This document is a translation of the Japanese original. The Japanese original has been disclosed in Japan in accordancewith Japanese accounting standards and the Financial Instruments and Exchange Act. This document does not contain orconstitute any guarantee and the Company will not compensate any losses and/or damage stemming from actions taken
based on this document. In the case that there is any discrepancy between the Japanese original and this document, theJapanese original is assumed to be correct.

Consolidated financial results (Japanese Accounting Standards)
for the First Quarter of the fiscal year ending March 31, 2023
Company name:IMAGICA GROUP Inc.

Securities code:

6879

Filing date: August 2, 2022
Stock exchange listing: Tokyo Prime
URL:

https://www.imagicagroup.co.jp/en/

Representative:
Nobuo Fuse, Representative Director, President
Inquiries:
Masakazu Morita, Director, Senior Managing Executive Officer
Quarterly report filing date (as planned):
August 2, 2022
Dividend payment date (as planned):－
Supplemental material of quarterly results:
Yes
Convening briefing of quarterly results:
None

Tel:+81-3-5777-6295(Millions of yen, rounded down)
1. Consolidated Financial Results for the First Quarter of the fiscal year ending March 31, 2023
(April 1, 2022 – June 30, 2022)(1) Consolidated Operating Results(Percentage represents change from the same period of the previous fiscal year.)Net sales

3 months ended June 30, 2022
3 months ended June 30, 2021
(Note) Comprehensive income:Operating income

Net income attributableto owners of the parent

Ordinary income

Millions ofyen%Millions of yen%

Millions of yen%

Millions of yen%

19,861

28.9

271

－

306

－

53

(89.3)

15,414

(8.6)

(255)

－

(285)

－

499

－

1st quarter ended June 30, 2022: 740 millions of yen / (43.3) %1st quarter ended June 30, 2021: 1,306 millions of yen /－%Diluted earnings
per share ofcommon stock

Earnings per share ofcommon stock
Yen

Yen

3 months ended June 30, 2022

1.20

－

3 months ended June 30, 2021

11.25

－

(2) Consolidated Financial Position
Total assets

Net assets

Shareholders' equity
ratio to total assets

Millions of yen

Millions of yen%

As of June 30, 2022

77,832

34,16040.1

As of March 31, 2022

73,38434,025

42.4(Reference) Shareholders’ equity:

As of June 30, 2022: 31,190 millions of yen
As of March 31, 2022: 31,149 millions of yen

2. Dividends

Dividend per share

1st quarter- end

2nd quarter- end

Year ended March 31,2022

－

0.00

－

15.00

15.00

Year ending March 31,2023

－
0.00

－

15.00

15.00

yen

Year ending March 31,2023(Forecast)(Note)

3rd quarter- end

yenYear-endyen

AnnualyenyenChanges in dividends forecast from the latest disclosed information: None

3. Consolidated forecast for the fiscal year ending March 31, 2023
(April 1, 2022 - March 31, 2023)(Percentage represents change from the same period of the previous fiscal year.)Net sales

Fiscal year ending March 31,
2023

Operating income

Net income
attributableto owners of theparentOrdinary income

Earnings per
shareof commonstock

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

yen

88,000

9.7

3,600

5.3

3,300

(16.1)

2,100(23.0)

47.30(Note) Changes in earnings forecast from the latest disclosed information： None

*Notes:(1) Material changes in subsidiaries during this period (changes in scope of consolidations resulting from change insubsidiaries): None
(2) The application of specific accounting of the consolidated quarterly financial statements: Yes(3) Changes in accounting policies, accounting estimates and retrospective
1) Changes in accounting policies based on revisions of accounting standards: Yes
2) Changes in accounting policies other than ones based on revisions of accounting standards: Yes
3) Changes in accounting estimates: None
4) Retrospective restatement: None
(4) Number of issued and outstanding shares (common stock)1) Number of issued and outstanding shares at the end of fiscal year (including treasury stock)
As of June 30, 2022

44,741,467 shares

As of March 31, 2022

44,741,467 shares

345,938 shares

As of March 31, 2022

345,938 shares

44,395,529 shares

As of June 30, 2021

44,386,657 shares

2) Number of treasury stock at the end of fiscal year
As of June 30, 2022

3) Average number of shares
As of June 30, 2022

*Consolidated quarterly financial results are exempted from quarterly review by a public certified accountant or an
auditing firm.
(Explanation regarding the appropriate usage of financial forecasts and other special instructions)
Forward-looking statements, such as financial forecasts, presented in this document are based on information available andcertain assumptions deemed to be reasonable to the Company at the time of publication, and are not to be read as
guarantees of future performance by the Company.

Table of Contents
Qualitative Information on Results in this Quarter ............................................................................................. 2

1.
(1)

Explanation of operating results..............................................................................................................2(2)

Explanation of financial position .............................................................................................................3(3)

Explanation of consolidated forecasts and other forward-looking information .......................................................... 3
Quarterly Consolidated Financial Statements .................................................................................................. 4

2.
(1)

Quarterly Consolidated Balance Sheets ..................................................................................................... 4(2)

Quarterly Consolidated Statements of Income and Statements of Comprehensive Income ............................................ 6(3)

Notes related to quarterly consolidated financial statements ............................................................................. 8(Notes regarding ongoing concern assumption) ............................................................................................... 8(Notes in the event of significant changes in shareholders' equity) .......................................................................... 8(The application of specific accounting of the consolidated quarterly financial statements) .............................................. 8(Changes in accounting policies) .................................................................................................................8(Segment information and others) ..............................................................................................................91

1. Qualitative Information on Results in this Quarter(1) Explanation of operating results① Overview of the first quarter of the consolidated fiscal year ending March 31, 2023
In the imaging-related business, the Group's main business domain, the market environment is undergoing dizzying changes,
including rapid technological innovation, the emergence of online live shows and new forms of entertainment utilizing themetaverse due to social changes caused by the COVID-19 pandemic, and fiercer competition among video streaming service
providers.
Viewing this environment as an opportunity for growth, the Group has launched its mid-term plan "G-EST 2025." In the fiscal
year ending March 31, 2023, the second year of the plan, we plan to "continue to build the foundation for conversion to a highprofitability Group" and will maintain our efforts to promote various initiatives based on our four key strategies.
The Group's financial performance for the first quarter of the consolidated fiscal year ending March 31, 2023, resulted in net
sales of 19,861 million yen (up 28.9% year over year), operating income of 271 million yen (compared to an operating loss of 255
million yen in the first quarter of the previous fiscal year), and ordinary income of 306 million yen (compared to an ordinary loss of
285 million yen in the first quarter of the previous fiscal year). On the other hand, net income attributable to owners of the parent
was 53 million yen (down 89.3% year over year) due to an extraordinary loss of 219 million yen and an increase in income taxes
due to deferred tax assets.
② Performance by business segment
Financial results by business segment are as follows.
Effective from the first quarter of the consolidated fiscal year ending March 31, 2023, one consolidated subsidiary (IMAGICA EEXInc.), which was previously included in "Adjustments," was reclassified to the Content Creation business segment because of anincrease in its importance.
Comparisons and analyses for the first quarter of the consolidated fiscal year ending March 31, 2023, are based on the newclassification.
1) Content Creation business
For the first quarter of the consolidated fiscal year ending March 31, 2023, the Content Creation business segment saw net salesof 4,149 million yen (up 5.0% year over year) but an operating loss of 193 million yen (compared to an operating loss of 28 million
yen in the first quarter of the previous fiscal year).
For feature film productions and TV dramas, business was healthy as there was an increase in the number of delivered products.
Orders for TV commercials also remained strong. On the other hand, for anime productions, both net sales and income declined
due to the postponement of the delivery of some productions to the second quarter or later. For the publishing business, both net
sales and income fell for the first quarter of the current fiscal year as a result of the strong earnings for the first quarter of theprevious fiscal year when new young-adult fiction novels were released.
IMAGICA EEX Inc. which is included in the Content Creation business segment from this fiscal year, is engaged in the "liveentertainment business," which forms one of the key strategies set forth in the mid-term plan, and orders were firm as a result ofcooperation in the development and movie direction of "NeoMe," a virtual live platform provided by PIA Corporation.
These developments resulted in improved net sales and income for the overall Content Creation business segment.
2) Production Services business
For the first quarter of the consolidated fiscal year ending March 31, 2023, the Production Services business saw net sales of
11,955 million yen (up 37.6% year over year), and operating income of 355 million yen (compared to an operating loss of 174
million yen in the first quarter of the previous fiscal year).
For the domestic E2E service*1, post-production service for large feature films and drama series, and feature animation films
were firm, and orders for digital cinema services also increased. In addition, through collaboration with Pixelogic Holdings LLC, we
continued to win orders from video streaming service providers, resulting in firm sales related to encoding, such as compression
and conversion of video files, and localization.
For overseas E2E services, demand for localization for video streaming service providers remained strong, and net sales grew.
As for post-production services for TV programs and TV commercials, etc., sales remained firm as a result of a steady stream oforders.
In game production and personnel services etc. orders for game 3DCG production and debugging, etc., were also strong.
As a result, net sales and income grew for the overall Production Services business.
*1 E2E services: End-to-end services. Refers to an integrated end-to-end (E2E) service that covers the entire post-production

process for feature films, dramas, animation, and other audio/video content through to media services for localization(subtitling/dubbing) and distribution of these through all kinds of media, including theaters, TV, and video streaming via the2Internet.
* Overseas E2E services have a settlement date of December 31, so E2E earnings from January 1, 2022, to March 31, 2022, arereflected in the results for the first quarter of the consolidated fiscal year ending March 31, 2023.
3) Imaging Systems & Solutions business
For the first quarter of the consolidated fiscal year ending March 31, 2023, the Imaging Systems & Solutions business saw net
sales of 4,225 million yen (up 34.1% year over year) and operating income of 325 million yen (up 214.6% year over year).
Orders for high-speed cameras remained steady in Japan and overseas, but the shortage of semiconductors caused delays insome deliveries. On the other hand, broadcasting video systems contributed to an increase in both net sales and income thanks toorders related to large projects. Sales of online delivery of TV commercials remained strong, and sales of video and image
processing LSIs continued to be strong in Japan and overseas (especially in Asia).
Therefore, net sales and income rose for the overall Imaging Systems & Solutions business.

(2) Explanation of financial position① Assets
Current assets decreased 59 million yen (0.1%) from the previous fiscal year to 41,007 million yen.
This was mainly due to decreases in notes and accounts, receivable-trade, contract assets, and cash and deposits even thoughinventories increased.
Non-current assets increased 4,507 million yen (13.9%) from the previous fiscal year to 36,824 million yen. This was mainly due
to an increase in lease assets.
As a result, total assets increased 4,447 million yen (6.1%) from the previous fiscal year to 77,832 million yen.
② Liabilities
Current liabilities increased 1,085 million yen (3.4%) from the previous fiscal year to 33,364 million yen. This was mainly due toan increase in contract liabilities even though notes and accounts payable decreased.
Non-current liabilities increased 3,227 million yen (45.6%) from the previous fiscal year to 10,307 million yen. This was mainly
due to an increase in other non-current liabilities.
As a result, total liabilities increased 4,312 million yen (11.0%) from the previous fiscal year to 43,671 million yen.
③ Net assets
Net assets increased 135 million yen (0.4%) from the previous fiscal year to 34,160 million yen.
This was mainly due to an increase in foreign currency translation adjustment even though retained earnings decreased.

(3) Explanation of consolidated forecasts and other forward-looking information
There are no revisions to the full-year forecasts for the consolidated fiscal year ending March 31, 2023, from those announced
on May 13, 2022.

3

2. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Thousands of yen)March 31, 2022

June 30, 2022

AssetsCurrent assets
6,420,308

5,487,142

Notes and accounts receivable - trade, and contract assets

18,849,395

15,331,717

Inventories

13,613,658

17,168,428

Other

2,223,017

3,059,997

Allowance for doubtful accounts(39,570)(40,032)

41,066,808

41,007,253

5,448,367

5,396,808

832,609808,174

1,705,807

1,705,807

303,675

4,183,503

Other

1,878,964

2,022,514

Total Property, plant and equipment

10,169,425

14,116,808

11,482,801

11,844,408

Cash and deposits

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Land
Lease Assets

Intangible assets
Goodwill
Other

2,352,770

2,422,193

Total Intangible assets

13,835,572

14,266,601

2,670,687

2,711,259

385,838

512,779

Lease and guarantee deposits

2,066,324

2,027,601

Deferred tax asset

Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates

3,051,529

3,074,182

Other286,596

271,440

Allowance for doubtful accounts(148,462)(155,724)

Total Investments and other assets

8,312,513

8,441,540

Total Non-current assets

32,317,511

36,824,950

73,384,320

77,832,204

Total assets4

(Thousands of yen)March 31, 2022

June 30, 2022

Liabilities
Current liabilities
Notes and accounts payable- trade

8,884,981

7,013,739

Short-term loans payable

4,170,485

4,308,115

Accounts payable

1,824,055

1,449,988

Income taxes payable

850,863

135,797

Contract liabilities

8,373,707

11,884,153

Provision for bonuses

1,594,260

699,423

3,717

6,168

Provision for loss on litigation

584,309647,606

Asset retirement obligations

41,401－Other

5,951,109

7,219,301

Total current liabilities

32,278,892

33,364,294

4,019,743

3,806,097

Long-term accounts payable-other

208,183

205,948

Deferred tax liabilities

396,815

411,417

Net defined benefit liabilities

1,311,241

1,277,036

Asset retirement obligations

636,938

639,839

Other

507,067

3,966,718

7,079,990

10,307,058

39,358,882

43,671,352

Provision for loss on order received

Non-current liabilities
Long-term loans payable

Total non-current liabilities
Total Liabilities
Net assets
Shareholders’ equity
Capital stock

3,306,002

3,306,002

Capital surplus

13,223,561

13,223,561

Retained earnings

13,785,809

13,171,481

Treasury stock(351,569)(351,569)

Total shareholders’ equity

29,963,804

29,349,475

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

610,074

612,974

Revaluation reserve for land

(17,933)(17,933)

Foreign currency translation adjustment

595,800

1,248,601(2,483)(2,861)

1,185,458

1,840,781

Non-controlling Interests

2,876,174

2,970,595

Total Net assets

34,025,437

34,160,852

Total liabilities and Net assets

73,384,320

77,832,204

Re-measurements of defined benefit plans
Total accumulated other comprehensive income5(2) Quarterly Consolidated Statements of Income and Statements of Comprehensive Income
Quarterly Consolidated Statements of Income
3 months ended
June 30, 2021
15,414,113

3 months ended
June 30, 2022
19,861,611

11,028,031

14,366,860

Gross profit

4,386,082

5,494,751

Selling, general and administrative expenses

4,642,006

5,223,393

Operating income (loss)(255,924)

271,357

Interest income

260

278

Dividend income

13,22916,006(Thousands of yen)
Net sales
Cost of sales

Non-operating income

Foreign exchange gains－

85,038Other

32,36655,352

Total non-operating income

45,856

156,675

52,16550,203

208

4,649

Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses

2,767

－

Other

19,976

66,872

Total non-operating expenses

75,117

121,725(285,186)

306,307

794

2,923

Ordinary income (loss)
Extraordinary income
Gain on sales of non-current assets
Gain on sale of shares of subsidiaries and associates
Compensation for forced relocation
Total extraordinary income

357,963－－

138,685358,757

141,609

4,039

1,640

－

170,228Extraordinary losses
Loss on retirement of non-current assets
Extra retirement payments
Other

68

47,685

Total extraordinary losses

4,107

219,554

Net income before income tax

69,464228,362

Income taxes(395,136)

145,385

Net income

464,601

82,976

Net income (loss) attributable to non-controlling interests(34,651)

29,746

Net income attributable to owners of the parent

499,252

53,2306

Quarterly Consolidated Statements of Comprehensive Income
3 months ended
June 30, 2021

(Thousands of yen)
Net income

3 months ended
June 30, 2022

464,601

82,976

Other comprehensive income
Valuation difference on available-for-sale securities

75,9732,900

Foreign currency translation adjustment

765,850

654,645

Re-measurements of defined benefit plans

(167)

(377)

841,656

657,167

1,306,257

740,144

Comprehensive income attributable to owners of parent

1,342,023

677,733

Comprehensive income attributable to non-controllinginterests(35,766)

31,591

Total other comprehensive income
Comprehensive income(Breakdown)7(3) Notes related to quarterly consolidated financial statements(Notes regarding ongoing concern assumption)
No relevant matters to be noted.
(Notes in the event of significant changes in shareholders' equity)
No relevant matters to be noted.
(The application of specific accounting of the consolidated quarterly financial statements)(Calculation of tax expenses)
Tax expenses are calculated by rationally estimating the effective tax rate after applying tax effect accounting to net income
before income tax for the consolidated fiscal year that includes the current first quarter and multiplying net income before
income taxes for the quarter by the estimated effective tax rate.
However, if the calculation of tax expenses using this estimated effective tax rate leads to obviously irrational results, thestatutory effective tax rate is used after adjusting income/loss before income taxes for material differences that do not fallunder temporary differences.
(Changes in accounting policies)(1) Adoption of FASB Accounting Standards Codification (ASC) No. 842, "Leases"
As of the beginning of the first quarter of the consolidated fiscal year ending March 31, 2023, ASC No. 842, "Leases,"
was adopted for foreign consolidated subsidiaries that have adopted U.S. GAAP.
In principle, therefore, all leases of lessees are recorded as assets and liabilities. When applying this standard, theCompany follows transitional treatment and recognizes the cumulative effect of a change in accounting policy at the dateof adoption.
As a result, "Lease assets (net)" under property, plant, and equipment, "Other" under current liabilities, and "Other"under non-current liabilities increased 3,002,985 thousand yen, 384,364 thousand yen, and 2,735,036 thousand yen,respectively, at the beginning of the first quarter of the current fiscal year. The effect on retained earnings at the
beginning of the first quarter of the current consolidated fiscal year and the effect on the quarterly consolidated
statement of income for the first quarter of the current consolidated fiscal year are immaterial.
(2) Change in method for calculating tax expenses
Previously, with the exception of some consolidated subsidiaries, tax expenses were calculated using the basic method.
However, in order to further improve the efficiency of the Company and its consolidated subsidiaries' quarterly
accounting operations, effective from the first quarter of the current consolidated fiscal year, the Company has changed
the method it uses to calculate tax expenses to rationally estimating the effective tax rate after applying tax effectaccounting to net income before income taxes for the consolidated fiscal year and then multiplying the estimatedeffective tax rate and net income before income taxes for the quarter.
Since the impact of this change is immaterial, it has not been retrospectively applied.

8

(Segment information and others)
I.

[Segment Information]
For the 3 months ended June 30, 2021 (from April 1, 2021 to June 30, 2021)
1. Information regarding net sales and profit (loss) by reportable segment(Thousands of yen)Content Creation

Production
Services

Imaging Systems &Solutions

Sub total

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers
Total
Segment Income(loss)

3,921,417

8,443,751

3,044,891

15,410,060

30,217

244,006

106,164

380,3883,951,634

8,687,758

3,151,056

15,790,449(28,682)(174,833)

103,511(100,004)

Adjustments(Note 1)

Amount in the
Quarterly
Consolidated
Statements of Income(Note 2)

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers

4,052

15,414,113(380,388)

－

Total

(376,335)

15,414,113

Segment Income(loss)(155,920)(255,924)

Notes:
1.
The segment income (loss) adjustment of (155,920) thousand yen consists of income/loss related to the Company of 978,807
thousand yen and elimination of inter-segment transactions of (1,134,727) thousand yen.
2.
Segment income (loss) is adjusted against operating loss on the quarterly consolidated financial statements.

9

II.

For the 3 months ended June 30, 2022 (from April 1, 2022 to June 30, 2022)
1. Information regarding net sales and profit (loss) by reportable segment(Thousands of yen)Content Creation

Production
Services

Imaging Systems &Solutions

Sub total

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers

4,145,021

11,648,297

4,060,900

19,854,219

4,672

307,413164,138

476,224

Total

4,149,693

11,955,710

4,225,039

20,330,443

Segment income (loss)(193,668)

355,187

325,674

487,192

Adjustments(Note 1)

Amount in the
Quarterly
Consolidated
Statements of Income(Note 2)

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers

7,391

19,861,611(476,224)

－

Total

(468,832)

19,861,611

Segment income (loss)(215,835)

271,357

Notes:
1.
Adjustment of segment income (loss) of (215,835) thousand yen consists of income/loss related to the Company of 1,502,576
thousand yen and elimination of inter-segment transactions of (1,718,411) thousand yen.
2.
Segment income (loss) is adjusted against operating loss on the quarterly consolidated financial statements.
2. Note concerning changes in reportable segments
Effective from the first quarter of the consolidated fiscal year ending March 31, 2023, one consolidated subsidiary (IMAGICA EEXInc.), which was previously included in "Adjustments," was reclassified to the Content Creation business segment because of anincrease in its importance.
"Information regarding net sales and income (loss) by reportable segment" for the first quarter of the previous fiscal year ispresented based on the new classification.

10