Financial Results Presentation
Second Quarter for FYE Mar. 2022
November 10, 2021

Stock code：6879
https://www.imagicagroup.co.jp/en/

Contents of Today’s Presentation

Ⅰ Second Quarter Financial Results Summary for
FYE Mar. 2022
Masakazu Morita, Director, Managing Executive Officer

Ⅱ Progress on New Mid-Term Plan "G-EST 2025"
Nobuo Fuse, Representative Director, President* Fiscal years in this presentation are abbreviated as follows: Fiscal year ended March 31, 2021 → FYE Mar. 2021

Ⅰ Second Quarter Financial Results Summary for
FYE Mar. 2022
Masakazu Morita, Director, Managing Executive Officer

Second Quarter Results Highlights

１

２

３

Total operating income before goodwill amortization for the company
was 1.2 billion yen, exceeding the level in FYE March 2020(pre-COVID-19) and staging a V-shaped recovery.

Operating income before goodwill amortization turned into the blackin all segments.

Production Services reached profitability both domestically andinternationally, showing substantial profit growth to 2.6 billion yen.

4

Highlights of Financial Results for the First Half
• Operating income before goodwill amortization was 1.2 billion yen, exceeding FYEMarch 2020 (pre-COVID-19) by more than 400 million yen.

(Million Yen)

Net sales

33,846
YoY

Operating income(loss) before goodwill
amortization

Operating income(loss)

YoY

YoY

1,274

431

3,360

3,060

(1,989)Net profit (loss)
attributable to ownersof the parent

1,694
YoY

3,646

47,42235,83533,846

1,694

1,274
834

431

275

(1,952)(2,086)2Q
FYE Mar 2020

2Q
2Q
FYE Mar. 2021 FYE Mar. 2022

2Q
FYE Mar 2020

2Q
2Q
FYE Mar. 2021 FYE Mar. 2022

865

2Q
FYE Mar 2020

(2,628)2Q
2Q
FYE Mar. 2021 FYE Mar. 2022

2Q
FYE Mar 2020

2Q
2Q
FYE Mar. 2021 FYE Mar. 2022

5

Contributing Factors to Increases (Decreases) in Net Sales(vs 2Q FYE Mar. 2021)• All business segments achieved growth in net sales when the decrease
due to the sale of SDI is excluded.

(Million Yen)

Production Services(Overall: (1,818))(9,323)

5,792

35,835

1,643

Content
Creation

1,713

Production
Services(Domestic)

Production
Services(International)

Sale of SDI

547(2,163)

Imaging
Systems &Solutions

Impact ofaccounting
standards(19)

33,846

Other

Production Services(International: (3,531))

2Q FYE Mar.
2021 Actual

2Q FYE Mar.
2022 Actual(1,989)6

Contributing Factors to Increases (Decreases) in Operating Income
before Goodwill Amortization (vs 2Q FYE Mar. 2021)
・ Operating income before goodwill amortization increased substantially to 3.3 billion yen on aconsolidated basis. Production Services was responsible for 2.6 billion yen of the increase, andContent Creation, for 700 million yen.

(Million Yen)

Production Services(Overall: 2,654)
Production Services(International: 836)

1,274

576
260

1,817

(2,086)

Production
Services(International)

Sale of SDI

(2)

(19)

Imaging
Systems &Solutions

Consolidated
Adjustments

728
Production Services(Domestic)

2Q
FYE Mar. 2021
ActualContent
Creation

2Q
FYE Mar. 2022
Actual3,360
7Content Creation (First Half)
・Net sales rebounded substantially, owing to a lesser impact from COVID-19 and arebound in orders, etc. This led to turning a profit from the 2Q onward.
YoY

YoY

＋1,643（+22.9%)
15,454

＋728
16

(26)

7,190

(Million Yen)

Operating income before
goodwill amortization

Net sales

8,833
(712)

2Q
FYE Mar.
2020

2Q
FYE Mar.
2021

2Q
FYE Mar.
2022

2Q
FYE Mar.
2020

2Q
FYE Mar.
2021

2Q
FYE Mar.
2022

 The rebound in the advertising market from the impact of COVID-19 resulted in a rebound in orders for
TV commercial production.

 Feature films, TV dramas, and animation productions were also firm.
 Orders for online streaming of live music performances and shooting music videos were strong.
8

Production Services (First Half)・Strong growth in operating income before goodwill amortization resulted mainly
from strong sales of global E2E services*1 and domestic structural reform*2.

Net sales

23,014
International

SDI

Domestic

2Q
FYE Mar. 2020

Operating income before
goodwill amortization
YoY+2,654

YoY(1,818)20,276

International

18,458International
Pixelogic
PPC

SDI
PPC

2Q
FYE Mar. 2021

(Numbers show thesum of domestic plus
international.)

1,024International

Domestic(Million Yen)

(250)

(1,630)

Domestic

国内

Domestic

Domestic

International

2Q
FYE Mar. 2022

2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

2Q
FYE Mar. 2022

 In the domestic market, global E2E services*1 for video streaming service providers*3 werestrong. Feature films, drama series, animation productions, and post-production services for TV
commercials were firm. This resulted in substantial growth in operating income before goodwill
amortization, due in part to orders for large event projects and benefits derived from structuralreform*1.
 In the international market, although feature film trailer production services were sluggish due tothe impact of COVID-19 in Europe and the U.S., Pixelogic’s localization business for video
streaming service providers*3 was strong.
•＊子会社のセグメント変更により、2021年3月期1Qの「映像制作サービス事業」の売上高、営業損益から株式会社イマジカ・ライヴを除外しております。

9

Production Services (International) Quarterly Consolidated
Performance Forecast
・The 2Q turned into the black as expected and growth is expected in the 3Q.
This will boost growth and profitability.

Net sales

Operating income before
goodwill amortization

5,000

800

4,000

600

3,000

400

2,000

200

1,000

0

0

(200)
1Q Actual

2Q Actual

3Q Forecast 4Q Forecast

1Q Actual

2Q Actual

3Q Forecast(Million Yen)

4Q Forecast We expect strong orders for video streaming service providers*3 from the 3Q onward.
 The resumption of new feature film releases are forecast to increase sales and profit of
Pixelogic from the 3Q onward.

10

Imaging Systems & Solutions (First Half)
・Net sales increased by 500 million yen, if the impact from the change inaccounting standard*4 is excluded.

Net sales

Operating income before
goodwill amortization

YoY(1,616)

YoY(2)

Excluding the impact from accounting
standard＊: +547

9,725

8,937

9,484
Change inaccounting
standard

7,321

2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

(Million Yen)

2Q
FYE Mar. 2022

2,163

1,311 (*)

2Q
FYE Mar. 2020

506

504

2Q
FYE Mar. 2021

2Q
FYE Mar. 2022

 Sales of the online delivery system for TV commercials*5 remained strong due to expansion inmarket needs.

 Sales of high-speed cameras rebounded in Asia and the U.S./Europe despite the continued struggle
for sales in the domestic market.

 Sales of video and image processing LSI were strong in both the domestic and international markets.
*Impact from a change in accounting standard: Impact from posting the net amount for mobile communication line sales.
*IMAGICA LIVE Corp. performance was added to Imaging Systems & Solutions net sales and operating income (loss) from FYE Mar. 2021 due to the reclassification of thesubsidiary into this segment.

11

Net Sales and Operating Income before Goodwill Amortization
Forecasts for FYE March 31, 2022
◆Despite the decline in net sales due mainly to structural reform of overseas business,
operating income before goodwill amortization is forecasted to exceed FYE March 31,
2020.

Second half: Content Creation will show signs of recovery, Production Services will remain strong both domestically andinternationally, and as for the Imaging Systems & Solutions despite the strong image processing
LSI,Yen)(Million
systems for broadcasting stations will struggle.

Operating income before
goodwill amortization

Net sales
94,09086,72775,000

3,100

2,456

320
FYE Mar.
2020
ActualFYE Mar.
2021
ActualFYE Mar.
2022
Forecast

FYE Mar.
2020
ActualFYE Mar.
2021
ActualFYE Mar.
2022
Forecast

12

Business Plan for Fiscal Year Ending March 31, 2022

FYE Mar. 2021
(Million Yen)FYE Mar. 2022
Forecast
disclosed on
May 13, 2021

ActualYoY

Forecast disclosed on
August 3, 2021

Change fromMay 13th
forecast

YoY

Net sales

86,72775,000(11,727)75,0000(11,727)

Operating income (loss)(1,084)

1,500

2,584

1,500

0

2,584

(%)

(2.0%)-(2.0%)－

Ordinary income (loss)(1,343)

1,300

2,643

2,000

700

3,343

Net income (loss)
attributable to owners ofparent3,454

800(2,654)

2,000

1,200

(1,454)

Earnings (Loss) per share
(Yen)

77.89

18.02

(58.87)

45.06

27.04

(32.83)

320

3,100

2,780

3,100

0

2,780

(Operating margin)

Operating income before
goodwill amortization

13

Ⅱ Progress on New Mid-Term Plan "G-EST 2025"
Nobuo Fuse, Representative Director and President

G-EST means: From four key strategies
G: The “3 Gs,” Growth, Global, and Group
E: E2E and Live Entertainment (global E2E business, live entertainment business)
S: System (Imaging Systems & Solutions business)
T: Transformation (Transformation business)(Re-posting) New Mid-Term Plan "G-EST 2025"
Become a Group consisted of a balanced, highly profitable businesses
that is resilient even under adverse circumstances<Key Strategies>
1.
Expand “Global
E2E” Business2.
Establish a newLive Entertainment
business

3.
Generate Additional
Business Value inthe Imaging
Systems &Solutions business

4.
Complete
Transformation inthe“Transformational
business”<Strategic Measures>
Achieve company
transformation
through DX

Strengthen R&D
capabilities

Secure & activate
talented employees<Resolve Social Challenges and Achieve Sustainable Growth>
SDGs initiatives
15

(Re-posting) Financial Goals in the New Mid-Term Plan "G-EST 2025"
Targeting to become a balanced business structure■ Global E2E

FYE Mar. 2021 Actual(Billion Yen)

Net sales■ Live Entertainment

Composition bybusiness segment*

69■ Imaging Systems & Solutions

FYE Mar. 2026

100

25%
51%

25%

8
25%

(Before goodwill amortization)

0.9

25%
10%

2025年度Operating income*

Composition bybusiness segment

40%

4%
20%

2020年度(調整)■Transformation

100%*Net sales and operating2020年度実績
income for FYE Mar. 2021 were adjusted for the impact from a change2025年度
in accounting
policies in overseas M&A and the Imaging Systems & Solutions business, for purposes of comparison.

35%

30%
10%

16

Progress in the Second Quarter
Become a Group consisted of a balanced, highly profitable businesses
that is resilient even under adverse circumstances<Key Strategies>
1.
Expand “Global
E2E” Business2.
Establish a newLive Entertainment
business

3.
Generate Additional
Business Value inthe Imaging
Systems &Solutions business

4.
Complete
Transformation inthe“Transformational
business”<Strategic Measures>
Achieve company
transformation
through DX

Strengthen R&D
capabilities

Secure & activate
talented employees<Resolve Social Challenges and Achieve Sustainable Growth>
SDGs initiatives
17

Vision for the Global E2E Business
The global E2E service is progressing steadily.
(Billion Yen)

Net sales

23
16.6

18.5
15.7

11.1

5.6
* FYE Mar.
2021
Actual25

Pursue the global
E2E service• Increase orders for E2E services received
Internationalfrom video streaming service providers.
17.2• Strengthen efforts to expand thebusiness to the Asian market.

12.7

5.8
FYE Mar.
2022
Plan

7.3

7.8

FYE Mar.
2024
Goal

FYE Mar.
2026
Goal

Domestic• Share domestic and internationalcustomer bases• Improve productivity by sharing systems.

*Regarding sales by each fiscal year FYE Mar. 2021: Adjusted for the impact from overseas M&A andinter-segment sales for purposes of comparison
FYE Mar. 2022 to FYE Mar. 2026: Adjusted for the inter-segment sales

18

Progress in the Global E2E Services
Orders for video streaming service providers are strong domestically andinternationally. We expect orders for digital cinema services to also reboundinternationally from the third quarter onward.

Domestic

Domestic E2E Services achieved 140% YoY (First half)Orders for encoding and localization for video streaming service providers are strong
domestically and internationally

Orders for digital cinema services rebounded from the second quarter→ Expect further expansion of orders in the second halfInternational

International E2E Services achieved 130% YoY (First half)Services for video streaming service providers are expected to remain strong→ Catalog work (past works)-related tasks in newly entering countries continueAlso expect digital cinema services to rebound with the reopening of theatres from the third
quarter onward

19

Progress in the Global E2E Service Activities
International: Strengthened Asian business and enhanced facilities
Domestic: Launched services in new locations
 Strengthened business in the Asian market

International

 Established a subsidiary in Korea as a location for media services business Enhanced facilities in each location to respond to Pixelogic’s Los Angeles officeincrease in orders
 Los Angeles: Expansion of audio and dubbing rooms
 South Africa: Established a subsidiary as a localization
business office

Domestic

Started providing services in new locations
from early November
 Promoted the global E2E services under the worldclass security management system according to
next-generation file-based workflow“Takeshiba Media Studio”
1-14-2 Kaigan, Minato-ku, Tokyo
7-story building above the ground
Fully equipped with preview room,
editing room and office space20

Alliance between Pixelogic and Imagica EMS
Progress in “jointly providing services to global clients” and “utilization of
sharing systems”
 Jointly provide services to global clients→ Imagica EMS handles Japanese localization of works ordered by Pixelogic
Global clients

Order

Major
Hollywoodstudios
Video streaming
service providers

Delivery

Order

Provision ofservices Utilization of sharing systems→ Share capacities in work fields which the two companies have in common and promote
discussions on workflow improvement, etc.

21

Vision for the Live Entertainment BusinessWe will establish new business models and expand business mainly
lead by IMAGICA EEX.

(Billion Yen)

Net sales

10

6
2.9

3.2

0.5

0.7

2.4

2.5

* FYE Mar.
2021
ActualFYE Mar.
2022
Plan

4.6

Establish new business models
New
entertainment
business

2.3

3.7

FYE Mar.
2024
Goal

5.4

FYE Mar.
2026
Goal

Existing
entertainment
business• Enter the digital event area(planning and producing online live
streaming)• Establish a business with a revenuesharing business model throughcooperation with streaming service
providers and talent agencies.
• Launch a sports tech business thatprovides a new spectator experienceand imaging solutions for sports
events.

*Regarding sales by each fiscal year FYE Mar. 2021 to FYE Mar. 2026: Adjusted for the inter-segment sale22Winning of Projects and New Initiatives
Winning of projects and promoting new initiatives in three fields.

１

Hybrid live

(real & online)

Strengthen collaboration withNTT DOCOMO

２
３

High-definition live
viewing

Joint venture with a partner isunder consideration

Experiential theme park

 Challenge to Metaverse businessCo-creation of “Real place” ＋“Virtual space”

 Plan to expand into the Theme Park
business23

Hybrid Live: Strengthen Collaboration with NTT DOCOMO
Expand both companies’ Live business in collaboration with NTT DOCOMO
Launched online live with NTT DOCOMO using online live streaming studio.
Strengthen relationship with NTT DOCOMO to expand both companies’ Live businesses.

“LIVE DIVE,” an imaging online live streaming using large-scale four-sided LED

24

Experiential Theme Park: Challenge to Metaverse BusinessEnter into Metaverse business (virtual-reality space) through VR platform.
Developed VR application “Virtual TGC β Version” at the online “TOKYO GIRLS COLLECTION
2021 AUTUMN/WINTER” and conducted trial operation in September 2021.

Develop and operate VR platform for various live events including live music.

Metaverse (virtual-reality space) application “Virtual TGC β Version” for fashion show through business alliance with TOKYO GIRLS COLLECTION

25

(Reference) Introduction of Previous PerformancesWork on various new live entertainment productions following the establishmentof IMAGICA EEX
Date

Event namePartner, etc.

August 22, 2020

In charge of video direction of “ALLE JAPAN TSUYOSHINAGABUCHI LINE LIVE VIEWING”

LINE

December 21, 2020

Produced an exact copy of the popular rock band “MY FIRSTSTORY” live on a giant screen using high realistic sensation live
viewing “VISIONS”

Project commissionedby the Agency for
Cultural Affairs

January 26, 2021

Produced an exact copy of the Japanese drum performer “DRUM
TAO” using high realistic sensation live viewing “VISIONS”

Project commissionedby the Agency for
Cultural Affairs

March 6, 2021

Planned, directed and produced “NTT DOCOMO New Virtual LiveCONNECT Special Live ‘TWICE in Wonderland’,” a nextgeneration online live using XR remotely between Japan and Korea

NTT DOCOMO

March 16, 2021

Held “NEXT VISION JAPAN 2021 XR LIVE,” a next-generation
online live using XR

Project commissionedby the Agency for
Cultural Affairs

September 4, 2021

Jointly developed “TOKYO GIRLS COLLECTION’s” virtual-reality
space application “Virtual TGC (β Version)” and used at the event

W TOKYO

October 16, 2021

Streamlined “LIVE DIVE,” a new type of online live using stateof-the-art studio with a large-scale four-sided LED

NTT DOCOMO
26

Progress in the Imaging Systems & Solutions BusinessPreparing for measures to switch to a “Service-Selling” business.

(Billion Yen)25

Building aframework

Net sales

22

Established a division incorporating technology segment ofgroup companies in PHOTRON LIMITED in April. Also made acompany of an engineer group a subsidiary in November.

Imaging Systems &Solutions・ An online delivery system for TV commercials is doing well (1016.3

Business modeltransformation

14.4

Establishment of Technology development
divisionthousand deliveries/month, share of less than 30%）

・Services for such as monitoring of network system andremote production are now under development

High-speed Camera

・Sold 2 new models
・New services for vehicle crash test is inpreparation“INFINICAM UC-1 Ver.1.3”“MH6 ST Camera Head”

2021
ActualFYE Mar.
2022
Plan

FYE Mar.
2024
Goal

FYE Mar.
2026
Goal

Scale
expansion* FYE Mar.

Optical Measurement
Business

Collaboration with Photonic Lattice, Inc. is going well

*Regarding sales by each fiscal year FYE Mar. 2021: Adjusted for the impact from overseas M&A andinter-segment sales for purposes of comparison
FYE Mar. 2022 to FYE Mar. 2026: Adjusted for the inter-segment sales

27

Progress in the Transformational Business
Promote initiatives to improve profitability in each business segment• Strengthen relationships with video
streaming service providers

Net sales and operating margin(Billion Yen)

5.0%
0.0%
-5.0%

34.6

37

39

40

Content Creation

5.0%

Original Netflix drama productions continue

・Production of “Alice in Borderland Season 2” in progress
・Production of “Yu Yu Hakusho” determined

Projects with other video streaming service
providers are also in process• Make a greater effort to acquire and create
intellectual property (IP)Animating Group companies’ original works of anime one
after another –“ODD TAXI” and “Restaurant to Another World 2,” etc.

2021
ActualFYE Mar.
2022
Plan

FYE Mar.
2024
Goal

FYE Mar.
2026
Goal

Production Services* FYE Mar.

• E2E service to the game industry is inprogress
Debugging and３DCG both exceeded 120% YoY• TV commercial post-production businessprofitability substantially improved
Improved due to increase in net sales and effect of structuralreform and promotion of DX is in preparation

28*Regarding sales by each fiscal year FYE Mar. 2021 to FYE Mar. 2026: Adjusted for the inter-segment sales

SDGs Initiatives: Examples
１．Initiatives that use “imaging” to contribute to society“Regional revitalization”
Produced a creator preparatory school incooperation with local governments“Koshi-city creator preparatory school”
Produced a creative preparatory school with Koshi-city, Kumamoto Prefecture as a joint
project. This year, the number of local governments has increased, and we are promoting thedevelopment of citizen creators who can publicize the appeal of the region by themselves.

© 合志市コンテンツ産業創出協議会

29

SDGs Initiatives: Examples
２. Creation of a production process that is environmentallyand people-friendly
Realized virtually 100% renewable energy at the Tokyo International Projection
Mapping Award Vol. 6
to develop domestic and international young spatial video creators and to spread newtechnologies
Offset (virtually 100% renewable energy) CO2 emitted byusing the J-Credit Scheme.

３．Development of human resources and promoting diversity
Promote the employment and support of athletes with disabilities

Currently, a track and field athlete with hearing disability andwheelchair basketball player belong to our company andparticipate actively.
Various athletes including Judo and archery also participate
actively in the entire Group.
Wheelchair basketball player: Takato Ueki

Track and field athlete: Satoshi Osanai

30

Growth up to FYE Mar. 31, 2026
Continue to grow steadily each fiscal year.
Bar chart: Net sales
Line chart: Operating income before goodwill amortization

8.0%
6.0%

4.0%

90

1.0%

69
Global E2E

16.6

Live Entertainment

2.9

Imaging Systems& Solutions
Transformational
Business

*

14.4

75
18.5
3.2
16.3

Billion Yen

100
25

23
6
22

10
25

34.6

37

39

40

FYE Mar. 2021 Actual

FYE Mar. 2022 PlanFYE Mar. 2024 GoalFYE Mar. 2026 Goal

*Regarding sales by each fiscal year FYE Mar. 2021: Adjusted for the impact from overseas M&A and inter-segment sales for purposes ofcomparison
FYE Mar. 2022 to FYE Mar. 2026: Adjusted for the inter-segment sales

31Notes*1 Global E2E services
Refers to an integrated end-to-end (E2E) service that covers the entire post-production process forfeature films, TV dramas, animation, and other audio/video content up to media services for
localization (subtitling/dubbing) and distribution of these through all kinds of media, including
theaters, TV, and video streaming via the Internet.
*2 Structural reform
The structural reform discussed in this document refers to the voluntary retirement implemented in
the Production Services business segment to achieve sustainable growth and a rebound in financial
performance of the IMAGICA GROUP, as stated ”Notice of Establishment of New Subsidiaries,
Structural Reform of Production Services, and Group Business Reorganization” disclosed on January
22, 2021 (posted in English on February 9, 2021).
*3 Video streaming service providers
Refers to companies that provide video streaming services on a platform through the Internet.
*4 Impact from a change in accounting standard
This refers to the impact from the change in accounting standard in the Imaging Systems & Solutions
business segment, which resulted in posting the net amount for mobile communication line sales.
*5

Online delivery system for TV commercials
Refers to the service for online delivery of TV commercial source materials, etc. (service provided by
PHOTRON: C.M. HARBOR).

32

Contact for inquiries:
IMAGICA GROUP Inc.
Corporate Management Department
1-14-2 Kaigan, Minato-ku, Tokyo, 105-0022, Japan
Email：ir@imagicagroup.co.jp
URL：https://www.imagicagroup.co.jp/
DISCLAIMER:
The forward-looking statements for the current and future business periods described in thisdocument are formulated based on the plans and prospects of the Group as of the date on
which these materials were disclosed. Actual performance may differ from numerical
forecasts due to the uncertainties inherent in the judgments and assumptions made, as wellas possibility of future changes that may occur in business management and internal andexternal circumstances.

34