Tencent and Sony Interactive Entertainment collectively acquire 30.34 percent of FromSoftware

1. Aims and reason for the third-Party allocation

The Kadokawa Group advocates a “mix of technology and global media” as its core strategy, which combines the creation of stable intellectual property (IP) from a diverse portfolio of content, primarily in Broadcast, Video, Gaming, Web Service and Education businesses. and making this intellectual property available on a global scale through the expanded use of technology aimed at achieving sustainable growth and increasing corporate value from medium and long-term perspectives. FromSoftware drives the Gaming Business as it consistently creates world-renowned works. Sekiro: Shadows Die Twice and Hand Ringleverages the power of advanced gaming IP development. Considering the further expansion of the Gaming Business, the Group recognizes the development of capabilities for the creation, development and distribution of gaming IP as one of the Group’s highest priorities. In line with this policy, the Company has decided to implement FromSoftware’s funding through Third Party Allocation to Sixjoy and SIE, which are scheduled allowances, for the following reasons.

Tencent acquired capital in Guangzhou Tianwen Kadokawa Animation and Comics Co., Ltd., a consolidated subsidiary of the Company, in 2016, and the two companies are jointly promoting their media mix strategies targeting the Chinese market. In addition, the Company, Sixjoy and Tencent Japan signed a capital and cooperation agreement from October 2021 to strengthen their strategic alliances in anime and gaming. Tencent and its subsidiaries and affiliates (hereinafter the “Tencent Group”) is a global Internet group that provides communications, social, gaming, digital content, advertising, fintech and cloud services and operates the leading communications and social platform in the Internet industry. in China.

Sony and its subsidiaries (hereinafter referred to as the “Sony Group”) and the Company have developed a collaborative business relationship across a wide range of areas related to Sony Group’s global Direct-to-Consumer (DTC) business operations, branded hardware business and gaming business. . In February 2021, the Company made a third-party assignment with Sony as the designated person to strengthen its long-term relationship with the Sony Group and to establish the Company’s new IP and maximize the use of its existing IP in anime. and playgrounds.

Through the implementation of the fundraising, FromSoftware will aim to proactively invest for itself in the development of stronger gaming IP to strengthen FromSoftware’s development capabilities, and will seek to create a framework that allows to significantly expand the scope of its own publishing. growing global market. In addition to these goals, FromSoftware has decided to undertake a Third Party Assignment to Sixjoy within the strong capabilities Tencent Group to increase the number of users in the global market for gaming IP created and developed by FromSoftware. Developing and deploying SIE within the Sony Group, strong in its capabilities to simultaneously and separately deploy mobile games and other networking technologies in the global market, including China, and IP to games, videos and various other media in the global market.

2. Outline of Third Party Allocation

• Payment period: From September 7, 2022 to September 12, 2022
• Number of New Shares to be Issued: 3,179 ordinary shares
• Release Price: 11,450,000 yen per share
• Capital to Be GainD: 36,399.550,000 yen
• Subscription or Allocation Method (Scheduled Subscriber): Through third party allocation (Sixjoy 1703 shares, SIE 1476 shares)
• Post Issue Affiliate Rate:
  • Kadokawa Company: 69.66%
  • Sixjoy Hong Kong Limited: 16.25%
  • Sony Interactive Entertainment Inc.: 14.09%

(Note) Payment related to Third Party Allocation expected on September 7, 2022 may occur on another day in the above payment period due to procedures required for international remittance, among other factors.

3. Use of Capital (Total Paid-in Capital: 36,399.550,000 yen)

• Special Use of Funds:
  • To empower FromSoftware’s gaming IP creation and development capabilities.
  • To create a framework that allows FromSoftware to expand its publishing scope in the global market.

4. Outline of Subsidiary Subject to Capital Increase

• • Title: from Software, Inc.
  • Location: 2-26-2 Sasazuka, Shibuya-ku, Tokyo
  • Representative’s Title / Name: Hidetaka MiyazakiRepresentative Director and President
  • Business Content:
    • Planning, development, sales of game software.
    • Planning and development of Internet content.
  • Capital city: 268,500,000 yen

• Year of foundation: November 1, 1986
• Major Shareholders and Shareholding Ratios:
• Relationship between the listed company and the related company:
  • Capital relations The company owns 100% of the company’s shares.
  • Personnel relations Two officials of the company have been assigned to the relevant company.
  • Business relations The Company and the related company have commercial transactions.

5. Outline of Planned Subscribers

• Title: Sixjoy Hong Kong Limited
• Location: 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
• Representative’s Title / Name: Wang Zheng, Director; Ai Ximin, Director; Byun Jung-won Elizabeth, Director; and Tse Cheuk Yin Tiffany, Director
• Business Content: Licensing and publishing of mobile games.
• Capital city: 1,000 Hong Kong dollars
• Year of foundation: February 28, 2011
• Major Shareholders and Shareholding Ratios:
  • Tencent Holdings Limited:
• Relationship Between Listed Company and Related Company:
  • Capital Relations:
    • The related company owns 9,724,400 shares (property voting rights: 6.86%) of the Company’s shares (Note 1).
  • Personnel Relations:
  • Business relationships:
    • The company and Tencent Group have maintained a strategic partnership in the publishing business since 2016 through a joint venture company in Guangzhou, China. In addition, the Company, Tencent Japan and dedicated Sixjoy signed a business alliance agreement as of October 29. , 2021, to strengthen their strategic alliance in the animation business.

(Note 1): This clause is based on the major shareholder report submitted by Sixjoy on November 16, 2021.

(Note 2): In the share subscription agreement signed between the Company and FromSoftware with Sixjoy, the Company and FromSoftware have received a statement and guarantee from Sixjoy that there is no antisocial force and that it has no relation with antisocial forces. The company also commissioned JP Research & Consulting, Inc.

(Address: 3-7-12 Toranomon, Minato-ku, Tokyo; Representative: Keisuke Furuno, Representative Director), an independent research organization conducting an investigation. Their report states that there are no facts to suggest that Sixjoy was involved in antisocial forces. Based on the foregoing, the Company has determined that Sixjoy, Tencent, their officers and major shareholders have no affiliation with antisocial forces.

• Title: Sony Interactive Entertainment Inc.
• Location: 1-7-1, Konan, Minato-ku, Tokyo
• Representative’s Title / Name: Jim Ryan, Representative Director and President
• Business Content:
  • Planning, development and sale of hardware, software, content and network services for play station.
  • “toio”, the planning, development and sale of software and content.
• Capital city: 110,000,000 yen
• Year of foundation: April 1, 2010
• Major Shareholders and Shareholding Ratios:
• Relationship Between Listed Company and Related Company:
  • Capital Relations:
    • Sony, the parent company of the related company, owns 2,844,950 shares (property voting rate: 2.01%) of the Company’s shares (as of end of March 2022).
  • Personnel Relations:
  • Business relationships:
    • The company engages in transactions with Sony and its subsidiaries, such as the sale and purchase of finished products and services.

(Note) In the share subscription agreement concluded with SIE, the Company and FromSoftware have received a statement and guarantee from SIE that it and its officers are not antisocial forces and that they have no relationship with asocial forces based on the share subscription agreement. Sony, the parent company of SIE, is listed on the Tokyo Stock Exchange. Reaffirming Sony’s fundamental stance on the elimination of antisocial forces and the establishment of related systems, referred to in their Corporate Governance Report to Tokyo Stock Exchange, Inc. as issues related to systems of internal control. On July 5, 2022, the Company determined that Sony and its officers had no affiliation with antisocial forces.

6. Third Party Allocation Schedule

• FromSoftware Board of Directors and General Assembly Resolution: 31 August 2022
• Date of Share Purchase Agreement for Third Parties: 31 August 2022
• Payment period: From September 7, 2022 to September 12, 2022

(Note) Payment for this third-party allocation is scheduled for September 7, 2022.

7. Looking Forward

The Company believes that the Third Party Allocation will contribute to the medium and long-term improvement of the Group’s corporate value and the impact of the Third Party Allocation on the Company’s consolidated financial results for the fiscal year ended 31 March 2023. It is expected to be small at the time of preparation of this report. When disclosure of information is needed, the Company will promptly provide the information.