SKY Perfect JSAT Report For the year ended March 31, 2018

Transcription

1 SKY Perfect JSAT Report 2018 For the year ended March 31, 2018

2 To Our Stakeholders

3 FORMULATION OF NEW GROUP MISSION Since its foundation in 1985 following the deregulation of the telecommunications sector, we have created new businesses and services as a pioneer in satellite communications and digital multichannel broadcasting. Subsequently, through the merger of SKY Perfect Communications Inc. and JSAT Corporation in 2007 followed by the acquisition of Space Communications Corporation in 2008, SKY Perfect JSAT Group has become one of the largest providers of multichannel pay TV broadcast services in Japan, operating the largest satellite communications business in Asia. In recent years, online video distribution services have sprung up while the pay broadcasting market has matured. The competitive landscape surrounding our business has changed significantly with technological innovations in geostationary satellites and new businesses starting up with small low earth orbit satellites. Against this backdrop, we has formulated a new Group Mission that redefines the role that it should play as digital innovations in society are likely to accelerate and business fields in every space are expanding. Representative Director, President Shinji Takada SKY Perfect JSAT Report

4 Space for your Smile Space for your Smile 2 SKY Perfect JSAT Holdings Inc.

5 CONTENTS Who We Are 4 Our Business 8 Our Vision 10 Financial Highlights Who We Are What We re Planning 12 Message from the President What We re Planning How We re Doing 18 Review of Operations Media Business 22 Review of Operations Space Business How We re Doing Governance 26 Board Directors 28 Corporate Governance 33 Message from Outside Director 34 System for the Development of Human Resources 36 Social Contribution Through Our Business Activities 37 Preserving the Environment Through Our Business activities Governance Corporate Profile 38 History 40 Corporate Data 42 Stock Information 43 Satellite Basics 45 Glossary Corporate Profile Financial Section 46 Consolidated Financial Highlights 48 Management s Discussion and Analysis 54 Consolidated Balance Sheet 56 Consolidated Statement of Income 57 Consolidated Statement of Comprehensive Income 58 Consolidated Statement of Changes in Equity 59 Consolidated Statement of Cash Flows 60 Notes to Consolidated Financial Statements 79 Audit Report Financial Section SKY Perfect JSAT Report

6 Our Business Consolidated Operating Profit for the Fiscal Year Ended March 31, billion Media Business Largest Number of Channels in Japan 157 channels SKY PerfecTV! Subscribers 3,262,393 subscribers 19.8% In the Media Business, we are a multichannel pay TV platform operator linking broadcasters and subscribers, providing program broadcasting, as well as customer management and sales promotion operations. Number of Years Providing Multichannel Pay TV Satellite Broadcasting Services (Since 1996) 22 years 67.7% Media Business Space Business * The percentages for operating revenues and profit are calculated by including intersegment transactions and adjustments. 4

7 Boeing All Rights Reserved. Who We Are 80.2% Consolidated Revenues for the Fiscal Year Ended March 31, billion 32.3% Largest Number of Satellites Owned in Japan 17 satellites (as of July 31, 2018) Asia s Largest Satellite Operator Number of Cumulative Years in Satellite Operations (since 1989) Over 270 years SKY Perfect JSAT is Japan s largest satellite-based multichannel pay TV and Asia s largest satellite communications operator. Space Business * In the Space Business, we provide satellite communications services to corporations and government agencies that take full advantage of the benefits of our satellite systems, including wide coverage, multi-destination distribution, and disaster resistance. * Effective July 1, 2018, the Space & Satellite Business was renamed the Space Business. (As of March 31, 2018) What We re Planning How We re Doing Governance Corporate Profile Financial Section 5

8 Our Business Media Business In the Media Business, we are increasing the number of channels for SKY PerfecTV! On-Demand amid rapid expansion in the video distribution market. We also aim to improve the customer experience by strengthening our Hybridcast feature that seamlessly combines TV and Internet services. Broadcasters Program providers Subscribers Platform Services Transmission/Distribution of Programs At the SKY PerfecTV! Tokyo Media Center, program content is digitally compressed and transmitted to our satellites. Customer Experience SKY PerfecTV! Hybridcast offers a variety of ways to view programs with seamless broadcasting and web services on TV. SKY PerfecTV! Tokyo Media Center SKY PerfecTV! Hybridcast Customer Management Customer support, operating customer management system and subscription revenue collection Promotions TV, online, newspaper commercial/advertising and other promotions are undertaken to capture and retain subscribers. Commercial in Japan 6 SKY Perfect JSAT Holdings Inc.

9 Space Business In Japan, our earnings foundation is anchored by long-term contracts with government agencies, local municipalities, and infrastructure companies such as mobile phone operators. In recent years, satellite communications have increased sharply for aircrafts and ships on the global mobile market. We plan to launch new satellites to meet growing demand. Digital divide areas Intra-company communications SNG truck Satellite Procurement Based on our accumulated knowledge from operating satellites for three decades, we decide satellite specifications and manage the production process. Launch rockets are chosen based on launch schedules, costs and other prerequisites. Space X Satellite Communication Services Satellite Operations Orbital slots are secured through international coordination The main station of The Yokohama Satellite Control Center (YSCC), monitors and controls satellites and satellite connections. Yokohama Satellite Control Center Aircrafts Ships Broadcasting Provision of Satellite Communication Services We provide satellite communication services, technical support, solutions and other value-added services. Who We Are What We re Planning How We re Doing Governance Corporate Profile Financial Section SKY Perfect JSAT Report

10 Our Vision Masao Nito Board Director, in charge of Corporate Planning & Strategy It has been approximately 30 years since we launched Japan s first private-sector communications satellite. Since then, we have built a solid foundation in both our broadcasting and communications businesses. Now it is time to address changes in our business environment brought about by technological innovations and new trends in the social environment. SKY Perfect JSAT has again drawn its vision of creating more corporate value by expanding business domains beyond the boundaries of broadcasting and communications. Media Business Vision With an eye on how people spend their time in the future, when there will be more free time and time to study, SKY Perfect JSAT is expanding its scope of business to include the LIFE business in addition to the platform business and content business. Platform Business SKY PerfecTV! Subscribers: 3 million Households Content Business Free time Sleep LIFE Business Unpaid Work Welfare Benefits AI Speaker E-magazines Healthcare Paid Work Learning 8 SKY Perfect JSAT Holdings Inc.

11 In the Media Business, from a customer base of over three million SKY PerfecTV! subscribers, we are creating services as new customer-oriented businesses that are tailored to the lifestyles of our customers so they can spend their time more enjoyably. In the Space Business, the Company is advancing its sensing business by expanding the scope of its communications business from space to the oceans. In addition, by combining external data with the Big Data generated from our satellites and other infrastructure, and then thoroughly analyzing this data with advanced AI and other systems, we are developing space intelligence business to provide our customers with helpful information. Under the new Group mission Space for your Smile, SKY Perfect JSAT aims to expand future-oriented business domains while creating a brighter tomorrow for each and all. Space Infrastructure Business Expansion of Communications Business Scope Moon 384,400km 36,000km 1,000km 100km 10km 1,000m 100m Ground Surface of the ocean Under the ocean Full-scale Entry into Sensing Business Communications Satellite Services Geostationary Satellite Low Earth Orbit Satellite High Altitude Pseudo-Satellite Drone Ground Station Services and Infrastructure Management Consignment Space Business Vision We aim to diversify in space, from outer space to the oceans, while creating businesses that utilize space data. Data Collected from Diverse Range of Our Infrastructure Development of Space Intelligence Creation of Businesses that Utilize Space Data Database External Data (weather, economy, transportation, etc.) AI Technology Database that Provides Advanced Intelligence Customers Who We Are What We re Planning How We re Doing Governance Corporate Profile Financial Section SKY Perfect JSAT Report

12 Financial Highlights Shinji Yokomizu Board Director, Chief Financial Officer The SKY Perfect JSAT Group has a stable financial foundation with a suitable capital and liability structure, as shown by its consolidated equity ratio of 60.3% as of March 31, Both operating revenues and EBITDA have held steady, backed by the Company s solid base of customers in the Space Business and multichannel pay TV broadcasting service subscribers in the Media Business. SKY Perfect JSAT has maintained an SKY Perfect JSAT Holdings Inc. and Consolidated Subsidiaries For the years ended March 31, 2014, 2015, 2016, 2017 and 2018 Revenues Operating Profit/ Operating Margin Profit Attributable to Owners of the Parent 145,502million Operating Profit 15,652million 11,353million () 200, , , , , , , ,000 () (%) 25,000 24,210 24, ,713 20,000 19, ,652 15, , () 20,000 15,000 10,000 9,659 13,516 16,868 17,415 11,353 50,000 5, ,000 0 March March March Operating Profit Operating Margin EBITDA/EBITDA Margin Depreciation and Amortization Capital Expenditures EBITDA 43,033million 23,494million 15,940million () (%) 50,000 44,551 44,503 46,670 47, ,033 40, () 25,000 24,433 20,000 22,868 20,694 21,541 23,494 () 50,000 40,000 40,377 30,000 20, ,000 10,000 30,000 20,000 23,002 26,266 16,177 15,940 10, ,000 10,000 0 March March March EBITDA EBITDA Margin 10 SKY Perfect JSAT Holdings Inc.

13 A issuer rating from both Rating and Investment Information, Inc. (R&I) and Japan Credit Rating Agency, Ltd. (JCR) Our business initiatives focus on risk management and the efficiency of invested capital. We support the creation of new businesses necessary for future growth by analyzing risk in a changing competitive landscape, building structures based on this analysis, and procuring capital through optimal means. The Company aims to improve corporate value and shareholder returns through growth in SKY Perfect JSAT Group earnings by undertaking new initiatives while ensuring a stable financial foundation and managing risks. Cash Flows from Operating Activities () 40,000 30,000 20,000 10,000 33,345 16,634 24,806 7,030 22,546 0 March (%) ,546million March () 100,000 50,000 45,995 38,366 64,138 82,753 92,767 0 March (%) March () (%) 250, , , , , , , , ,000 50, March ROE Dividend Payout Ratio Rating Information 5.2% Interest-Bearing Debt 92,767million 47.1% Net Assets/ Equity Ratio Net Assets Equity Ratio Equity Ratio60.3% Rating and Investment Information, Inc.(R&I) Long-term rating A Definition of rating: High creditworthiness supported by a few excellent factors Japan Credit Rating Agency, Ltd. (JCR) Long-term rating A Definition of rating: A high level of certainty to honor the financial obligations (As of September 28, 2017) (As of October 12, 2017) 0 Who We Are What We re Planning How We re Doing Governance Corporate Profile Financial Section SKY Perfect JSAT Report

14 Message from the President WE WILL EXPAND BUSINESS DOMAINS BY TAKING ON NEW BUSINESS CHALLENGES. Representative Director, President Shinji Takada 12 SKY Perfect JSAT Holdings Inc.

15 Media Business Pursuing Services Unique to SKY PerfecTV! for Customers to Enjoy More Content will always be the lifeline of the Media Business no matter how business conditions change. We are keen to offer valuable products to our customers through a diverse lineup of compelling content in our multichannel pay TV broadcasting service. In Japan, broadcasters have been and always will be the largest and most powerful content creators. As such, they are our most important partners. Over the past few years, a number of OTT service providers have launched video distribution services, but the SKY PerfecTV! platform emphasizes quality first in broadcasting services with the healthy development of society and the creation of video culture in mind. In addition, we are deepening our relationships with broadcasters so that SKY PerfecTV! Services can be enjoyed anytime and anywhere, including over the Internet. As an advanced broadcasting service made possible through public-private collaboration, in December 2018, SKY Perfect JSAT Group launched 9-channel 4K broadcasting with the New 4K/8K Satellite Broadcasting Service using the BS 110-degree east longitude CS slot. With the spread of larger ultra-high-resolution TVs as a tailwind, we aim to help expand the number of households able to view 4K/8K broadcasts, a key pressing issue in the broadcasting industry, through appealing SKY PerfecTV! products and fiber to the home (FTTH) services. Focusing Efforts on Creating Attractive Content and Products, and Improving Value of SKY PerfecTV! for Customers (i.e., the Customer Experience) In the past, we invested heavily in marketing in line with its foremost priority of acquiring new subscribers in order to hone its competitiveness in the Media Business. From now on, the Company will relentlessly pursue the creation of attractive content and products, and the improvement of value of SKY PerfecTV! for customers (i.e., the customer experience). We must change our business structure so that a certain level of operating profit can be reliably secured over a mediumterm period, even in the absence of growth in subscriber numbers. With regard to content, SKY Perfect JSAT Group is refraining from engaging in overheated competition for sports broadcasting rights, and is instead concentrating on producing original programs and collaborative works with organizations in genres that have synergies with our platform. Our SKY PerfecTV! New Basic Service Package for Multiple TV Sets, which lets subscribers watch on up to three sets for the price of one, has proved popular since becoming available in December 2017, leading to positive feedback from customers and the acquisition of new subscribers. Families that have signed up for this package can enjoy watching SKY PerfecTV! programs in the living room and their individual rooms at the same time, an advantage not found with other services. We are preparing new enduring core product to coincide with the addition of new channels this autumn. Integrating broadcasting and communications functions, our SKY PerfecTV! Hybridcast brings even more convenience to viewers by enabling the display of information on TV screens, What We re Planning Who We Are How We re Doing Governance Corporate Profile Financial Section SKY Perfect JSAT Report

16 Message from the President including a program guide with images and notifications about missed favorite programs. By further advancing and developing the SKY PerfecTV! Hybridcast, we aim to offer an unprecedented experience to our customers while enabling the development of new businesses that take advantage of our base of over three million subscribers. Entering the Lifestyle Support Business SKY Perfect JSAT Group creates completely new value of television viewing + alpha, through leveraging new technologies like larger Internet-connected TVs. The way people spend their time is changing alongside the utilization of AI and advances in work-style reform. As the number of hours worked declines, people are likely to spend more time on hobbies, self-improvement activities and interacting with media. Since TVs are prominently located in living spaces, we intend to evolve the Media Business into a platform where TVs are more than a way of enjoying programs, as they could become a means of delivering lifestyle support services, such as healthcare and nursing care services in an aging society. The SKY Perfect JSAT Group aims to turn its Customer Center into smart contact center with AI and advanced systems in a bid to improve customer value while earning a profit on services that cater to the diverse needs of all consumers and corporations. Space Business Earnings Growth via Three New Satellites In the Space Business, we believe its total system, which combines satellite communications and terrestrial optical fiber, will become even more invaluable amid the shift to 5G technology and IoT. As the only satellite communications provider in Japan, SKY Perfect JSAT Group has continued to win praise for its high service quality as well as the disaster resistance and flexibility of its satellite communications. Roughly half of the revenues in the Space Business have consistently come from national government agencies, local governments and infrastructure-related companies (based on fiscal 2017 results). Also in backhaul line applications for mobile phone base stations, major carriers have decided to use our satellite communications services, reinforcing our earnings foundation in Japan. Expectations are on the rise for stronger growth on the global mobile market. Two major airlines have introduced free in-flight Internet connection services on domestic routes, leading to a sharp increase in the number of aircrafts and passengers connected to the Internet via our communications satellites. In the shipping industry as well, needs for Internet connectivity via communications satellites have continued to grow. To meet these needs, we began offering OceanBB Plus broadband services with much faster speeds. It has been installed on Japan s largest modern luxury cruise ship, the Asuka II. In light of strengthening demand for satellite communications services from the mobile market, we plans to launch three new satellites from fiscal 2018 to fiscal 2019, including two highthroughput satellites (HTS) with far more communications bandwidth than conventional satellites due to the efficient use of multiple spot beams. SKY Perfect JSAT Group forecasts operating revenues in the Space Business will exceed 60.0 billion in fiscal 2020, when the three new satellites are operating. 14 SKY Perfect JSAT Holdings Inc.

17 Who We Are What We re Planning Move from Infrastructure Business to Space Intelligence Business In addition to its stable infrastructure business using communications satellites in geostationary earth orbit, SKY Perfect JSAT Group is engaged in the low earth orbit satellite business and the industrial drone business as new ventures with proven synergies. The SKY Perfect JSAT Group has partnered with Planet Labs Inc. (headquartered in the U.S.), which provides frequently taken satellite images from 200 satellites in low earth orbit, to sell these satellite images to Japanese government agencies. enroute Co., Ltd., a Group company that is the largest agricultural drone developer and manufacturer in Japan, is keen to expand its surveying services and sales of industrial drone units. In an increasingly connected society, the Group is expanding into domains related to the space intelligence business to complement its infrastructure business by providing value-added services to customers, such as by using AI to process and analyze data generated by sensors in low earth orbit satellites and geostationary satellites. Fiscal 2017 Results In accordance with the Mid-term Business Plan 2020 (from fiscal 2016 to 2020) unveiled in May 2016, SKY Perfect JSAT Group has advanced measures to expand its foundation for growth through the launch of new satellites in the Space Business and Structural reform in the Media Business. In fiscal 2017, however, the number of subscribers and subscription fee revenue in the Media Business decreased, owing to the loss of rights to broadcast J-League games. Moreover, How We re Doing Governance Corporate Profile Financial Section SKY Perfect JSAT Report

18 Message from the President the Space Business saw an increase in depreciation for new satellites, and the disappearance of one-time revenue posted in fiscal 2016 for handing over a dedicated satellite to the Ministry of Defense. As a result, consolidated operating revenue fell 24.6% year on year to billion, operating profit decreased 35.9% to 15.6 billion, and profit attributable to owners of parent declined 34.8% to 11.3 billion. Fiscal 2018 Outlook and Shareholder Returns Expecting Higher Revenue and Profit on Sale of Satellite to Ministry of Defense and Cost Controls Due to challenging conditions for increasing subscriber numbers, we plan to restructure the Media Business, including cutting new subscriber acquisition costs. In the Space Business, a satellite was successfully launched for the Ministry of Defense in April 2018 after some delays. For fiscal 2018, management forecasts a return to year-on-year growth of 15.8% in operating revenue, 5.4% in operating profit, and 1.4% in profit attributable to owners of parent. With regard to shareholder returns, we have set a basic policy of targeting an annual dividend of at least 16 per share or a dividend payout ratio of at least 30%. For the fiscal year ended March 31, 2018, the Company paid an annual dividend of 18 per share from the standpoint of maintaining a stable dividend. Management aims to pay the same dividend per share in the fiscal year ending March 31, (Billions of yen) Actual Forecast Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018 Operating revenue Operating profit Aggressively Moving to Expand New Businesses In the decade since the three-company merger in 2008, the operating environment for multichannel pay TV broadcast and satellite communications services has changed even more than we had originally forecast. The increasing prevalence of the Internet in society from the spread of smartphones has had a major impact on the business model of existing visual media business. In space and satellite related businesses, innovations that turn conventional notions on their head have appeared one after the other. We view these trends as signs of tougher competition in our existing businesses while creating major opportunities for technological innovation on the digital and space frontiers as we use our innovative resources to collaborate optimally to address the changing needs of society, companies and consumers. Based on its new Group Mission statement, the SKY Perfect JSAT Group has taken up the challenge of entering new business domains. We ask for the continued understanding and support of our shareholders and investors as we work toward growth of the SKY Perfect JSAT Group. 16 SKY Perfect JSAT Holdings Inc.

19 SKY Perfect JSAT has two representative directors in order to reinforce the Group management structure and more rapidly respond to changes in the business environment surrounding the Group. Based on the newly created Group mission, we intend to strengthen management under this new structure with the ultimate aim of maximizing corporate value. What We re Planning Who We Are Eiichi Yonekura Representative Director, Senior Executive Vice President Shinji Takada Representative Director, President How We re Doing Governance Corporate Profile Financial Section SKY Perfect JSAT Report

20 Review of Operations Media Business Jiro Komaki Director, in charge of Media Business Breakdown of Subscribers Per Service SKY PerfecTV! Premium Service 1,093,608 Operating Revenues () 122, , , , ,900 3,262,393 subscribers (As of at the end of March, 2018) Segment Profit () 6,242 SKY PerfecTV! Premium Service HIKARI 84,563 SKY PerfecTV! 2,084,222 4,572 We will reassess the cost structure and improve profitability in content, while developing new services and upgrading current services unique to customer-oriented SKY PerfecTV!. 2,433 3,233 3, (FY) Forecast (FY) Forecast Reference Data for All SKY PerfecTV! Services (in thousands) Q Fiscal Q Q 4Q 1Q 2Q Fiscal 2017 Fiscal 2016 Fiscal 2017 Number of new subscribers (in thousands) Net increase (in thousands) (162) (57) Cumulative total number of subscribers (in thousands) 3,320 3,262 Average monthly subscriber s payment (in yen) 3,291 3,219 ARPU*(Average Revenue per User) (in yen) 2,133 2,040 SAC (Subscriber Acquisition Cost) Total (in billions yen) SAC (Subscriber Acquisition Cost) per Unit (in yen) 39,274 33,353 * Within the average monthly subscription revenue paid by subscribers, the amount the Group records as operating revenue. Number of New Subscribers SKY PerfecTV! SKY PerfecTV! Premium Service SKY PerfecTV! Premium Service HIKARI Q 87 4Q 92 Quarterly Churn Rate * 6.0 (%) 400, , , , ,456 34,567 1Q Fiscal ,824 28,833 2Q 210,374 27, ,372 74, ,888 45, ,943 32,927 3Q 4Q 1Q 2Q Fiscal ,068 31,267 3Q ,717 69,269 Average quarterly churn rate Churn rate after exclusion of re-registered subscribers Number of churns Number of re-registered subscribers * Total for all of SKY PerfecTV! Shows the total number of churns each quarter divided by cumulative number of subscribers as of the end of the previous fiscal year 4Q SKY Perfect JSAT Holdings Inc.

21 Review of Fiscal 2017 With the pay broadcasting market showing signs of maturation in Japan, competition has heated up in the acquisition of customers for various OTT services that utilize Internet streaming and also for broadcasting rights, especially for sports events. Under these circumstances, SKY Perfect JSAT was able to increase the number of new subscribers through its SKY PerfecTV! New Basic Service Package with Free Subscriptions for Multiple TV Sets, a service not offered by rivals. In fiscal 2017, however, operating revenues in the Media Business decreased 11 billion year on year to billion, owing mainly to declines of 5.2 billion in soccerrelated content revenue due to the loss of J-League broadcasting rights, 3.6 billion in subscription revenue for non-soccer content, and 2.2 billion in lost revenue from not charging for registration. The Company worked to offset the decrease in operating revenues by cutting back on advertising expenses by 2.6 billion, but segment profit fell 1.3 billion to 3.2 billion. Average Monthly Subscriber s Payment * SAC (Subscriber Acquisition Cost) per Unit * (Yen) 4,000 3,000 2,000 1,000 0 (Yen) 2,500 2,000 1,500 1, ,331 3,323 3,295 3, Q Fiscal Q Fiscal ,728 2,726 2,696 2, Q 3Q 4Q 1Q Fiscal 2017 ARPU * (Average Revenue per User) 2,164 2,154 2,142 2, ,561 1,556 1,543 1, Q 3Q 4Q 1Q Fiscal ,247 3,254 3,209 3, ,750 2,766 2,717 2, Q 3Q 4Q Basic fee Rental fee Monthly subscription fee PPV subscription Revenues from SKY Perfect s own content *Average monthly subscription revenue paid by each subscriber 2,063 2,056 2,034 2, ,566 1,567 1,542 1, Q 3Q 4Q Basic fee Rental fee Monthly subscription fee PPV subscription Revenues from SKY Perfect s own content * Within the average monthly subscription revenue paid by subscribers, the amount the Group records as operating revenue. (Yen) 50,000 40,000 30,000 20,000 10,000 0 Outlook for Fiscal 2018 We must maintain and improve the competitiveness of our content and products to the extent possible. Looking ahead, we will thoroughly review the heavy spending we did on marketing to attract new subscribers, focus more on analyzing the cost effectiveness of content production for our own channels, and seek to further improve content revenues. Assuming challenging conditions for attracting subscribers, SKY Perfect JSAT forecasts operating revenues will decline by 1.8 billion to billion, but estimates segment profit will increase 0.3 billion to 3.5 billion thanks to progress on business restructuring. 37,790 37,971 1Q Fiscal Q Fiscal ,490 37,992 37,934 37,550 2Q 3Q 4Q 1Q Fiscal 2017 SAC (Subscriber Acquisition Cost) Total 2Q 3Q 4Q 1Q Fiscal ,223 30,804 2Q 3Q 4Q * SAC per unit is calculated by dividing the SAC total (excluding free content costs ) by the number of new subscribers in the subject period. () 6,000 5,202 4,814 4,308 4,557 4,277 4,513 1,849 1,110 4,010 3,896 4,000 1,057 1,105 1,078 1, ,198 1,205 1,427 1,844 1,497 1,379 1,184 1,378 1,614 2, Q 3Q 4Q Advertising expenses Campaign expenses Promotional expenses Sales incentives Others Free content costs How We re Doing Who We Are What We re Planning Governance Corporate Profile Financial Section SKY Perfect JSAT Report

22 Review of Operations Future Initiatives Three Key Measures As competition for content and subscribers intensifies with OTT service providers, SKY Perfect JSAT will continue to strictly control costs in order to secure a certain level of profit over the medium term, even if the number of subscribers declines. The Company is advancing three key measures, namely creating attractive content and products, the foremost priority for broadcasters; improving the value of SKY PerfecTV! for customers (i.e., the customer experience), in order to reduce churn to retain and expand its base of subscribers; and develop new services, going beyond broadcasting services. (1) Create Attractive Content and Products Longer contract terms, decrease number of churn (2) Improve the Value of SKY PerfecTV for Customers (3) Continue initiatives to grow earnings via new services, etc. (1) Create Attractive Content and Products For soccer content to replace J-League broadcasting rights, SKY Perfect JSAT has obtained exclusive broadcasting and distribution rights (excluding terrestrial broadcasting rights) for two seasons (18/19 and 19/20) of teams that field Japanese leading soccer players, including Bundesliga of Germany, the Portugal league, and the Belgium league. While strictly managing profitability, we aim to augment our competitive original programs through BS SKY PerfecTV! The Company is focusing on putting together compelling bundles of products while deepening its relationships with broadcasters. This autumn, SKY Perfect JSAT plans to launch new major products. Exclusively broadcasting Bundesliga (2) Improve the Value of SKY PerfecTV! for Customers (i.e., the customer experience) Our SKY PerfecTV! New Basic Service Package with Free Subscriptions for Multiple TV Sets, which lets subscribers watch on up to three sets for the price of one, no extra charge, has proved popular since becoming available in December This allowed us to increase the number of new subscribers to 370 thousands in fiscal 2017 (up 20 thousands from the previous fiscal year). Affordably priced and unavailable anywhere else, this service has proved popular for allowing each member of the family to watch their own programs at the same time. With customer satisfaction above 90% according to a survey, we have decided to extend this campaign. In addition, SKY Perfect JSAT launched the SKY PerfecTV! Hybridcast that features Hybridcast of both SKY PerfecTV! Hybridcast 20 SKY Perfect JSAT Holdings Inc.

23 broadcasting and communications services via the Internet. Pushing the d button on a remote control connects the SKY PerfecTV! broadcasting service and web services. All available channels are displayed without having to switch between BS broadcasting and CS broadcasting. Subscribers can view missed programs without having to think about whether they are being broadcast or on demand. These diverse and convenient features, developed by thoroughly pursuing viewer needs, have proved very popular among subscribers. For the SKY PerfecTV! On-Demand service, which can be accessed by just connecting a TV to the Internet, we are expanded to 96 channels as of June 1, 2018, taking another step toward linear IP that allows subscribers to view (3) Develop New Services SKY Perfect JSAT is concentrating on expanding TV + alpha services. As a value-added service for SKY PerfecTV! customers, we launched the SKY PerfecTV! Benefit in May 2018 that lets our customers take advantage of discount prices and other benefits at leisure facilities around the country and chain stores in their neighborhoods. Moreover, we began to offer SKY PerfecTV! Magazine in July as a service for unlimited reading of e-magazines. Going beyond broadcasting services, we aim to transform our platform into a convenient portal for providing a variety of customer-oriented services that are in tune with customers lifestyles. For the future, The Company intends to Initiatives for Advancing Broadcasting Services satellite broadcasting channels and programs in real time on their smartphones, PCs, and tablets. SKY PerfecTV! On-Demand aggressively develop new lifestyle support services that can be provided through SKY PerfecTV!. SKY PerfecTV! Benefit SKY PerfecTV! Magazine SKY Perfect JSAT has pioneered the advancement of broadcasting services in the industry. Since 2014, SKY Perfect plans to begin offering right-handed circular polarization new For FLETS TV and other FTTH services, the Company JSAT has launched its SKY PerfecTV! Premium Service and 4K/8K satellite broadcasting sequentially. Without having to SKY PerfecTV! Premium Service Hikari compatible with 4K prepare new antennas, subscribers can view the new 4K/8K broadcasts. With the commencement of new 4K/8K satellite satellite broadcasting service on compatible TVs and tuners. broadcasting on December 1, 2018, SKY Perfect JSAT will SKY Perfect JSAT aims to increase product appeal and add nine 4K channels (one BS channel and eight 110-degrees customer satisfaction by offering compelling programs and east longitude CS channels) to the SKY PerfecTV! service. actively working on 4K broadcasts, which can offer beautiful, high-resolution videos. How We re Doing Who We Are What We re Planning Governance Corporate Profile Financial Section SKY Perfect JSAT Report

24 Review of Operations Space Business Koki Koyama Director,in charge of Space Business Breakdown of Revenues Global/Mobile 22% Domestic 47% Operating Revenues () 50,400 (Fiscal 2017) Broadcasting 31% Segment Profit () 87,749 75,300 17,830 18,612 20,528 By launching New satellites including High Throughput Satellites (HTS) SKY Perfect JSAT aims to expand earnings in the satellite business while expanding into new business domains, including low earth orbit satellites. 53,388 54,560 50, (FY) Forecast 13,137 13, (FY) Forecast Satellites to be Launched in 2018 and Onwards Satellite name Horizons 3e (HTS) Orbital position 169 E JCSAT E Scheduled launch date September 2018 Second half of FY2019 Launcher Arianespace Arianespace Our Satellite Fleet Orbital position N-SAT- 110 Used primarily for Broadcasting Service JCSAT- 110R JCSAT- 110A JCSAT- 4B JCSAT- 3A 110 E 110 E 110 E 124 E 128 E JCSAT-18 (HTS) Second half of FY2019 SpaceX * Superbird-B3/DSN-1 was successfully launched on April 6, 2018 (JST). Launch date (Japan time) Oct.7, 2000 Aug.7, 2011 Dec.22, 2016 May.16, 2012 Aug.12, 2006 Launch vehicle Ariane4 Ariane5 Ariane5 Ariane5 Ariane5 Satellite bus A2100 AX A2100 A SSL 1300 A2100 AX A2100 AX Design life 15 years 15 years 15 years 15 years 15 years JCSAT-17 (illustration) Lockheed Martin 22 SKY Perfect JSAT Holdings Inc.

25 Review of Fiscal 2017 Demand strengthened for backhaul lines (lines connecting mobile phone base stations to trunk line networks) for mobile phone base stations, as well as for mobile satellite communications for ships and aircrafts. However, SKY Perfect JSAT came face-to-face with fierce price competition with foreign satellite operators on global markets. Against this backdrop, revenues increased from domestic mobile phone operators. However, operating revenues decreased 37.3 billion year on year to 50.4 billion in the Space & Satellite Business in fiscal 2017, owing to the disappearance of sales ( 36.9 billion) booked last year from the delivery of the No. 2 satellite for the Ministry of Defense, and a decrease in broadcasting transponder revenues alongside a decline in subscription fees and subscriber numbers for SKY PerfecTV! Segment profit fell 7.4 billion to 13.1 billion, owing in part to an increase of 1.6 billion in operating expenses due to higher depreciation following the launch of communications satellites in the previous fiscal year. JCSAT- 2B JCSAT- 5A JCSAT- 85 Used primarily for Communications Service JCSAT- 6 JCSAT- 8 Superbird- C2 Superbird- B3 Horizons- 1 Horizons- 2 N-STAR c JCSAT E 132 E 85 E 150 E 144 E 162 E 127 W 85 E 136 E May.6, 2016 Falcon9 SSL 1300 Apr.13, 2006 Zenit- 3SL A2100 AX Dec.1, 2009 Zenit- 3SLB STAR-2 15 years 12 years 15 years Feb.16, 1999 Mar.29, 2002 Aug.15, 2008 Apr. 6, 2018 Atlas2AS Ariane4 Ariane5 Ariane5 Boeing years Boeing years DS 2000 Over 15 years DS 2000 Over 15 years Outlook for Fiscal 2018 Repairs were completed on the No. 1 satellite for the Ministry of Defense that had been damaged during transport to the Guyana Space Center in June 2016, and the satellite was successfully launched in April SKY Perfect JSAT aims to create new services and expand business for retaining and increasing domestic customers, and continue focusing on growth fields including mobile communications for ships and aircrafts and backhaul lines for mobile phone base stations. For fiscal 2018, the Company forecasts operating revenues will grow 24.9 billion to 75.3 billion. Management estimates segment profit will rise 0.5 billion to 13.6 billion, reflecting the completion of depreciation on the JCSAT-5A satellite. Oct.1, 2003 Zenit- 3SL Boeing 601HP Over 15 years Dec.22, 2007 Jul.6, 2002 Aug.22, 2009 JCSAT- 16 Aug.14, 2016 Ariane5 Ariane5 Ariane5 Falcon9 STAR-2 STAR-2 A2100 AX SSL years 10 years 15 years 15 years How We re Doing Who We Are What We re Planning Governance Corporate Profile Financial Section (As of July 31, 2018) SKY Perfect JSAT Report

26 Review of Operations Future Initiatives Plans to Use Three New Satellites Demand has rapidly strengthened for mobile communications amid the increasing use of smartphones and tablets on ships and airplanes. It is projected that compared with 2016, communications bandwidth for aviation will be roughly 11x in 2021 and 38x in 2026 on a global basis. SKY Perfect JSAT also anticipates a sharp increase in backhaul lines for mobile phone carriers. In fiscal 2018, the Company plans to launch the Horizons 3e satellite jointly with Intelsat S.A., and it has already signed usage agreements with mobile phone operators. The Horizons 3e and JCSAT-18 satellites are High Throughput Satellites (HTS) with roughly 10x the communications capacity of conventional satellites. We plan to offer satellite communications services for mobile phone backhaul lines and to meet brisk demand for mobile services on airplanes and ships. The Company plans to launch the JCSAT-17 satellite in the second half of fiscal 2019, and NTT DOCOMO, Inc. has already signed a long-term contract. Global Ku band satellite bandwidth for aircrafts Usage of the Company s transponders for mobile backhaul applications 150 (Band in MHz) 1,500 To Introduce Two New HTS 100 1,000 Increased usage of approx. 55 times forecasted from 2014 to Source: Euroconsult, Based on PROSPECTS FOR IN-FLIGHT ENTERTAINMENT AND CONNECTIVITY Increasing Options for Launch Rockets and Efforts to Reduce Costs SKY Perfect JSAT has signed a memorandum of understanding with Blue Origin, LLC, a space development company established by Jeff Bezos, the founder of Amazon.com, about using the New Glenn rocket currently under development by the company. Over the past two years, two satellites have been launched successfully, one each by Arianespace and Space Exploration Technologies Corp. (SpaceX), as well as one satellite using the H-IIA rocket made by Mitsubishi Heavy Industries, Ltd. SKY Perfect JSAT aims to flexibly maintain a wide range of options for planning the launch of communications satellites and reduce launch costs for satellites in the future. Depiction of New Glenn Rocket CEO Jeff Bezos and President Shinji Takada Blue Origin 24 SKY Perfect JSAT Holdings Inc.

27 Who We Are Diversification into New Domains Low Earth Orbit Satellite Business Industrial Drone Business As satellites become smaller and cheaper to launch, companies around the world are planning to launch a large number of low earth orbit satellites. A huge volume of satellite data, such as images and surface data, will become available and spur rapid growth on the market for analyzing this satellite data with AI in the geospatial information field. By 2022, some surveys project this market will exceed $25 billion in value. Against this backdrop, SKY Perfect JSAT entered the low earth orbit satellite business as a new business domain in fiscal SKY Perfect JSAT has already forged partnerships with leading companies in their respective fields, such as Axelspace Corporation (Japan), Kongsberg Satellite Services AS (Norway), Planet Labs Inc. (U.S.), LeoSat Enterprises, Inc. (U.S.) and Orbital Insight, Inc. (U.S.) The Company aims to expand ground station services for low earth orbit satellites and services for analyzing and providing satellite images. SKY Perfect JSAT has already entered into major longterm contracts with government agencies for supplying them with satellite images. The Company has also commenced services for receiving and distributing data from low earth orbit satellites using its ground station facilities. Planet Labs Inc. s ultra-compact satellite SKY Perfect JSAT is also concentrating on developing an industrial drone business. Subsidiary enroute Co., Ltd. is the one of the largest manufacturer of industrial-use drones in Japan. It is specializing in the agriculture and surveying fields and plans to offer services that combine solutions for maintenance inspections and information analysis, while also selling drone equipment. It also engages in cutting-edge research in the fields of infrastructure inspection, such as bridges and solar panels, as well as disaster response. In addition, SKY Perfect JSAT conducts research on flight management systems in order to ensure the safe deployment of drones. The Company has been contracted to conduct R&D by the New Energy and Industrial Technology Development Organization (NEDO), and worked with the National Institute of Information and Communications Technology (NICT) to conduct the world s first experiment for in-flight communications of position and direction data between a drone and a piloted helicopter as a substitute for a high-altitude unmanned plane. Currently, an assistant must monitor the drone on its flight path, but this experiment will contribute to the realization of unmonitored drone flight without an assistant. Industrial drone market projection (Billion yen) 2,500 2,000 1,500 1, Service Drones enroute s drone How We re Doing What We re Planning Governance Corporate Profile Financial Section KSAT s antenna base at the Arctic Circle Source: Seed Planning, Inc. SKY Perfect JSAT Report

28 Board Directors (As of June 22, 2018) Board Director Jiro Komaki Board Director Koki Koyama Representative Director, Senior Executive Vice President Eiichi Yonekura Representative Director, President Shinji Takada Board Director Masao Nito Board Director Shinji Yokomizu 26 SKY Perfect JSAT Holdings Inc.

29 Representative Director, President Shinji Takada 2011 Representative Director, President (to the present) Representative Director, President & CEO, SKY Perfect JSAT Corporation (to the present) [Reasons for nomination] Mr. Shinji Takada was appointed Representative Director, President of the Company in 2011, and has provided the Group s management with strong leadership. He is expected to implement strategies for the growth of our business and our Group s improved performance and appropriately supervise the entire Group, based on a wide range of knowledge of the communications and broadcasting industry, as well as extensive experience as a corporate manager. Representative Director, Senior Executive Vice President Eiichi Yonekura 2018 Representative Director, Senior Executive Vice President (to the present) Representative Director, Senior Executive Vice President, SKY Perfect JSAT Corporation (to the present) In charge of Internal Control (to the present) Chief Information Management Officer (to the present) [Reasons for nomination] Mr. Eiichi Yonekura has high level of expertise as a corporate manager, extensive experience and knowledge at a general trading company. He is expected to implement strategies for our Group s improved performance and appropriately supervise the entire Group; therefore, he is proposed as a candidate for new election as a Board Director. Board Director Masao Nito 2008 Director (to the present) Director, Senior Executive Vice President, SKY Perfect JSAT Corporation (to the present) 2010 In charge of Corporate Planning & Strategy (to the present), Chief Risk Management Officer (to the present) 2013 Chief Group Compliance Officer (to the present) 2018 In charge of Engineering (to the present) [Reasons for nomination] Mr. Masao Nito is expected to implement strategies for our Group s improved performance and appropriately supervise the entire Group, based on extensive experience and knowledge across operations as a manager at the Company and Group companies. Board Director Koki Koyama 2014 Director, In charge of Space Business (to the present) Director, Senior Managing Executive Officer, SKY Perfect JSAT Corporation (to the present) [Reasons for nomination] Mr. Koki Koyama is expected to implement Space Business strategies for our Group s improved performance and appropriately supervise the entire Group, based on a wide range of knowledge in the fields of space & satellite business and extensive experience as a Board Director. Board Director Shinji Yokomizu 2015 Director, Chief Financial Officer (to the present) Director, Senior Managing Executive Officer, SKY Perfect JSAT Corporation (to the present) [Reasons for nomination] Mr. Shinji Yokomizu is expected to implement financial strategies for our Group s improved performance and appropriately supervise the entire Group, based on a wide range of knowledge of finance and accounting and extensive experience as a Board Director. Board Director Jiro Komaki 2015 Director, In charge of Media Business (to the present) Director, Senior Managing Executive Officer, SKY Perfect JSAT Corporation (to the present) [Reasons for nomination] Mr. Jiro Komaki is expected to implement Media Business strategies for our Group s improved performance and appropriately supervise the entire Group, based on a wide range of knowledge of the broadcasting industry and extensive experience as a Board Director. Board Directors (Non-Standing) Iwao Nakatani (outside) * Kazunobu Iijima Kiyoshi Kosaka (outside) Yoshinobu Kosugi (outside) Hiroshi Fujiwara (outside) * Corporate Auditors Itaru Nishimura (outside) Akira Ogawa (outside) * Corporate Auditors (Non-Standing) Toshiaki Katsushima (outside) * Mikio Kokubu (outside) * Filed to the Tokyo Stock Exchange as independent directors/auditors based on the Company s own judgment criteria for independence Governance Who We Are What We re Planning How We re Doing Corporate Profile Financial Section SKY Perfect JSAT Report

30 Corporate Governance The SKY Perfect JSAT Group strives to maintain highly transparent corporate governance systems that are able to quickly meet the demands of a changing business environment. As a corporate entity that provides the highly public services of broadcasting and communications, we pursue rigorous corporate ethics based on legal compliance and the ongoing reinforcement of our risk management system. Our Basic Philosophy on Corporate Governance As a publicly traded company, we believe maximizing the Group s corporate value in the capital market is the fundamental goal of corporate governance. To this end, we consider it one of the most critical management issues to establish a good relationship with stakeholders surrounding the Group consisting of our shareholders and customers who use our services, as well as business partners, employees, and communities, along with making prompt management decisions in a changing social and economic environment and further enhancing the soundness of management, while bearing in mind the importance of corporate ethics based on compliance with laws and regulations. Based on such philosophies, as a corporate group that provides highly public services of broadcasting and communications, we have been making efforts to ensure and enhance the transparency and soundness of management since our establishment in April Examples of those efforts include the appointment of multiple outside directors and the establishment of the Nomination and Remuneration Committee to act as an optional advisory body to the Board of Directors. In respect of the judgment criteria for the independence of directors/auditors, we have formulated our own standards, effective from FY 2015, on top of the requirements stipulated by the Tokyo Stock Exchange. To our shareholders and investors, we ensure prompt and accurate information disclosure, as well as an increase in our management transparency by providing extensive information. Overview of the Governance Structure The Company's Board of Directors consists of 11 directors, 4 of which are outside directors (as of June 22, 2018). As a foundation of the structure to ensure the efficient performance of the directors' duties, the Board meets regularly, once a month in principle, and holds extraordinary meetings when necessary, to make decisions concerning important business operations for the Company and its Group companies. The directors also share information on material facts that occur in the Group companies to implement risk management in an appropriate and swift manner. Along with clearly defining the duties of each director, the Company clarifies their roles in business execution by the Organization Regulation and also appoints a responsible leader for each department and function. Through this system, the Company ensures that each duty is carried out in an appropriate and efficient manner. Meanwhile, the appointment of 4 outside directors who possess a wealth of expertise and experience in corporate management enriches discussions in the Board meetings with diverse viewpoints, and enhances the rationality and appropriateness of decision making, thereby increasing the effectiveness of the Group s corporate governance system. 28 SKY Perfect JSAT Holdings Inc.

31 Highly Transparent Remuneration System Designed to Establish Greater Linkage with Corporate Performance Who We Are The Company has adopted a performance-linked cash remuneration system. Under this system, in addition to a basic salary, directors also receive remuneration based on their achievement of management indices established at the Remuneration of Directors and Auditors Organization for Corporate Governance Reports Board of Corporate Auditors: 4 Corporate Auditors (All Outside Corporate Auditors) Reports Accounting Auditor Accounting Audit Appoints/removes Total Remuneration ( millions) Audits General Meeting of Shareholders Board of Directors: 11 Directors (including 2 Representative Directors and 4 Outside Directors) President Appoints/removes Departments: Compliance Promotion/Internal Audit/Internal Control Promotion/Corporate Planning/ Human Resource/Corporate Communications & Investor Relations Finance/Accounting/General Affairs/Legal/Information Systems beginning of the fiscal year as an incentive to improve corporate performance. The Nomination and Remuneration Committee is chaired by an outside director and a majority of its members are outside directors. Total Remuneration by Type ( millions) Basic salary Consults Consults Performance-linked Nomination and Remuneration Committee Management Committee Information Disclosure Committee Number of Eligible Recipients Directors(Excluding Outside Directors) Corporate Auditors (Excluding Outside Corporate Auditors) Outside Directors/Corporate Auditors Reasons for Adopting the Current Corporate Governance System As a company with Board of Corporate Auditors, SKY Perfect JSAT Holdings Inc. aims to ensure the soundness and transparency of management and strengthen the monitoring and supervising functions by having the corporate auditors fully monitor corporate management. In addition to the corporate governance system being primarily based on the monitoring of corporate management by the corporate auditors, the Company has appointed multiple outside auditors and directors with high levels of independence for the purpose of further increasing the effectiveness of the supervision of management by the Board of Directors as well as the transparency and soundness of management. The Company has also established the Nomination and Remuneration Committee to act as an optional advisory body to the Board of Directors. Outside directors account for more than half the members of this Committee, with an outside director acting as chairman, allowing the Committee to issue independent reports in regard to remuneration and nominations. Governance What We re Planning How We re Doing Corporate Profile Financial Section SKY Perfect JSAT Report

32 Corporate Governance Policy on Constructive Dialog with Stakeholders, Including Shareholders In order to achieve sustainable growth and increase the Company s corporate value over the medium to long term, the Director in charge of Corporate Planning & Strategy will also be responsible for investor relations and play a central role in implementing a constructive dialogue with shareholders and potential investors, with the President and Chief Financial Officer (CFO) also contributing to a reasonable extent. Opinions and concerns of the shareholders and potential investors learnt through such dialogue will be forwarded to the Board of Directors on a quarterly basis by the Director in charge of Corporate Planning & Strategy as a report on investor trends and IR activities. We remain committed to listening to the thoughts of shareholders and other stakeholders in managing the Company. In connection with policies for providing information to our stakeholders, the Company has established the Information Disclosure Committee as an advisory organ to the President. This Information Disclosure Committee is responsible for offering opinions to the President from the standpoint of timely and accurate information disclosure. Evaluation and Analysis of the Board of Directors Based on the results of the Directors self-assessments conducted in March 2018, the Board of Directors implemented, from April through May 2018, the evaluation and analysis of the Board's effectiveness for FY 2017 by having discussions with the Board members including Corporate Auditors. As a result, it was determined that, for matters requiring consideration for improvements, improvement activities shall be implemented over operations, agendas and proceedings of the Board of Directors meeting under the leadership of the Chairman of the Board and facilitation of the Secretariat of the Board of the Directors meeting. Summary of results of evaluation on the Board effectiveness The Board of Directors consists of 7 full-time directors and 5 non-standing directors, of which 2 are independent outside directors, and 2 are outside directors. Each director leverages their knowledge and experience in the Board of Directors by making effective remarks and engaging in high-quality discussions. The results of the Company s assessment show that the Board effectiveness has been sufficiently ensured. With regard to the Board s operation, we have been striving to address issues targeted for improvement as necessary, and we consider it appropriate to continue such efforts going forward. System Ensuring and Supervising Sound Business Management Appointment of Independent Directors/Auditors To protect general shareholders and enhance corporate governance, the Tokyo Stock Exchange, on which the Company the Company or Group. objective standpoint and who does not have any interests in is listed, requires that all listed domestic companies appoint In accordance with this requirement, we have formulated our own judgment criteria for the independence of at least one independent director/auditor. An independent director/auditor is an outside director or auditor who is directors/auditors in addition to those stipulated by the Companies Act and the Tokyo Stock Exchange, and the Company unlikely to have any conflict of interest with general shareholders. In other words, an independent director/auditor is a currently has two independent directors and two independent person who participates in management from a neutral and auditors. 30 SKY Perfect JSAT Holdings Inc.

33 FY2017 Major Activities Conducted by Outside Directors Position Name Activities Board Director Iwao Nakatani Michiaki Ogasawara Kiyoshi Kosaka Yoshinobu Kosugi Tatsushi Shingu Board of Corporate Auditors The Company s Board of Corporate Auditors consists of four members, all of whom are outside auditors. Corporate auditors attend important decision-making meetings, including Board of Directors and Management Committee meetings, where they engage in active exchanges of ideas and opinions. They conduct investigations of departments and FY2017 Major Activities Conducted by Outside Auditors Mr. Nakatani attended 17 of the 19 Board of Directors meetings held in the fiscal year ended March 31, With regard to business deliberations and other matters, he provided advice as necessary based on his high level of expertise in the field of economics and business management. Mr. Ogasawara attended all 19 of the 19 Board of Directors meetings held in the fiscal year ended March 31, With regard to business deliberations and other matters, he provided advice as necessary based on his abundant experience and knowledge in the field of public administration. Mr. Kosaka attended all 19 of the 19 Board of Directors meetings held in the fiscal year ended March 31, With regard to business deliberations and other matters, he provided advice as necessary based on his abundant experience and knowledge in the field of telecommunications. Mr. Kosugi attended all 12 of the 12 Board of Directors meetings since his appointment. With regard to business deliberations and other matters, he provided advice as necessary based on his abundant experience and knowledge of the broadcasting industry. Mr. Shingu attended 10 of the 12 Board of Directors meetings since his appointment. With regard to business deliberations and other matters, he provided advice as necessary based on his abundant experience and knowledge in the field of information and communications acquired during his time at a general trading company. Position Name Activities Corporate Auditor Akira Ogawa Itaru Nishimura Toshiaki Katsushima Hiroyuki Aiko subsidiaries based on annual plans, and audit the business performance of directors. The Board of Corporate Auditors receives audit reports from the accounting auditor as necessary, and the board receives reports from the Internal Audit Department, provides advice, and exchanges opinions on the status of internal controls. Mr. Ogawa attended all 19 of the 19 Board of Directors meetings and all of the 15 Board of Corporate Auditors meetings held in the fiscal year ended March 31, With regard to business deliberations and other matters, he provided advice as necessary based on his abundant experience and knowledge in the field of international financial business management. Mr. Nishimura attended 11 of the 12 Board of Directors meetings and 9 of the 10 Board of Corporate Auditors meetings held since assuming office. With regard to business deliberation and other matters, he provided advice as necessary based on his abundance of experience and knowledge that he has acquired at a general trading company. Mr. Katsushima attended 17 of the 19 Board of Directors meetings and all of the 15 Board of Corporate Auditors meetings held in the fiscal year ended March 31, With regard to business deliberation and other matters, he provided advice as necessary from his standpoint as a certified public accountant and a certified public tax accountant based on his abundant experience and knowledge in the field of accounting and finance. Mr. Aiko attended all 12 of the 12 Board of Directors meetings and all of the 10 Board of Corporate Auditors meetings since his appointment. With regard to business deliberations and other matters, he provided advice as necessary based on his abundant experience and knowledge of the broadcasting industry. Governance Who We Are What We re Planning How We re Doing Corporate Profile Financial Section SKY Perfect JSAT Report

34 Corporate Governance Status of Compliance, Risk Management, and Information Control Systems Group Compliance Committee and Group Compliance Help Line To ensure that business execution of the Company s directors and employees comply with relevant laws and regula- the Company has put into place an internal and external Board of Directors, executives, and employees. Moreover, tions, the Articles of Incorporation, and various internal Group Compliance Help Line system, under which those who regulations, the Company has established a Group Compliance Committee and its Secretariat, the Compliance Promo- carried out by employees, executives, or members of the discover that the Company s business activities or practices tion Office. The Committee appoints a Chief Group Board of Directors might be illegal can report them immediately or consult with the Help Line staff. Moreover, if there is Compliance Officer who acts as the chairperson of the Committee. The Committee chairperson submits issues on compliance program matters and facts regarding compliance to Board Directors of the Company or Board Directors or Execu- a consultation or report for which involvement of full-time the Committee for deliberation, as well as reports deliberation tive Officers of the Group companies is suspected, it can be results to the Board of Directors as necessary. Regarding the forwarded directly over to the Company s full-time Corporate maintenance, management, and contents of compliance Auditors through the external Group Compliance Help Line, programs for the entire company, the Compliance Promotion bypassing the Compliance Promotion Office and the Chief Office provides education and training to members of the Group Compliance Officer. Risk Management Committee To recognize and evaluate risks related to business execution comprehensively and conduct appropriate risk management, the Company has established risk management regulations. To ensure the effectiveness of the regulations, the Company has established a Risk Management Committee, which is chaired by the Chief Risk Management Officer. The Committee determines risk management policies, evaluates risks, and examines risk prevention measures. At the same time, the Committee is responsible for strengthening the overall risk management system through the study of individual events. The Chief Risk Management Officer reports to the Board of Directors on the status of risk management and other matters as necessary. The Information Security Management Committee, the Personal Information Management Committee, and the Information Security System Alongside the establishment of a Security Policy to maintain including executives and contractors. information security and a Privacy Policy to protect personal There has been an increase in recent years in cyberattacks on information systems, including targeted attacks information, the Company has established an Information Security Management Committee and a Personal Information through the introduction of malware and unauthorized Management Committee, both chaired by the Chief Information Management Officer, to ensure an appropriate and effec- Group has established a Computer Security Incident access through the Internet. Against this backdrop, the tive management structure in each area. We have also placed Response Team (CSIRT) as part of a system designed not a person responsible for information security management at only to strengthen security for websites providing Intranet each of the Group companies and implemented thorough systems and services, but also to limit the spread of information management training for all Group employees, damage from any such attack. 32 SKY Perfect JSAT Holdings Inc.

35 Message from Outside Director Who We Are Role and Responsibility of an Outside Director Outside Director Iwao Nakatani Profile: Graduated from the Faculty of Economics, Hitotsubashi University Ph.D. in Economics, Harvard University Professor, School of Economics, Osaka University Professor, Faculty of Commerce and Management, Hitotsubashi University Chairman, the Board of Counselors, Mitsubishi UFJ Research and Consulting Co., Ltd. (present) Outside Director, WDI Corporation (to the present) Representative Director, Fushiki-an (to the present) As an Independent Outside Director, I believe my greatest responsibility is to always focus on maximizing the interests of all shareholders, and not to be confined to furthering the interests of only a few major shareholders. With this in mind, I believe it an important that I never hesitate in making my voice heard when I believe it necessary. I also believe deeper dialog with management necessary to the improvement of corporate value. Even when a proposal has been discussed at length within the company at management meetings, there is still value in considering the outlook from an outside perspective. In such a case, outside directors should leverage their external perspective and be proactive in the frank exchange of views with management. Indeed, there are several cases in which deeper dialog with management has allowed improvements in corporate value that were not readily apparent at internal discussions. Finally, I believe the Board of Directors at SKY Perfect JSAT has been particularly proactive in promoting discussion when compared to other listed Japanese companies, and this has been always pointed out by newly appointed directors who are participating in Board Meetings. In recent years, the Outside Directors have held meetings for themselves alone in order to discuss themes where public discussion, including Board Meetings, has been inadequate, and I believe this as well has contributed to enhanced governance at the Company. Governance What We re Planning How We re Doing Corporate Profile Financial Section SKY Perfect JSAT Report

36 System for the Development of Human Resources With the goal of developing our business not only in Japan, but around the world, we are moving ahead with a variety of strategies based on the belief that establishing a working environment and system where all workers can participate to the best of their abilities and promoting a system with a wide range of work styles is key to growth at a company focused on global business development. Developing Human Resources with a Global Perspective and Abilities to Take Action Basic Policy on the Development of Human Resources Technological innovation is contributing to rapid changes in the environment in which the Company s media and space businesses operate. SKY Perfect JSAT remains committed to human resources development so that we can continue to field a strong and flexible work force ready to take on new challenges in new fields. Human resource development plans and the Company s training system Human resource development starts with cultivating the corporate mindset in interns and pre-employment training before a new worker joins the Company. After a new employee training, the successive training is given to those deemed to be next-generation leaders. In particular, training in the first year includes senior workers mental and business support as well as follow-up training designed to quickly establish independence, including companywide training programs and programs specialized for each department. Training continues after a worker is promoted to management, including training designed to enhance skills and the mind for working in external environments, such as exchange-based training outside the Company. Many company employees are involved in self-study programs, for which the Company provides 100% funding for expenses incurred in designated programs, such as TOEIC, and 50% funding for self-development-related expenses. Development of Globally Competent Human Resources With the goal of fostering human resources with a global perspective and skills to take action, we have an ongoing program to dispatch some of our younger employees to our Hong Kong branch and JSAT International Inc., our North American subsidiary in Washington, D.C. After returning home, they are involved primarily in our overseas business in order to support our international business development by utilizing their business experience overseas as well as their network of personal connections and a wider perspective they acquired during their assignment in Hong Kong or North America. Additionally, since 2016, we have started dispatching our employees to Silicon Valley in the United States as a measure to develop human resources with hands-on business experience and who are capable of developing new businesses. They contribute to the expansion of our global activities and new businesses through acquiring business experience in strategic partnership building, business development, and venture investment. Internship with an eye toward grad hiring The Hong Kong branch 34 SKY Perfect JSAT Holdings Inc.

37 Creating an Employee-Friendly Working Environment Efforts in line with the Act on Advancement of Measures to Support Raising Next-Generation Children We are taking initiatives to implement an action plan in accordance with the Act on Advancement of Measures to Support Raising Next-Generation Children. In 2013, as a result of our efforts such as the promotion of child care leave for male employees, we were certified as a business operator which conforms to the Tokyo Labor Bureau standards, and were awarded with the Kurumin Mark, a certification provided by the Ministry of Health, Labour and Welfare in recognition of the above efforts. Since then we have been actively involved in supporting to raise the next generation of children and were awarded with the Kurumin Mark for a second time in Kurumin Mark Efforts in response to the promotion of the empowerment of women, and the child care and nursing system In line with the Act on Promotion of women's Participation and Advancement in the workplace which was enacted in April 2016, the Company aims to advance the careers of women by promoting measures to improve the working environment so that employees can work to the best of their abilities while maintaining balance between the work and home responsibilities. In particular, we are enhancing the provisions of career development support supplied to those employees returning from their maternity or child care leave, and creating a working environment where those returning to work can overcome their time constraints by improving our system of shortened working hours for childcare, providing subsidies for hiring babysitters, and establishing a family-friendly system for the taking of leave. At SKY Perfect JSAT Corporation, 100% of the employees who took child care leave returned to work. A System for Accumulating Paid Time Off At SKY Perfect JSAT, all employees are granted paid leave that surpasses the legally mandated paid leave based on the length of their service. Depending on the length of their service, employees shall be granted up to 24 days of paid leave every year (with a maximum of 48 days including unclaimed paid leave carried forward from the previous fiscal year). In addition, up to five days out of the total number of paid days off that expire each year shall be automatically be carried forward to the following year as accumulated leave until the total reaches a maximum of 60 days. This accumulated leave can be used by the employee to, for example, provide nursing care for family members. Teleworking System Starting from April 2018, SKY Perfect JSAT has implemented a teleworking system to broaden workstyle choices available to employees. Following the Council for the Realization of Work Style Reform proposed by the Cabinet Office, we have established improving the productivity of each employee as a key theme, and, in order to achieve this, we have constructed a flexible work system. Through these efforts, we aim to enhance the autonomy, self-motivation, and work-life balance of each employee. Family Workplace Tour SKY Perfect JSAT instituted family workplace tours to better facilitate exchanges with and the understanding of family members that support our employees. So that these family members can understand the jobs of the employees who put so much into their work, we have created a variety of events for children and it appears that many families look forward to the visits every year. Employee data Family workplace tours (based on the non-consolidated figures for SKY Perfect JSAT Corporation) End-March 2017 SKY Perfect JSAT Report 2018 End-March 2018 Number of employees* 1 Male Female Total Average Age of Employees* 1 Male Female Total Average Years of Employment* 1 Male Female Total Rate of Return to Work from Parental Leave (%) Employee Turnover Rate (%)* 2 Including Retirements Excluding Retirements Rate of Disabled in the Workforce (%)* Number of Female Managers* Percentage of Female Managers (%)* Percentage of Annual Leave Taken by Employees (%)* Average number of hours worked overtime* Regular employees (Based on total employment including temporarily transferred employees) 2. Regular employees (Based on total employment) Number of resignations from the end of the previous fiscal year until the day before the end of current fiscal year total employment as of the end of the previous fiscal year. 3. In accordance with legal calculation (Based on total direct employment) 4. Regular employees in managerial positions (Based on total employment) 5. Female employees in managerial positions Total employees in managerial positions (Based on total employment of regular employees) 6. Number of paid leave days taken per annum number of paid leave days granted at the beginning of the fiscal year (maximum 24 days) (Annual paid leave of maximum 48 days including unclaimed paid leave carried forward from the previous fiscal year) 7. Regular working hours = 7 hours, Overtime working hours = a total of overtime working hours in weekdays and working hours in holidays (Days of compensatory leave taken x 7 hours) 35 Governance Who We Are What We re Planning How We re Doing Corporate Profile Financial Section

38 Social Contribution Through Our Business Activities SKY Perfect JSAT Group is devoted to offering fullness and meaning, entertainment and safety to people s lives through the development of the highly public services of broadcasting and communications worldwide. The Company remains committed to using its business resources to contribute to communities. Education Support Project for Southeast Asia As part of the education support project for Southeast Asia, SKY Perfect JSAT began offering a satellite-based distance education program in concert with Southeastasianet Technologies Myanmar Co., Ltd., a Myanmar-based information and communications company from July The service is provided to three temple schools operated by the Monastic Education Development Group, an education group operating in Mandalay, the country s second-largest city, and the Shan State. The company is supporting the project by providing satellite facilities and operational expenses, with the goal of improving teacher skills in Myanmar and expanding the educational opportunities available to children in the country. Science Koshien Tournament Children learning at the community learning center In order to cultivate a new generation of human resources with excellent levels of creativity and the inquisitive spirit required to investigate unexplored fields of knowledge, SKY Perfect JSAT has been a co-operative partner of the Science Koshien (held by the Japan Science and Technology Agency) event since FY The event pits junior high and high school students representing each prefecture around the country against each other, testing their skills and thinking power in science. The Company is a sponsored in the High School Koshien portion and a supporter in the Junior High School Koshien portion. At the national competition, which follows prefectural tournaments sponsored held by respective prefectural boards of education, the problem-solving abilities of students are tested in addition to not only by a written exam, the problem-solving Image provided by the Japan Science and Technology Agency abilities of students are tested but also with a two types of skill-based practical competitions. We awarded prefectural teams that presented excellent craft designs in the practical competition of the tournament with a SKY Perfect JSAT Award. Disaster Medical Relief SKY Perfect JSAT newly added the disaster medical relief plan to the ExBird satellite IP network service operating under the space business and launched services in May Satellite communication lines offer the potential to avoid the disruption seen in ground lines and other infrastructure during large-scale disasters. Making good use of the advantages of satellite communication lines, the ExBird service can be used in a variety of applications, including a back-up to ground communication lines during a disaster, remote control communications routes for energy lines, and satellite-based Internet in digital divide areas. The newly-added disaster medical relief plan focuses on municipalities and related organizations conducting disaster medical relief operations during a disaster. The service is selectively focused to perform the minimal functions of providing voice communication and Internet connections to disaster medical relief portal sites (EMIS). SKY Perfect JSAT has been developing a stable satellite operation system that includes multiple satellite control centers to prepare for use during a large-scale disaster. At the same time, the Company has been working with medical institutions since 2015 in the testing of the disaster medical relief plan. The plan offers emergency communication capabilities at a low cost and is being introduced to municipalities and related organizations conducting medical relief operations, as well as more than 700 disaster base hospitals nationwide. In this way, the Company makes a firm contribution to the smooth collection of information at medical sites during a large-scale disaster. ExBird portable satellite communications station 36 SKY Perfect JSAT Holdings Inc.

39 Preserving the Environment Through Our Business Activities SKY Perfect JSAT is using our strengths in satellite communications to develop new businesses contributing to the preservation of the environment. Who We Are Targeting Commercialization of the World s First Service Combining Next-Generation Wind Power Generators, which Boast a Low Environmental Impact, with Satellite Communication Services The Company and Challenergy Inc. are working together with the goal of commercializing in FY 2019 services combining wind-power generation and satellite communications, particularly for countries and regions where electric power and communications infrastructure is somewhat vulnerable to breakdown or disruption. Challenergy currently aims to be the first company in the world to commercialize the Magnus Vertical Axis Wind Turbine ( Magnus VAWT ), which is a next-generation wind power generator and derives its power not from propellers, but rather from the Magnus effect resulting from a cylinder rotating within an air stream. Since there are no propellers moving at high speed, the Magnus VAWT allows the possibility of reducing the impact of wind power generation on the environment through reduced bird strike and less noise. Due to the risk of accidents and malfunction, propeller-based wind power generators are considered unacceptable for outlying islands and mountainous areas, which to date have been reliant on diesel power generation, which costs much and exacts a heavy price on the environment. However, the Magnus VAWT is expected to represent the world s first technology that can be implemented safely in these areas, which in turn could contribute to its increased utilization. Through the use of the Magnus VAWT, the Company and Challenergy will be able to provide the stable operation of ground communications equipment in mountainous regions and outlying islands where electric power supply has been an issue for some time. This system would make it possible to maintain uninterrupted communications with these areas even in the wake of a disaster in which there could be power supply disruptions. The Company in this way aims to bolster its ability to offer solutions to domestic communications demand in the event of a disaster. SKY Perfect JSAT also aims through this program to expand services in digital divided areas around the world, including the remote islands of Oceania and Southeast Asia, where there are vulnerabilities in both electric power and communications infrastructure. The partnership made its first step toward commercialization in January 2018, launching joint testing operations involving the connecting of our satellite communications system with Magnus VAWT testing equipment at the Challenergy s testing site in Okinawa. We are currently scheduling testing at multiple locations following the planned August 2018 link-up of a satellite communications system with a large-scale windmill installed on Ishigaki Island. Image of A Joint Testing Operation in which We Connect the SKY Perfect JSAT Satellite Communications System to Challenergy s Magnus Vertical Axis Wind Turbins Internet Real-time data collection and analysis of weather conditions around the generator JCSAT-2B Magnus Vertical Axis Wind Turbins Satellite communications equipment WiFi LPWA Ensuring communications infrastructure in the event of a disaster Testing station Municipal facilities, hotels,hospitals, and etc. Governance What We re Planning How We re Doing Corporate Profile Financial Section SKY Perfect JSAT Report

40 History SKY Perfect Communications Inc. and JSAT Corporation were consistent leaders in multichannel pay TV broadcasting and satellite communications, respectively. A holding company of those two corporations was established in April 2007, and is now known as SKY Perfect JSAT Holdings Inc. Furthermore in October 2008, Space Communications Corporation joined SKY Perfect Communications and JSAT in a three-way merger to form SKY Perfect JSAT Corporation, marking a new start for the SKY Perfect JSAT Group, with SKY Perfect JSAT Corporation as a core business company DMC Planning Inc. established 1995 Name changed to Japan Digital Broadcast Service Co., Ltd Japan Sky Broadcasting Co., Ltd. (JSkyB) established. PerfecTV! Started Merged and renamed its service as SKY PerfecTV! 2000 March June Announcement of our intention to cooperate in the migration of DIRECTV Japan subscribers to SKY PerfecTV! following the termination of DIRECTV Japan s services. Japan Digital Broadcast Service Co., Ltd. changed its name to SKY Perfect Communications Inc. October SKY Perfect Communications Inc., went public on Mothers of Tokyo Stock Exchange Satellite Japan Corporation established Japan Communications Satellite Company, Inc. established Japan Satellite Systems Inc. established upon the merger of the two companies April Company name changed to JSAT Corporation. August JSAT Corporation went public on the first section of Tokyo Stock Exchange Space Communications Corporation established. 38 SKY Perfect JSAT Holdings Inc.

41 In July 2018, the SKY Perfect JSAT Group formulated a new Group Mission and Business Vision that redefine the role that it should play as digital innovations in society are likely to accelerate and business fields in every space are expanding. Who We Are 2004 The 110-degree CS broadcasting company Plat One Corp., Ltd. Was merged into the company. The company moved up to the first section of Tokyo Stock Exchange April SKY Perfect Communications Inc. and JSAT Corporation integrated their businesses and established SKY Perfect JSAT Corporation as a joint holding company, which then went public on the first section of Tokyo Stock Exchange March June 2018 July Along with formulating the new group mission of Space for your Smile, formulated a business vision that expands the business domain beyond the framework of broadcasting and communications Made Space Communications Corporation a subsidiary. The group holding company SKY Perfect JSAT Corporation changed its name to SKY Perfect JSAT Holdings Inc. October SKY Perfect Communications Inc., JSAT Corporation and Space Communications Corporation merged and began operations as a new company, SKY Perfect JSAT Corporation. Corporate Profile What We re Planning How We re Doing Governance Financial Section SKY Perfect JSAT Report

42 Corporate Data Corporate Information Corporate Name Headquarters SKY Perfect JSAT Holdings Inc. 8-1, Akasaka 1-chome, Minato-ku, Tokyo , Japan Telephone URL Established April 2, 2007 Number of Employees (Consolidated) 858 Capital 10 billion Stock Listing First Section, Tokyo Stock Exchange (Code 9412) Number of Shares Issued 344,603,700 Total Number of Shareholders 33,206 Fiscal Year-End March 31 Annual General Meeting of Shareholders Payment of Dividends (Dividend Record Date) Transfer Agent of Common Stock June March 31 (and September 30 for interim dividends) Mizuho Trust & Banking Co., Ltd. Group Companies Media Business Space Business SKY Perfect Broadcasting Corporation SKY Perfect Customer-relations Corporation SKY Perfect Entertainment Corporation WAKUWAKU JAPAN Corporation SKY Perfect JSAT Holdings Inc. SKY Perfect JSAT Corporation Satellite Network, Inc. enroute Co., Ltd. JSAT MOBILE Communications Inc. JSAT International Inc. 40 SKY Perfect JSAT Holdings Inc.

43 List of Group Companies Media Business Space Business Ownership includes indirect holdings. Who We Are Corporate Name Capital Principal Activities Ownership 100.0% Corporate Name SKY Perfect JSAT Corporation 50,083 million Provision of satellite communications and Media Business SKY Perfect Customer-relations Corporation SKY Perfect Broadcasting Corporation SKY Perfect Entertainment Corporation WAKUWAKU JAPAN Corporation Capital 100 million 2,500 million 10 million 100 million Principal Activities Involved in Customer Center operations for multichannel pay TV broadcast and other services Production of Content, a provider of programs Licensed broadcaster providing multichannel pay TV services via CS-110/124/128 degrees platform Ownership 100.0% 100.0% 100.0% 60.0% Corporate Name Satellite Network, Inc. enroute Co., Ltd. JSAT MOBILE Communications Inc. Involved in the operation of overseas channels related business activities JSAT International Inc. Capital 1,600 million 946 million 200 million US$25 million Principal Activities Telecommunications carrier and a systems integrator for satellite communications and broadcasting services A seller of industrial drones Ownership 92.0% 100.0% Total ratio of Satellite Network, Inc. and SKY Perfect JSAT Corporation A provider of mobile satellite communications (Inmarsat) services 53.3% 100.0% U.S. subsidiary working with joint venture partner, Intelsat, to market capacity on satellites in North America Corporate Profile What We re Planning How We re Doing Governance Financial Section SKY Perfect JSAT Report

44 Stock Information Basic Information Total number of shares authorized to be issued Number of shares issued 1,450,000,000 shares* 344,603,700 shares* Fiscal year-end March 31 Annual General Meeting of Shareholders Transfer Agent of Common Stock June Mizuho Trust & Banking Co., Ltd., 1-2-1, Yaesu, Chuo-ku, Tokyo , Japan Stock Listing First Section, Tokyo Stock Exchange (Code 9412) * The Company conducted a 100-for-1 common stock split effected on October 1, Major Shareholders Number of shares held Shareholding ratio* ITOCHU FUJI Partners, Inc. 76,568, % NTT Communications Corporation 26,057, % Nippon Television Network Corporation 20,891, % Tokyo Broadcasting System Holdings, Inc. 18,434, % Japan Trustee Services Bank, Ltd. (Re-entrusted by Sumitomo Mitsui Trust Bank, Limited/Pension trust account for Mitsui & Co., Ltd.) 13,405, % Sumitomo Corporation 11,129, % The Master Trust Bank of Japan, Ltd. (Trust account) 10,124, % Japan Trustee Services Bank, Ltd. (Trust account) 7,979, % STATE STREET BANK AND TRUST COMPANY ,096, % DENTSU INC. 4,059, % Other than the above, 47,595,852 shares of treasury stock are held by the Company. * The shares of treasury stock are excluded from the calculation of the shareholding ratio. Breakdown by Shareholder Category Number of shareholders % of total Number of shares held % of total Financial institutions % Financial institutions 49,588, % Securities firms % Securities firms 3,542, % Other Japanese corporations % Other Japanese corporations 165,629, % Foreigners % Foreigners 52,520, % Individuals and others 32, % Individuals and others 25,726, % Treasury stock % Treasury stock 47,595, % 42 SKY Perfect JSAT Holdings Inc.

45 Satellite Basics Communication satellite s main components Who We Are Solar Array Panel The solar array panel uses solar power to generate electricity. It can generate up to 3.5 kw of electricity Communications satellites are generally about as big as a railroad car although the size varies depending on the type of satellite. Ku Band Deployable Mirrored Antenna This antenna receives and transmits signals. The antenna is called deployable because it opens after the satellite is launched into space and reaches the proper orbital slot. Types of radio frequencies used by communications satellites The radio frequencies commonly used for satellite communications in Japan are called Ku-band and C-band. C-band frequencies ( GHz frequency range: GHz band for downlinks, and GHz band for uplinks) have been widely used since the satellite communications began because they are less affected by rain, but low frequencies require large antennas for reception. The Ku-band frequencies ( GHz frequency range: GHz band for downlinks and GHz band for uplinks) characteristically enable small antennas to send and receive data, making them suitable for SKY PerfecTV! broadcasts and communications in Japan. The advantage of reception by small antennas is somewhat compromised by the fact that the signals are weakened when they bump against water particles in the atmosphere, such as during heavy rain, which can affect reception. The X-band frequencies ( GHz frequency range) are mainly used for military communications, weather, and earth observation satellites. Telemetry Command Omni Antenna This antenna receives and transmits signals while a satellite is being launched into orbit before the deployable antennas can be opened. High frequency Low frequency GHz MHz KHz Thruster A thruster is the fuel injection system to keep the satellite positioned at the correct orbit. Heat Dissipation Panel As satellites easily accumulate heat, this panel dissipates the heat via embedded heat conducting pipes to maintain a constant temperature inside the satellite. Diagnostic X-ray Ultraviolet Frequencies Visible light commonly used for communications Infrared light satellites Television FM radio Marine communication Ka Ku X C S L (GHz) Corporate Profile What We re Planning How We re Doing Governance Financial Section SKY Perfect JSAT Report

46 From Satellite Procurement to Operation 1. Prior Analysis Securing orbital slot and demand forecasting 2. Satellite Specifications Study Service area, frequency, number of transponders 3. Order and Manufacture Choose a manufacturer and conduct process management and performance assessments 4. Insertion into Geostationary Orbit Launch on rocket, insert into geostationary orbit, and perform in-orbit tests 5. Operation Provide transponders while monitoring and controlling the satellite from the control center 2-3 years from Order to Launch In Operation: years Mounting a JCSAT-RA antenna Photo: Lockheed Martin Start Capital Investment Satellite Rocket Launch Insurance Start Depreciation The Cost of Procuring and Launching a Satellite is Between 20.0 billion and 25.0 billion and the Depreciation Period is 15 years. When we introduce a new commercial satellite, we start by forecasting demand in the coverage area and securing an orbit location, and then procure a satellite and a rocket. Following these processes over a preparation period of two to three years, the satellite is launched into a geostationary orbit 36,000 kilometers above ground. The cost of procuring and launching a satellite is booked on the asset side of the balance sheet as a value between 20.0 billion and 25.0 billion. The satellite depreciates over its operating life period of around 15 years. In order to guard against the risk of a launch failure, we purchase launch insurance. Rocket Launch Sequence (in the case of the Ariane5 rocket) Fairing jettisoned (about 3 minutes later) First-stage rocket engine stops and separates (about 9 minutes later) Second-stage rocket engine fires Second-stage rocket engine stops After confirmation that target orbit has been reached, the satellite separates (about 30 minutes later) Solid fuel booster stops and separates (about 2 minutes later) First-stage rocket engine fires Solid fuel booster fires, rocket launches 44 SKY Perfect JSAT Holdings Inc.