Imagica・Robot Group

Financial Results Presentation for FY2017 2QImagica Robot Holdings Inc.
November 22, FY2017© 2017 Copyright Imagica Robot Holdings Inc.

１

Summary for 2Q FY2017
Forecast for the full year FY2017© 2017 Copyright Imagica Robot Holdings Inc.

Summary▍ Net sales increased 7% YoY（Excluding the impact of sales IMAGICA TV: 15% YoY)

▍ OP reached ¥1.1bn(5 times YoY)

Improvement of Media localization segment was attributable tothis performance greatly.

▍ Gain on sales of IMAGICA TV stocks were posted¥2.1bn and Net profit records ¥1.85bn.
▍ Consolidated forecast for FY2017 was revised
based on 2Q performance.
3© 2017 Copyright Imagica Robot Holdings Inc.

Highlights of financial results
Nat sales

Operating income

Net income attributableto owners of the parent¥42.2bn¥1.1bn¥1.8bnYoY＋¥2.6bn

YoY+¥0.9bn

YoY+¥1.5bn（billions of yen）

39.6

42.2

1.8

1.1

0.2

FY2016 2Q

FY2017 2Q

FY2016 2Q

0.2

FY2017 2Q

FY2016 2Q

FY2017 2Q

4© 2017 Copyright Imagica Robot Holdings Inc.

Net sales Analysis: YoY Change Factors▍ Net sales were up 7% YoY as the decrease resulting fromselling IMAGICA TV was covered by other segments（Sales grew +5.4bn or +15% YoY without the impact of sales of IMAGICA TV ）（¥billion）

IMAGICATV sales△2.8MediaLocalization+2.0（+20%）

Content
Creation+1.6

Production
Services+1.2

Imaging
Systems &Solutions+0.6（+12%）（+10%）（+18%）

42.2

39.6

FY2016 2Q

FY2017 2Q5© 2017 Copyright Imagica Robot Holdings Inc.

Operating income Analysis: YoY Change Factors▍ Improved profitability of the Media Localization segment
contributed to ¥0.9 billion increase in income YoY（¥billion）

Media
Localization

Production
Services

Imaging
Systems &Solutions+0.1+0.2

1.1
IMAGICATV sales

0.2
FY2016 2Q△0.1

ContentCreation△0.3+1.0

FY2017 2Q

6© 2017 Copyright Imagica Robot Holdings Inc.

2Q Financial results by segments
FY2016（Millions of yen）

2Q Actual

Production
Services

10,705

Operatingincome567

277（OP ratio）(6.3％)(2.6％)Net sales

12,397

13,642

Operatingincome356

611（OP ratio）(2.9％)(4.5％)

10,242

12,235Net salesMediaLocalization

Imaging
Systems &Solutions

2Q Actual

9,070

Net sales
ContentCreation

FY2017Operatingincome△1,02418.0%

Factor

YoY

1,635△51.1%

△289

10.0%

1,245(---％)Net sales

5,747

6,419

Operatingincome358440(6.2％)(6.9%)

Decrease YoY in Anime
committee¾

Decrease YoY CM production¾

Business for OTT saw strong
performance.

71.4%

254

¾

19.5%

1,992

¾

Increase sales in the game CG
and debugging businesses.
Business for OTT saw strong
performance¾-(---％)¾

distribution from production△25（OP ratio）（OP ratio）

YoY ratio

999

Performance was improved due
to improvement of direct margin
in Europe.

11.7%
22.9%

672
82

¾

Increase sales in 4Kbroadcasting system andmaintenance service.

＊OTT＝”Over The Top” means the companies excluding telecommunications that provide contents such as video and audio. 7© 2017 Copyright Imagica Robot Holdings Inc.

Topics for 2Q FY2017▍ June：Venture investmentcompanyName

OLM ventures

Equity¥10 million（OLM 100％）

Foundation

2017, Jun 30

We established a new company to promote capital tie-ups in
the media and content domain with venture companies
engaged in VR, AR, MR and new film-related businesses.

▍ Sep：Mobile Satellite Service▍ July：Capital from J.LEAGUEIMAGICA LIVE accepted a capital contribution from J.LEAGUE.
Together we will engage in recording of live sports anddistribution and archiving that leverages the worldʼs first cloudbased media center.

▍ Sep：R&D group

Partnering with Globalstar, a US-based satellite

Advanced Research Group, specializing in support of R&D on

communications provider, we will launch a mobile satellite

cutting-edge technology for production of visual contents

communications in Japan. Product sales are to be launched atutilizing the Groupʼs technology resources, was established as athe end of 2017.

cross-functional research organization for the Group.

8© 2017 Copyright Imagica Robot Holdings Inc.

Revision on consolidated forecast▍ Net sales remains, but Operating income, Ordinary income（Millions yen)
and Net income were revised upward.
FY2015FY2016

ActualActual

70,036

87,58687,90087,9000.0%

0Operating income

653

1,787

1,600

1,800

12.5%

200(Ratio)(0.9%)(2.0%)(1.8%)(２.0%)

Ordinary income

760

2,014

1,500

1,800

20.0%

300(Ratio)(1.1%)(2.3%)(1.7%)(2.0%)Net income (loss)
attributableto owners of theparent△1,555

1,707

2,200

2,300

4.5%

100Earnings per shareof common△34.93

38.35

49.40

51.6

4.5%

2.2

Net sales

FY2017
PreviousForecast

Revised forecast

Difference
ratio

Difference

The target consolidated dividend payout ratio is 30%, with a basic policy of distribution according to consolidated results. In theevent that an extraordinary factor such as an extraordinary loss will significantly impact net income, when determining thedividend, a comprehensive review will be conducted that includes maintaining stable dividends for shareholders, future businessexpansion and the status of internal reserves based on a payout ratio that basically takes special factors into account.
The dividend forecast for the fiscal year ending March 31, 2018 is 10 yen per share as announced on August 3, 2017.

9© 2017 Copyright Imagica Robot Holdings Inc.

Revision on forecast by segments

Net sales
Content
Creation

Operatingincome24,00024,300

277

900

700
(2.9%)Net sales

13,64228,00027,800Operatingincome

611

1,100

1,100

(4.5％)(3.9％)(3.6%)

12,23524,00024,000Net sales

ImagingSystems &Solutions

10,705(3.8％)（Ratio）

Media
Localization

FY2017Revisedforecast(2.6％)（Ratio）

ProductionServices

FY2017
Previousforecast

FY2017 2Q
Actual（Millions yen）

Operatingincome△25（Ratio）(---％)(---％)(---%)Net sales

6,419

14,00014,000Operatingincome

440

1,300

1,300

(6.9%)(9.3%)（Ratio）△1,050△650(9.3%)

Perspective

Difference

300

Sales forecast raised due to strong
orders for TV animation. OP
decreased due to low distribution△200

from the animation production
committee.

△200

Sales in TV business are expected todecline temporarily, but we maintain0OP.

0

Sales for OTT was favorable in thefirst half, but will return to normal

400base in the second half. Such as IT
expenses are expected to increase inthe second half.

00The Order of 4K system in broadcast
station is steady. No change in theinitial forecast.

＊OTT＝”Over The Top” means the companies excluding telecommunications that provide contents such as video and audio.
10© 2017 Copyright Imagica Robot Holdings Inc.

Topics (Oct,2017 – March,2018)¾

Movie「DESTINY 鎌倉ものがたり」「妖怪ウォッチ シャドウサイド「嘘を愛する⼥」

Dec 9 Release

⻤王の復活」Dec 16 Release

January 20 Release（Movie image）（Movie image）（Movie image）「ちはやふる-結び-」
March 17 Release（Movie image）*For copyright reasons, images are not posted.

¾

Projection mapping
award vol.2(Dec 16）¾

Expansion of transition
to 4Kbroadcastingsystem¾

Polari metric measurement system（KAMAKIRI)KAMAKIRI is a specialized device
for high-speed, two-dimensionalbirefringent inspection andmeasurement researched anddeveloped using a new approachdiffering from conventional
methods of measurement. The
business is currently being
expanded for optical film.

Ⓒ2017「DESTINY鎌倉ものがたり」製作委員会 Ⓒ2018「嘘を愛する⼥」製作委員会ⒸLEVEL-5/映画「妖怪ウォッチ」プロジェクト2017Ⓒ2018映画「ちはやふる」製作委員会 Ⓒ末次由紀/講談社

11© 2017 Copyright Imagica Robot Holdings Inc.

２Business strategy© 2017 Copyright Imagica Robot Holdings Inc.

Management KPI

FY2016FY2020Net sales￥85bn¥100bnOP ratio

1.5%

5.0%

13
© 2017 Copyright Imagica Robot Holdings Inc.

To generate profits

MediaLocalization
Improve profits

Imaging
Systems &Solutions

Production
Services

Expand profitablebusiness

Add high value
and Improve
profits
14© 2017 Copyright Imagica Robot Holdings Inc.

About SDI Media▍ Provide localize service in 37 countries
Dubbing Services

Subtitling Services

Dubbing services including television, movie, digitalcontent and new media formats provided in more than
50 languages

Subtitle translation services including television, movie,
digital content and new media formats provided in morethan 80 languages

U.S.（LA）

Denmark

Poland（Warsaw）¾ SDI has strong relationships with major media-related companies.
AETN, History Channel

Imagica Corp.

Sony Pictures

CBS

Lego

Turner

CNN

MTG

Universal

Discovery

NBC/Universal

ViasatFoxParamount

Warner Bros

HasbroPokémon

HBO

Scripps15© 2017 Copyright Imagica Robot Holdings Inc.

Sales breakdown▍ Breakdown by region and channels（FY2017 2Q Actual)¾ Europe business accounts for more than 50%¾ Business for OTT is rapidly increasing; itʼs over 30%
RegionChannelAsiaOthers
9% 3%

Americas
35%

Others9%Europe
53%

OTT
31%

Broadcast56%

DVD/BD4%＊OTT＝”Over The Top” means the companies excluding telecommunications that provide contents such as video and audio.

16© 2017 Copyright Imagica Robot Holdings Inc.

Reasons for strong performance 2Q▍ Great business performance for OTT¾ Received bulk order for localization of works for OTT fromcontent holder.
¾ Received order for localization of original content from.

▍ Improve direct margin and reduce fixed costs¾ Obtained favorable business terms through negotiations withmajor customers.
¾ One-time cost for establishing administrative structure to beeliminated¥million¾ Effects of management reform by new CEO (including reductionof management positions based on organizational review)
FY2016FY2017

2Q Actual

2Q Actual

Difference ratio

Diffrence

Net sales

10,242

12,235

19.5%

1,992

Operatingincome△1,024△25(---％)(---％)-999（Ratio）

17© 2017 Copyright Imagica Robot Holdings Inc.

Main factor for improving performanceMedia localization segment performance trends($ million)
Net sales

218.2

199.0

135.8
OP Income/LossOP Incomebefore goodwill/Lossamortizations

OPIncome/Loss

3.3
△ 0.6

△ 3.5
△ 12.7FY2015(9months)△ 5.9△ 10.7FY2016FY2017
forecast¾ Expansion of market size：Global market projected to grow an averageof 4% per year, reaching approx. $1,600* million by 2020
¾ Focus on growth fields: Ongoing orders from multiple OTT¾ Business expansion through M&A and entry into the green field:
Acquisition of PPC¾ Expansion of business for Asia: Expansion of Japan-related localization
business¾ Improvement of profitability: Improvement of service quality and grossmargin＊Global market size is based on our study.

18© 2017 Copyright Imagica Robot Holdings Inc.

About PPC▍ Company overview
Name

PPC（Picture Production Company)

Business

Creative production agency
Film marketing, creative advertising, create movie
previews and localization

Size

Net sales ¥1.67bn（FY2017 prospect)

OfficeLondon, Los Angeles

Clients

Major film studio in UK and U.S.

Consolidation

FY2017 4Q▍ Goal and synergy¾ Aim for improved profitability by integrating companies withhighly profitable structures.
¾ Expand business into localization of movie previews.
19© 2017 Copyright Imagica Robot Holdings Inc.

【About this document】
No information included in this document is intended to solicit investments in marketable securities issued byour company. Furthermore, the forecasts, plans, projects, and other information concerning earnings for thecurrent or future fiscal years included in this document is calculated based on information currently available atthe time. As such, there is a possibility that actual performance may differ from forecast figures due touncertainties inherent in judgments or assumptions, as well as due to the possibility of unforeseeablefluctuations, including changes in future operations or changes in internal or external environments.
Under no circumstances may this document be reproduced or forwarded without prior authorization.

© 2017 Copyright Imagica Robot Holdings Inc.

© 2017 Copyright Imagica Robot Holdings Inc.