P.20 Message from the CFO (3)

Message from the CFO

Medium-Term Business Plan 2026 Updated capital allocation Based on these policies, we have updated our capital allocation in preparation for the next MTBP, which will begin in FY2027. In terms of cash inflow, we will increase debt financing from ¥44.0 billion to ¥84.0 billion in order to use leverage to optimize the WACC of the new segments, including the Akasaka 2-chome and 6-chome Development Plan. With regard to sales of investment securities, we have raised our minimum commitment from ¥110.0 billion to ¥135.0 billion to ensure that the proceeds are appro- priately reallocated to growth strategy investments and used for shareholder returns. We have revised our forecast for cash flow from operations downward due in part to the higher tax burden resulting from the increased sales of investment securities and the front-loaded spending associated with the new business model for our LTV initiatives aimed at diversifying our revenue sources. Nevertheless, we expect to maintain ¥20.0 billion in EBITDA from returns, supported by returns on our growth investments. On the cash allocation side, growth strategy investments, which remain our highest priority, are unchanged at ¥160.0 billion. However, if opportunities arise that will contribute to strengthening our content IP planning and production capabilities or advancing the EDGE strategy, among other objectives, we may make additional investments and may also increase funding through sales of investment securities. In addition, we have newly allocated ¥15.0 billion for large-scale capital expenditures aimed at modernizing our broadcasting facilities. Cash acquisition In anticipation of segment-based ROIC management beginning with the next MTBP, we initiated a review of invested capital by segment in order to manage WACC appropriately. We have thoroughly reviewed the financing for the Akasaka 2-chome and 6-chome Development Plan and increased debt financing from ¥44.0 billion to ¥84.0 billion. Based on our sales of investment securities over the two-year period and through the date of the earnings announcement, we have further increased the forecast sales during the MTBP2026 period to ¥135.0 billion. We will continue to respond flexibly based on the progress of our growth investments. While working to expand cash flow from operations through strong business performance and returns on growth investments, we have revised the forecast downward to ¥61.0 billion due to factors including the higher tax burden resulting from increased sales of cross-shareholdings and a temporary increase in working capital associated with higher sales. Cash distribution MTBP2026 (Forecast) Updated Forecast Investments to acquire and expand content IP Established SAND B, Inc. Made K contents Inc. a subsidiary Debt financing, etc. Made WACUL, INC. a subsidiary ¥44 billion ¥ 84 billion Growth investments Advancing the Global Business in its first year 160 Invested in Legendary Entertainment ¥ billion Established a joint venture with CJ ENM Co., Ltd. and U-NEXT Expanding the Lifestyle Business Investment securities sales Capital expenditures to StylingLife Holdings Inc. became a wholly owned subsidiary ¥110 billion ¥ 135 billion modernize broadcasting facilities 15 Developed and expanded the EduTainment ¥ billion Business, and more Executed growth investments totaling ¥71.4 billion Return on investments in growth, EBITDA Shareholder return ¥ 20 billion ¥80 billion ¥ 105 billion We are actively working to enhance Cash flow from operations shareholder returns through improved ¥86 billion ¥ 61 billion corporate value. Having achieved part of the MTBP2026 targets ahead of schedule in FY2025, we have increased total shareholder Cash acquisition Cash distribution returns to ¥105.0 billion over the three-year period. ¥240 billion ¥ 280 billion ¥240 billion ¥ 280 billion We have increased our shareholder returns from the initial target of ¥60.0 billion under MTBP2026 to approximately ¥105.0 billion. Specifically, we have raised the year-end dividend for FY2025 from ¥38 to ¥49 per share. For FY2026, we plan to in- crease the annual dividend by ¥16 to ¥100 per share and buy back shares worth ¥36.0 billion. We decided to increase shareholder returns proactively in light of the achievement of MTBP2026 profit targets ahead of schedule, higher-than-expected accumu- lation of cash and cash equivalents, and the low “initial ROIC” of growth strategy investments in areas such as content IP. This represents a front-loaded action toward our next MTBP. Over the medium to long term, our fundamental premise is to create a cycle in which growth strategy investments gen- erate future excess earnings, leading to expanded cash flow from operations and, ultimately, enhanced corporate value and returns to our stakeholders. However, in the next MTBP, we need to take a somewhat different perspective in light of the current state of our balance sheet and other factors. In other words, after determining the amount of capital necessary to generate earnings through our growth strategies, we will seek to redefine the appropriate level of shareholders’ equity through “disciplined capital control.” Based on this approach, we will explore a shareholder return policy. However, at the announcement of our Q1 financial results on August 6, we lowered our FY2026 operating profit forecast from ¥26.0 billion to ¥23.0 billion, taking into account the softening advertising market amid uncertainty in the global economy, including the situation in the Middle East. Even under these circumstances, we will work to secure profits by exploring new revenue sources and implementing rigorous cost control. At the same time, we will conduct an even more thorough review of invested capital in our efforts to achieve our ROIC target. 20