Consolidated Financial Highlights for
the Second Quarter of the fiscal year ending
March 31, 2022

IMAGICA GROUP Inc.
Code：6879

November 1, 2021

Second Quarter Results Highlights

１

２

３

Total operating income before goodwill amortization for thecompany was 1.2 billion yen, exceeding the level in FYEMarch 2020 (pre-COVID-19) and staging a V-shaped recovery.

Operating income before goodwill amortization turned into
the black in all segments.

Production Services reached profitability both domesticallyand internationally, showing substantial profit growth to
2.6 billion yen.

Notes (*1-*5) are on page 18 of these materials.

2

Highlights of Financial Results for the First Half・ Operating income before goodwill amortization was 1.2 billion yen, exceeding
FYE March 2020 (pre-COVID-19) by more than 400 million yen.

(Million Yen)

Net sales

33,846
YoY

Operating income(loss) before
goodwill amortization

Operating income(loss)

YoY

YoY

1,274

431

3,360

3,060

(1,989)Net profit (loss)
attributable to ownersof the parent

1,694
YoY

3,646

47,42235,83533,846

1,694

1,274
834

431

275

865

(1,952)(2,086)2Q
FYE Mar. 2020

2Q
2Q
FYE Mar. 2021 FYE Mar. 2022

2Q
FYE Mar. 2020

2Q
2Q
FYE Mar. 2021 FYE Mar. 2022

(2,628)2Q
FYE Mar. 2020

2Q
2Q
FYE Mar. 2021 FYE Mar. 2022

2Q
FYE Mar. 2020

2Q
2Q
FYE Mar. 2021 FYE Mar. 2022

3

Contributing Factors to Increases (Decreases) in Net Sales(vs 2Q FYE Mar. 2021)
・ All business segments achieved growth in net sales when the decrease due tothe sale of SDI is excluded.
(Million Yen)

Production Services(Overall: (1,818))
5,792

35,835

1,643

1,713

547
(9,323)

Content
Creation

Production
Services(Domestic)

Production
Services(International)

Sale of SDI

Imaging
Systems &Solutions

33,846(2,163)
Impact fromAccountingStandards

(198)
Other

Production Services(International: (3,531))

2Q FYE Mar. 2021
Actual2Q FYE Mar. 2022
Actual(1,989)4

Contributing Factors to Increases (Decreases) in Operating
Income before Goodwill Amortization (vs 2Q FYE Mar. 2021)
・ Operating income before goodwill amortization increased substantially to
3.3 billion yen on a consolidated basis. Production Services was responsible for2.6 billion yen of the increase, and Content Creation, for 700 million yen.

(Million Yen)

Production Services(Overall: +2,654)
Production Services(International: +836)

1,274

576
1,817

260

(2)

(19)

Imaging
Systems &Solutions

Consolidated
Adjustments(2,086)
Production
Services(International)

728

Sale of SDI

Production
Services(Domestic)

2Q FYE Mar. 2021
ActualContent
Creation

2Q FYE Mar. 2022
Actual+3,3605

Content Creation (First Half)・ Net sales rebounded substantially, owing to a lesser impact from COVID-19 anda rebound in orders, etc. This led to turning a profit from the 2Q onward.
Net sales

Operating income before goodwill
amortization

YoY(Million Yen)

YoY

+1,643(+22.9%)

+728
(26)

16

15,454
7,190

8,833

(712)
2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

2Q
FYE Mar. 2022

2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

2Q
FYE Mar. 2022

 The rebound in the advertising market from the impact of COVID-19 resulted in a rebound inorders for TV commercial production.

 Feature films, TV dramas, and animation productions were also firm.
 Orders for online streaming of live music performances and shooting music videos were strong.
6

Production Services (First Half)・ Strong growth in operating income before goodwill amortization resulted mainly
from strong sales of global E2E services*1 and domestic structural reform*2.
Net sales

Operating income before goodwill
amortization

YoY
23,014
International

SDI

Domestic

2Q
FYE Mar. 2020

YoY

(1,818)20,276+2,654

International

2Q
FYE Mar. 2021

(250)

Pixelogic
PPC

SDI
PPC

Domestic(Numbers show thesum of domestic
plus international.)

1,024International

18,458International(Million Yen)

Domestic

Domestic

International

Domestic

2Q
FYE Mar. 2022

(1,630)2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

2Q
FYE Mar. 2022

 In the domestic market, global E2E services*1 for video streaming service providers*3 were strong.

Feature films, drama series, animation productions, and post-production services for TV commercials
were firm. This resulted in substantial growth in operating income before goodwill amortization, due inpart to orders for large event projects and benefits derived from structural reform*1.
 In the international market, although feature film trailer production services were sluggish due to theimpact of COVID-19 in Europe and the U.S., Pixelogic’s localization business for video streaming
service providers*3 was strong.
＊IMAGICA LIVE Corp. performance was excluded from net sales and operating income (loss) for Production Services from 1Q FYE Mar. 2021 due to the reclassification of the subsidiary into another segment.

7

Production Services (International) Quarterly Consolidated
Performance Forecast
・ The 2Q turned into the black as expected and growth is forecast in the 3Q.
This will boost growth and profitability.
Net sales

Operating income before goodwill
amortization

5,000(Million Yen)

800

4,000

600

3,000

400

2,000
1,000

200

0

0
(200)
1Q ActualFYE Mar. 2022
2Q Actual
3Q Forecast

4Q Forecast

1Q ActualFYE Mar. 2022
2Q Actual
3Q Forecast

4Q Forecast We expect strong orders for video streaming service providers*3 from the 3Q onward.
 The resumption of new feature film releases are forecast to increase sales and profit of Pixelogic
from the 3Q onward.

8

Imaging Systems & Solutions (First Half)・ Net sales increased by 500 million yen, if the impact from the change inaccounting standard*4 is excluded.
Net sales

Operating income before goodwill
amortization

YoY(1,616)

YoY(2)

Excluding the impact fromaccounting standard＊: +547

9,725

8,937

9,484

1,311*
Change inaccounting
standard

7,321
2Q
FYE Mar. 2020

2Q
FYE Mar. 2021

(Million Yen)

2,163

2Q
FYE Mar. 2022

2Q
FYE Mar. 2020

506

504

2Q
FYE Mar. 2021

2Q
FYE Mar. 2022

 Sales of the online delivery system for TV commercials*5 remained strong due to expansion inmarket needs.

 Sales of high-speed cameras rebounded in Asia and the U.S./Europe despite the continued
struggle for sales in the domestic market.

 Sales of video and image processing LSI were strong in both the domestic and international
markets.

＊ Impact from a change in accounting standard: Impact from posting the net amount for mobile communication line sales.
＊ IMAGICA LIVE Corp. performance was added to Imaging Systems & Solutions net sales and operating income (loss) from 1Q FYE March 2022 due to the reclassificationof the subsidiary into this segment.

9Consolidated Forecasts for FYE March 31, 2022
FYE Mar. 2021
(Million Yen)FYE Mar. 2022
Forecast
disclosed on
May 13, 2021

ActualYoY

Full-year forecast

Change fromMay 13th
forecast

Percentagechange fromMay 13th
forecast

Net sales

86,72775,000(11,727)75,0000０%Operating income (loss)(1,084)

1,500

2,584

1,500

0

０

(Operating margin)(%)(2.0%)-(2.0%)－－

Ordinary income (loss)(1,343)

1,300

2,643

2,000

＊1

700

53.8%

Net income (loss)
attributable to owners ofparent3,454

800(2,654)

2,000

＊2

1,200

150.0%

Earnings (Loss) per share
(Yen)

77.89

18.02

(58.87)

45.06

27.04

150.0%

Operating income before
goodwill amortization

320

3,100

2,780

3,100

0

0

*1 Reason for increase in ordinary income: We posted 640 million yen in subsidy income in the 2Q due to debt relief on a loan Pixelogic
received as part of government COVID-19 assistance measures.
*2 Reasons for increase in net income: A gain of 357 million yen on the sale of affiliate shares was posted in the first quarter, and again of 395 million yen on sales of investment securities was posted in the 2Q. (See the July 12, 2021 news release for further
information.)10Appendix

11

Consolidated Statements of Income
2Q FYE Mar. 2021

(Million Yen)

Actual2Q FYE Mar. 2022
ActualYoY% YoY

Net sales

35,83533,846(1,989)(5.6%)

Gross profit

7,621

9,858

2,237

29.4%

21.3%

29.1%

(2,628)

431

3,060

ー

ー

1.3%

(2,928)

999

3,928

ー

ー

3.0%

Extraordinary income

123

793

670

543.9%

Extraordinary losses

118

237

118

99.8%

Net income (loss) before income tax(2,924)

1,555

4,480

ー

Net profit (loss) attributable to ownersof parent(1,952)

1,694

3,646

ー

(Reference) Operating income (loss)
before goodwill amortization(2,086)

1,274

3,360

ー

(Gross margin)

Operating income (loss)(Operating margin)

Ordinary income (loss)(Ordinary margin)* Operating income before goodwill amortization includes: Operating income, goodwill amortization, and amortization of intangible assets including trademarks.

12Consolidated Balance Sheets(Million Yen)

Assets

As of
Sep. 30, 2021

YoY

Main Factors
2,845 Cash and deposits: (494)Notes and accounts receivable-trade andcontract assets: (1,473)(494) Inventories: +4,818 Other: (26)30,44033,286

Cash and deposits

6,908

6,414

Non-current assets

30,00531,247

Goodwill

12,04812,363

1,242 Investment securities: (550)
Shares of subsidiaries and affiliates: (636)314 Deferred tax assets: +424

Total Assets

60,44664,533

4,087

Current liabilities

22,117

24,196

7,402

5,205

8,495

7,753

(742)

5,384

4,590

(794)

Total Liabilities

30,613

31,950

1,337

Shareholders’ equity

27,14928,935

1,786 (Reference) Equity capital

Accumulated othercomprehensive income

301

881

Stock acquisition rights

11

11

Non-controlling interests

2,370

2,754

383

Total Net Assets

29,83232,583

2,750

Total Liabilities and Net Assets

60,44664,533

4,087

Net cash(5,878)(3,382)

2,496

Current assets

Short-term loans payable
Liabilities / Net Assets

As ofMar. 31, 2021

Non-current liabilities
Long-term loans payable

2,079 Notes and accounts payable-trade: +1,485
Short-term loans payable: (2,197)
Income taxes payable: +53(2,197) Advances received: (2,811)
Long-term loans payable: (794)580 As of March 31, 2021: 27,450 (45.4%)
ー As of September 30, 2021: 32,583 (46.2%)(Cash and deposits － long-term and shortterm loans payable)

13

Financial Results by Segment
2Q FYE Mar. 2021

(Million Yen)

Content Creation

Actual

1,643

22.9%

Operating income (loss)

(712)

13

726

ー

ー

0.2%

(712)

＊ 20,276

16

728

ー

18,458(1,818)(9.0%)(2,172)

202

2,374

ー

ー

1.1%

(1,630)

1,024

2,654

ー

＊ 8,937

7,321(1,616)(18.1%)

506

486

(20)

(4.1%)

5.7%

6.6%

506

504

(2)

(0.6%)Net sales

(568)

(766)

(198)

ー

Operating income (loss)

(250)

(270)

(19)

ー

Net sales

35,83533,846(1,989)(5.6%)

Operating income (loss)(2,628)

431

3,060

ー

Operating income (loss)
before goodwill amortization(2,086)

1,274

3,360

ー

(Operating margin)

Operating income (loss)(Operating margin)

Net sales
Operating income (loss)(Operating margin)
Operating income (loss)
before goodwill amortization

Consolidated total

% YoY

8,833

Operating income (loss)
before goodwill amortization

Others

YoY

7,190

Net sales

Imaging Systems &Solutions

ActualNet sales

Operating income (loss)
before goodwill amortization

Production Services

2Q FYE Mar. 2022

* The figures for Production Services, Imaging Systems and Solutions, and Others have changed due to reclassification of subsidiaries into different segments.

14

Consolidated Statements of Cash Flow
(Million Yen)

2Q FYE Mar. 31, 2021

2Q FYE Mar. 31, 2022

(2,924)

1,555

1,308

939

293

690

Loss (gain) on sales of investment securities

－

(414)

Loss (gain) on sales of stocks of subsidiaries and affiliates

－

(357)

4,871

2,938

Decrease (increase) in inventories(1,098)(4,508)Decrease (increase) in notes and accounts payable-trade(1,755)

600

2,217

2,626

Income before income taxes (loss)
Depreciation and amortization
Amortization of goodwill

Decrease (increase) in notes and accounts receivabletrade and contract assets

Increase (decrease) in contract liabilities
Income taxes paid

(1,466)(90)

Other, net(1,546)(1,302)

Net cash provided by operating activities

(98)

2,679

Purchase of property, plant and equipment(606)(1,373)Purchase of intangible assets

(361)

(402)

Proceeds from the sale of investment securities

5944

Proceeds from sale of shares of subsidiaries resulting inchange in scope of consolidation

－

357

(9)

(526)

Payment of lease and guarantee deposits
Other, net
Net cash used in investing activities
Net increase (decrease) in short-term loans payable

(262)

(70)

(1,235)(1,069)

2,677

(897)

Proceeds from long-term loans payable

434－

Repayment of long-term loans payable(1,230)(1,346)

Other, net(1,961)75

Net cash used in financing activities(79)(2,169)Effect of exchange rate change on cash and cash
equivalents

(54)

66

(1,468)

(492)

－

48

5,859

6,413

Net increase (decrease) in cash and cash equivalents
Increase (decrease) in cash and cash equivalents resulting
from change in scope of consolidation
Cash and cash equivalents at end of period

15

(Reference)
Change in Overseas Subsidiaries in Production Services
 The P/L of Pixelogic, which provides E2E service, was consolidated from the fourth
quarter of FYE March 2021.
 All shares held in SDI were sold at the end of March 2021, removing it from the scopeof consolidation.

Fiscal Year

Company Name

SDI

1Q

2Q

3Q

4Q

Consolidated through the 4Q of FYE Mar. 2021

FYE Mar. 2021

Pixelogic

FYE Mar. 2022

Pixelogic

P/L consolidated from the 4Q of FYE Mar. 2021

Full-year consolidation in FYE Mar. 2022

* Pixelogic has a fiscal year-end of December 31. The financial performance during the 2Q of FYE March 2022 therefore
reflects the results for January 1 through June 30, 2021.

16

(Reference)

Disclosure of Operating Income before Goodwill Amortization
We have disclosed operating income before goodwill amortization as a key
indicator from the first quarter of FYE March 2022 onward to appropriatelyreflect the actual status of the IMAGICA GROUP.

(Million Yen)

1H
FYE Mar. 2022

FYE Mar. 2022
Full year

New Mid-Term Plan
"G-EST 2025"

ActualPlan

Goal

33,84675,000Operating income

431

1,500

Operating income
before goodwill
amortization

1,274

3,100

Net sales

100,000

8,000

Operating income before goodwill amortization includes: Operating income, goodwill
amortization, and amortization of intangible fixed assets accompanying M&A.
17

Notes*1 Global E2E services
Refers to an integrated end-to-end (E2E) service that covers the entire post-production process forfeature films, TV dramas, animation, and other audio/video content up to media services for
localization (subtitling/dubbing) and distribution of these through all kinds of media, including
theaters, TV, and video streaming via the Internet.
*2 Structural reform
The structural reform discussed in this document refers to the voluntary retirement implemented in
the Production Services business segment to achieve sustainable growth and a rebound in financial
performance of the IMAGICA GROUP, as stated ”Notice of Establishment of New Subsidiaries,
Structural Reform of Production Services, and Group Business Reorganization” disclosed on January
22, 2021 (posted in English on February 9, 2021).
*3 Video streaming service providers
Refers to companies that provide video streaming services on a platform through the Internet.
*4 Impact from a change in accounting standard
This refers to the impact from the change in accounting standard in the Imaging Systems & Solutions
business segment, which resulted in posting the net amount for mobile communication line sales.
*5

Online delivery system for TV commercials
Refers to the service for online delivery of TV commercial source materials, etc. (service provided by
PHOTRON: C.M. HARBOR).
18

Contact for inquiries:
IMAGICA GROUP Inc.
Corporate Management Department
1-14-2 Kaigan, Minato-ku, Tokyo 105-0022, Japan
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.
19