1H FY03/2023

Financial Results
Briefing Presentation
November 7,2022
Dream Incubator Inc.
(Stock Code: 4310)
本資料は機密性の高い情報や第三者の権利に関連しうる情報を含んでおり、開示は貴社内に限定され、また、使用目的もご依頼の際に合意した目的に限定されます。外部への開示や、目的外の使用を検討される場合は、事前に当社にご相談のうえ、書面の同意を取得していただくよう御願いいたします。

SUMMARY
Made steady progress in line with the medium-term management plan.
Resolved to transfer* ipet, DI’s largest incubation investment, acceleratingtransformation of the business structure
Ongoing steady performance in 1H● Business Production policy: Continue growth– 1H sales were JPY1.7bn (+31% YoY, 51% of full-year plan). Ongoing expansion on
the back of mounting demand for new business creation– Team expansion (accelerated hiring) progressing smoothly● Incubation policy: Selectively cultivate and appropriately harvest– Business Investment: Following Work Style Lab and PEACS, resolved to sell* ipet.
Will record approximately JPY18.2bn in extraordinary income if successful– Venture Capital: Secured multiple harvests. Expecting several more in pipelinefrom Q3 onward

Made progress in preparation for medium- to long-term growth(expanding collaboration with other industries)● Accelerating Business Production through tie-up with MUFG
● Launched Business Production Support Program for the ASEAN market with Dentsu*Entered into agreement to sell all shareholdings in ipet Holdings in response to a tender offer by Dai-ichi Life Holdings© DI 2022 － ALL RIGHTS RESERVED.

11. （repeat）Medium-Term Management Plan
2. 1H FY03/2023 Financial Results Summary

3. Explanation for ipet Stock Transfer© DI 2022 － ALL RIGHTS RESERVED.

2

INCORPORATE INVESTMENT ASSETS TO FURTHER
STRENGTHEN BUSINESS PRODUCTION
Expand service lineup

Expand our teamExpandcollaborations

Expandfunctions

Industry
Production

Business
Production
Global SX

Business
Production
Installation● Further strengthen our Business Production platform● Enhance profitability by investing in related andperipheral businesses

Integrate assets (harvested funds/capabilities) byincorporating them into Business Production

Incubation© DI 2022 － ALL RIGHTS RESERVED.

3

(3) MAINTAIN BALANCE BETWEEN GROWTH INVESTMENT TOWARD
ENHANCING CORPORATE VALUE, AND SHAREHOLDER RETURNS
As we transition from NAV-based to P&L-based management, we will
be resuming shareholder returns.
Growth investment: Improve profitability(Expand functions)Shareholder returns: Improve EPS and PER
Balance

Disciplined investment(cost effectiveness)

Based on profits from stable growth in P&Land harvested funds(1) Further strengthen our Business
Production platform

Realized appropriately● Invest in recruitment and HRdevelopment● Invest in infrastructure to raise

Incubation(Harvests)

productivity(2) Enhance profitability by investing in
related and peripheral businesses ofBusiness Production● Invest to bolster capabilities, expandBusinessProduction(Profit)

revenue opportunities, etc.

● Estimated ROIC*＞12%*Net income ÷ invested capital© DI 2022 － ALL RIGHTS RESERVED.

Returned toshareholders
except for
funds forgrowthinvestment
and required
cash flow
Dividend
fromBusinessProduction4

MEDIUM-TERM PROFIT PLAN (FY03/2023 – FY03/2025）
Net income from Business Production ＋ Potential upside of harvests from Incubation
Net income

attributable toparent company
shareholders*＋ JPY11.0bn (unrealized gains after tax)***(JPYbn)Incubation(Harvests:Upside)

1.0
0.3
FY03/2023

FY03/2024

FY03/2025

3.3

4.8

5.9

Personnel(headcount)7093115

EPS (JPY)**

3156102Sales(JPYbn)

***
***

0.6

Simplified calculation of recurring profit × tax rate of 30%
Calculation assumes number of shares outstanding as of end-March 2022
As of end-March 2022
© DI 2022 － ALL RIGHTS RESERVED.

Business
Production(Base)

5

1. （repeat）Medium-Term Management Plan
2. 1H FY03/2023 Financial Results Summary

3. Explanation for ipet Stock Transfer© DI 2022 － ALL RIGHTS RESERVED.

6

1H FY03/2023 CONSOLIDATED P&L (AFTER INSURANCE ITEM ADJUSTMENTS)

1H
FY03/2022

1H
FY03/2023Amount%Sales

16.79

18.87

2.08

12.4%

Gross profit

7.51

9.35

1.84

24.6%

Operating profit

0.23

2.02

1.79

755.3%

Recurring profit

0.44

2.11

1.67

378.4%Net income

0.06

0.95

0.89

－(JPYbn)

YoY change(attributable to parent company shareholders)Tax cost due to resolution for ipet transfer(Consolidated tax effects on retained earnings)
Accrue JPY0.71bn**

Retained earnings is calculated based on after insurance item adjustments after
FY03/2018, and based on before insurance item adjustments before FY03/2018.

© DI 2022 － ALL RIGHTS RESERVED.

7Reference

1H FY03/2023 CONSOLIDATED P&L (BEFORE INSURANCE ITEM ADJUSTMENTS)

1H
FY03/2022

1H
FY03/2023

Amount%

Sales

16.79

18.87

2.08

12.4%

Gross profit

7.04

8.12

1.08

15.4%

Operating profit

▲0.23

0.79

1.02

－

Recurring profit

▲0.02

0.87

0.90

－

Net income

▲0.12

1.01

1.14

－

(JPYbn)YoY change(attributable to parent company shareholders)Tax cost due to resolution for ipet transfer(Consolidated tax effects on retained earnings)
Accrue JPY0.15bn
Note: Figures affected by insurance item adjustments are shown in blue.

© DI 2022 － ALL RIGHTS RESERVED.

8

Reference

ADJUSTED INSURANCE ACCOUNTING ITEMS AND AMOUNTS

1H
FY03/
2022

1H
FY03/
2023

7.04

8.12

● Adjustment related to ordinary underwriting
reserves*

＋0.05

＋0.73

● Catastrophe reserve provision**

＋0.42

＋0.49

＋0.47

＋1.23

7.51

9.35(JPYbn)

Unadjusted gross profit (consolidated)

Total adjustments
Adjusted gross profit (consolidated)***

Adjustment to revise the ordinary underwriting reserve calculation from the initial year balance method to the unearned premium method
Excludes the impact of transferred provision amount (negative if reversed)© DI 2022 － ALL RIGHTS RESERVED.

9

SUPPLEMENTAL INFORMATION ON INSURANCE ITEM
ADJUSTMENTS

Reference

1. Adjustment related to ordinary underwriting reserves● Non-life insurance companies are required under the Insurance Business Act to calculate
ordinary underwriting reserves using two methods (unearned premium balance and first yearbalance) and record the larger of the two as a liability.
● Based on this, ipet Insurance uses the first year balance method for institutional accounting,but emphasizes profit and loss under the unearned premium method, which is equivalent toprofit under accrual accounting.
● In addition, since there are no listed non-life insurance companies that use the first year
balance method, we believe that the disclosure of profits and losses calculated using theunearned premium method is useful for investors in making investment decisions as it helps
with making competitor comparisons.

2. Adjustment related to catastrophe reserves● A catastrophe reserve is a type of underwriting reserve required by law to be set aside to coverlosses from catastrophic events.
● If the loss ratio exceeds the standard loss ratio specified by law, the amount equivalent to theexcess of the loss ratio must be reversed (lowers expenses); if the loss ratio is lower, theamount equivalent to the shortage must be reserved.
‒ The loss ratio at ipet Insurance is lower than the standard, so the amount of 3.2%
multiplied by underwriting revenue must be reserved each fiscal year.
● We focus on the profit and loss excluding the effect of reversals and reserves as a measure ofactual profit and loss.
© DI 2022 － ALL RIGHTS RESERVED.

10

1H FY03/2023 P&L BY SEGMENT
1H
FY03/2022(JPYbn)Business
Production

Business Investment

VentureCapitalPet
LifestyleHR
Innovation

Fan
Marketing

1H
FY03/2023

YoYchange⚫ Sales⚫ Recurring
profit

1.29

1.70

31%

0.13

0.15

13%

⚫ Sales

0.32

1.17

258%

⚫ Recurring
profit

0.01

0.38－

⚫ Sales

13.69

15.99

17%

⚫ Recurring
profit*

0.58

1.57

170%

⚫ Sales－－⚫ Recurring
profit0.63-0.07－－⚫ Sales0.86－－⚫ Recurring
profit-0.22－－(0.11)(0.33)

Notes● Continued solid performancefrom Q1● Recurring profit flat YoY due topersonnel growth● Secured multiple harvests● Expecting further harvest fromtrade sales from Q3 onward● Steady performance on the backof solid pet demand● Sold in Q1 FY03/2023 andrecorded JPY0.03bn in
extraordinary income● Excluded from consolidationfrom beginning of FY03/2023● Sold in Q1 FY03/2023 andrecorded JPY0.51bn in
extraordinary income● Excluded from consolidationfrom beginning of FY03/2023

Note: Recurring profit was calculated as segment profit - companywide expenses ± non-operating profit/loss*
After insurance item adjustments (Figures in parentheses are before adjustment)© DI 2022 － ALL RIGHTS RESERVED.

11

BUSINESS PRODUCTION SALES
Sales* progress vs. plan

Quarterly sales*(JPYbn)(JPYbn)

70
7.0

1.0
10

60
6.0

0.8
8
4.8
48

50
5.0

3.3
33
25
2.5

5
0.5

2.6
26

0.6
6.1

5.2
0.5

0.7
7.8

0.8
8.6
68

0.8
8.4
411

2

4
0.4
3
0.3

1.7
17

2.0
20

2
0.2

1.0
10

1
0.100
FY
通期
Plan

計画

FY
通期Actual

実績

FY03/2022
*7.1
0.7

70.7

60.6

40
4.0

3.0
30

0.9
959
5.9

FY
通期
Plan

計画

1H
2Q
Actual実績

FY03/2023

FY
通期
Plan

計画

FY
通期
Actual実績

FY03/2024

FY
通期
Plan

計画

FY
通期
Actual実績

00

2022/3
1Q

2022/32Q

2022/33Q

2022/3
4Q

2023/3
1Q

2023/32Q

FY03/2025

Excluding sales and profit from carved-out businesses © DI 2022 － ALL RIGHTS RESERVED.

12

EXPAND OUR TEAM: STEADY PROGRESS
Business producer* team size against plan(No. ofpeople)“Business Production” itself attracts talent
115120100● Created original comic series to widely
convey the social significance of DI and theappeal of our work, developed marketingmeasures focused on business producers● Accelerated hiring of ambitious, highly
talented personnel, which also feeds intoretention

93

80
60

Aggressively broadcasting the appeal of DI

56

70

70

FY
Plan

Actual(endSep)

58

40

200
FY
Plan

Actual(endMar)

FY03/2022*

FY03/2023

Excluding incubation specialists

FYPlanActualFY03/2024

FY
Plan

ActualFY03/2025© DI 2022 － ALL RIGHTS RESERVED.

13

ACCELERATE GROWTH OF BUSINESS PRODUCTION
THROUGH COLLABORATION
Accelerating Business Production
through collaboration with MUFG

Launch of Business Production Support
Program for the ASEAN market with Dentsu

Mitsubishi UFJ Financial Group (MUFG), one of theworld’s largest financial groups, established a newunit to contribute to the business creation of large
corporate clients.

Providing support in the areas of three E’s basedon DI and Dentsu’s support track records inSoutheast Asia
1. Entry: Support market entry

DI will support this initiative by leveraging its
Industry Production and Business Production
schemes, while accelerating its own Industry
Production and Business Production businesses,
pursuing business development and innovation
for both companies.

2. Expansion: Expand local business3. Evolution: Design SX**SX=Sustainability Transformation© DI 2022 － ALL RIGHTS RESERVED.

14

1H FY03/2023 CONSOLIDATED BALANCE SHEETMarch 31, 2022
(Total assets: JPY33.5bn)

September 30, 2022
（Total assets： JPY35.3bn）

Cash and deposits
JPY12.9bn

Cash and deposits
JPY15.4bn

Liabilities
JPY21.1bn＋JPY1.01bn

・ Non-controlling interests＋JPY0.22bn

iPet investment
securities
JPY3.0bn

Other assets
JPY11.4bn

Breakdown of change in net assets
・ Net income

Venture capital
JPY6.1bn

・ Valuation differences onavailable-for-sale securities＋JPY0.43bn

Net assets
JPY12.4bn

Liabilities
JPY21.3bn

・ Other comprehensive income＋JPY0.05bn
・ Capial surplus
・ Total▲JPY0.17bn

Venture capital
JPY6.2bn
iPet investment
securities
JPY3.7bn

Other assets
JPY10.0bn

Net assets
JPY14.0bn＋JPY1.55bn

Includes non-controlling

Includes non-controllinginterests of JPY2.6bn

interests of JPY2.8bn© DI 2022 － ALL RIGHTS RESERVED.

15

STATUS OF INVESTMENT AS OF END-1H FY03/2023
Book value*
Unrealized gains

Market value**: 13.4

Unrealizedgains＋18.4(of which, tax 5.5)

(JPYbn)Market value**: 12.1

6.7
11.7
Tax 1.9
Tax
3.5

5.3

1.7
Business Investment***

Venture CapitalFund investments include DI’s interests only.
Listed companies: Market capitalization at period-end × DI’s interests
Unlisted companies: Book value of investment at period-end ± mark-to-market valuation difference(recent financing prices and third party transaction prices)
When these prices are unavailable, book value is used without revaluation.
© DI 2022 － ALL RIGHTS RESERVED.

16

1. （repeat）Medium-Term Management Plan
2. 1H FY03/2023 Financial Results Summary

3. Explanation for ipet Stock Transfer© DI 2022 － ALL RIGHTS RESERVED.

17

SUMMARY
Purpose and background of business transfer
●

●
●

●

We first invested in ipet in February 2011 and has supported the company’sgrowth. As a result, over roughly a 10-year period, ipet has realized an 11-foldincrease in sales and a 9-fold increase in policies in force.
Considering this remarkable growth, DI determined that it has fulfilled its missionof incubation.
ipet needs to build relationships with new partners that can provide capital andother support for the next stage of growth.
In line with direction laid out in our medium-term management plan, we decided
to sell our entire stake in ipet in response to takeover bid by Dai-ichi Life Holdings.

Financial impact (if transfer proceeds to plan)●●Extraordinary income of approximately JPY18.2bn
Net cash inflow of approximately JPY15.0bn

Planned use of proceeds from sale●Of the expected net cash inflow of roughly JPY15.0bn, we plan to use JPY10.0bn tomake returns to shareholders and JPY5.0bn to fund growth investments inBusiness Production. We will provide more information by fiscal year end.

© DI 2022 － ALL RIGHTS RESERVED.

18

AFTER DI INVESTMENT, IPET ON MAJOR GROWTH TRAJECTORY
Sales and policies in force after investment
Sales(JPYbn)

350
35.0

Value provided by DIPolicies in force(thousand)

Sales

80
800

Policies in force

700
70

30.030025.0250

5005020.0200

400
40

15.0150

11-fold

5.05000

formulation to execution●'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21

Built management and governanceframework●Growth strategy planning, execution
support●Channel, product strategy support

300
30

●

Digital marketing support

20020

●

Capital policy, IPO support●

M&A support●DX support

100
1000

Initialinvestment

to-end support, from strategy

600
60

9-fold10.0
100Sent officers, employees to provide end-(FY)・・・IPO© DI 2022 － ALL RIGHTS RESERVED.

19INCUBATION (BUSINESS INVESTMENT) PERFORMANCE
Business

3.
4.
5.

Sale

（Mo/Yr）（Mo/Yr)(JPYbn)Boardwalk

Events
E-tickets

Sep 2015―

Undisclosed 3

Sale inprogress

ipetHoldings

Health insurance
for pets

Sep 2011―+19.3 2Work StyleLab

Matching platform
for freelance
consultants

Aug 2018

Jun 2022▲0.22 4PEACS

IPs related to hobbies(magazines/digital media)

Feb 2021

Apr 2022+0.34 4(+18.2)(+0.03)(+0.51)DI Asia

Market research inAsia

Jul 2014

Oct 2019▲0.26

ReValue

Asset liquidation

Jul 2010

Jan 2016▲0.70

TGCTrademark rights toTokyo Girls Collection

Feb 2012

Jul 2015+0.24(Japan IP Fund 1 5)
2.

Investment

Unrealized/realized gain or loss 1

Investmentin progress

Salecompleted

1.

Reference

Lists unrealized gain/loss for “Investment in progress” and realized gain/loss for “Sale completed.”
Figures are based on pre-tax cash flows, excluding amounts reflected in consolidated P&L.
Gains to be realized under the tender offer agreement with Dai-ichi Life Holdings for shares of ipet Holdings (tender offer price of JPY3,550 per share).
The figure in parenthesis is the amount expected to be recorded in the current fiscal year.
In principle, unrealized gains from investments in progress are not disclosed (excluding cases where the investee is listed)
Amounts include prior year losses. Figures in parentheses are amounts recorded in the current fiscal year.
Takes form of a fund but effectively evaluated as business investment © DI 2022 － ALL RIGHTS RESERVED.

20

PROFIT SHARING POLICY:SHAREHOLDER RETURNS=JPY10.0BN, GROWTH INVESTMENT=JPY5.0BN
Strengthen Business Production platform andexpand, evolve (including M&A )“Evolve”● Tie-ups with other

Shareholder
returns
JPY10.0bn● Timing,

method to beannounced
by fiscal yearend

types of business● Technology● Application offinancial functions“Expand”● Service lineup● Regions● Functions

JPY5.0bn

Growthinvestment“Strengthen the platform”● HR investment● Customer investment● System investment● Product investment© DI 2022 － ALL RIGHTS RESERVED.

21

DI ＝ The Business Producing Company

Mission: Create Businesses and Change Societies
Vision:Become the First Choice of Challengers

Value:

Advance Beyond Boundaries.
‒ Envision Beyond Boundaries of Areas‒ Formulate Beyond Boundaries of Customaries‒ Partner Beyond Boundaries of Organizations‒ Challenge Beyond Boundaries of Ourselves© DI 2022 － ALL RIGHTS RESERVED.

22

DISCLAIMER

These materials contain forward-looking statements pertaining to forecasts
and future strategies, which are based on information available to theCompany at the time the materials were prepared. These statements are notguarantees that targets and forecasts will be reached, nor an assurance offuture operating results. Future performance may vary substantially due tochanges in the operating environment, downturns in performance at investee
companies, share price fluctuations in the markets for financial products, andother factors.

Also, the content of these materials may change without notice. People using
these materials are advised to refer also to other sources of information andmake any decisions based on their own judgment. The Company accepts
absolutely no responsibly for losses arising from the use of these materials.

© DI 2022 － ALL RIGHTS RESERVED.

23

The Business Producing Company