SKY Perfect JSAT : Question-and-Answer session at video conference for FY2023

Question-and-Answer session at video conference for Full-Year 2023

Date	April 26, 2024 4:30pm-5:30pm
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)

Factors behind operating profit upside

Questioner: From the earnings forecast revised upward in 3Q, operating income exceeded in both the Space Business and the Media Business. What is the background and positive factors?

Matsutani: In 4Q, the yen depreciated more than anticipated, and sales in the business divisions also generated stable revenues within the expected range. In the Media Business in particular, the number of subscribers to the Professional Baseball Set and the Basic Package Plan exceeded last year due to aggressive promotional activities despite the decline in subscribers. We also realized effective advertising with less than anticipated spending by shifting our advertising expenditures to a more efficient segmented advertising strategy rather than a mass advertising mass rollout.

Factors behind the decline in operating income in the Space Business in Q4

Questioner: My understanding is there was a one-time sales and profit in 4Q of fiscal 2022 in the Space Business. Excluding this impact, did operating income decline in 4Q of fiscal 2023 compared to the previous 4Q?

Matsutani: That's correct. Due to the absence of a one-time deal as in the previous fiscal year, we recorded less sales in 4Q.

Exchange rate settings and sales assumptions in the financial forecast for fiscal 2024

Questionnaire: How much is the exchange rate set in the financial forecast for the fiscal year ending March 2025?24? According to the presentation, the sales related to national security field will increase by ¥1.4 billion, are sales expected to increase in other areas, such as In-Flight,maritime, and mobile carriers, as well? What about the broadcast transponder-relatedrevenue?

Matsutani: The exchange rate is set in the ¥140 range. Due to the termination of 4K broadcasting, broadcast transponder-related revenue paid by our subsidiary, SKY Perfect

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Entertainment Corporation, to SKY Perfect JSAT Corporation, another subsidiary, will decrease. This amount is in the billions of yen, but almost the same amount will be offset by the cost of the Media Business. Considering that there will be no future capital expenditures for renewal of ground equipment for 4K broadcasting (CS left-handed circular polarization), the overall consolidated results are expected to be slightly positive.

Reasons for Profit Decline in the Space Business

Questioner: Looking at the forecast, operation expenses are expected to increase significantly. How much increase in expenses is anticipated in which specific areas?

Matsutani: There are active initiatives to new fields in both the Space Business and the Media Business, and the costs of these are also included in the plan.

Questioner: The revenue from fees for satellite images sales, etc., to the Ministry of Defense may be one of the major factors behind the increase in profits. National security-related sales will increase by ¥1.4 billion, but why will profits for the Space Business decrease?

Ogawa: Satellite images sales will contribute to profits, but due to the large upfront costs associated with New Business Area, such as Orbital Lasers, we are planning a total negative ¥1.1 billion.

Factors behind the Decrease in Depreciation and Expenses in the Media Business.

Questioner: Please explain the factors behind the decline in expenses and depreciation in the Media Business and the cost efficiency improvement.

Matsutani: The decrease in depreciation expenses was primarily due to the elimination of depreciation on 4K broadcasting-related facilities. As for expenses, we also anticipate expenses related to New Business Areas.

Differences in Capital Expenditure Plans and Results for fiscal 2023

Questionnaire: The equipment investment plan for the fiscal year ended March 31, 2024, was ¥30.5 billion, but the actual expenditure was ¥16.4 billion. The plan for the fiscal year ending March 2025 has not increased significantly. What are the factors contributing to this difference? Additionally, could you provide reasons for the increase in capital investment in the fiscal year ending March 2025?

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Matsutani: In the capital investment plan for the fiscal year ended March 2024, we were planning to place orders for a new satellite, we expected the payments to be made during the previous fiscal year. However, because the conclusion of the contract has not yet been completed, it has been delayed until this fiscal year. In the fiscal year ending March 2025, we plan to make large-scale investments, and there are no changes in the overall investment plan for fiscal 2030.

Capacity of the New Satellite

Questioner: Superbird-9 is expected to be operational in the first half of 2027, with depreciation expected to begin after that time. Additionally, in fiscal 2025, we plan to launch a space-installed optical telescope riding on ETS-9, which we anticipate will also incur depreciation. Is the new satellite intended for communication purposes slightly larger than Superbird-9, with an anticipated operational timeframe around 2028?

Ogawa: The new satellite is designed for communication use with a capacity of 50Gbps, slightly larger than Superbird-9, which has a capacity of around 30Gbps to 40Gbps. We anticipate the operational start timeframe to be around 2028, slightly later than Superbird-9.

Breakdown and Amount of Business Investments

Questioner: As of the end of the fiscal year ended March 2024, investment securities in fixed assets have increased by about ¥14 billion, and I feel that there is a considerable amount of funds in addition to business investments. Are investments in funds also being included within the ¥11.5 billion business investment plan in the fiscal year ending March 2025?

Matsutani: Investments in fixed assets on the balance sheet include an investment in iQPS Inc. The stock price of iQPS Inc. has increased considerably since we invested as a lead investor, and this has had a significant impact on the increase in the balance sheet.

This fiscal year's business investment plan also includes investment in funds.

Shareholder Returns and Share Buybacks

Questioner: Net cash, including short-term securities, has also increased considerably in the year, and I feel that it would be good if you could repurchase shares this year as well. Let me confirm what you think of it.

Matsutani: At this time, our plans for this fiscal year do not include share buybacks, but there is no change to our five-year shareholder return policy. If such timing arises during this fiscal year,

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we will make a decision to implement share buybacks each time.

Questioner: Since your current cash position is good and your business performance is improving, are you planning to think flexibly according to the situation, rather than setting a maximum shareholder return of ¥40 billion?

Matsutani: As you have understood.

Yonekura: We should take flexible measures for shareholder returns, depending on the situation. As we operate in the capital investment industry, it is important to pursue a balanced approach with an emphasis on stock prices and stability of cash flows. In principle, I consider to provide shareholder returns in a balanced manner.

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