Financial Results

Fiscal Year Ended March 31, 2021
(FYE Mar. 2021)

May 19, 2021

Contents of Today’s Presentation

I.

Financial Results Summary for FYE Mar. 2021 andBusiness Plan for FYE Mar. 2022

II.

New Mid-Term Plan "G-EST 2025"* Fiscal years in this presentation are abbreviated as follows: Fiscal year ended March 31, 2021 → FYE Mar. 2021

2

Ⅰ

Financial Results Summary for FYE Mar. 2021 andBusiness Plan for FYE Mar. 2022

3

Highlights of Consolidated Financial Results(Million Yen)

An operating loss of 1.0 billion yen was posted.
Due to a gain on the sale of shares posted to extraordinary income, 3.4 billion yen
was recorded as a net income attributable to owners of the parent.
Net sales

EBITDA

86,7272,544(7,363)(2,162)

YoY

94,09086,727

YoY

Operating income(loss)Net income attributableto owners of the parent

YoY

YoY

(1,084)(2,435)

3,454
2,790

Gain on the sale of SDI
shares (¥4,900 million) was
posted to extraordinary
income

4,706

3,454
2,544

1,351
664
(1,084)FYE Mar.
2020

FYE Mar.
2021

FYE Mar.
2020

FYE Mar.
2021

FYE Mar.
2020

FYE Mar.
2021

FYE Mar.
2020

FYE Mar.
2021

2

FYE Mar. 2021 Operating Income: YoY Comparison
Production Services saw a substantial decline in operating income due to
COVID-19.

(2,435)
1,351(81)
Content
Creation(1,242)(International)

(669)
188

(1,874)
Production Services

Main reasons for decline:(1,084)(632)(Domestic)FYE Mar. 2020
Actual(Million Yen)

Imaging Systems& Solutions

OthersFYE Mar. 2021
Actual

•Production Services: The overseas business (SDI) recorded a substantial decline in both net sales andoperating income due to COVID-19.
 The domestic business recorded a decline in both net sales and operating income due toa decline in orders for feature film editing and distribution, suspension of events, andother factors due to COVID-19.

•

Imaging Systems & Solutions: Large projects were delivered in FYE Mar. 2020, resulting in a
decline in net sales and operating income in FYE Mar. 2021 by comparison.

5

Net Sales and Operating Income by Quarter• The first and second quarters deteriorated substantially from the previous
year due to the impact of COVID-19.
• Both net sales and operating income improved over the previous year fromthe third quarter onward, returning to generate profit.
(Million Yen)

Net sales

Operating income

28,05725,675
21,747
16,85518,980■■ FYE Mar. 2020 Actual■■ FYE Mar. 2021 Actual

26,64022,835

1,285

994

956

20,028
82

(681)

259

(760)

(1,868)

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q
6

Overview of FYE Mar. 2021 by Segment(Million Yen)

Content Creation

26,205

Production Services

Net sales

49,091

Operating income

19,809(359)

48,286• Net sales and operating income improved during the second
half as postponed feature films were released, shooting ofdrama series resumed, and online streaming of live music
performances and orders for production of TV commercial
productions increased.

(440)
Domestic(348)

International(2,222)

Imaging Systems& Solutions

20,551

19,669• Conditions were tough during the first half. The release ofmultiple feature films was postponed and shooting of TV
commercials was canceled or postponed.

2,714

2,045

■ FYE Mar. 2020 Actual ■ FYE Mar. 2021 Actual• Conditions were tough in the domestic business during thefirst half. During the second half, orders increased for postproduction services for animation and services for video
streaming service providers. Distribution for streaming of live
music performances and Game 3DCG production was firm.
• SDI Media Group continued to experience severe conditions
such as the cancellation of new projects due to COVID-19.
Pixelogic received steady orders for E2E services for video
streaming service providers.
• The online delivery system for TV commercials saw strong
sales.
• Some system projects for broadcasting stations declined or
shrunk in size due to curtailment of investment by eachbroadcaster.
• Sales were tough for high-speed cameras in Japan, Europe,and the U.S., while sales showed signs of rebounding in the
Asian region.
• Sales of LSI for Taiwan and China continued to remain firm.

7

Business Plan for Fiscal Year Ending March 31, 2022
Net sales are forecast to decline due to the deconsolidation of SDI MediaGroup, Inc., but we expect substantial improvement in operating and ordinary
income.
(Million Yen)FYE Mar. 2020

FYE Mar. 2021

ActualActualFYE Mar. 2022
Full year forecast

YoY

% YoY

94,09086,72775,000(11,727)(13.5%)

1,351(1,084)

1,500

2,584

－

(Operating margin)(1.0%)(-)(2.0%)-

Ordinary income (loss)

416(1,343)

1,300

2,643

－

Net income attributableto owners of parent

664

3,454

800

(2,654)(76.8%)

Earnings per share
(Yen)

15.05

77.89

18.02

(59.87)－

EBITDA (Reference)

4,706

2,544

5,228

2,684

Net sales
Operating income(loss)

7

Contributing Factors to Increases (Decreases) in the Net Sales
Forecast for FYE Mar. 2022
Despite the decline in net sales due to the deconsolidation of SDI Media Group
Inc., net sales is forecasted to increase in all segments including significant gainin the international production services through expansion of E2E services.

86,727(11,727)(26,000)
SDI
Deconsolidated
Change inaccounting
standards(21,000)

FYE Mar. 2021
ActualMain Factors:(Million Yen)

(5,000)Content
Creation

Production
Services(Domestic)

75,00011,000

Production
Services(international)

Imaging
Systems &Solutions

Consolidated
adjustments* Production Services (international) = Sum of two companies, Pixelogic + PPC

FYE Mar. 2022
Forecast

Net sales decreased by 21 billion yen due to the deconsolidation of SDI Media Group, Inc.
and by 5 billion yen due to a change in accounting standards.
Net sales increased by 11 billion yen in Production Services (international) due to expansionof E2E services.
Net sales increased in all segments: Content Creation, Production Services, and Imaging
Systems & Solutions.

9Contributing Factors to Increases (Decreases) in the Operating
Income Forecast for FYE Mar. 2022
The deconsolidation of SDI Media Group, Inc. and improvement in Production
Services are forecasted to contribute to the large increase in operating income.

2,584

Production Services(Million Yen)

1,500

FYE Mar. 2021
SDI
ActualDeconsolidation(1,084)

1,400

Content
Creation

Production
Services(international)
Production
Services（domestic）

Imaging
Systems &Solutions

1,500
Consolidated
adjustments(including
strategic
investments)* Production Services (international) = Sum of two companies, Pixelogic + PPC

Main factors:
 Production Services (domestic) will see an increase in operating income
from the effect of structural reform.
 Production Services (international) will see an increase in operating
income from expansion of E2E services.
 Content Creation will see an increase in operating income due to growthin net sales and benefits from cost control.

FYE Mar. 2022
Forecast

1.5 billion yen
in total

10

FYE Mar. 2022 Directions and Actions
Build the foundation to transform into a highly profitable business structure

Content
Creation

Focus on video production (TV commercials, feature films, and video streaming
service providers) and strengthen the sales structure.



Utilize and expand the intellectual property (IP) owned by the Group (animate
original works by Shufunotomo Infos Co., LTD.) Exercise strict cost control and improve productivity by pursuing digitalization.

Production
Services

Imaging
Systems &Solutions

Pixelogic: Expand E2E services (expand transactions with key customers).



IEMS: Expand localization in Japanese and digital cinema services.



Strengthen solution services in the game business domain.

Reduce fixed costs through effect derived from structural reform and improve
productivity through remote production workflow.

 Expand sales by accessing new sales channels and providing new solutions forimaging systems for broadcasting stations.
 Develop the solution business for the vehicle crash test market.
 Launch and expand sales of a cloud-based production workflow service(subscription-based model).
11* IEMS＝Imagica Entertainment Media Services, Inc.

II. New Mid-Term Plan "G-EST 2025" M 2025"
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)

12

Review of the “Integration to 2021” Mid-term Business Strategy(formulated in May 2019)

We developed the “Integration to 2021” Mid-term Business
Strategy based on our business challenges and opportunities.
We will accelerate the Group’s structural reform and build a well-balanced
business portfolio with five key strategies.

Key Strategies
1. Develop a new global strategy.
2. Improve profitability of existing
businesses.
3. Transition to a new business model.
4. Create and develop new businesses.

A business portfoliothat provides both
growth andprofitability

5. Develop human resources andpromote workstyle reform.
13

Achievements in the Previous Mid-term Strategy “Integration to2021”
We have achieved a certain degree of progress over the past two years.
“Integration to 2021” Assessment
1. Develop a new global
strategy.

2. Improve profitability ofexisting businesses.

3. Transition to a new
business model.
4. Create and develop new
businesses.
5. Develop human resources
and promote workstylereform.

•Made Pixelogic a consolidated subsidiary, sold SDI MediaGroup, Inc. and established IEMS* to complete building a new
global business structure.

•

Cost management and improvement of ROBOTCOMMUNICATIONS INC. and OLM, Inc. is underway.

•

Implemented structural reform in the Production Services
business in April 2021.

•

Started work on establishing a new business model for the IP
business (Shufunotomo Infos Co., LTD.), digital marketing, cloudservices, etc.

•

Expanded into new businesses by establishing IMAGICA EEXCo., Ltd. (live entertainment), acquiring Photonic Lattice,Inc. (optical measurement), etc.

•

Began developing executive management and global talent.

•Will accelerate workstyle reform and diversity in the future.

* IEMS: Imagica Entertainment Media Services, Inc.

14

Trends in Business Results (FYE Mar. 2018 to FYE Mar. 2022)• An operating loss was recorded in FYE Mar. 2021 due to the large impact fromCOVID-19.
• We expect it will be difficult to achieve the financial goals in the previous midterm business strategy for FYE Mar. 2022.
Net sales
Operating income
before goodwill amortization

100.0

Integration to 2021 indicators

Operating income

91.4

Net sales(Billion yen)

94.0

Operating margin

90.2
Operatingincome86.7(Before goodwill
amortization)

2.6%

3.9

1.0%

2.4

2.5

0.9

6.0%

1.5%

2.5

6.0

0.３

1.4

(1.0)

0.3％

FYE Mar. 2018
ActualFYE Mar. 2019
ActualFYE Mar. 2020
ActualFYE Mar. 2021
ActualIntegration to 2021
(Initial goal)
15

Challenges
Following six challenges have been revealed due to the COVID-19 pandemic, in addition
to rapid market changes in the visual media industry.
１. We are just at the starting line in expanding revenues in the global market.

• We have built a new global business structure, but the results in terms of net sales will emerge in
FYE March 2022 and beyond.

２. We are working on domestic growth markets, but the business scale is still small.
• We have entered the live entertainment market and other new markets, but business expansion
will occur from this point onward.

３. We rely on the Imaging Systems & Solutions business for profit.

• We cannot hedge risks with our current business structure amid rapid social changes and need asecond and third pillar of business.

４. Improving the profitability of existing businesses continues to be a significant
challenge.

• Transforming the business structure and entering growth markets are pressing issues amid therapid changes in the market environment.

５. Operational improvements through digital technology and data utilization are
insufficient and not yet established.
６．Further efforts are needed to secure and develop talent.

We have formulated a new mid-term plan
to resolve these challenges.

16

Goal of the New Mid-Term Plan "G-EST 2025"

Become a Group consisted of a balanced, highly profitable businesses
that is resilient even under adverse circumstances

Make the global E2E business a second pillar of the Group.

Put the live entertainment business on the path to growth.
Leverage the highly profitable
Imaging Systems & Solutions business to an even greater degree.
Stabilize transformational businesses*
and build a structure capable of generating profit.
* Transformational businesses: Production services (feature film shooting and editing, human talent solutions),
anime production, feature film/drama production, TV commercial/video production

17Key Strategies in the 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
18

Financial Goals in the New Mid-Term Plan "G-EST 2025"
Targeting to become a balanced businessstructure■ Global E2E ■ Live Entertainment ■ Imaging Systems & Solutions ■Transformation(Billion yen)

Net salesFYE Mar. 2021 Actual
Composition bybusiness segment*

69

FYE Mar. 2026

Composition bybusiness segment

100

25%
51%

40%

4%
20%

2020年度(調整)

10%
25%

2025年度8

Operating income

35%(Before goodwill amortization)

* 0.9

25%

100%

2020年度実績
2025年度* Net sales and operating income
for FYE Mar. 2021 were adjusted for the impact from a change in accounting
policiesin overseas M&A and the Imaging Systems & Solutions business, for purposes of comparison.

30%
10%

25%
19

Key Strategies in the 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
20

<Key Strategies> 1. Expand “Global E2E” Business

Vision for the Global E2E Business
Expand the business domain globally by integrating operation of Pixelogic andImagica Entertainment Media Services, Inc.
Net sales(Billion yen)

16.6

25.0
Pursue a global
E2E service structure
17.2

International

11.1

5.6
FYE Mar. 2021 *• Increase orders for E2E services received
from video streaming service providers.
• Strengthen efforts to expand thebusiness to the Asian market.

7.8

DomesticFYE Mar. 2026

* FYE Mar. 2021 results reflect full-year sales of Pixelogic.

• Share domestic and internationalcustomer bases• Improve productivity by sharing systems.
21

<Key Strategies> 1. Expand “Global E2E” Business

Global Client Needs
Worldwide Simultaneous release requires implementing complex tasks in a secureenvironment over a short period of time.

E2E services (rapid delivery)
Localization(subtitling/dubbing)(Example)
Decision to distribute thebiggest hit Sci-Fi filmin 25 languages

・ Translation into
25 languages(from English into French, Spanish,
Japanese, etc.)

・ Subtitling

Editing the translated text andadding subtitles to the film

・ Dubbing

Adding voice data recorded byvoice actors in a studio to thefilm

Distribution(file production/streaming)
Producing files by format
・ By language

25 languages

・ By subtitling & dubbing

2 formats

・ By media format

multiple formats

・ By video format

multiple formats

・ By voice format

multiple formats(TV, PC, smartphone)(SD, HD,４K, etc.)(2ch, 5.1ch, etc.)

Worldwide
Simultaneous releasein 25 languages

25 ×２× No. of media formats
× No. of video formats
× No. of voice formats＝ several hundred
formats

22

<Key Strategies> 1. Expand “Global E2E” Business

Competitive Environment Surrounding Pixelogic
Pixelogic is one of the few E2E service providers capable of providing seamlesslocalization and distribution, even on a global basis.
Competitive environment
Global E2E

Video streaming
service providers

Major studios(few companies)
Mainlylocalization

Mainlydistribution

Several dozen
companies

Several dozen
companies<Strengths of Pixelogic>
Uses a proprietary IT
system to respond to thehigh quality requirementsof customers in a shorttimeframeVideostreaming

Theater

BD/DVD23

<Key Strategies> 1. Expand “Global E2E” Business

Competitive Advantage of Pixelogic
Achieve a high growth rate (double-digit CAGR or higher) and high profitability
through competitive superiority on the following points.
(Billion yen)High growth rate

<Pixelogic>
Net Sales Trend
Double-digit CAGR
or higher

98

ActualHigh productivity, low-cost
High profitability

FYE Mar.
2018

47

FYE Mar.
2019
ActualFYE Mar.
2020
ActualUses the proprietary pHelix IT system to provide
secure, high-quality, seamless service
that supports the requirements for a shortdelivery timeframe, many languages, andmany file formats.

Strong trust from customers

65
44

Provide secure, high-quality service
only possible through E2E

FYE Mar.
2021
ActualFYE Mar.
2026
Goal

Uses the proprietarily developed IT system
to automate tasks(IT system developed at a location in Egypt)
Minimum necessary owned studios
Network of translators and dubbing studios(production of English files in South Africa, etc.)

High gross margin24

<Key Strategies> 1. Expand “Global E2E” Business

Services Structure of the Global E2E Business
Increase productivity, expand the scope of services provided, and expand thebusiness through integrated operation of Pixelogic and Imagica Entertainment
Media Services, Inc.

Build the structure for global E2E services
through integrated operation

Sharecustomer bases

Enter
the Asian market↓↓

Expandmarket share

Expandbusiness scale

Share systems↓
Improveproductivity

25

Key Strategies in the New Mid-Term Plan "G-EST 2025"
Become a Group consisted of a balanced, highly profitable businesses
that is resilient even under adverse circumstances

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
26

<Key Strategies> 2. Establish a new Live Entertainment business

Vision for the Live Entertainment Business
Establish a new business model through cross-organizational Group efforts andexpand business.
Net sales(Billion yen)

10.0

4.6

2.9
0.5

5.4

Establish a new business modelNew
entertainment
business

Existing
entertainment
business

2.4
FYE Mar. 2021

FYE Mar. 2026

• 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.
27

<Key Strategies> 2. Establish a new Live Entertainment businessLive Entertainment Industry Undergoing Major Changes
The business scale shrank temporarily due to the COVID-19 pandemic, but a new
online live market emerged and grew rapidly.
Domestic Live Entertainment Market Scale(Billion yen)

+8%

586.2
501.5

Online live market that emerged during
the COVID-19 pandemic

Forecast at 98.4 billion yen
in 2024*

629.5

Forecast digital live entertainment market sizein 2020―2024

515.1

98.4
71.5
49.2
31.4
14.0

130.6

2020

2016

2017

2018

2019

2020

20XX

* Created based on a survey by Pia Research Institute

2021

2022

2023

2024

* From CyberZ, Inc., OEN, and Digital InFact surveys.

Copyright © CyberAgent, Inc. All Rights Reserved.

28

<Key Strategies> 2. Establish a new Live Entertainment business

New Business Opportunities from the Emergence of Online LiveEntertainment Business
Opportunity to enter the live entertainment market as a digital event producer.

Hybrid Live Market

Existing live market
The players in directing, shooting, etc. andthe business flow are entrenched.
(little opportunity for entrance)Stage
directors

Technologies(Use of both real & online)

Switched to revenue-sharing based businessmodel for online events, in collaboration with
communications carriers and streaming service
providers.
(more room for entrance)
Talent agencies

Shooting

Communications
carriers
Streaming service
providers

IMAGICA Group(Digital event producers)

Talent agencies

Promoters

VenuesTicketingAdvertising& promotion

Advertising& promotionStage
directors
Shooting

Technologies

Provide planning and directing usingstate-of-the-art technologies unique toonline live through cross-organizational
Group efforts and expand business.

29

<Key Strategies> 2. Establish a new Live Entertainment businessSuccessful case study in the Digital Event Production
NEXT VISION JAPAN 2021 XR LIVE

Online live employing two-way communication and XR direction

Each company in the Group manifested its strengths in online live event production.

Planning &production

Video, shooting,and VFX

Stage creation(progress, lighting,and sound)

Direction
through two-way
communication

Imagingtechnology

Distribution

30

<Key Strategies> 2. Establish a new Live Entertainment business

Establish New Business Models
Enter the live market as a digital event producer.

High-definition
live viewing

Experiential
theme park

Hybrid live

(Use of both real & online)

Establish a revenue-sharing business model for production of various
kinds of events through collaboration with many partners.
Stage
direction

Talent agencies

Communications
carriers & streaming
service providers

IMAGICA Group

Advertising& promotion(Digital event producer)
Shooting

Technologies

Provide planning and directing using state-of-the-art technologies
through cross-organizational Group efforts and expand business.

31

Key Strategies in the New Mid-Term Plan "G-EST 2025"
Become a Group consisted of a balanced, highly profitable businesses
that is resilient even under adverse circumstances

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
32

<Key Strategies> 3. Generate Additional Business Value in the Imaging Systems & Solutions business

Imaging Systems & Solutions Business: From Selling Products to Selling Services
Switch to a “Service-Selling” business (Subscription SaaS, and Solutions)

25.0* FYE Mar. 2021: Numbers adjusted for change in accounting standards

OpticalMeasurement

FYE Mar. 2026

Business domain
expansionFYE Mar. 2021*

High-speed Camera

14.4

Imaging Systems &Solutions(Billion yen)

Business model transformation

Net sales

Continue to expand provision of imaging
systems (equipment).

+• Cloud-based production workflow service(subscription or SaaS model)• Imaging network monitoring business
Expand business solutions for vehicle crashsafety tests, etc.

• Overseas expansion of polarization testing
equipment(E.g.: Smartphone liquid crystal film testing devices, etc.)• Provide polarizer components to the highspeed communications market
33

＜Key Strategies＞ 4. Complete Transformation in the “Transformational business”

Transformational Business: Improved Profitability and Stabilized Profit

Generation

Target an operating income of 5% or higher through business expansion in highgrowth industries.
• Acquire production projects in Japan and overseas bystrengthening relationships with streaming service
providers.

Net sales(Billion yen)

34.6

Content Creation

40.0<Actual example>

Alice in Borderland

An original Netflix series planned and produced
by ROBOT COMMUNICATIONS, INC.
December 10, 2020, exclusive global rights• Make a greater effort to pursue acquisition and create
intellectual property (IP).
Obtain copyrights through active involvement inproduction committees.
Create IP by animating original works of Group companies.

FYE Mar. 2026

Production Services

FYE Mar. 2021

• Expand business and net sales by rolling out E2E
services to the game industry.
(1) contracts for 3DCG production.
(2) game creators dispatching.
(3) contracts for game debugging (quality assurance).

• Improve productivity by promoting DX in post-production
business.
34

Strategic Measures in the 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
35

<Strategic Measures>

Achieve company transformation through DX
Pursue DX in both business and management foundation (management) andcreate new value in the entire Group.

Create new value through digital technology
Business evolution

Extract the Group from reliance on equipment, location,and physical media.
Automate simple creator tasks.
Move relay productionand editing work toremote work.

Go all digital in the
anime production
workflow.

Automate image
processing andvisualize status.

Strengthen the
management foundation

Make swift management judgments and decision-making based on data.
Improve efficiency of management and administrative work through digital technology.
Build a flexible ICT platform that is capable of responding even in uncertain times.
Visualize management
performance andforecast information
and build a business
management system.

Reduce the number ofhours spent on
administrative work by
going paperless anddigitalization.

Create a centralized
database of talent
information.

Strengthen security
and expand the cloudenvironment.

36

<Strategic Measures>

Strengthen R&D capabilities
Make technological development capabilities the engine of growth for the entire
Group.
Integration & connection oftechnological development capabilities

A dvanced
R esearch
G roupEstablish a Group R&D
organization.
Collaborate with overseas Group companies.

Fuse creativity and technology.

Build a global imaging network with Pixelogic.

Provide live streaming, recording, real time
synthesis, and other solutions.

Develop products for research institutions
and the manufacturing industry.

Use technology to transform theproduction business.

Provide imaging products and analysis, design, and drawing
management solutions for research, development, andquality control.

Provide a broad range of proposals for production
and streaming equipment, cloud service, etc.
37

<Strategic Measures>

Secure & activate talented employees
Improve ability to secure and develop the talent to support business growth.
Secure talentpossessing bothcreativity andknowledge oftechnology

Utilize talent throughtalent management

Build a personnel
system that provides
job satisfaction

Promote diversity•

Secure talent to lead new businesses and centralize hiring activities.

•

Establish an employment format that makes it easy for creators to work.

•

Introduce a career development system for talent skilled in technology.

•

Centralize information on the next generation of management, global
talent, etc. and use it strategically.

•

Introduce a job rotation system in which Group talent can take onchallenges.
Develop multi-talented personnel who specialize in multiple areas andpursue integrated strengths.

•

•
•
•

Promote advancement of female leaders.
Encourage promotion of foreign nationals and transform the workplace
into an inclusive workplace.
Utilize veteran talent.
38

< Resolve Social Challenges and Achieve Sustainable Growth >SDGs Initiatives
Establish Group SDGs initiatives based on the three themes from the management
philosophy and business model.

１

２

３

Use “imaging” to resolve social challenges inmany areas.

Initiatives that use“imaging” to contributeto society

Example:Produce a “creator preparatory school” incooperation with local governments (ROBOTCOMMUNICATIONS INC.)

Pursue ecological activities and services that
support new workstyles in video production
workplaces and offices.

Creation of a production
process that isenvironmentally andpeople-friendly

Example:Pursue full digitalization of the animation production
process.

Build an environment in which many different kindsof talent who work for “imaging” industry to be
active and pursue talent development.

Development of humanresources and promoting
diversity

Resolve social challenges

Example:Establish an environment where people withdisabilities can actively contribute.
Implement programs to develop the next generation(entire Group).

+

Achieve sustained growth39

Goal of the New Mid-Term Plan "G-EST 2025"
Strive for a balanced, highly profitable structure by implementing the Key Strategies.

Imaging Systems &Solutions business
Leverage to an evengreater degree

Global E2E business
Make it the second
pillar of the GroupNet sales

Net sales

25 billion yen

25 billion yen
30%

35%

Percentage
of profit

Transformational
business
Create a structure
capable of generating
stable profit
Net sales

40 billion yen

25%

10%

Live Entertainment
business
Put on the path to
growthGroup with a balanced, highly
profitable structure that is resilienteven under adverse circumstances

Net sales

100 billion yen

Operating income(Before goodwill amortization)

8 billion yen

Net sales

10 billion yen
40Appendix.

Consolidated Statements of Income
FYE Mar. 2020

(Million Yen)

ActualFYE Mar. 2021
ActualYoY% YoY

Net sales

94,09086,727(7,363)(7.8%)

Gross profit

23,76920,582(3,186)(13.4%)

25.3%

23.7%

1,351

(1,084)(2,436)

ー

1.4%

ー

416

(1,343)(1,759)

ー

0.4%

ー

Extraordinary income

1,688

7,138

5,449

322.7%

Extraordinary losses

358

2,240

1,881

525.3%Net income (loss) before
income tax

1,746

3,554

1,808

103.5%Net profit attributable toowners of parent

664

3,454

2,790

420.2%

4,706

2,544

(2,162)(45.9%)(Gross margin)

Operating income (loss)(Operating margin)

Ordinary income (loss)(Ordinary margin)

EBITDA (Reference)* EBITDA includes: Operating income, depreciation and amortization, goodwill amortization and intangible fixed assets amortization including trademarks

42

Financial Results by Segment (1Q-4Q)
FYE Mar. 2020

FYE Mar. 2021

(Million Yen)

Actual(6,395)(24.4%)

(359)

(440)

(81)

ー

ー

ー

49,091

48,286(805)(1.6%)(348)(2,222)(1,874)ーーー

20,551

19,669(882)(4.3%)

Operating income

2,714

2,045

(669)

(24.6%)(Operating margin)

13.2%

10.4%

(1,758)(1,038)

720

ー

(655)

(466)

188

ー

94,09086,727(7,363)(7.8%)

1,351(1,084)(2,436)ーOperating loss

Net sales
Operating loss
(Operating margin)

Net sales

Imaging Systems &Solutions

OthersConsolidated total% YoY

19,809(Operating margin)

Production Services

YoY

26,205Net sales

Content Creation

ActualNet sales
Operating loss
Net sales
Operating income (loss)

43

Consolidated Balance Sheets
As of Mar. 31, 2020

As of Mar. 31, 2021

35,29530,440Cash and deposits

7,339

6,908

Non-current assets

26,85930,005

Goodwill

3,167

12,048

Total Assets

62,15460,446(1,708)Current liabilities

25,762

22,117(3,645) Notes and accounts payable-trade: (644)Short-term loans payable

5,004

7,402

Short-term loans payable: +2,398
Income taxes payable: (1,292)
2,398 Advances received:(2,128)

Non-current liabilities

8,913

8,495

(417)

Long-term loans payable

5,510

5,384

(126)

Total Liabilities

34,67630,613(4,062)

Shareholders’ equity

25,42827,149

Accumulated othercomprehensive income

(361)

301

662 As of March 31, 2020: 25,066 (40.3%)

Stock acquisition rights

11

11

ー As of March 31, 2021: 27,450 (45.4%)

2,400

2,370

(29)

Total Net Assets

27,47829,832

2,354

Total Liabilities and Net
Assets62,15460,446(1,708)Net Cash(3,175)(5,878)(2,703) short-term loans payable)(Million Yen)

Liabilities / Net Assets

AssetsCurrent assets

Non-controlling interests

YoY

Main Factors(4,854) Cash and deposits: (431)

Notes and accounts receivable-trade:(1,450)(431) Inventories: (3,234) Other: +252

3,145 Investment securities: +867

Shares of subsidiaries and affiliates:(1,595)8,880 Deferred tax asset: +301

Long-term loans payable: (126)

1,721 (Reference) Equity capital(Cash and deposits －long-term and44Consolidated Statements of Cash FlowFYE Mar. 2020
1,746
2,777
576
(7)
－
2,248
1,528
(480)
(482)
(933)
6,974
(1,791)(1,468)2,674(2,975)－FYE Mar. 2021
3,554
2,757
871
(4,936)(2,076)
(52)
2,741
26
(1,635)(1,843)(592)－(1,500)
5
(467)
(60)

Expenditure for purchase of subsidiary stock accompanying a change inthe scope of consolidation－(4,099)Gain on sales of subsidiary stock accompanying a change in the scopeof consolidation

－

5,859

(735)
(4,297)245
1,090(2,473)(220)(1,100)(1,364)3,596
4,939(4,048)(221)(7)(2,794)74(1,291)
(124)
1,260

(2)
1,469
(2)
(485)

－

14

7,327

6,856

(Million Yen)

Net income (Loss) before income tax
Depreciation and amortization
Amortization of goodwill
Loss (Gain) on sales of stocks of subsidiaries and affiliates
Gain (Loss) on step acquisitions
Decrease (Increase) in notes and accounts receivable-trade
Decrease (Increase) in inventories
Decrease (Increase) in notes and accounts payable-trade
Increase (Decrease) in advanced payment
Other, net
Cash flows from operating activities
Long-term loan advances
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investments in affiliates
Purchase of investments in subsidiaries

Other, net
Cash flows from investing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Purchase of investments in subsidiaries do not result in change inscope of consolidation
Other, net
Cash flows from financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Net increase (decrease) in cash and cash equivalents accompanying
change in the scope of consolidation
Cash and cash equivalents at end of period

45

Contact for inquiries:
IMAGICA GROUP Inc.
Corporate Management Department
11th Floor, Uchisaiwaicho Tokyu Building 1-3-2 Uchisaiwaicho,
Chiyoda-ku, Tokyo 100-0011, Japan
TEL: +81-3-6741-5742

FAX: +81-3-6741-5752

Email: ir@imagicagroup.co.jp
URL: https://www.imagicagroup.co.jp/en/
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 whichthese materials were disclosed. Actual performance may differ from numerical forecasts due to theuncertainties inherent in the judgments and assumptions made, as well as possibility of futurechanges that may occur in business management and internal and external circumstances.

46