Financial Results Presentation
Third Quarter for FYE Mar. 2022
February 17, 2022

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

Contents of Today's Presentation

I

Third Quarter Financial Results Summary for FYE Mar. 2022

II Global E2E Business
III Metaverse Business

Masakazu Morita, Director, Managing Executive Officer* Fiscal years in this presentation are abbreviated as follows: Fiscal year ending March 31, 2022 = FYE Mar. 2022
* Global E2E business (overseas) is the video production service business (overseas) in the disclosure segment categories.

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Contents of Today's Presentation

I

Third Quarter Financial Results Summary for FYE Mar. 20223

Third Quarter Results Highlights

１Total operating income before goodwill amortization* for thecompany was ３.2 billion yen, an increase of 4.7 billion yen versus
the 3Q of FYE March 2021, and an increase of 2.0 billion yen fromFYE March 2020 (pre-COVID-19).

２Production Services was the engine driving improvement in profit,
recording a 3.8 billion yen increase in OIBGA versus the 3Q of FYEMarch 2021.

３

Content Creation also saw a rebound in orders. This resulted inimprovement in OIBGA of 0.7 billion yen versus the 3Q of FYE March2021.

• Operating income before goodwill amortization: Abbreviated to “OIBGA” hereafter.
• Notes (*1-*5) are on page 19 of these materials.

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Highlights of Financial Results for the First Three Quarters• Net sales declined due to the sale of SDI, but profit at all levels substantiallyoutperformed FYE March 2020 (pre-COVID-19).

(Million Yen)

Net sales

OIBGA*

Operating income(loss)

Net profit (loss)
attributable to ownersof the parent

55,618

3,210

1,938

2,460

YoY

YoY

YoY

YoY

(3,052)+4,774+4,307+3,123

3,210

67,405

2,460

1,938
58,67055,6181,186815357(663)(1,564)(2,369)3Q
3Q
3Q
FYE Mar. 2020 FYE Mar. 2021 FYE Mar. 2022

3Q
3Q
3Q
FYE Mar. 2020 FYE Mar. 2021 FYE Mar. 2022

3Q
3Q
3Q
FYE Mar. 2020 FYE Mar. 2021 FYE Mar. 2022

3Q
3Q
3Q
FYE Mar. 2020 FYE Mar. 2021 FYE Mar. 2022

5
*Operating income before goodwill amortization: Abbreviated to “OIBGA” hereafter.

Contributing Factors to Increases (Decreases) in Net Sales(vs 3Q FYE March 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: (2,007))
10,30658,670

1,395

2,064
(14,378)

Content
Creation

Production
Services(Domestic)

55,618

1,263

ProductionServices(International)

Sale of SDI

Imaging
Systems &Solutions(3,443)(259)

Impact fromAccountingStandard

Other

Production Services(International: (4,072))

3Q FYE
Mar. 2021
Actual3Q FYE
Mar. 2022
Actual(3,052)
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Contributing Factors to Increases (Decreases) in OIBGA*(vs 3Q FYE March 2021)
・ OIBGA increased substantially to 4.7 billion yen on a consolidated basis.
Production Services was responsible for 3.8 billion yen of the increase, andContent Creation, for 700 million yen.
(Million Yen)

Production Services(Overall: +3,894)
Production Services(International)+1,724

650

3,210

175

1,074(38)2,169
Sale of SDI

Imaging
Systems &Solutions

Consolidated
Adjustments

Production Services(International)(1,564)743

Production Services(Domestic)

3Q FYE
Mar. 2021
ActualContentCreation

3Q FYEMar. 2022
Actual+4,775
7*Operating income before goodwill amortization: Abbreviated to “OIBGA” hereafter.

Production Services (International)
Quarterly Consolidated Performance Forecast
・3Q results exceeded the forecast.
・ Theaters in Europe and the U.S. will continue to resume operation in the 4Q,(Million Yen)
resulting in substantial improvement in net sales and OIBGA*.
Net salesOIBGAFYE Mar. 2022

FYE Mar. 2022

6,000
800

5,000

600

4,000
3,000400

2,000200

1,00000(200)
1Q Actual

2Q Actual

3Q Actual

4Q Forecast

1Q Actual

2Q Actual

3Q Actual

4Q Forecast✔ Services for video streaming service providers are also expected to be strong from the 4Q onward.

✔ The resumption of theater operation in Europe and U.S. in the 3Q (July through September locally),
resulted in substantial improvement in OIBDA, as anticipated.

*Operating income before goodwill amortization: Abbreviated to “OIBGA” hereafter.

8II

Global E2E Business

III Metaverse Business

9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 “GlobalE2E” Business2.
Establish a newLive Entertainmentbusiness

4.

3.
Generate Additional
Business Value inthe Imaging
Systems &Solutions businessComplete
Transformation inthe“Transformationalbusiness”<Strategic Measures>
Achieve company
transformationthrough DX

Strengthen R&D
capabilities

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

SDGs initiatives
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Global Video Business Environment Trends••

The video streaming market continues to grow and expand, and Box office arerecovering from the impact of the COVID-19 pandemic.
The number of original works produced is increasing, and movies are being
simultaneously released at theaters and offered via streaming services.
Video Streaming Service Provider/Movie Company Trends

Size of the Entertainment Market

240230(Billion $)

220
210

TV

200

CAGR: 9%(2021–2025)

10090

VideoStreaming

80
70
6050

Box office4030

2. Diverse delivery formats are necessaryfor each distribution platform.

20100

2017

1. The number of works with multilingual
subtitles/translations is growing.

DVD/BD
2019

2021

2023

2025

PwC Global Entertainment and Media Outlook: 2021-2025

3. The demand for greater security isincreasing.

11Global Business Fields•The global end-to-end service field, which involves providing localization anddistribution services to video streaming service providers and major Hollywoodstudios
Global E2E Service<Pixelogic's strengths>
High quality and quick delivery
through the use of its own IT system
Trust of customers and proven trackrecordVideostreaming
serviceproviders(Severalcompetitors)
localization

Distribution

Videostreaming

Theaters

Hollywood
Major studios(Dozens ofcompetitors)(Dozens ofcompetitors)
BD/DVD

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Global E2E Business Net Sales (FYE Mar. 2021–FYE Mar. 2026)
FYE Mar. 2022 net sales are forecast to hit 23.3 billion yen (26% above plan)and surpass the FYE Mar. 2024 goal.

•(100 million yen)300+26%250200166100230

185150111233250172160157737378

FYE Mar. 2022 Forecast

FYE Mar. 2024 GoalFYE Mar. 2026 Goal

International

127505658

FYE Mar. 2021 Actual

FYE Mar. 2022 PlanDomestic0*Adjustments were made to net sales for each fiscal year. For comparison purposes, net sales for FYE Mar. 2021 were adjusted
for the impact of overseas M&As and internal inter-segment sales.
For FYE Mar. 2022 – FYE Mar. 2026, adjustments were made for inter-segment sales.

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FYE Mar. 2023 Global E2E Business International• FYE Mar. 2023 nets sales are projected to grow 25% YoY and surpass the FYEMar. 2026 goal.
• Growth in localization (+20%) and digital cinema (+45%) is expected to drive(100 million yen)overall growth in sales.
250

Sales up 25%200
200

172

160
150

127
111

100500FYE Mar. 2021 Actual

FYE Mar. 2022 PlanFYE Mar. 2022 Forecast

FYE Mar. 2023 PlanFYE Mar. 2026 Goal

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Response to Customer Trends and Business Environment
Customer trends
Entry of new video streaming service providers
and greater use of simultaneous theater releaseand streaming

Countermeasure 1• Increase in the number of both original andcatalog works

Expand capacity• Greater demand for multi-language
localization• Need for quick delivery and 24-hour-a-day
customer service
E2E business environment
Fiercer competition for human resources• Red-hot labor market for video-related
human resources• Competition for engineers• Greater costs to capture and keep humanresourcesCountermeasure 2

Raise productivity
and reduce costs
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Concrete Measures•Maintain competitive advantage by expanding capacity and raisingproductivity and reducing costs.
Los Angeles office

Expand capacity.

•Expand the Los Angeles and London offices.
Expand audio-related facilities and creative services.

•Move and expand the Egypt office.
Increase audio facilities and improve security by relocating to new offices.

•Invest in a digital cinema distribution service company.
Leverage partnership with MetaMedia, which is involved in distribution services to theaters.

Raise productivity andreduce costs.

•Make additional investment in "pHelix", our proprietary IT system.
Further increase efficiency of E2E operations by moving forward withdevelopment.

•Acquire superior human resources in Egypt.
Implement low-cost operations and introduce 24-hour-a-day customer service.

•Expand the South African English-language service team.
Have South African native English speakers handle English-language files thatwill be the source of subtitles and dubbing.

New Egypt office16

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 “GlobalE2E” Business2.
Establish a newLive Entertainmentbusiness

4.

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

CompleteTransformation inthe“Transformationalbusiness”<Strategic Measures>
Achieve company
transformationthrough DX

Strengthen R&D
capabilities

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

SDGs initiatives
17

New Initiatives of Live Entertainment business
Promoting new initiatives in three fields.

１

２

３

Hybrid live
(real & online)

High-definition live
viewing

Experiential theme park
Co-creation of “Real place” ＋“Virtual space”

Strengthen collaboration with NTT
DOCOMO

Joint venture with a partner is inprogress

Expand into Metaverse business18

IMAGICA GROUP's Expansion into the Metaverse Business
IMAGICA GROUP Metaverse business

Leverage our video production skills in space and our strength invisualization technology for videos in virtual worlds•

Investment in Metaverse business will focus on entertainment, urban spaces, and industrial use.
Investment amount: 1 billion yen

Priority fields

Entertainment Metaverse

Urban space Metaverse

Metaverse for industry

Plan, direct, and produce
various virtual events,
including music concerts andsports events.

Plan, direct, and create
virtual cities and buildings
linked to new developmentareas and existing facilities.

Photograph products, create
detailed reproductions using
3D CG, and conductsimulations in virtual space.

Related fields

Advertising Metaverse

EC Metaverse

Introduce new ad videos in Metaverse
using XR technology.

Create avatars in virtual space anddigital products using 3D CG.
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Examples of Priority Fields
Entertainment Metaverse
Develop and operate a VR app for Tokyo Girls Collection.

Urban space Metaverse

Metaverse for industry

Plan, direct, and produce
virtual cities and buildings.

Conduct simulations using 3D CG.

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For FYE Mar. 2023
Drive further growth with global E2E business.
•25% growth due to strong demand from video streaming service
providers and Hollywood major studios•

Maintain competitive advantage by expanding capacity and raisingproductivity and reducing costs.

Develop the Metaverse business.

•Invest in Metaverse business and focus on the three fields of"entertainment", "urban spaces", and "industry".

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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/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.

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