Imagica Robot Group

Financial Results Presentation for FY2017
Imagica Robot Holdings Inc.
May 25, 2018

© 2018 Copyright Imagica Robot Holdings Inc.

FY2017 financial results© 2018 Copyright Imagica Robot Holdings Inc.

Highlights of financial results（¥billion）

Net Sales

Operating income

Net income attributableto owners of the parent

91.3bn

2.4bn

2.9bn

YoY
＋3.7bn87.5

YoY+0.7bnYoY+1.2bn

91.3
2.9

2.4

1.7
1.7

FY2016FY2017FY2016FY2017FY2016FY20173© 2018 Copyright Imagica Robot Holdings Inc.

Net Sales Analysis: YoY Change Factors（million yen）

▍ Net sales were up 4% YoY as the decrease resulting fromselling IMAGICA TV was covered by other segments（Sales grew +9,206million yen or +11% YoY without the impact of sales of
IMAGICA TV ）Content
Creation

IMAGICATV salesMedia
Localization△5,441
87,586FY2016+3,156+3,728（+17.3%）

Production
Services+1,301

Imaging
Systems &Solutions＋3,765（+4.3%）+1,021（+7.3%）（+4.9%）

91,351（+14.6%）FY20174© 2018 Copyright Imagica Robot Holdings Inc.

Operating income Analysis: YoY Change Factors（million yen）

▍ Improved profitability of the Media Localization segment
contributed to up 637 million yen or up 35.6% YoY（Operating income grew +807 million yen or +45.1% YoY without the impactof sales of IMAGICA TV ）Imaging
Systems &SolutionsMedia
Localization
IMAGICATV sales

1,787

FY2016

Production
Services

+214

+214

（+17.3%）＋637（+35.6%）（+21.5%）△170

Content
Creation

（－%）

△109
（△12.0%）

+487

2,424

（－%）

FY20175© 2018 Copyright Imagica Robot Holdings Inc.

Key points from segment-specific earnings
Content Creation(million yen）

Media Localization

Net sales (YoY ratio)

OP income (YoY）

Net sales (YoY ratio)

OP income (YoY）

25,289 （+17.3%)

799 (△109)

24,814 （14.6%)△674 (+487)

・Film, TV animation, CM production wasfavorable

・OTT business favorable
・European direct margin ratio improved

・Royalty revenues from theater animation
declined YoY

Production Services

Imaging Systems & Solutions

Net sales (YoY ratio)

OP income (YoY）

Net sales (YoY ratio)

OP income (YoY）

27,725 （+4.9%)

1,209 (+214)

14,997 （7.3%)

1,449 (+214)

・Editing: Digital cinema, OTT favorable
・Contracting: Game CG, debugging

business favorable

・4K broadcasting system sales,
maintenance increased
・LSI (for video) sales in China favorable＊＊OTT＝”Over The Top” means the companies excluding telecommunications that provide contents such as video and audio.

6© 2018 Copyright Imagica Robot Holdings Inc.

FY2017 financial results by segments
FY2016（million yen）

Content
Creation

Production
Services

Media
Localization

FY2017

ActualActualNet sales

21,56025,289

17.3%

3,728

Operatingincome908

799△12.0%△109（OP raito）(4.2％)(3.2％)Net sales

26,42427,725

4.9%

1,301

Operatingincome

995

1,209
21.5%

214

（OP raito）(3.8％)(4.4％)Net sales

21,65824,814

14.6%

3,156

Operatingincome△1,161

△674

-

487

(---％)(---％)

13,97614,997

7.3%

1,021

1,235

1,449

17.3%

214

（OP raito）

YoY ratio

YoY

Imaging
Systems &Solutions

Net sales
Operatingincome（OP raito）(8.8％)(9.7%)

Others(Consolidated
adaptation)

Net sales
Operatingincome3,966△1,475-△5,441

△190

△360

-

△170

Net sales

87,58691,351

4.3%

3,765

Operatingincome

1,787

2,424

(2.0%)(2.7%)

35.6%

636

Consolidated（OP raito）

Analysis Film, TV animation, CM production
was favorable.
 Decrease royalty from production
committee YoY
 Orders of post-production from TV
program was decreased due to TV
programming reshuffle,etc.
 Business for Digital cinema and OTT
were strong.
 Game CG, debugging business wasfavorable
 OTT business favorable
 Performance was improved due toimprovement of direct margin in
Europe.
 Increase sales in 4K-broadcasting
system and maintenance service.
 Sales in LSI for film and images for
China was strong.
（＊FY2016 includes the net sales andoperating income of IMAGICA TV.）

＊OTT＝”Over The Top” means the companies excluding telecommunications that provide contents such as video and audio.

7© 2018 Copyright Imagica Robot Holdings Inc.

FY2018 Business Forecast© 2018 Copyright Imagica Robot Holdings Inc.

FY2018 Full-Year Business Forecast
 Forecasting higher net sales and operating income
 Net income decreased 1.3 billion yen YoY（Recorded gains on salesof IMAGICA TV on extraordinary income in the previous year）
FY2016FY2017FY2018ActualActual

87,58691,351

95,000

4.0%

3,649

1,787

2,424

2,600

7.3%

176

(2.0%)(2.7%)(２.7%)

2,014

2,424

2,450

1.1%

26

(2.3%)(2.7%)(2.6%)Net income (loss)
attributableto owners of theparent

1,707

2,937

1,600

△45.5%△1,337

Earnings per shareof common

38.3

65.9

35.9

△45.5%△30.0(Reference)
Operating income before
goodwill

3,270

3,878

4,203

（3.7%)(4.2%)(4.4%)

8.3%

325(million yen)

Net Sales
Operating income(ratio)Ordinary income(ratio)(OP ratio before goodwill）

Plan

YoY ratio

YoY

9© 2018 Copyright Imagica Robot Holdings Inc.

FY2018 Operating income by segments: YoY Change Factors▍ Forecasting increased income (517 million yen) for all
business segments but forecasting total increase in income
to be 176 million yen due to conducting lay foundation for
future growth（million yen）

Media
Localization

274

Imaging
Systems &Solutions

151

Production
Services

Content
Creation91

1

Investment in
new business,
R&D expenses（+0.1%）△341（+7.5%）（+10.4%）＋176（+７.3%）

（－%）

（－%）

2,424

FY20172,600

FY2018 Forecast10© 2018 Copyright Imagica Robot Holdings Inc.

FY2018 Business Forecast by segments
FY2017(million yen)Content
Creation

Production
Services

Media
Localization

Imaging
Systems &Solutions
Others(Consolid
ated adaptation)

Consolidated

FY2018

FactorActualForecast

YoY ratio

YoY

Net sales

25,28923,200△8.3%△2,089Operatingincome799

800（OP raito）(3.1％)(3.4％)Net sales

27,72529,900Operatingincome

1,209

1,300

（OP income）(4.3％)(4.3％)Net sales

24,81427,700Operatingincome△674△400（OP ratio）(---％)(---％)Net sales

14,997

15,500Operatingincome

1,449

1,600

（OP rratio）(9.6％)(10.3%)Net sales
Operatingincome△1,474films decreased YoY TV

0.1%

1

7.8%

2,175

 TV animation and CM production was favorable

 Aimed to improve income from TV post production
business through work optimization

7.5%

91

 Organizational restructuring to strengthen CG/VFX Game CG, debugging favorable

11.6%

2,886

 Invest in upgrade of studios to strengthen dubbing
 Updated IT systems to improve workflow

-

274

3.4%

503

10.4%

151

△1,300

-

174

△359

△700

-

△341

Net sales

91,351

95,000

4.0%

3,649

Operatingincome

2,424

2,600

(2.6%)(2.7%)

7.3%

176（OP ratio）

 Major film production and royalty revenues from Focused on improving per customer margin Planning to launch new high-speed video cameras

 Sales of 4K broadcasting systems remain favorable
 Optical measurement business grew
 Increased investments for new business creation
and R&D

11© 2018 Copyright Imagica Robot Holdings Inc.

Dividend policy and Dividend forecast
Dividend policy
The target consolidated payout ratio is 30%, with a basic policy of distribution according
to consolidated results. In the event that an extraordinary factor such as an extraordinary
loss will significantly impact net income, when determining the dividend, a comprehensive
review will be conducted that includes maintaining stable dividends for shareholders,
future business expansion and the status of internal reserves based on a payout ratio thatbasically takes special factors into account.

Dividend

Net income
attributableto owners of theparentPer share
Net income
attributableto owners of theparentPayout ratio(Reference)*Payout ratio
without IMAGICA TV
impact

FY2017（Actual）

10yen

2,938million yen

65.98yen

15.2％

31.2％

FY2018（Forecast）

10yen

1,600million yen

35.93yen

27.8%－＜Note＞* Payout ratio without IMAGICA TV impact = dividend payout ratio calculated based on 32.03 yen, which is the per share net
income attributable to parent company shareholders when we exclude the 2,177 million yen in gains on sale of IMAGICA TV.

12© 2018 Copyright Imagica Robot Holdings Inc.

Share buyback▍ Conducted share buyback with total value of
512 million yen, equivalent to 1.1% of total
shares issued
 Transaction date

：May 25, 2018

 Share price：1,024 yen (final stock price on May 24)

 Total shares acquired：500,000 shares Ratio to total shares issued：1.1％

 Acquisition amount：512 million yen

 Purpose：
To improve capital efficiency and establish platform for dynamic capital
strategy in the future13© 2018 Copyright Imagica Robot Holdings Inc.

Evolving into New Group© 2018 Copyright Imagica Robot Holdings Inc.

New group nameIMAGICA GROUP
New company name

株式会社IMAGICA GROUPIMAGICA GROUP Inc.
© 2018 Copyright Imagica Robot Holdings Inc.

18

Background of name change and ideal structure Comprehensive Group brand reconstruction
Getting back to our founding principles, we adopted IMAGICA
as a common group keyword and as the new Group name toexpress the entirety of our Group business. IMAGICA borrows
from the Latin word “imaginica”, which means “related to images”.

 Desired effect, expectations
We will use this name change as an opportunity to increase ouroverall Group brand recognition through internal and externalbrand promotion.

Elevating our presence will strengthen our new client
development, business partnerships with othercompanies, and personnel hiring.
19© 2018 Copyright Imagica Robot Holdings Inc.

Group Management Principles and Our Ideal Situation-1

IMAGICA GROUP
Group Management Principles
We approach the creation of new value withintegrity and commitment and strive to achieve
visual communications that deliver surprise andexcitement to people around the world.

Our Ideal Situation for 2020 (Vision)
To be an Only One creative & technology group that delivers
world-class visual content, production services, and imaging
systems solutions.

20© 2018 Copyright Imagica Robot Holdings Inc.

Group Management Principles and Our Ideal Situation-2

IMAGICA GROUP Values – The “4 We’s”
We lead

We will continue to respond quickly to changes insociety and be an industry leader.

We c o l l a b o r a t e

We will apply our strengths as a global one-stop
solutions provider to offer customers premiumvalue.

We s e r v e

We will continue to use advanced technology andour commitment to excellence to respond to all ourcustomer needs.

We d i s c o v e r

We will continue our pursuit of that which moves
people and the innovation that propels business.

21© 2018 Copyright Imagica Robot Holdings Inc.

FY2018 Strategy© 2018 Copyright Imagica Robot Holdings Inc.

The strategy from FY2015 to FY2020
FY2015FY2016・Acquisition of SDI・Acquisition of OLM

Globalization, business expansion

FY2018FY2019FY2017・Announcement of Mid-term
management plan 2020
・Review of segment
・Sales of IMAGICA TV

Selection and Integration
Strengthening of governance
Planting seeds

FY2020・Final year of Mid-term
management plan 2020

Establish platform for growth and revenue
Continue planting seeds (Capital investments, R&D, M&A)

Reap benefits
Next stage

20© 2018 Copyright Imagica Robot Holdings Inc.

Positioning and Strategy of FY2018

Year to establish platform for achieving our2020 Medium-Term Business Plan①

Establish growth platform:
Upfront investments in growth businesses②

Build revenue platform:
Improve profitability of low-profit business21© 2018 Copyright Imagica Robot Holdings Inc.

Establish growth platform© 2018 Copyright Imagica Robot Holdings Inc.

Upfront investments in growth businesses▍ Dynamic investments with focus on growthbusinesses
Amount（FY2018 plan）

Capital investment, IT, contents, etc.

4 billion yen

R&D expenses

2 billion yen

Examples of investment
 Content Creation
 Media Localization
 Imaging Systems & Solutions
 New business development, R&D

23© 2018 Copyright Imagica Robot Holdings Inc.

Content Creation▍ Investment in content
Advertisement × entertainment

Original TV animation「OVER DRIVE」「Space Bug」

・Work by Eiichiro Hasumi (director signed with ROBOT)・Original film based on planning & development with
DENTSU・Japan-Korea collaboration based on screenplay and direction
by Hiroyuki Nakao (director signed with P.I.C.S.)
・Simultaneous production of Japanese language/English
dubbing with focus on overseas market*For copyright reasons,images are not posted.

*For copyright reasons,images are not posted.

（Movie image）（Work image）
July 8 Release

June 1 ReleaseⒸ2018「OVER DRIVE」製作委員会©W.BABA&TMS

Develop new schemes and original content
collaborating with other companies

24© 2018 Copyright Imagica Robot Holdings Inc.

Media Localization▍Promote investments that solidify competitive
advantage + improve profitability
 Expand dubbing business: Upgrade dubbing studio Use IT system investments to pursue optimization (workflow
improvements, etc.)25© 2018 Copyright Imagica Robot Holdings Inc.

Imaging Systems & Solutions▍Optical measurement business grew－High-speed polarization camera
High-speed polarization image sensor: visualization of light and airflow
CRYSTA series

PI-1P/PI-1WP・World’s first high-speed camera withsensitivity for polarization invisible tothe human eye
・Enables measurement and visualizationof various physical quantities andphysical properties such as stress andobject recognition
・Applicable in a wide range of fields
Bio, military, aviation & space, food &pharmaceuticals, etc.
26
© 2017 Copyright Imagica Robot Holdings Inc.

Imaging Systems & Solutions▍Optical measurement business grew
－KAMAKIRI series
KAMAKIRI series

System that detects the optical distortions of optical film or glass
used in smartphones and LCD panels
Compared to conventional detection
systems:
・Testing speed up to 1000x faster・Over 400x more measurement points

・Increase in types of detectable optical
distortions
・Major reduction in man-hours
・Can measure broad spectrum optimal
distortions
・Various uses, including film and glass
manufacturers
27© 2017 Copyright Imagica Robot Holdings Inc.

New business development, R&D▍ Invest in development of new businesses withimaging technology
 Collaborate with external organizations and companies
 Start internal venture system▍ R&D by Group R&D departments
Gather information and promote R&D of advanced
technology for image production（Examples of research）

Improve efficiency of video processing using AI
Development of learning analysis system using AI
28© 2018 Copyright Imagica Robot Holdings Inc.

Build foundation for profit© 2018 Copyright Imagica Robot Holdings Inc.

Production Services▍Merger of IMAGICA and two subsidiaries (October 1)
 Increase orders in growth fields and reorganize production structure:
Archive business, Web video, CG/VFX domain Optimize system for orders received and management functions:
Strengthen sales structure for new contacts in existing clients, eliminate
redundant administrative operations「IMAGICA Lab.」30© 2018 Copyright Imagica Robot Holdings Inc.

Media Localization▍Focused on profit improvement
Category

Area of improvement

Sales

Improve direct margin ratio, increase transactions with OTTProcess improvement

IT system investments to improve workflow and processes

Cost management

Reduce costs such as outsourcing costs, translation costs, etc.

Synergies with PPC

Joint sales activities, Capability sharing

Media Localization

Operating income
Operating income

Operating income before goodwill

799(million yen)

388
(66)
(674)

(400)

(1,161)FY2016FY2017FY2018 plan31

© 2018 Copyright Imagica Robot Holdings Inc.

Mid-term management plan 2020

© 2018 Copyright Imagica Robot Holdings Inc.

KPI in 2020

FY2018 plan

FY2020 goal

Net sales¥95bn¥100bnOP ratio

2.7％

5.0％
33
© 2018 Copyright Imagica Robot Holdings Inc.

Topics© 2018 Copyright Imagica Robot Holdings Inc.

New business model trials using 4K/8K
 In collaboration with other companies through participation
in “Next Generation Contents Distribution Forum”, we
conducted a trial (a demonstration experiment) of a new
business combining technologies of 4K / 8K and advanced
video distribution system.
 Demonstration experiment
February 8

Streaming 4K/HDR content to movie theaters

March 1

Live video streaming to planetariums

March 31

Live viewing using 12K wide video
35© 2018 Copyright Imagica Robot Holdings Inc.

Assess new business model through verification testing▍Live viewing using 12K wide video
 One demonstration experiment: "TOKYO GIRLS COLLECTION" held at
Yokohama Arena was filmed with a 4K camera and delivered to anothervenue in Omotesando by Live video.

Screening on wide screen realizes a sense of high realism and high definition.

36© 2018 Copyright Imagica Robot Holdings Inc.

© 2018 Copyright Imagica Robot Holdings Inc.