Legal

Supplementary Document of the Company’s Initiatives to Enhance Corporate Value and the Shareholder Proposal: Japan

Summary

The supplementary document presents KADOKAWA’s strategic response to a shareholder proposal, outlining a six‑year Mid‑term Management Plan that replaces the previous five‑year framework. The core objective is to restore profitability and build a resilient, IP‑driven revenue base by restructuring domestic publishing and animation operations, tightening fixed costs, and investing in high‑growth intellectual property. The plan targets a 12 % return on equity (ROE) by fiscal year 2031, with an emphasis on portfolio and price‑strategy optimization in publishing, cost control in animation production, and a strategic early‑retirement program to free resources for growth. The transformation strategy is divided into three phases: structural reform (FY2026‑27), profit growth (FY2028‑29), and expansion (FY2030‑31). During the reform phase, KADOKAWA will consolidate business units under new executive leaders and establish a cross‑business steering committee, while pruning unprofitable lines. Net sales are projected to rise from ¥325 bn in FY2026 to ¥400 bn by FY2031, and operating margins are expected to improve from 4.0 % to 9.5 %. A disciplined capital policy will aim for a 30 % payout ratio and maintain share‑buyback flexibility. Governance measures reinforce the plan’s execution. CEO Takeshi Natsuno maintains 100 % attendance at key board, executive council, and investor meetings, while conducting regular “direct‑meeting” sessions with employees and final interviews for new hires. The board will continuously monitor KPIs—sales returns, in‑house animation production, overseas revenue, ROE, and EPS—and will adjust management structure or investment allocation if progress lags. These initiatives collectively aim to accelerate revenue restructuring, enhance capital efficiency, and sustain leadership continuity across Japan’s media‑mix industry.

From the report

Supplementary Document of the Company’s Initiatives to Enhance Corporate Value and the Shareholder Proposal - For the Ordinary General Shareholders Meeting (May 28, 2026) - KADOKAWA

⚫ The Company believes that the website, “A Better KADOKAWA” pertaining to the shareholder proposal created by Oasis Management Company Ltd. (“Oasis”) contains statements that differ from the Company’s understanding and do not fully reflect the Company’s initiatives. ⚫ The Company is receiving from its institutional investors’ questions about Oasis’ assertions and the new Mid-term Management Plan that the Company announced on May 14, 2026. ⚫ The purpose of this Document is to communicate the Company’s view once again in light of the above situations. (This Document summarizes existing disclosed information including the new Mid-term Management Plan.) 1. Course of Events Leading to Revision of the Mid-term Management Plan P.3 2. Specific Measures and Roadmap to Achieve the New Mid-term Management Plan (ROE Target, etc.) P.7 3. Finance Policy and Capital Allocation P.17 4. Outline of Opinions of the Company’s Nominating Committee and Board of Directors on the Shareholder Proposal (Proposal for Dismissal of CEO Natsuno) P.21

Former Mid-term Management Plan: Five-year plan (announced on November 2, 2023) 【Initial goal for FY2027 plan (vs most recent forecast)】 FY2023 FY2024 FY2025 FY2026 FY2027 Consolidated sales: 340 billion yen (vs 325 billion yen) Consolidated operating profit: 34 billion yen (vs 13 billion Seeding period Harvesting period yen) FY2023-FY2025 (three years) FY2026-FY2027 (two years) Publication is the source of the In the wake of unexpected downturn in profitability in the domestic publication Company’s IP business and the animation business (consolidated sales and overseas sales Origin of all of the Company’s businesses were steadily growing, operating profit significantly decreased) , leading to animation, films, games, and the Board of Directors decided to revise the former Mid-term Management Plan overseas rollout and formulate a new one. New Mid-term Management Plan: Six-year plan (announced on May 14, 2026) FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 -Reform period Profit growth period Profit expansion period Transformation -Growth -Expansion FY2026-FY2027 FY2028-FY2029 FY2030-FY2031 (two years) (two years) (two years) ROE 12% in the medium

> **[Chart page]** This page contains visual data — view in PDF for the best experience. ⚫ While sales grew both domestically and internationally, we determined that achieving our operating profit target would be difficult due to declining profitability in domestic publication and animation. Consolidated net sales FY2027 Consolidated operating profit FY2027 (Unit: 100 Million JPY) Forecast vs mid (Unit: 100 Million JPY) Forecast vs mid term management 500 Publication/IP term management 出版・IP創出アニメ・実写映像出版・IP創出アニメ・実写映像 Webサービス Publication/IP Creation Animation/Film plan target Creation Animation/Film Web Services plan target 教育・EdTech その他ゲーム Webサービス教育・EdTech Education/ EdTech Others Gaming Web Services Education/ EdTech 全社・消去営業利益率 10% Others Gaming Corporate Operating margin その他ゲーム 3,400 / Eliminations Publication/ 10.0% Corporate / Eliminations Overseas net sales 全社・消去海外売上高 3,250 400 7.1% IP Creation + 340 Animation/Film 2,581 2,779 2,829 3,003 420 495 6.0% 3.9% 70 336 298 312 203 274 3.4% 5.0% 254 170 172 226 252 300 185 167 2.9% 38 203 179 172 196 208 238 18 134 151 205 204 130 214 180 483 586 605 565 200 80 95 81 101 60 461 511 17 43 0.0% 1,593 1,653 1,684 4 24 75 45 40 1,420 1,514 1,556 100 46 47 32 24 184 28 20 0 104 84 21 5 86 602 560 606 640 700 41 68 -5.0% 408 0 -10 -5 -28 -20 -17

170 172 226 252 300 185 167 2.9% 38 203 179 172 196 208 238 18 134 151 205 204 130 214 180 483 586 605 565 200 80 95 81 101 60 461 511 17 43 0.0% 1,593 1,653 1,684 4 24 75 45 40 1,420 1,514 1,556 100 46 47 32 24 184 28 20 0 104 84 21 5 86 602 560 606 640 700 41 68 -5.0% 408 0 -10 -5 -28 -20 -17 -55 -60 -65 -108 -44 -42 -40 -41 -43 -13 -104 -92 -21 -32 -40 FY2023 FY2024 FY2025 FY2026 FY2027 FY2027 -100 FY2023 FY2024 FY2025 FY2026 FY2027 FY2027 -10.0% (Results) (Results) (Results) (Forecast) (Forecast) (Current mid-term 24/3期 25/3期 26/3期 27/3期 28/3期 28/3期 24/3期 25/3期 26/3期 27/3期 28/3期 28/3期 (Results) (Results) (Results) (Forecast) (Forecast) (Current mid-term

With the awareness of challenges, the Company has already begun executing the reform. The Company’s management team takes seriously the results for FY2025, underachievement of the former Mid-term Management Plan, and decreased profitability. Based on such acknowledgement, the Company announced the new Mid-term Management Plan on May 14, 2026, explicitly setting forth a policy of revising the revenue structure, investment distribution, execution system, and KIP management. The Company will advance a revenue structure reform, fixed costs optimization, and investments in growing areas with a focus on the domestic publication business and the animation business.

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