operating income of ¥21.7 billion, or ¥1.1 billion, and segment income of ¥15.1 billion, or ¥400 million.

The increase in sales of Space Intelligence Business and other services is expected to offset the decrease in broadcasting transponder-related revenue associated with the end of 4K broadcasting service (CS left-handed circular polarization). However, operating income is expected to decline due to the anticipated increase in upfront expenses as new initiatives for business expansion shift to the implementation phase. This is due to upfront investment for future growth. In the Media Business, operating revenue was ¥64.9 billion, a year-on-year decrease of ¥1.6 billion, operating profit was ¥4.8 billion, a year-on-year increase of ¥400 million, and segment profit was ¥3.3 billion, a year-on-year increase of ¥800 million.

We aim to accelerate initiatives for the future by investing upfront expenses in New domains while reducing costs, including the end of 4K broadcasting service (CS left-handed circular polarization) and streamlining various measures.

p11: Shareholder Returns

We strengthened shareholder returns, and in fiscal 2023, we increased the year-end dividend by ¥1 from our initial plan, bringing the annual dividend to ¥21. In fiscal 2024, while continuing to improve core profitability, we plan to pay an interim and year-end dividend of ¥11 per share, for an annual dividend of ¥22 per share.

p.13: Revised Value Creation Story

Toward 2030, we reviewed and revised the previously disclosed value creation story. In both the Space and Media businesses, we aim to leverage our management resources, which are the source of our competitiveness, to "Connect all information and emotion from space and Earth."

From the provision of high-quality and stable telecommunications infrastructure and broadcasting platforms to the provision of problem solutions for customers and new experiences for subscribers, we will identify where we should invest capital and human resource and make optimal allocations in order to strengthen and expand our existing businesses and develop new businesses.

p.14: Growth Strategies for 2030

In the Space Business, we will build Universal NTN and strengthen sales capabilities in global markets to meet expanding telecommunications demand, expand services using ground facilities in Connectivity Business, and strengthen initiatives in the national security field. In the Space Intelligence Business, we will actively promote initiatives in the national security field and strengthen our solutions business for private-sector companies.

In the Media Business, we will promote leaner operations while maintaining our subscriber base, and seek to expand revenue beyond broadcasting, such as through our FTTH Business and Media Solution Business.

In addition, we intend to accelerate growth by early commercialization of New Business Areas, which are also new challenges in both businesses.

p.15: Capital Investments to Realize Business Vision (FY2022～FY2030)

As we approach fiscal 2030, the expansion of core profitability through the growth of existing businesses is also a major factor. Accordingly, we have revised our previous policy of "investing ¥200 billion in New domains" to "investing ¥300 billion both in new domains and

existing businesses."

Accordingly, this is not a major change from what we have shown. By investing capital with an awareness of asset efficiency and the cost of capital, we aim to achieve net income of more than ¥25 billion in fiscal 2030 and increase our corporate value.

p.16: Future Capital investment

Capital allocation, which had been shown for the period from fiscal 2022 to 2026, was set up to 2030 in conjunction with the previous page and included strategic capital investment over multiple years other than capital investment.

The amount of strategic capital investment is not large compared to capital investment. The cumulative amount of capital invested over the three-year period is expected to exceed 70 billion yen, including the fiscal 2022 and 2023 results and the fiscal 2024 plan. By advancing these investments, we hope to achieve our vision for 2030.

p.17: Strengthen Human Capital to Realize Business Vision

We will also strengthen our human capital to realize our business vision. In fiscal 2023, we worked on reforming the awareness of each employee to be active through the formulation of human resource strategies and the revision of our personnel system.

We are also steadily implementing job-type projects, including the selection of specialists and high performers. In addition to new graduates, we have succeeded in securing a certain number of employees, including mid-career hires.

In the current fiscal year, we have already implemented base pay increases and strengthened support for rescheduling. In addition to establishing a foundation that includes enhancing employee engagement and creating a safe and secure organization, we will organize and visualize the skills of each individual and actively assign them to focus areas.

p.18: Space Business Vision

In the Space Business, we have set out our "Space Business Vision" with the aim of contributing to the realization of a super-smart society.

p.19: Initiatives to Achieve Universal NTN (Non-Terrestrial Networks)

We have decided to procure the new satellite in order to realize our Universal NTN. Although the communication capacity of conventional satellites is 3Gbps from 2Gbps per satellite, the satellite we procure this time will realize the largest 50Gbps class communication capacity in our history.

We hope to firmly meet the demand for communications satellites to be expanded by the next-

generation large-capacity fleet of over 100Gbps, which will be realized by the satellite fleet that includes Superbird-9 currently procuring and this satellite.

In addition, in accordance with the launch of "Superbird-9" and the new satellite, we will begin the early servicing of Universal NTN. Details are scheduled for release later, but we plan to offer innovative services that meet the needs of high speed, large capacity, and convenience while maintaining the reliability of conventional services.

We will also strengthen global alliances with the aim of developing more attractive services over a wider area.

p20: Initiatives in National Security

In national security field, there are areas where our company's efforts overlap with the government's space security initiatives, and we believe that there are highly compatible aspects. Therefore, we aim to contribute actively. By incorporating new demands and making proactive investments, we will continue to expand our business scope and increase our revenue.

National security-related sales in fiscal 2023 were approximately ¥7.6 billion. We expect sales to exceed 9 billion yen in fiscal 2024 and aim to achieve 15 billion yen in fiscal 2030.

p.21: Initiatives to Create New Space Business

Recently, in order to accelerate collaboration with space startups, we decided to invest with a ¥10 billion scale.

In conjunction with this event, we held "The SKY Perfect JSAT Space Startup Connect" on March 28, which was attended by many space-related startups, investors, and commercial enterprises.

We also decided to invest in "Seraphim Space Ventures," a space venture capital firm in the United Kingdom that has the largest investment records in the industry, mainly in Europe and the United States, as the first project in the announced our investment framework.

Starting with this investment, we intend to collaborate with start-ups that have high affinity and synergies with our Space business and promote open innovation in the areas of creating new value and developing existing businesses.

p.22: Major Investment and Collaboration Achievements (FY2020～)

As illustrated on the slide, we started with ZENRIN CO., LTD. and Nippon Koei Co., Ltd. in fiscal 2020 and have a track record of investing in and collaborating with iQPS Inc., Space Compass Corporation, Space Capital, Orbital Lasers Co. LTD., and other companies. We will continue to create space businesses through aggressive partnering.

p.23: Efforts to Improve Presence in Space Business

We are also working to improve our presence in the space industry. In March, we exhibited at "Satellite 2024", the world's largest space-business exhibition held annually in the Washington D.C., U.S.A.

This year, we conducted an exhibit on Space Compass, iQPS Inc. and SSA (Space Situational Awareness), and highlighted the Innovativeness of our business.

In light of the growing interest in space security in recent years, we gave a presentation on the theme of Japan-U.S. security, emphasizing Japan-U.S. cooperation and the areas in which we contribute to.

In addition, with the aim of enhancing our presence in the Japanese space industry, we exhibited together with Space Compass at "SPEXA" (Space Business Expo-exhibition), which was held for the first time for the largest space business in Japan. We introduced our initiatives in the Connectivity Business, Space Intelligence business, and New Business Areas widely.

We will continue to further improve our presence and drive the creation of new space businesses.

p.24: Satellite Fleet Update

This is the latest satellite fleet. We currently have 17 satellites.

p.25: Media Business Vision

Our vision for the Media Business is to contribute to the realization of a diverse and creative society by extending the experience of fans through "broadcasting + distribution + real/virtual experiences".

p.26: Growth of FTTH Business

We aim to grow our FTTH Business on the two services. The first service is to re-transmit terrestrial and BS/CS broadcasting, etc. via the optical fiber. The number of connected households continues to increase at an annual positive rate of 110,000 households and revenues have grown, and we expect this to further contribute to earnings in the future.

The second one is a video transmission service for CATV operators that provides our satellite communications and viewer key signal management technologies.

CATV operators that have adopted the Pass-through method were only 5 in fiscal 2022, but now the number has reached 22 operators."

p.27: Broadcasting Business: Promotional Activities of Core Products

We are broadcasting live coverage of all games for all 12 professional baseball teams this season as well. You can watch it on TV as well as from your smartphone app, so subscribers can enjoy it on the go without missing a beat.

In addition, we continued "U30 Discount Campaign", which performed well last year, and are strengthening sales promotions for the younger generation. The current number of contracts is 104% of the same day of the previous year, which is a good result this year as well.

In the Basic package plan, we have launched a campaign starting in this April and ending in three months, which is earlier than usual. By focusing on sales promotions for the Basic package plan, which has a low churn rate and a high unit price and expanding subscriber share, we will improve profitability even as the number of subscribers declines.

p.28: Broadcasting Popular Sports Games

In addition to Japanese Professional Baseball, the 2024 Major League Baseball season, where Japanese players are making a significant impact, is also worth noting. J SPORTS is broadcasting live the starting lineup games featuring Shohei Otani and Yoshinobu Yamamoto. J SPORTS broadcast the games played by other Japanese players every day as well.

Also, the J-League YBC Levain Cup, one of the three major soccer tournaments in Japan, in which all 60 J-League clubs compete, is broadcasted and distributed. It is distributed not only through broadcasting but also through "SPOOX" and "Amazon Prime Video" channels, and we aim to have more viewers watching it.

p.29: Promotion of Connected TV

In response to changes in the way viewers enjoy contents, we are moving ahead with initiatives for Connected TV that provide viewing data and users' other data, as well as locations and mechanisms for proposing optimal contents.

We hope to further enhance contents viewing on TV by creating encounters and discoveries with new contents through the genre specialized channels that we provide, while at the same time enabling deeper contents drilling in VOD of the newly provided video distribution service.

p30: Connected TV: "SKY PerfecTV! Plus" launch scheduled in October (Planned)

In order to realize those customer experiences, we plan to launch a service called "SKY PerfecTV! Plus" in October, which uses the device " SKY PerfecTV! + plus Netstick" that can be used simply by connecting to a TV.

First of all, we will solicit net stick monitors for SKY PerfecTV! subscribers to verify trends in service usage and the value provided. In addition, we intend to combine FTTH Pass-through and Netstick for CATV operators to promote solutions that can provide both genre specialized

channels and video distribution services.

Our efforts in "Connected TV" are focused on improving the customer experiences in our broadcasting business and developing a platform-based advertising business in the future.

p31: SKY Perfect Pictures Inc. Established

This section introduces the latest initiatives in the Media Business. In April of this year, we established "SKY Perfect Pictures Inc" with the aim of promoting the planning, production, investment, and sales of video contents, focusing on Animation, as well as peripheral businesses.

We will become an IP holder and expand our business globally.

Currently, we are starting production of four anime titles. Over the next few years, we aim to launch more than 10 anime titles from the planning stage and expand them both domestically and overseas.

We will welcome ITOCHU as a partner and promote further business growth and strategic expansion of peripheral businesses.

Through this new company, we aim to improve the richness of life through diverse contents by advancing into the animation domain, which is Japan's export asset that boasts worldwide popularity, and we intend to acquire new earnings.

That concludes our presentation. Thank you for your attention.