メディアドゥ（3678） – Financial Results Briefing FY2021 4Q (Ended Feb.2022)

FY2021.4QMEDIA DO Co., Ltd.As of February 28, 2022Financial Results BriefingMore Content for More People!INDEX1. Consolidated earnings highlights2. Reference dateCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202211. Consolidated earnings highlightsCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 2022Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202222Consolidated earnings highlightsDespite some areas falling short relative to initial forecasts, full-year results posted all-time recordsAlthough profits were affected by special factors in the form of large promotional campaigns and by an impairment loss on goodwill of a subsidiary, full-year results were the highest ever recordedConsolidated earningsNet salesOperating profitEBITDA4Q (Actual)FY2021YoY¥104.7bn+25.4%(+¥21.2bn)FY2020¥83.5bn¥2,660mn¥2,810mn+5.5%(+¥150mn)¥3,420mn¥3,920mn+14.7%(+¥500mn)Profit attributable to owners of parent¥1,510mn¥1,570mn+3.8%(+60mn)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 20223Consolidated earnings highlightsBoth quarterly net sales and EBITDA achieved all-time records for 4Q, growing steadily in line with market expansionQuarterly consolidated net salesMillions of yenQuarterly consolidated EBITDAMillions of yen1Q: Large promotional campaigns by some book retailers2Q: NIHONBUNGEISHA special factor (5 months long)25,954FY2017FY2018FY2019FY2020FY2021FY2017FY2018FY2019FY2020FY2021Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 20228644Consolidated earnings highlightsWith special factors such as stay-at-home consumption and large promotional campaigns having come to an end, growth should continue at cruising speed in line with market expansioneBook distribution business’s YoY net sales growth rateMarket to shift to growth at cruising speed220%200%180%160%140%120%100%80%Impact of promotional campaigns by certain book retailersGrowth slowed from 2Q average of 18% → 14% in Sep/Oct, and 16% in 4QNovember fell due to rebound decline caused by popular products boosting sales in previous yearFY2020FY2021Large promotional campaigns by certain book retailers in 1Q FY2021 led to higher growth than the marketMarket growth, which was buoyed by stay-at-home consumption in the wake of the COVID-19 pandemic, began slowing in 3Q following normalization of economic activityNo concerns about the possibility of sales falling sharply as stay-at-home consumption fades5Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 2022Consolidated earnings highlightsAchieved initial net sales forecast of ¥100.0 billionEven in other areas that fell short for various reasons, results hit new all-time recordsComparison of consolidated results to full-year forecast (Billions of yen)Full-year forecast100.0Net sales104.7Progress rate: 104.7%EBITDA3.92Progress rate:98.1%Full-year forecast4.0Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 20226Consolidated earnings highlightsIn line with previous announcements, shareholder return for FY2021 is planned to be a year-end dividend of ¥21.00 Achieved the minimum total return ratio*1 of 20% set in the shareholder return policy for FY2021Have kept to the dividend forecast announced on October 13, 2021*1. Total return ratio = (total dividends paid + total share repurchases) ÷ profit attributable to owners of parentFY2021 year-end DPS¥21.00Total return ratioowners of parent was incurred in FY2018*2. FY2018 total return ratio was omitted because a loss attributable to 21.1% 21.1% 32.2%NA20.1%20.1%21.1%¥21.0¥21.0¥10.5¥10.5¥13.0¥8.8¥7.2(Pending Board approval scheduled for April 21, 2022)FY2015actualFY2016actualFY2017actualFY2018actualFY2019actualFY2020actualFY2021plannedCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202272.Reference dateA P P E N D IXCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 20228Reference dataFY2021 4Q Results (P/L)(Millions of yen)Net saleseBook distribution businessOther businessesCost of sales, SG&A expensesRoyalties/other cost of salesCommissionsAdvertising expensesPersonnel expensesDepreciation/amortizationOtherOperating profitOrdinary incomeProfit attributable to owners of parent1Q2Q3Q4Q1Q2Q3Q4QFY2020FY202120,29221,44120,27221,53328,40826,82523,53325,95420,06498.9% 21,14198.6% 19,95798.4% 21,18698.4% 28,07498.8% 24,80792.5% 22,05493.7% 24,37393.9%2281.1%2991.4%3141.6%3471.6%3341.2% 2,0177.5% 1,4806.3% 1,5816.1%19,56096.4% 20,64396.3% 19,65096.9% 21,02097.6% 27,57197.1% 25,97396.8% 22,97197.6% 25,39497.8%17,86288.0% 18,87888.0% 17,75087.6% 19,01288.3% 25,66990.4% 23,42687.3% 20,57987.4% 22,77587.7%542147501824947327340.3%1.1%3.7%0.9%2.4%3.6%3.6%572007841815417978490.3%0.9%3.7%0.8%2.5%3.7%4.0%532377991846246216150.3%1.2%3.9%0.9%3.1%3.1%3.0%512268522106665125210.2%1.0%4.0%1.0%3.1%2.4%2.4%421218992296108368460.1%0.4%0.8%2.1%2.9%3.0%371603055878518360.1%0.6%1.1%2.2%3.2%3.1%341132765925625470.1%0.5%1.2%2.5%2.4%2.4%36823046685605520.1%0.3%5.9%1.2%2.6%2.2%2.1%3.2% 1,4565.4% 1,3745.8% 1,5274502.2%4592.1%3541.8%2541.2%6172.2%2180.8%2601.1%4801.9%EBITDA9144.5%9794.6%8064.0%7233.4% 1,0653.8% 1,1574.3%8393.6%8643.3%*1 Temporary increase in cost-of-sales ratio due to cooperation with promotional campaigns by certain book retailers*2 Increase in sales and expenses following acquisition of NIHONBUNGEISHA (5 months’ worth) and Firebrand Group*3 Of which ¥22,599 million in 2Q, ¥20,053 million in 3Q, ¥22,248 million in 4Q are related to the eBook distribution business*4 Following the transition from consolidated subsidiary to equity-method affiliate, an adjustment was made to the fair value of the equity in MyAnimeList by an amount equivalent to the net book value, resulting in an extraordinary gain (gain on change in ownership interest) of ¥117 million in 1Q and of ¥91 million in 2Q.*5 An impairment loss related to goodwill (Nagisa) of ¥394 million was recorded*6 Increase in personnel expenses due to an increase in personnel numbers and bonus payments made at NIHONBUNGEISHA Co., Ltd., and the Firebrand GroupCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 20229Reference dataThe Impact of M&A on Consolidated EarningsReference: mapping of recently acquired companies’ P/Ls to consolidated P/L社名Companyグループ参画Acquisition date1Q1Q2Q2Q3Q3Q4Q4QMEDIA DONagisaFirebrand Group―Oct. 2020Jan. 2021Mar.-MayMar.-May——Jun.–Aug.Sep.–Nov.Dec.–Feb.Jun.–Aug.Sep.–Nov.Dec.–Feb.Apr.–Jun.July–Sep.Oct. –Dec.NIHONBUNGEISHAMar. 2021Apr.–Aug.Sep.–Nov.Dec.–Feb.M&A’s impact on P/L in FY2021SalesOperating profit after goodwill amortizationNagisaFirebrandNIHONBUNGEISHATotalNagisaFirebrandNIHONBUNGEISHATotalFY2020(full year)1Q2QFY20213Q69–69-49—49110–110-67—671243531,4291,906-9522119461153568761,347-723230-10(Millions of yen)4QFull year2021年2月期3Q4691,0643,3324,864-295-17211-1001193551,0271,501-60-7162-69Firebrand Group and NIHONBUNGEISHA will be included in consolidated P/L from 2QNote: NIHONBUNGEISHA’s 2Q is 5 months longCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202210Reference dataResults for FY2021 4Q (B/S)FY2020 3QFY2020 4QQoQ changeMain factor behind change(Millions of yen)Current assetsCash and depositsNotes and accounts receivable – tradeNon-current assetsSoftwareGoodwillInvestment securitiesTotal assetsCurrent liabilitiesProperty, plant and equipmentNotes and accounts payable -tradeCurrent portion of long-term borrowingsTotal non-current liabilitiesLong-term borrowingsTotal liabilitiesTotal shareholders’ equityCapitalCapital surplusRetained earningsTotal accumulated other comprehensive incomeShare optionNon-controlling interestTotal net assetsTotal liabilities and net assetsLinked to declining sales.Increased due to M&AIncreased due to capital alliancesLinked to declining sales.Increase due to borrowings by subsidiariesDecrease due to repayment of loans34,68911,88921,26714,7694019006,4746,26449,45927,70124,4001,1205,5124,69533,21315,8795,9087,1972,77435301316,24549,45936,45711,39923,38616,1473449737,1766,68152,60530,53526,5391,1275,1564,44335,59616,4475,9097,2853,25436709716,91252,6051,767-4892,1181,377-56737014173,1452,8332,1397-356-2522,383568088480140836663,145Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202211Reference dataBalance Sheet DataFinancial stability has improved following April 2021 capital raiseShareholders’ equity ratio (SER)(Millions of yen)Key B/S accounts (Millions of yen)年 月年 月年 月年 月年 月年 月年 月年 月総資産自己資本自己資本比率のれん 投資有価証券有利子負債純資産Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202212Reference dataBusiness overview (1/3)35% of eBooks are distributed via MEDIA DOin Japanstsitra/srohtuAsrehsilbuPGross transaction value of eBooks distributed byMEDIA DO:¥158bnFY2020sreliater kooBe➀➁UsersMarket size:¥455.8bn*➂Publishers’ B2C eBook retailers* Source: Actual data from FY2020 taken from Impress Research Institute’s eBook Marketing Report 2021 on Japanese marketCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202213Reference dataBusiness overview (2/3)MEDIA DO is the biggest eBook distributerin JapanAuthors/artistsPublisherseBook retailersReaders1. Brokering of contracts/transactions with publishersPro rata distribution of revenues to publishers 2.and authors3. Operation of eBook distribution system4. Execution of promotional campaigns4.Expansion of eBook retailers’ content lineupsAggregation of eBook retailers’ monthly sales dataDistribution of content to eBook retailers on behalf of publishersOffering of discounts, freebies and other promotions in coordination with publishers and eBook retailersCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202214Reference dataBusiness overview (3/3)MEDIA DO’s track record in JapanTrusted by publishersOver 2,200 publisher accounts, including 1,680 non manga publishers, all major publishers*1 and over 99% of eBook publishers*2Trusted by book retailersSupplier to over 150 book retailers including all of top 20 by usage rate*3*1. Defined as publishers that belong to the Japan Book Publishers Association (394 members as of July 31, 2021), excluding non print (e.g., audiobook) publishers.*2. Per a MEDIA DO survey. Excludes sub scale publishers, publishers without regular publications, etc.*3. Top 20 eBook retailers (excluding book retailers run directly by publishers) ranked by popularity based on number of survey respondents who reported purchasing an eBook from the retailers within the previous six months per Impress Research Institute’s eBook Marketing Report 2021.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202215Reference dataMEDIA DO’s operating environmentDigital shift is drivingmangamarket growthComic book market (excludes magazines)+11% CAGR for hard-copy/digital combined7,0006,0005,0004,0003,0002,0001,0000CAGR+23.3%CAGR–0.1%66%34%eComics market is now larger than paper comic market, largely by virtue of digital channel’s anytime, anywhere accessibilityPaper comics’ sales decline should tend to taper off by virtue of catalog effect of consumers’ exposure to digitalGrowth in eBook distribution is revitalizing entire publishing market2015201620172018201920202021Source: All-Japan Publishers and Editors Association’s annual publishing statisticsNote: Paper comics market data are for comic books only (i.e., magazines are excluded).Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202216Reference dataGroup overviewCore focus is eBook distribution businessFY2020 net sales¥83.5bneBook distribution business¥82.3bn (98.6%)MEDIA DO Co., Ltd.Digital Publishing Initiatives Japan Co., Ltd.Other businessesMEDIA DO TEC TOKUSHIMA Co., Ltd.Nagisa, Inc.Media Do International, Inc.Hub of Media Do Group’s international operations (San Diego, US)ARTRA ENTERTAINMENT Inc.Provides graphic production support services (e.g., eManga coloring) for manga authorsFlier Inc.Operates “flier,” a book summary serviceJIVE Ltd.Operates next-generation imprint publishing business; owns female-oriented manga imprint¥1.2bn (1.4%)J-Comic Terrace CorporationDistributes eBooks, including through its “Manga Library Z” site, a free digital comic serviceMyAnimeList, Co., Ltd.Operates “MyAnimeList,” one of the world’s largest anime/manga community sitesNIHONBUNGEISHA Co., Ltd.Quality Solutions, Inc.NetGalley, LLCPublishes and sells both paper and digital magazines and books, including how-to guides, comics and fictionProvides publishing workflow management and bibliographic information management servicesProvides NetGalley online marketing tool for publishing industryCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202217Reference dataAppendixGrowth in net salesCompany history1994: CEO Yasushi Fujita starts first business while still in university1996: Fuji Techno Ltd. founded in Nagoya1999: Media Do Co., Ltd., founded in Nagoya (it later merged with Fuji Techno)2006: eBook business launched2013: IPOed on TSE Mothers market2014: Head office relocated from Nagoya to Tokyo2016: Stock exchange listing moved to TSE 1st Section2017: Acquired Digital Publishing Initiatives Japan Co., Ltd., as wholly owned subsidiary Reorganized as holding company, changed company name to MEDIA DO HOLDINGS Co., Ltd., and established the new business subsidiary Media Do Co., Ltd.2019: Merger of Digital Publishing Initiatives Japan Co., Ltd., with Media Do Co., Ltd.(Name following merger Media Do Co., Ltd.)2020: Media Do Co., Ltd., merged into MEDIA DO HOLDINGS Co., Ltd.(Name following merger MEDIA DO Co., Ltd.)2021: Entered into capital/operational alliance with TOHAN CORPORATION and became its main shareholder65,8603Q23,533104,7224Q25,95483,5404Q21,5333Q20,2722Q21,4412Q2Q26,82526,8251Q1Q28,40828,4081Q20,292(Millions of yen)1971398121,4156174111,676Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 20222000/22001/22002/22003/22004/22005/22006/22007/22008/22009/22010/22011/22012/22013/22014/22015/22016/22017/22018/22019/22020/22021/22022/2(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018)(2019)(2020)(2021)18Reference dataAppendixShare price performance and trading volume since IPOShare price (lhs)Volume traded (rhs)October 21, 2020 Stock hits post-IPO high of ¥9,090株価：円9,0008,0007,0006,0005,0004,0003,0002,0001,0000出来高：千株2022年5,0009,0008,0007,0006,0004,0003,0002,0001,0000202219Closing price on April 13, 2022:¥2,214201320142015201620172018201920202021Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 2022Reference dataMEDIA DO’s market capitalization since IPO¥129.0bn based on Oct. 20, 2020, closing price¥35.1bn based on Apr. 13, 2022, closing price単位：億円1,4001,2001,00080060040020002013201420152016201720182019202020212022Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202220Reference dataCompany OutlineTrade nameEstablishedCapitalStock listingSecurities codeBoard MembersMEDIA DO Co., Ltd.April 1999¥5,909 million (as of February 28, 2022)Tokyo Stock Exchange, First Section3678President and CEO: Yasushi FujitaDirector: Shin NiinaDirector: Atsushi MizoguchiDirector: Hiroshi KandaOutside Director: Keiichi EnokiOutside Director: Ayako KanamaruExecutive Officer: Kayoko HanamuraExecutive Officer: Susumu TsukamotoExecutive Officer: Ryo YamadaExecutive Officer: Yoichi ChiharaExecutive Officer: Hajime SuzumuraExecutive Officer:Shoichiro TokoroStanding Audit & Supervisory Board Member: Kazuyoshi OhwadaOutside Audit & Supervisory Board Member: Toshiaki MorifujiOutside Audit & Supervisory Board Member: Tsuyoshi Shiina※ Directors will be appointed at AnnualGeneral Meeting planned in 26 May, 2022.※Executive Officer structure will startoperating in 1 June, 2022JIVE Ltd.JIVE Ltd.株式会社メディアドゥペイメント（株式会社出版デジタル機構から改称）Head OfficeTokushima Kito Office5F PALACESIDE Bldg. 1-1-1 Hitotsubashi Chiyoda-ku Tokyo, Japan5-23 Iwatsushi, Kitowamuda, Naka-cho, Naka-gun, Tokushima, JapanSubsidiaries(Domestic)Media Do Tech Tokushima Co., Ltd.; ARTRA ENTERTAINMENT Inc.; J-Comic Terrace Corporation; Digital Publishing Initiatives Japan Co., Ltd.; Flier Inc.; MangaNews Inc.; JIVE Ltd.; Nagisa, Inc.; NIHONBUNGEISHA Co., Ltd.;Everystar Co., Ltd,(Overseas) Media Do International, Inc.; Quality Solutions, Inc. (Firebrand Technologies); NetGalley, LLC; Supadü LimitedAffiliatesMyAnimeList, LLC; A.I. Squared, Inc.; Tec Information Corp.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202221Reference dataManagement Team (1/2)Yasushi Fujita, President and CEOLaunched first business in 1994 while in university. Founded Fuji Techno in 1996 and Media Do in 1999 (the former was merged into the latter in Nov. 2001). Involved in various businesses before launching eBook distribution business in 2006. Listed Media Do on TSE Mothers Market in 2013 and moved its listing to TSE 1st Section in 2016. As CEO, is in charge of management strategy, particularly creation of new drivers of shareholder value. Established Tokushima Innovation Base Association in 2020 in aim of supporting entrepreneurs and serves as its representativedirector. Actively involved in local economic revitalization since 2013 in hometown of Kito- mura (now Naka-cho), Tokushima Prefecture, while also contributing to society as an entrepreneur in roles such as president of Entrepreneurs’ Organization Tokyo.Shin Niina, Director, Vice-President and COOBegan career at Chuokoronsha (now Chuokoron-Shinsha) in 1980. Hired by KADOKAWA SHOTEN (now KADOKAWA CORPORATION) in 1996. Promoted to general manager of its book business in 2003. Appointed managing director of KADOKAWA SHOTEN in 2007, representative director of KADOKAWA EDITORIAL in 2008, director of BOOK WALKER in 2012 and executive director of Kadokawa Culture Promotion Foundation in 2013. Appointed president/representative director of DPIJ (renamed Media Do in March 2019) in 2014. Has served as vice president/COO/director of MEDIA DO since 2018. Appointed representative director of antipiracy organization Authorized Books of Japan in 2020. Heads core eBook distribution business and publishing support business as COO, capitalizing on his many years of literary editorial experience and quarter century of experience in digital publishing. Acts as MEDIA DO’s point man in dealings with publishing industry.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202222Reference dataAppendixManagement Team (2/2)Atsushi Mizoguchi, Director and CBDOBegan career at NTT DOCOMO in 2000, working in its content business. Involved in launching “Chaku-uta” (musical ringtones) for i-mode handsets. Joined Media Do in 2008. Appointed executive officer/general manager of Sales Division in 2010, director/general manager of Business Development Division in 2016, group COO in 2017, representative director of subsidiary MyAnimeList in 2019 and CBDO in charge of new businesses and alliances in June 2020. As CBDO, leads development of new domestic and overseas markets and expansion of content offerings, capitalizing on his IT and mobile telecom expertise and broad experience in core eBook distribution business, eLibrary business and new businesses.Hiroshi Kanda, Director, CSO and CFOBegan career in 2008 in UBS Securities Japan’s Investment Banking Division, where his roles included advising clients on M&A andcapital raising. Hired by Frontier Management in 2009 to formulate and help execute business plans for B2C company turnarounds/management support. In 2013, cofounded and appointed Director/CFO of Flier, which became part of the MEDIA DO Group in 2016. Joined MEDIA DO in 2018. Appointed general manager of Corporate Planning Division in 2019 and executive officer/CSO in charge of management strategy formulation and IR in June 2020.He is scheduled to be appointed director/CSO & CFO in June 2022, when he will take charge of the corporate division.As CSO & CFO, he will leverage his extensive financial knowledge, consulting skills, and his own experience of starting companies to formulate and implement financial, corporate, and ESG strategies, while taking responsibility for coordination with internal and external stakeholders.※ Directors will be appointed at Annual General Meeting planned in 26 May, 2022.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. | MEDIA DO Co., Ltd. Financial Results Briefing for the Year Ended February 28, 202223