Q1 FY03/2023

Supplementary Materials for
Consolidated Financial Results
August 5,2022
Dream Incubator Inc.
(Stock Code: 4310)
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SUMMARY
Q1 results were largely in line with plan
● Business Production: Continued growth– Structured organization into three divisions based on Business Production

values. Also strengthened external marketing– Q1 sales reached JPY0.86bn (+40% YoY), growing for the fifth consecutivequarter.

● Incubation: Selectively cultivated and appropriately harvested– ipet: Steady performance on the back of solid pet demand– Work Style Lab, PEACS: Sales completed. Recorded JPY0.54bn in extraordinary
income– Venture Capital: Secured multiple harvests. Expecting several more in pipelinefrom Q2 onward
Made progress in preparation for medium- to long-term growth(expanding collaboration with other industries)● Jointly established R&D Transformation Promotion Team with Dentsu● Number of SIB* fund investors grew
– Mitsui Sumitomo Insurance, San-in Godo Bank*Social Impact Bond

© DI 2022 － ALL RIGHTS RESERVED.

1Q1 FY03/2023 CONSOLIDATED P&L (AFTER INSURANCE ITEM ADJUSTMENTS)

Q1
FY03/2022

Q1
FY03/2023AmountSales

7.97

8.98

1.00

13%

Gross profit

3.64

4.56

0.92

25%

Operating profit

0.08

0.96

0.88

1097%

Recurring profit

0.27

1.03

0.75

272%

Net income

0.06

0.97

0.90

1349%

(JPYbn)YoY change%(attributable to parent company shareholders)© DI 2022 － ALL RIGHTS RESERVED.

2

Reference

Q1 FY03/2023 CONSOLIDATED P&L (BEFORE INSURANCE ITEM ADJUSTMENTS)

Q1FY03/2022

Q1
FY03/
2023

AmountSales

7.97

8.98

1.00

13%

Gross profit

3.42

3.95

0.52

15%

Operating profit

-0.13

0.35

0.49

－

Recurring profit

0.05

0.42

0.36

606%

Net income

-0.02

0.72

0.74

－(JPYbn)

YoY change%(attributable to parent company shareholders)Note: Figures affected by insurance item adjustments are shown in blue.

© DI 2022 － ALL RIGHTS RESERVED.

3

ADJUSTED INSURANCE ACCOUNTING ITEMS AND AMOUNTS

Q1
FY03/
2022

Q1
FY03/
2023

3.42

3.95

● Adjustment related to ordinary underwriting
reserves*＋0.01＋0.37● Catastrophe reserve provision**

＋0.20

＋0.24

＋0.21

＋0.61

3.64

4.56(JPYbn)

Unadjusted gross profit (consolidated)

Total adjustments
Adjusted gross profit (consolidated)***

Reference

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 2021 － ALL RIGHTS RESERVED.

4

Q1 FY03/2023 P&L BY SEGMENT
Q1
FY03/2022

Q1
FY03/2023

YoYchange⚫ Sales

0.610.8640%⚫ Recurring
profit0.08

0.16101%⚫ Sales

0.03

0.20504%⚫ Recurring
profit

0.04

0.09

115%

⚫ Sales

6.63

7.91

19%

⚫ Recurring
profit*

0.30

0.78

160%

(0.08)(0.16)⚫ Sales0.28––⚫ Recurring
profit-0.03––⚫ Sales

0.40

–

–

-0.11

–

–

(JPYbn)ﾋﾞｼﾞﾈｽBusiness
ﾌﾟﾛﾃﾞｭｰｽ
Production
ｾｸﾞﾒﾝﾄBusiness Investment

VentureCapitalPet
LifestyleHR
Innovation

Fan
Marketing⚫ Recurring
profitNotes● Sales grew for the fifth
consecutive quarter● Sales growth exceeded personnel
growth, resulting in profit aheadof plan
● Secured multiple harvests● Expecting further harvest fromIPOs and trade sales from Q2onward● Steady performance on the backof solid pet demand● Sold in Q1 FY03/2023 and recorded
JPY0.03bn in extraordinary income● Excluded from consolidation frombeginning of FY03/2023● Sold in Q1 FY03/2023 and recorded
JPY0.51bn in extraordinary income● Excluded from consolidation frombeginning 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.

5

INITIATIVES TO STRENGTHEN BUSINESS PRODUCTION
Reinforced structure by organizing into threedivisions based on Business Production values

Division 1ValueCreation

Division 2
Execution

Division 3
Value
Expansion

Engaging in aggressive marketing activities to spreadthe details and value of our initiatives to the world
DI’s Works Vol.1
Division 1 Head:
Masahito Ishikawa

Industry Production/ Business Production● Develop ideas and concepts, thenleverage DI’s core competence ofdesigning new business models andstrategies for business creation
Business Production Installation / DX
● Provide support for building
organizations that enable businessproduction, and for business
implementation“Our mission is to bring newvalue to the world”
DI’s Works Vol.2
Division 2 Head:
Takashi Shimazaki“We will share our successstories with our customers as abusiness creation partner”

Global Sustainability Transformation(SX) / Incubation● Provide business creation support
on a global scale by extending theconcept of business production
overseas

Expand Business Production operations by assigning ageneral manager (COO or senior executive officer) to eachdivision and closely collaborating with one anotherDI’s Works Vol.3
Division 3 Head:
Kyohei Hosono“We will become the preferredpartner for solving social issues
in developing countries”

Promote the appeal of DI’s value not only to customers
and partners, but also to employees to boost job
fulfillment and expand recruitment© DI 2022 － ALL RIGHTS RESERVED.

6

BUSINESS PRODUCTION SALES
Sales* progress vs. plan

Quarterly sales*(JPYbn)(JPYbn)

70
7.0

1.0
10

5.9
59

60
6.0

8.6
0.86

0.9
9

7.8
0.78

0.8
8

4.8
4850
5.0

30
3.0

0.7760.6

40
4.0

3.3
33
2.5
25

6.1
0.61
5.2
0.52

50.5

2.6
26

40.4
30.3

2.02020.20.8
8.6
61.0
10

10.100
FY
通期
Plan

計画

FY
通期
Actual実績

FY03/2022
*

7.1
0.71

FY
通期
Plan

計画

Q1
1Q
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

2022/3Q1
FY03/2022
1Q

2022/3Q2
FY03/2022
2Q

2022/3Q3
FY03/2022
3Q

2022/3Q4
FY03/2022
4Q

2023/3Q1
FY03/2023
1Q

FY03/2025Excluding sales and profit from carved-out businesses © DI 2022 － ALL RIGHTS RESERVED.

7

Reference

INCUBATION BUSINESS PERFORMANCE
Business Investment
Investmentin progressSalecompleted2345Investment

Sale

Unrealized/realized gain or loss 1（Mo/Yr）（Mo/Yr)(JPYbn)ipetHoldings

Health insurance
for pets

Sep 2011―+9.8 2

Boardwalk

Events
E-tickets

Sep 2015―

Undisclosed 3

Work Style Lab

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

DI Asia

Market research inAsia

Jul 2014

Oct 2019-0.26

ReValue

Asset liquidation

Jul 2010

Jan 2016

-0.70

TGC

Trademark rights toTokyo Girls Collection

Feb 2012

Jul 2015+0.24(Japan IP Fund 1 5)
1Business

Lists unrealized gain/loss for “Investment in progress” and realized gain/loss for “Sale in progress” and “Sale completed.” Figures arebased on pre-tax cash flows, excluding amounts reflected in consolidated P&L.
Based on closing price on June 30, 2022
In principle, unrealized gains from investments in progress are not disclosed (excluding cases where the investee is listed)
Amounts include losses from prior periods. Figures in parentheses are only for amounts recorded in the current Q1
Takes form of a fund but effectively evaluated as business investment© DI 2022 － ALL RIGHTS RESERVED.

(+0.03)(+0.51)

8

EXPAND COLLABORATION WITH OTHER INDUSTRIESFOR MEDIUM- AND LONG-TERM GROWTH
Progress of initiatives with Dentsu

Progress of SIB* initiatives

Jointly established R&D Transformation
Promotion Team with Dentsu (July 4, 2022)● Integrating Dentsu/DI’s knowledge andstrengths to unify problem-solving
service lines for corporate R&D divisions● Number of SIB* fund investors grew

(July 1, 2022)– Mitsui Sumitomo Insurance– San-in Godo Bank

● Signed an MoU with Matsue City, San-in

Godo Bank, and Development Bank ofJapan for investigation and research on
utilizing SIBs
(July 22, 2022)*Social Impact Bond

© DI 2022 － ALL RIGHTS RESERVED.

9

Q1 FY03/2023 CONSOLIDATED BALANCE SHEETMarch 31, 2022
(Total assets: JPY33.5bn)

June 30, 2022
(Total assets: JPY33.8bn)

Cash and deposits
JPY12.9bn

Cash and deposits
JPY12.4bn
Liabilities
JPY20.2bn

Liabilities
JPY21.1bn
Venture capital
JPY6.1bn

Breakdown of change in net assets
・ Net income

iPet investment
securities
JPY3.0bn

Other assets
JPY11.4bn＋JPY0.72bn

・ Non-controlling interests＋JPY0.11bn

Net assets
JPY12.4bn

・ Valuation differences onavailable-for-sale securities＋JPY0.33bn
・ Other comprehensive income＋JPY0.05bn
・ TotalVenture capital
JPY6.6bn

iPet investment
securities
JPY4.0bn

Other assets
JPY10.8bn

Net assets
JPY13.6bn＋JPY1.21bn

Includes non-controlling

Includes non-controllinginterests of JPY2.6bn

interests of JPY2.7bn© DI 2022 － ALL RIGHTS RESERVED.

10STATUS OF INVESTMENT AS OF END-Q1 FY03/2023
Book value*
Unrealized gains

Market value**: 11.6

Unrealizedgains＋16.3(of which, tax 4.9)

(JPYbn)Market value**: 12.3

6.4
9.8
Tax 1.9
Tax
3.0

5.8

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.

11

Reference

SUPPLEMENTAL INFORMATION ON INSURANCE ITEM ADJUSTMENTS
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 yearbalance 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.

12

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.

13

The Business Producing Company