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

IMAGICA GROUP Inc.
Code: 6879

August 3, 2021

First Quarter Results Highlights

１

２

３

4

 Consolidated operating income before goodwill amortization* turned
into the black, reaching a level that exceeded FYE March 2020 (prior
to the COVID-19 pandemic).
*including amortization of some intangible assets (Pages 4,7)
 In Production Services (international), the strong start of Pixelogic
will boost growth and profitability from the second quarter onward.
(Page 11)

 Production Services (domestic) recorded substantial growth in profit
owing to benefits from structural reform. (Page 9)
 Content Creation saw a rebound in profit level to the FYE March 2020(pre-COVID-19) level. (Page 8)
 The full-year forecasts for FYE March 2022 were revised upward,
increasing the forecasts for ordinary income (+700 million yen) andnet income (+1.2 billion yen) to 2 billion yen. (Page 13)
Notes (*1 -*8) in this document are on Pages 21 and 22.

2

(Reference)
Disclosure of Operating Income before Goodwill Amortization
We will disclose 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)

1Q
FYE Mar. 2022

FYE Mar. 2022
Full year

New Mid-Term Plan
"G-EST 2025"

ActualPlan

Goal

15,41475,000Operating income

(255)

1,500

Operating income
before goodwill
amortization

158

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.
3

Highlights of Financial Results for the First Quarter• Net sales decreased due to the sale of an overseas subsidiary (SDI Media Group,Inc.).
• Operating income before goodwill amortization turned into the black and improvedby 1.7 billion yen from last fiscal year.
(Million Yen)
Net sales

EBITDA

15,414539(1,441)

1,602

YoY

16,855

Net income (loss)
attributable to ownersof the parent

YoY

YoY

158

YoY

15,414

Operating income (loss)
before goodwill
amortization

499

1,748

1,712

539

499
158

357 million yen ingains on sales ofstocks of subsidiaries
and affiliates posted(1,063)(1,213)(1,590)1Q FYE Mar. 2021 1Q FYE Mar. 2022

1Q FYE Mar. 2021

1Q FYE Mar. 2022

1Q FYE Mar. 2021

1Q FYE Mar. 2022

1Q FYE Mar. 2021

EBITDA includes: Operating income, depreciation and amortization, goodwill amortization and amortization of intangible fixed assets
accompanying M&A

1Q FYE Mar. 2022

4

Contributing Factors to Increases (Decreases) in Net Sales(vs 1Q FYE Mar 2021)• All business segments achieved growth in net sales when the decrease due tothe sale of SDI is excluded.
Production Services(1,831)
949(Million Yen)

(5,205)

2,425

16,855996

1Q FYE Mar. 2021

Content

Production Services

Production Services

ActualCreation(Domestic)(International)

Sale of SDI

1,167(1,593)

Imaging Systems& Solutions(180)

15,414

Impact from

Consolidated

1Q FYE Mar. 2022

Accounting Standards

Adjustments

Actual

(1,441)Net sales decreased by 5.2 billion yen due to the sale of SDI and by 1.59 billion yen due tothe impact from a change in accounting standard*1.



In Production Services, global E2E services*2 got off to a good start.

5

Contributing Factors to Increases (Decreases) in Operating Income
before Goodwill Amortization (compared to the previous fiscal year)• All business segments achieved growth in operating income before goodwill
amortization. Production Services, in particular, achieved substantial growth
due to structural reform*3.
Production Services+1,218(1,590)

1,090

(213)

(Million Yen)

341

158

(68)

Imaging

Consolidated

1Q FYE Mar.

Adjustments

2022

158

440

Sale of SDI

1Q FYE Mar.

Content

Production

Production

2021

Creation

Services

Services

Systems(Domestic)(International)& Solutions

ActualActual

+1,748
6

Comparison to 1Q FYE March 2020 (pre-COVID-19)(company-wide basis)• Operating income before goodwill amortization in Production Services improved
compared to before the COVID-19 pandemic. The improvement resulted fromreorganization of the global business structure*4 and structural reform *3
in Production Services.
(Million Yen)
Net sales

21,747

15,414

16,855

Operatingincome before
goodwill
amortization

158

(401)

(1,590)1Q FYE Mar. 2020

1Q FYE Mar. 2021

1Q FYE Mar. 2022

7

Content Creation (Quarterly Performance)••

Commercial production and music-related orders rebounded and net sales
increased.
Cost reductions achieved contributed to substantial growth in operating income
before goodwill amortization.

Net sales

Operating income
before goodwill amortization

YoY+996 (+34%)
2,932

1Q FYE Mar. 2021

(Million Yen)

3,928

YoY

(469)

+440
(29)

1Q FYE Mar. 2022

1Q FYE Mar. 2021

1Q FYE Mar. 2022

 Increased activity in the advertising market resulted in a rebound in orders for TV commercial
production.

 Some feature films and TV dramas were delayed into the second quarter onward.
 Orders for online streaming of live music performances and shooting music videos were strong.
 Operating income before goodwill amortization rebounded to the pre-COVID-19 level seen in
FYE March 2020 (loss before goodwill amortization: -31 million yen).

8

Production Services (Quarterly Performance)•

This segment achieved substantial growth in operating income before goodwill
amortization despite the decrease in net sales due to the sale of SDI. The growth
resulted from the benefits of structural reform and strong sales of global E2E services*2.
Operating income
before goodwill amortization

Net sales
YoY

10,519*International
SDI
PPC

Domestic

1Q FYE Mar. 2021

YoY

(1,831)+1,2188,687International

Domestic

1Q FYE Mar. 2022

(989)*
International
Pixelogic
PPC

Dome
stic

(Million Yen)
(Numbers show the sum ofdomestic plus international.)

229
Domestic

Dome
stic

International

Domestic

International

1Q FYE Mar. 2021

1Q FYE Mar. 2022

 In the domestic business, collaboration with Pixelogic contributed to an expansion in orders for encoding(video file compression and conversion) and localization services. Orders increased for post-production
services for TV programs and TV commercials. The implementation of structural reform reduced fixed
costs and substantially improved operating income before goodwill amortization.

 In the international business, sales of Pixelogic services for video streaming service providers*5 werestrong, despite the decrease in net sales due to the sale of SDI.

 Sales for Pixelogic localization services were strong, while sales of feature film trailer production services
in Europe and the U.S. declined due to the COVID-19 pandemic.

* IMAGICA LIVE Corp. performance was excluded from net sales and operating income (loss) due to the reclassification of the subsidiary into another segment.

9

Production Services

Comparison to 1Q FYE March 2020 (pre-COVID-19)• Operating income before goodwill amortization in Production Services improved
compared to before the COVID-19 pandemic. The improvement resulted fromreorganization of the global business structure*4 and structural reform*3.
(Million Yen)

Net sales

10,734＊

8,687

10,519＊Operatingincome before
goodwill
amortization

229(533)＊(989)＊
1Q FYE Mar. 2020

1Q FYE Mar. 2021

1Q FYE Mar. 2022

＊ IMAGICA LIVE Corp. performance was excluded from net sales and operating income (loss) due to the reclassification of the subsidiary into another segment.

10

Production Services (International)
Quarterly Consolidated Performance Forecast
We expect a return to profitability and profit growth from the second
quarter onward as film-related business rebounds in Europe and the U.S.
Operating income
before goodwill amortization

Net sales

5,000

800

4,000

600

3,000

400

2,000

200

1,000

0

0

(200)

1Q Actual

2Q Forecast

3Q Forecast

4Q Forecast

1Q Actual

2Q Forecast

3Q Forecast(Million Yen)

4Q Forecast We expect strong orders for services performed for video streaming service providers*5 from thesecond quarter onward.

 We expect the resumption of movie theater operation and new feature film releases in Europe

and the U.S. to lead to growth in orders for distribution services*6 and digital cinema services*7
from the second quarter onward.
11

Imaging Systems & Solutions (Quarterly Performance)
Net sales increased by 1.1 billion yen, if the impact from a change inaccounting standard* is excluded.
Operating income
before goodwill amortization

YoY

Net sales(426)
Excluding the impact fromaccounting standard+1,167

3,577*(Million Yen)

YoY

+158

4,744

112

Change in accounting
standard

1,593

3,151
(46)*
1Q FYE Mar. 2021

1Q FYE Mar. 2022

1Q FYE Mar. 2021

1Q FYE Mar. 2022

 The online delivery system for TV commercials*8 saw firm orders due to the expansion inmarket needs.

 Sales of high-speed cameras was sluggish in Japan, but rebounded in Asia and Europe.
 Sales of video and image processing LSI were strong, mainly in Japan, North America, andSouth Korea.

＊ 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 reclassification of the subsidiary into this segment.

12

Revision of the Consolidated Forecasts for FYE March 31, 2022
Revisions to ordinary income and net income mainly resulted from posting
non-operating income and extraordinary income.
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 ownersof parent

3,454

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%

320

3,100

2,780

3,100

0

0

Operating income before
goodwill amortization*1 Reason for increase in ordinary income: We plan to post 640 million yen in subsidy income in the second quarter due to debt relief on a loan
Pixelogic received as part of government COVID-19 assistance measures. (See the August 3, 2021 news release for further information.)*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 we plan topost a gain of 395 million yen on sales of investment securities in the second quarter. (See the July 12, 2021 news release for further
information.)13

Appendix.

14

(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 first quarter of FYE March 2022
therefore reflects the results for January 1 through March 31, 2021.

15

Consolidated Statements of Income
1Q FYE Mar. 2021

(Million Yen)

1Q FYE Mar. 2022

ActualActualYoY% YoY

Net sales

16,855

15,414(1,441)(8.6%)

Gross profit

3,357

4,386

1,028

30.6%

19.9%

28.5%

(1,868)

(255)

1,613

−

-

-

(1,942)

(285)

1,656

−

-

-

Extraordinary income

0

358

358

54281.3%

Extraordinary losses

90

4

(86)

(95.5%)Net income (loss) before income tax(2,031)

69

2,101

−

Net profit (loss) attributable to ownersof parent(1,213)

499

1,712

−

(Reference) Operating income (loss)
before goodwill amortization(1,590)

158

1,748

−

(Gross margin)

Operating loss
(Operating margin)

Ordinary loss
(Ordinary margin)

16

Consolidated Balance Sheets(Million Yen)

AssetsYoY

Main Factors(1,384) Cash and deposits: (1,109)

30,44029,056

Cash and deposits

6,908

5,799

Non-current assets

30,00531,679Goodwill

12,04812,727

Shares of subsidiaries and affiliates: (769)678 Deferred tax assets: +427

Total Assets

60,446

60,735289

Current liabilities

22,117

21,389

Short-term loans payable

7,402

5,904

Non-current liabilities

8,495

8,034

(461)

Long-term loans payable

5,384

4,977

(407)

Total Liabilities

30,61329,424(1,189)

Shareholders’ equity

27,14927,739590 (Reference) Equity capital

Accumulated othercomprehensive income

301

1,144

842 As of March 31, 2021: 27,450 (45.4%)

Stock acquisition rights

1111− As of June 30, 2021: 28,883 (47.6%)

2,370

2,416

45

Total Net Assets

29,83231,311

1,478

Total Liabilities and Net
Assets60,446

60,735289

Net Cash(5,878)(5,082)796 payable)

Current assets

Liabilities / Net Assets

As of Mar. 31, 2021 As of June 30, 2021

Non-controlling interests

Notes and accounts receivable-trade and contract
assets: (3,215)(1,109) Inventories: +2,413 Other: +526

1,674 Investment securities: +126

Notes and accounts payable-trade: (63)(727) Short-term loans payable: +1,498
Income taxes payable: (75)

(1,498) Advances received: (2,811)

Long-term loans payable: (407)(Cash and deposits －long-term and short-term loans

17Financial Results by Segment
1Q FYE Mar. 2021

(Million Yen)

Content Creation

Actual996

34.0%Operating loss

(469)

(30)

438

−

−

−

(469)

(29)

440

−

10,5198,687(1,831)(1,267)

(174)

1,092

−

−

−

(989)

229

1,218

−

3,577

3,151

(426)

(46)

103

149

−

−

3.3%

Operating income (loss)
before goodwill amortization

(46)

112

158

−

Net sales

(172)

(353)

(180)

−

Operating loss

(85)

(153)

(68)

−

Net sales

16,855

15,414(1,441)(8.6%)

Operating loss

(1,868)

(255)

1,613

−

Operating income (loss)
before goodwill amortization(1,590)

158

1,748

−

(Operating margin)

Operating loss*

(Operating margin)

Net sales

Consolidated total

Reference

% YoY

3,928

Operating income (loss)
before goodwill amortization

Others

YoY

2,932

Net sales

Imaging Systems &Solutions

ActualNet sales

Operating loss before
goodwill amortization

Production Services

1Q FYE Mar. 2022

Operating income(loss)(Operating margin)*(17.4%) +3,373 (+63.5%)* Change when impact
from the sale of SDI is
excluded.

(11.9%) +1,167 (+32.6%)* Change when impact
from change inaccounting standard is
excluded* The change in subsidiaries included in segments resulted in changes to net sales and operating income (loss) in the Production Services, Imaging Systems &Solutions, and Other business segments.

18

Year-end Dividend Forecast
Dividend policy
The Group considers the return of profits to shareholders as an important management objective.
Our basic policy is to distribute earnings in line with consolidated results. We target a consolidated
payout ratio of 30% and aim to maintain stable dividends and increase the level of dividends.
If any special factor, such as an extraordinary gain or loss, significantly impacts the net income ofa given fiscal year, our general policy is to take the special factor into consideration in determining
dividends, after consideration of all aspects, including provision of stable dividends to shareholders,
future business development, and retained earnings.

There is no change in the dividend forecast of five yen per share for FYEMarch 2022 disclosed on May 13, 2021 based on the policy stated above.

19

Notes*1 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.
*2 Global E2E services
Refers to an integrated end-to-end (E2E) service that covers the entire post-production process for featurefilms, 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.
*3 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 performanceof 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).
*4 Reorganization of the global business structure
As stated on Page 14 of “Financial Results Fiscal Year Ended March 31, 2021 (FYE Mar. 2021)” disclosed on
May 19, 2021, this refers to reorganization of the global business structure by adding Pixelogic as aconsolidated subsidiary, selling SDI, and establishing Imagica Entertainment Media Services.

20

Notes*5 Video streaming service providers
Refers to companies that provide video streaming services on a platform through the Internet.
*6 Distribution services
Refers to the encoding, authoring, and packaging necessary for distribution of video content on all types of
media, including movie theaters, video streaming through the Internet, and DVD/BD packages.
*7 Digital cinema services
Refers to services for DCP (Digital Cinema Package) production and DCP delivery for digital showing in movie
theaters, KDM distribution, and other services (KDM: An abbreviation of Key Delivery Message, the key forunlocking DCP encryption).
*8 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).

21

Contact for inquiries:
IMAGICA GROUP Inc.
Corporate Management Department
11th Floor, Uchisaiwaicho Tokyu Building 1-3-2 Uchisaiwaicho,
Chiyoda-ku, Tokyo 100-0011, Japan
TEL: +81-3-6741-5742

FAX: +81-3-6741-5752

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.

22