Financial Results Presentation
Second Quarter for FYE Mar. 2021

November 18, 2020

Contents of Today’s Presentation

I.

Second Quarter Financial Results Summary and Financial Forecast
for FYE Mar. 2021
1.
2.
3.
4.
5.

Highlights of Financial Results for the First Half
Second Quarter Results (July 1 to September 30)
Trend in Quarterly Consolidated Performance
Business Environment by Segment
FYE Mar. 2021 Forecast

II. Progress on Priority Measures for FYE Mar. 2021
1.
2.
3.
4.
5.
6.

Five Key Strategies and Priority Measures for FYE Mar. 2021,
announced in June 2020
Develop a New Global Strategy
Propose New Ways to Provide Entertainment
Innovate in Video Production Processes
Utilize Imaging in the Industrial World
Conclusion* The notation for fiscal years in this presentation is abbreviated as follows: Fiscal year ended March 31, 2021 → FYE Mar. 2021

2

I Second Quarter Financial Results Summary
and Financial Forecast for FYE Mar. 2021

3

I Second Quarter Financial Results Summary and Financial Forecast for FYE Mar. 2021
１. Highlights of Financial Results for the First Half

Net sales decreased by 11.5 billion yen.
An operating loss of 2.6 billion yen was posted.

(Million Yen)

Net sales

EBITDA

Operating income (loss)

35,835(1,025)(2,628)(11,587)(2,951)(2,903)

YoY

YoY

YoY

Net profit (loss)
attributable to ownersof the parent(1,952)
YoY(2,817)

1,926

47,42235,835865
275(1,025)(1,952)(2,628)2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

4

I Second Quarter Financial Results Summary and Financial Forecast for FYE Mar. 2021
２. Second Quarter Results (July 1 to September 30)

Both net sales and losses improved in the second quarter, comparedto the first quarter.
1Q(Million Yen)

Actual

2Q(July 1 to September 30)

1H% Change from
1Q/
Change from 1Q

ActualActualNet sales

16,85518,98012.6%

35,835

Operating loss

(1,868)

(760)

1,108

(2,628)

Ordinary loss

(1,942)

(986)

956

(2,928)Net loss attributableto owners of parent(1,213)

(739)

474

(1,952)

EBITDA (Reference)(1,063)37

1,101(1,025)5

I Second Quarter Financial Results Summary and Financial Forecast for FYE Mar. 2021
３. Trend in Quarterly Consolidated Performance

Improvement in both net sales and operating income to the samelevel as last year is anticipated in the fourth quarter.
(Million Yen)

Net sales

16,855

Operating income

18,980(760)(1,868)

1Q Results

2Q Results

3Q Forecast

4Q Forecast

1Q Results

2Q Results

3Q Forecast

4Q Forecast

6I Second Quarter Financial Results Summary and Financial Forecast for FYE Mar. 2021
４. Business Environment by Segment

Further improvement in the business environment is expected in thethird quarter onward.
Segments

Trend(vs. 1H)

Comments(Positive) Release of feature film productions will be scheduled in the third
quarter onward.

Content Creation

Production
Services

Improvement(Positive) Resumption in shooting of TV commercials will continue.

Domestic:
Improvement(Positive) Digital cinema services will rebound as theaters reopen.

Overseas:
Slightimprovement(Neutral) It is still unclear whether there will be large live-music
performance projects, but online streaming of performanceswith no audience will proceed.

(Positive) J.LEAGUE resumed in the second quarter and other sports will
also resume.
(Neutral) International media services (localization) will struggle in the
U.S. and various countries in Europe due to the spread of
COVID-19. Asia will rebound.
(Positive) Orders from TV broadcasters are expected in the fourth quarterand maintenance services will increase.

Imaging Systems& Solutions

Improvement(Positive) Online delivery system demand will increase amid the remote
production environment.
(Neutral) The demand for high-speed cameras will be strong in Asia, but it
is still unclear what conditions in Europe and the U.S. will be.
7I Second Quarter Financial Results Summary and Financial Forecast for FYE Mar. 2021
５. FYE Mar. 2021 Forecast

Continued improvement is anticipated in the third quarter onward.
FYE Mar. 2020

FYE Mar. 2021

(Million Yen)

Actual1H

YoY

Full Year Forecast

YoY

YoY ratio

94,09035,835(11,587)

84,000(10,090)(10.7%)

1,351(2,628)(2,903)(2,200)(3,551)－(1.0%)

(-)

-

(-)

-

Ordinary income

416(2,928)(2,736)(2,650)(3,066)－

Net profit (loss)
attributable to owners ofparent664(1,952)(2,817)(1,150)(1,814)－

Earnings (Loss) per
share (Yen)

15.05(44.05)(63.69)(25.91)(40.96)－

EBITDA (Reference)

4,706(1,025)(2,952)

1,255(3,451)(73.3%)Net sales
Operating income(Operating margin)

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

II Progress on Priority Measures for FYE Mar. 2021

9II. Progress on Priority Measures for FYE Mar. 2021

1. Five Key Strategies and Priority Measures for FYE Mar. 2021 (announced June 24, 2020)

Key Strategies- Areas of investmentin the future -Priority Measures
for FYE Mar. 2021

1. Develop a new global strategy

Develop a new global strategy

2. Improve profitability ofexisting businesses
3. Transition toa new business model
4. Create and develop
new businesses
5. Develop human resources
and promote workstyle reform

Propose new ways toprovide entertainment

Innovate invideo production processes

Utilize imaging
in the industrial world10II. Progress on Priority Measures for FYE Mar. 2021

Develop a
new global strategy

2. Develop a New Global Strategy (1) Overall Picture

Pixelogic became a consolidated subsidiary as of October 1st→Pixelogic performs key role in E2E Service and IMAGICA GROUP
accelerates a globally integrated management.
E2E service in Japan
Aim to Other Asian Countries

Global clients

Major Hollywood
studios
TV broadcastingstations
OTT

Localization functionin E2E service* E2E (End-to-End) Service:
Integrated services encompassing localization (subtitling, dubbing) and distribution provided after the original
production of a feature film, etc. is completed11

Develop a
new global strategy

II. Progress on Priority Measures for FYE Mar. 2021

2. Develop a New Global Strategy (2) Pixelogic Company Overview
Company
namePixelogic Holdings LLC

Dateestablished

July 19, 2016

No. ofemployees

Approx. 600

Net sales

6,769 million yen (FY2019)

Officers

Masakazu Morita, Shunjiro Nagase,
Masashi Nakamura (IMAGICA GROUP)John Suh, Robert Seidel

Business
description

Provides integrated localizationand distribution services (E2E
Service) for entertainment
content (feature films and dramas
series etc.) mainly to major
Hollywood studios, broadcasters
and digital platforms(OTT/streaming services).

Headquartered in Los Angeles (Burbank and Culver City), Pixelogic also has
UK operation in London and technology development team in Cairo, Egypt.

12

Develop a
new global strategy

II. Progress on Priority Measures for FYE Mar. 2021

2. Develop a New Global Strategy (3) Changes in External Environment

Expanded the video streaming platform
Major studios(feature films)

TV broadcastingstations

OTT(Video streaming platform) Increase of original content produced by OTTs
 Diversification of distribution/release windows

Growing Demand for E2E Service
13II. Progress on Priority Measures for FYE Mar. 2021

Develop a
new global strategy

2. Develop a New Global Strategy (4) Advantages of Pixelogic

1. Growing demand for E2E service by major Hollywood studios and OTT.
2. Increasing requirements for capability to handle for diverse
distribution formats with a short turnaround and high-level security.

Unique Position

Technical
Capabilities

Customerbase

One of the few companies that can provide E2E Service
globally.
→ Key factor to expand IMAGICA GROUP’s global presence.
Capable engineers and internally developed systems thatenable seamless E2E workflow.
→ Shorter turnaround and higher-level security requirements
Strong relationships with industry leading content owners
including major Hollywood studios and OTTs.
→ Essential to global business expansion of IMAGICA GROUP.
14

Develop a
new global strategy

II. Progress on Priority Measures for FYE Mar. 2021

2. Develop a New Global Strategy (5) Vision

Scale the business of E2E Service as a whole Group

Target CAGR 10%+
Trend in Net Sales Growth for Pixelogic and IMAGICA Lab. (E2E service segment)

E2E service in FY2019: Approx. $90 million

Pixelogic

IMAGICA Lab.
Only E2E service segment
FY2016
Pixelogic established

FY2019FY2025＊The figures above do not include SDI sales.

15II. Progress on Priority Measures for FYE Mar. 2021

Propose new ways toprovide entertainment

3. Propose New Ways to Provide Entertainment (1) Business Model

Target business expansion in the entertainment technology business segment
by concentrating Group “creativity x technology,” mainly in IMAGICA EEX.
Group companies engaged
in the entertainment business

Talent agencies, etc.
Artists,
Performers ・・・

IMAGICA EEX

Wholly owned by IMAGICA GROUP
・ Business planning & promotion
・ IP development & investment
・ Project management

Streaming
platforms* Entertainment Technology:
Refers to the use of live viewing, 5G, video streaming, AR/VR, and other state-of-the-art technologies to provide a more enjoyable
entertainment experience and new innovations in technology or the entire business.

16II. Progress on Priority Measures for FYE Mar. 2021

Propose new ways toprovide entertainment

3. Propose New Ways to Provide Entertainment (2) First Half Business Results

1. XR stage for online streaming
fashion show(Sep. 5)
Produced online streaming fashion show using XRtechnology for “The 31st Mynavi TOKYO GIRLS
COLLECTION 2020 AUTUMN/WINTER ONLINE” on
September 5.

© Mynavi TOKYO GIRLS COLLECTION 2020 AUTUMN/WINTER ONLINE

2. Online streaming live
performance (Aug. 22)
Produced online streaming live performance using 360
degree giant LED vision that enabled viewers toparticipate in “ALLE JAPAN TSUYOSHI NAGABUCHI LINE
LIVE VIEWING”, which was streamed by LINE
Corporation for a fee.

17

Propose new ways toprovide entertainment

II. Progress on Priority Measures for FYE Mar. 2021

3. Propose New Ways to Provide Entertainment (3) Second Half Initiatives

Our proposals were selected for the Project to Strengthen Earning Capacityof Cultural Arts led by the Agency for Cultural Affairs (¥483 million in aid).
We plan to implement six projects on following four themes
1. High-definition live
viewing on wide
screen2. Planetarium screening 3. XR live streaming(Showing visual contents on adome shape)(Streaming using XR and otherstate-of-the-art technologies)

4. Natural 3D imaging(Showing 3D films that can beviewed with the naked eye)(Live viewing of live music andtheatrical performances, etc.)

Aim for full-scale businesses from next year onward.
18

II. Progress on Priority Measures for FYE Mar. 2021

Propose new ways toprovide entertainment

3. Propose New Ways to Provide Entertainment (4) Future Business Development and Scale

Targeting ¥5 billion in the entertainment technology business in 2025
To develop new business only IMAGICA Group can produce byleveraging its unique capability of “Creativity x Technology”.

1. High-definition live viewing

Planning and operating theater-style live viewing throughcollaboration

2. Experiential theme park

Planning and operating an experiential theme park using
imaging technology

3. Online streaming of live performances

Online live streaming using XR and other state-of-the-art
technologies

19

Innovate in video
production processes

II. Progress on Priority Measures for FYE Mar. 2021

4. Innovate in Video Production Processes (1) Conceptual Diagram of Cloud Service

Provide all video production processes on the cloud Respond to advances in new forms of video production due to the COVID-19
pandemic.
 Make progress on the platform business concept.

PharosAutomated transcription

PhotronLive Cloud Service
Remote editing &preview function

Integrated
management ofmedia, materials &other data

Production
management

Image & video file management
Cloud storage

Distribution
supportCloud platform

Secure, high-speed
and huge filetransfer service

20Innovate in video
production processes

II. Progress on Priority Measures for FYE Mar. 2021

4. Innovate in Video Production Processes (2) Introduction of Case 1: C.M.Harbor”C.M.Harbor”, an online delivery system for TV commercials.
Conventional Method

Current Method

Tapes containing commercial source
materials are delivered in many ways,
including bike courier and hand delivery.

Various commercial production processes
are completed online.

Production
company

TV Commercial Delivery Workflow
TV commercial
production request

TV commercial production

TV commercial source
materials/meta data

Advertising company
handling production

Advertiser
Request to send
TV commercialdeliveryuploadedMedia handling company
registers, previews &approves

EditingstudioShooting(Materials transporter)

Online delivery
instructions

Production
company

Post
productiondeliverySends TVcommercial
source materials/
meta script

Advertising company
handling media(sales)Broadcaster
Advertising company
handling media(progress)

CMDeCoonline delivery
system for TV
commercials

Broadcaster capable of accepting
online delivery

Broadcaster not capable ofaccepting online delivery

The COVID-19 pandemic has had a ripple effect on online delivery system.
↓
C.M.HARBOR has a 30% share of the industry and aims to expand this share further.
21

Innovate in video
production processes

II. Progress on Priority Measures for FYE Mar. 2021

4. Innovate in Video Production Processes (3) Introduction of Case 2: Pharos”Pharos”supports Cloud production workflow
Conventional Method

Future Method

Visual data are managed on the server
for the video editing tools. Visual data is
distributed via physical media or by
sending files.

Various kinds of visual data are managed
and accepted/delivered on the cloud,regardless of the types of video editing
tools used, and file conversion is also
possible.

CompanyA

Company
B
CompanyA

Company
B

CompanyC

Home

The COVID-19 pandemic is also having a ripple effect on the video production
workflow online.
↓
We launched this service in November and aim for top share.
22

Utilize imaging
in the industrial world

II. Progress on Priority Measures for FYE Mar. 2021

5. Utilize Imaging in the Industrial World (1) Expansion from Existing Areas

New Challenges in the Optical Measurement Area

Existing areas
High-speed camera
Polarization camera
6D-MARKER

Expand areas of use
Measurement

Integration

Analysis■ Vehicle inspection area
Expandproduct areas
Fine tune to the needsof the new area
E.g.:
Ultra compact pencilshaped camera head, highspeed camera equippedwith wireless capability

・ Collision safety performance
testing
・ Visualization of
combustion

Control

Use IoT & AI

■ Optical measurement area

・ Development of polarization
elements , and measurement systems.

■ FA area

High-speed
monitoring system

CRYSTA

Polarizationinterferometer

KAMAKIRI・ Used to evaluate and andinspect distortion of thetransparent film usedon LCD televisions
and smartphones23II. Progress on Priority Measures for FYE Mar. 2021

Utilize imaging
in the industrial world

5. Utilize Imaging in the Industrial World (2) Acquisition of shares in Photonic Lattice, Inc.

PHOTRON LIMITED acquired 100% of the shares in Photonic Lattice, Inc.
This will the expansion of Optical Measurement Business.

Photonic Lattice, Inc. is a technology venture company from Tohoku University, which excels inphotonic crystal designing and manufacturing of Photonic Crystal.

Technological
Advantage

Photonic Lattice is one of the few companies in the worldthat can design and mass produce Photonic Crystals.

Basic Patents

Photonic Lattice holds highly effective patents of photonic
crystals and polarization cameras.

Joint Developmentwith Photron

Photonic Lattice has engaged in joint development ofpolarization cameras and other devices with the Optical
Measurement Divisions of PHOTRON for more than 10
years.

* A Photonic Crystal is an artificial crystal that can controls lightpath and direction of light. It is expected to be used in the fieldof optical multiplexing communication (5G), and Optical
Measurement area.

Controls light pass, and direction via ahighly flexible 3D nano structure.

24

II. Progress on Priority Measures for FYE Mar. 2021

Utilize imaging
in the industrial world

5. Utilize Imaging in the Industrial World (3) Purpose of Share Acquisition

Purpose of share acquisition:
To expand the optical measurement business of PHOTRON LIMITED
Build a more closely integrated relationship between the twocompanies in development, sales, manufacturing, and management.

１

Secure a stable supply chain, shorten development lead time,and improve manufacturing quality.

２

Develop and sell new products in the optical measurement area,
using the technology of Photonic Lattice.

３

Engage in new product development in the opticalcommunications and semiconductor manufacturing sectors
where market growth is anticipated and pursue global market
expansion.
25

Utilize imaging
in the industrial world

II. Progress on Priority Measures for FYE Mar. 2021

5. Utilize Imaging in the Industrial World (4) Vision Targeted by the Optical Measurement Business

Target net sales of ¥2 billion in 2025 through synergistic benefits.
Image of growth in the optical measurement business of PHOTRON LIMITEDNet sales of ¥2 billion
Photonic Latticesales

Sales fromsynergistic
benefits

Sales fromexisting opticalmeasurementbusiness
FYE Mar. 2021

FYE Mar. 2022

FYE Mar. 2023

FYE Mar. 2024

FYE Mar. 2025

FYE Mar. 2026

26

II. Progress on Priority Measures for FYE Mar. 2021

6. Conclusion

Invest in the future.
Curb unnecessary and non-urgent investment,
And steadily implement priority measures for FYE Mar. 2021

Develop a new global
strategy

Propose new ways
to provide entertainment

Innovate in video
production processes

Utilize imaging
in the industrial world

27

Feature film productions and drama productions
to be released in the third quarter onward
STAND BY ME Doraemon 2

Alice in Borderland

Pocket Monsters the Movie: CocoNov. 2020 release

Exclusive streaming on
NETFLIX from Dec. 10

Dec. 25 release

Image not displayed
due to copyright considerations

Image not displayed
due to copyright considerations

Image not displayed
due to copyright considerations© Fujiko Pro/2020 STAND BY ME Doraemon 2
Film Partners© Haro Aso, Shogakukan/ROBOT© Nintendo, Creatures, GAME FREAK, TV
Tokyo, ShoPro, JR Kikaku© Pokémon ©1998-2020 Pikachu Project28

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.

2930