Frequently Asked Questions and Answers (March 2026)

Borrowing Capacity and M&A Strategy

Our borrowing covenants have no Net Debt/EBITDA=3.0x restriction, and exceeding this temporarily in high-quality M&A transactions is within acceptable limits. With deals at EV/EBITDA 5.0x, approximately 25 billion yen of additional investment is possible, and EBITDA additions from acquisitions limit deterioration of key ratios. Going forward, we will reduce interest-bearing debt through operating cash flow, continue growth investments while conserving borrowing capacity, and utilize equity-based M&A.

Background and Policy on Dividend Initiation

Historically, dividends were not paid as we did not consider returning profits to shareholders our priority. However, through dialogue with capital markets, we acknowledge that the presence of dividends is important for expanding the investor base. Dividends will start from the fiscal year ending January 2027, with disciplined annual increases that do not hinder growth investments. Dividend amounts will remain limited, with growth investment continuing as the top priority.

Factors Behind Strong Domestic Business

In the game center business, the lineup of GiGO-exclusive prizes has increased to over 200 types, supporting existing store sales growth of approximately 100–110% Year-over-Year. The karaoke business has strengthened its distribution network by integrating industry-leading dealers, maintaining Karaoke BanBan's existing store growth rate of 101%. The foreign currency exchange machine business has increased revenue Year-over-Year through DX initiatives, with EBITDA up 1.5 times achieving high ROIC.

Operational Improvements in North American Business

When the number of stores rapidly increased through M&A in North America, operational integration errors resulted in insufficient prize replenishment and revenue decline. The cause was identified in November 2025, when bank deposit rules were abolished, and patrol frequencies have been recovering since February 2026. The in-house AI business application 'Kiddleton Force' was introduced to optimize replenishment routes and perform image analysis. Earnings recovery is expected in the latter half of this fiscal year.

North American New Store Opening Plan

With the expansion of North American locations, comprehensive installation contracts with major chains have become active. Walmart stores in small spaces are being exited and new stores opened in tenant spaces 5 to 10 times larger. An agreement with AMC targets 170 locations to be completed by April. A contract with Applebee's covers 85 stores aiming for further expansion.