English Translation

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 fiscal year ended March 31, 2020
Filing date: June 12, 2020
Company name:IMAGICA GROUP Inc.
Stock exchange listings: Tokyo 1st section
Securities code:
6879
URL: https://www.imagiagroup.co.jp/en/
Representative:
Nobuo Fuse, President
Tel:+81-3-6741-5742
Inquiries:
Masakazu Morita, Director and Managing Executive Officer
Scheduled date for ordinary general meeting of shareholders: June 30, 2020
Scheduled date for commencement of dividend payment:
June 30, 2020
Supplementary briefing material on annual results:
Yes
Holding of financial results briefing:
Yes(Japanese yen amounts of less than 1 million have been rounded down)

1. Consolidated Financial Results for the fiscal year ended March 31, 2020
(April 1, 2019 - March 31, 2020)(1) Consolidated Operating Results(Percentage represents change from the previous fiscal year.)Net sales

Net profit attributableto owners of the parent

Ordinary income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

94,090

4.3

1,351

45.9

416

(47.2)

664－

90,212(1.2)

926(61.8)

789(67.5)(2,010)－Fiscal year ended Mar.2020
Fiscal year ended Mar.2019(Note) Comprehensive income:Operating income

Fiscal year ended March 31, 2020：(537) millions of yen /(-)%
Fiscal year ended March 31, 2019：(3,768) millions of yen /(-)%

Net profit attributable to
Diluted net profit
owners of parent per attributable to owners of
shareparent per share

ReturnTotal asset ordinary Operating incomeon equity net
income ratio
ratio
income

yen

yen

%

%

%

Fiscal year ended Mar.2020

15.05

－

2.6

0.7

1.4

Fiscal year ended Mar.2019(45.55)

－

(7.4)

1.2

1.0

(Reference) Equity in net income of affiliates: Fiscal year ended March 31, 2020 : (597) millions of yen
Fiscal year ended March 31, 2019 : 20 millions of yen(2) Consolidated Financial Position
Total assets
As of March 31, 2020
As of March 31, 2019
(Reference) Shareholders’ equity:

Net assets

Shareholders' equity
ratio to total assets

Net assets per share of common
stock

%

yen

Millions of yen

Millions of yen

62,15427,47840.3

566.1964,72527,89738.9

570.90

As of March 31, 2020 : 25,066 millions of yen
As of March 31, 2019 : 25,150 millions of yen(3) Consolidated Cash Flows

Cash flow from operating Cash flow from investing
activities
activities

Cash flow from financing Cash and cash equivalents at theactivities
end of the period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Fiscal year ended Mar.2020

6,974(4,297)(1,291)

7,327

Fiscal year ended Mar.2019

117(1,420)(3,760)6,067

English Translation

2. Dividends
1stquarterend

yen

Dividend per share

Dividend
payout ratio(Consolidated)

Dividends to
Net Assets(Consolidated)

Millions of yen

%

%

5.00

220

－

0.8

221

33.2

0.9

2nd
quarterend

3rdquarterend

Year-end

yen

yen

yen

5.00

yen

AnnualFiscal year ended
Mar.2019

－

0.00

－

Fiscal year ended
Mar.2020

－

0.00

－

5.00

5.00

Fiscal year ending
Mar.2021(Forecast)

－

－

－

－

－

Total
dividends(Annual)－(Note) We have refrained from providing a forecast for the year-end dividends in fiscal year ending March 31, 2021
3. Consolidated earnings forecast for the fiscal year ending March 31, 2021
(April 1, 2020 - March 31, 2021)
The financial forecast for the fiscal year ending March 2021 has not yet been determined because the conditions noted
above make it difficult to calculate a reasonable forecast. The financial forecast will be disclosed once it becomes possible tocalculate it.

* Notes:(1) Changes in significant subsidiaries during this period (Changes in scope of consolidations resulting from change issubsidiaries): Yes(Name) IMAGICA TOTAL SERVICE(2) Changes in accounting policies, accounting estimates and retrospective
1) Changes in accounting policies based on revisions of accounting standards: None
2) Changes in accounting policies other than ones based on revisions of accounting standard: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
(3) 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 March 31, 2020

44,741,467 shares

As of March 31, 201944,531,567 shares

468,341 shares

As of March 31, 2019478,341 shares

44,133,005 shares

As of March 31, 201944,127,131 shares

2) Number of treasury stock at the end of fiscal year
As of March 31, 2020
3) Average number of shares
As of March 31, 2020

(Disclaimer)This document is a translation of the Japanese original. The Japanese original has been disclosed in Japan in accordance with Japanese
accounting standards and the Financial Instruments and Exchange Act. This document does not contain or constitute any guarantee andthe 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, the Japanese original is assumed to be correct.

English Translation

Table of Contents
1.

Overview of operating results .............................................................................................................................................................. 2(1)

Overview of operating results for fiscal year ended March 31, 2020 .......................................................................................... 2(2)

Overview of financial position for fiscal year ended March 31, 2020 ......................................................................................... 3(3)

Overview of cash flows for fiscal year ended March 31, 2020 .................................................................................................... 3(4)

Forecast of financial results for fiscal year ending March 31, 2021 ............................................................................................ 4

2.

Basic policy for the selection of accounting standards ......................................................................................................................... 53.

Consolidated Financial Statements ...................................................................................................................................................... 6(1)

Consolidated Balance Sheets ...................................................................................................................................................... 6(2)

Consolidated Statements of Income and Statements of Comprehensive Income ...................................................................... 8(3)

Consolidated Statements of Cash Flow Statement ................................................................................................................... 10(4)Notes to consolidated statements ............................................................................................................................................ 12(Segment information and others) ..................................................................................................................................................... 121

English Translation

1.

Overview of operating results(1) Overview of operating results for fiscal year ended March 31, 2020(i) Overview of the consolidated fiscal year ended March 31, 2020
The IMAGICA GROUP has formulated “Integration to 2021,” our new mid-term business strategy aimed at accelerating structural reform of the Groupand building a business portfolio that balances growth and profitability, in light of the growth opportunities and business challenges surrounding theGroup. Based on this new mid-term business strategy, the Group positioned fiscal year ended March 31, 2020 as the year to reinforce its earning
structure, adopting “Motivate - Integration to 2021 - on imaging” as its basic policy. Each business segment has engaged in efforts directed at its
individual areas of focus through this basic policy.
The Group’s financial performance for consolidated fiscal year ended March 31, 2020 resulted in net sales of 94,090 million yen (up 4.3% year-onyear), and operating income of 1,351 million yen (up 45.9% year-on-year). Ordinary income fell to 416 million yen (down 47.2% year-on-year) due tonon-operating expenses such as foreign exchange losses and equity in losses of affiliates. Net income attributable to owners of the parent was 664
million yen (compared to a net loss of 2,010 million yen in the previous fiscal year). This resulted from the recognition of an extraordinary gain on thetransfer of non-current assets, and recognition of other extraordinary income which more than covered for impairment losses posted under
extraordinary losses due to the collective assessment of the impact of the novel coronavirus on future results as well as the reversal of deferred tax
assets.

(ii) Performance by business segment
The financial results by business segment are as follows:
1) Content Creation
The financial performance of the Content Creation Business Segment in consolidated fiscal year ended March 31, 2020 resulted in net sales of 26,205
million yen (up 11.8% year-on-year) and an operating loss of 359 million yen (compared to operating income of 43 million yen in the previous fiscal
year).
In the first half of the fiscal year, the Content Creation Business Segment showed an increase in sales, owing to the expanded scale and increased
number of feature film productions of both anime and live action films compared with the same period of the previous year, alongside the positive
trend in the increased number of TV commercials and major live-music performances. The second half saw a decrease in the number of TV anime
series produced, but this segment achieved growth in full-year sales despite this.
At the operating income level, a valuation loss on investment in production committees for feature film production resulted in an operating loss.
2) Production Services
The financial performance of the Production Services Business Segment in consolidated fiscal year ended March 31, 2020 resulted in net sales of
26,557 million yen (down 3.5% year-on-year) and operating income of 431 million yen (down 36.3% year-on-year).
In the visual content post-production and E2E services*1 area, digital cinema services and post-production services for feature films and anime
performed well. This business segment was able to maintain net sales for the full year on par with last fiscal year despite the decrease in orders forsome filming and archiving services that accompanied the suspension and delay of sports and other events during the fourth quarter to prevent the
spread of the novel coronavirus. Operating income grew due to ongoing cost control efforts.
Both sales and operating income in human talent services declined compared to last fiscal year, owing to the sale of one consolidated subsidiary andinvestment in the expansion of the digital content business.
*1
E2E services: Refers to an integrated end-to-end (E2E) service that covers the entire post-editing process from localization (subtitling/dubbing)to distribution*2 of feature films, TV dramas, and other source videos.
*2
Distribution refers to a comprehensive service which includes the creation of data from the original version of the completed work, QC anddistribution tailored to the requirements of release/delivery format of visual contents (theater, VOD, DVD/BD, etc.), and the management of
the process and source materials.
3) Media Localization
Media Localization Business Segment in consolidated fiscal year ended March 31, 2020 resulted in net sales of 22,660 million yen (down 9.1% yearon-year) and an operating loss of 768 million yen (compared to an operating loss of 1,257 million yen in the previous fiscal year). Net sales declined
due to the slowdown in localization of episodic programs in Europe and the sale of two consolidated subsidiaries. The operating loss reduced despite
the decrease in revenue, however, thanks to a favorable mix of projects delivered and the steady efforts made to reduce fixed costs by improving
production efficiency.
SDI Media Group, Inc. continued to collaborate with Pixelogic Holding, LLC, a company which began to be consolidated with IMAGICA GROUP startingin April 2019 by equity method, to increase its business with new OTT media service providers. For the purpose of this fiscal year, the performancesof SDI Media Group, Inc. and its subsidiaries are consolidated for a period from January 1, 2019 through December 31, 2019, which is their fiscal yearend.

2English Translation

4) Imaging Systems & Solutions
The financial performance of the Imaging Systems and Solutions Business Segment in consolidated fiscal year ended March 31, 2020 resulted in net
sales of 20,551 million yen (up 28.9% year-on-year) and operating income of 2,714 million yen (up 43.1% year-on-year).
The video systems business area saw substantial profit growth as a result of smooth progress on the completion and delivery of various other projects,
in addition to a major project for a broadcasting station posted in the first half of the fiscal year. Sales from the online delivery system for TV
commercials also grew steadily along with expanding market needs. In the imaging business area, sales of new high-speed camera products in Europe
and the United States remained strong, contributing to a significant increase in the overall sales and profits of the Imaging Systems and Solutions
Business Segment.
* The business that had been described and reported as the “professional video equipment business” until fiscal year ended March 31, 2019 has
been renamed to the “video systems business area” in line with the Group’s current business structure.

(2) Overview of financial position for consolidated fiscal year ended March 31, 2020
1) Assets
Current assets declined by 4,824 million yen (12.0%) from the end of the previous consolidated fiscal year to 35,295 million yen. This decline wasmainly due to a decline in notes and accounts receivable-trade and inventories.
Non-current assets increased by 2,253 million yen (9.2%) from the end of the previous consolidated fiscal year to 26,859 million yen. This increase
was mainly due to an increase in stocks of subsidiaries and affiliates and long-term loans receivable, which more than compensated for the decreasein land and goodwill.
The above factors resulted in total assets of 62,154 million yen, a decline of 2,570 million yen (4%) from the end of the previous consolidated fiscal
year.
2) Liabilities
Current liabilities decreased by 950 million yen (3.6%) from the end of the previous consolidated fiscal year to 25,762 million yen. This decrease wasmainly due to a decrease in advance payments, accounts payable, and notes and accounts payable-trade, which more than compensated for an
increase in income taxes payable.
Non-current liabilities decreased by 1,201 million yen (11.9%) from the end of the previous consolidated fiscal year to 8,913 million yen. This was
mainly due to a decrease in long-term loans payable and deferred tax liabilities.
The above factors resulted in total liabilities of 34,676 million yen, a decrease of 2,151 million yen (5.8%) from the end of the previous consolidated
fiscal year.
3) Net assets
Net assets declined by 418 million yen (1.5%) from the end of the previous consolidated fiscal year to 27,478 million yen. The shareholders’ equity
ratio to total assets was 40.3%.

(3)

Overview of cash flows for fiscal year ended March 31, 2020
Cash and cash equivalents (hereafter, “cash”) on March 31, 2020 increased by 1,260 million yen (20.8%) from the end of the previous consolidated
fiscal year to 7,327 million yen. The breakdown of cash flows for fiscal year ended March 31, 2020 and the main factors behind changes in cash flows
are summarized below.
1) Cash flows from operating activities
Net cash provided by operating activities was 6,974 million yen (compared to 117 million yen in net cash provided in the previous fiscal year). This
mainly resulted from an increase in cash due to collection of notes and accounts receivable-trade, a decrease in inventories, and the net change in
consumption taxes payable or receivable, which more than compensated for a decrease in cash from a decrease in advance payments.
2) Cash flows from investing activities
Net cash used in investing activities was 4,297 million yen, an increase of 2,876 million yen (202.5%) from the end of the previous consolidated fiscal
year. This mainly resulted from cash expended for the acquisition of stocks of subsidiaries and affiliates and a decrease in cash from the provision of
long-term loans, which outstripped the cash inflow from the sale of property, plant, and equipment.
3) Cash flows from financing activities
Net cash used in financing activities was 1,291 million yen, a decrease of 2,468 million yen (65.7%) from the end of the previous consolidated fiscal
year. This resulted from cash expended for the redemption of long-term loans payable, which exceeded the cash inflow from long-term loans received.

3

English Translation(Reference) Trend of Cash Flow Indicators
Fiscal year ended
Mar.2016

Fiscal year ended
Mar. 2017

Fiscal year ended
Mar.2018

Fiscal year ended
Mar.2019

Fiscal year ended
Mar.2020

Shareholders’ equity ratio (%)

40.2

38.6

41.7

38.9

40.3

Shareholders’ equity ratio on a market pricebasis (%)

28.4

48.5

76.0

45.5

25.1

Ratio of net cash to interest-bearing liabilities(year)

3,430.8

371.7

358.2

10,625.2

162.4

5.9

26.3

26.0

0.4

21.4

Interest coverage ratio (times)*Shareholders’ equity ratio: Shareholders’ equity/Total assets
Shareholders’ equity ratio on a market price basis: Total market value of shares/Total assets Ratio of net cash to interest-bearing liabilities: Interestbearing liabilities/Operating cash flow
Interest coverage ratio: Operating cash flow/Interest payments
Notes:
1. These indicators are calculated based on consolidated financial results.
2. Total market value of stock is calculated by the following formula: closing price at period-end x outstanding shares at period-end (excluding
treasury stock).
3. Operating cash flow is based on net cash provided by operating activities reported on the consolidated statement of cash flow. Interestbearing liabilities include all liabilities reported on the consolidated balance sheet for which interest is paid. The amount of interest payments isthe amount of interest expenses paid reported on the consolidated statement of cash flow.

(4)

Forecast of financial results for fiscal year ending March 31, 2021
The IMAGICA GROUP has been pursuing to the following basic strategies raised in “Integration to 2021,” our new mid-term business strategy whichstarted in fiscal year ended March 31, 2020. We are accelerating structural reform of the Group and aim to build a business portfolio that balances
growth and profitability.
1
2
3
4
5

Develop a new global strategy.
Improve profitability of existing businesses.
Transition to a new business model.
Create and develop new businesses.
Develop human resources and promote workstyle reform.

The Group has entered a major period of transformation in our core imaging business due to an environment and social changes precipitated by the
recent spread of the novel coronavirus in addition to rapid advancement in technological innovation.
The Group is accelerating reforms aimed at accomplishing “Integration to 2021” by seizing the business opportunities presented by these changes inthe environment to take on the challenge of offering new types of entertainment through imaging, producing visual content that suits new lifestyles,
using imaging in non-entertainment fields such as healthcare and education, and other initiatives to transform our business model and create new
businesses.
The spread of the novel coronavirus will have a certain degree of impact on Group businesses, owing to the delay in delivery of productions causedby the delay in opening movie theaters and the postponement of post-production and E2E services due to the temporary suspension of TV commercial
production, among other factors. Moreover, while the Declaration of a State of Emergency has been rescinded nationwide in Japan, it will take sometime for the business environment to improve.
The financial forecast for the fiscal year ending March 2021 has not yet been determined because the conditions noted above make it difficult to
calculate a reasonable forecast. The financial forecast will be disclosed once it becomes possible to calculate it.
<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 withconsolidated 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 of a given fiscal year, our general policy is to take thespecial factor into consideration in determining dividends, after consideration of all aspects, including provision of stable dividends to shareholders,
future business development, and retained earnings.
We have refrained from providing a forecast for the year-end dividends in fiscal year ending March 31, 2021 and will disclose our forecast once it
becomes possible to calculate it.

4English Translation

2.

Basic policy for the selection of accounting standards

Considering comparability of consolidated financial statements over time, the Group will continue to use the Japanese accounting standards in theimmediate future.
Meanwhile, the Group plans to appropriately decide the adoption of the International Financial Reporting Standards (IFRS) after consideringdevelopments regarding accounting standards in Japan and abroad.

5

English Translation

3.

Consolidated Financial Statements(1) Consolidated Balance Sheets(Thousands of yen)March 31, 2019

March 31, 2020

AssetsCurrent assets
Cash and deposits

6,079,172

7,339,777

Notes and accounts receivable- trade

19,043,240

16,609,098

Inventories

11,352,166

9,734,028

Other

3,704,760

1,665,660

Allowance for doubtful accounts(60,006)(53,471)

40,119,332

35,295,092

Buildings and structures

3,502,684

3,343,459

Machinery and equipment

117,391

133,153

Total current assets
Non-current assets
Property, plant and equipment

Land2,944,295

1,705,819

Leased assets

800,677

735,973

Construction in progress

60,508341,285

Other

1,658,500

1,563,637

Total Property, plant and equipment

9,084,058

7,823,328

Software

1,189,223

1,242,332

Goodwill

3,769,751

3,167,870

Other

4,377,450

4,085,856

Total Intangible assets

9,336,425

8,496,059

Intangible assets

Investments and other assets
Investment securities

2,780,364

2,296,170

Stocks of subsidiaries and affiliates

306,705

2,691,296

Long-term loans receivable

182,554

1,986,264

Lease and guarantee deposits

1,177,433

1,466,390

Deferred tax asset

1,407,252

1,852,835

Other441,921375,336

Allowance for doubtful accounts(110,528)(128,070)

Total Investments and other assets

6,185,703

10,540,222

Total Non-current assets

24,606,187

26,859,610

64,725,520

62,154,703

Total assets

6English Translation(Thousands of yen)March 31, 2019

March 31, 2020

Liabilities
Current liabilities
Notes and accounts payable- trade

6,657,281

6,060,774

Short-term loans payable

5,375,309

5,004,318

Accounts payable

3,688,369

3,027,865

Income taxes payable

646,989

1,504,588

Advanced payment

5,735,832

4,939,345

Provision for bonuses

1,131,264

1,245,383

Provision for directors compensations based on profit

146,678

106,568

Provision for loss on order received

73,117

218,878

Other

3,257,658

3,654,716

Total current liabilities

26,712,502

25,762,438

Non-current liabilities
Long-term loans payable

6,169,835

5,510,940

Long-term accounts payable-other316,773

174,097

Deferred tax liabilities

493,520

283,312Net defined benefit liabilities

1,356,280

1,233,649

Other

1,779,206

1,711,796

Total non-current liabilities

10,115,616

8,913,796

Total Liabilities

36,828,119

34,676,235

Net assets
Shareholders’ equity
Capital stock

3,244,915

3,306,002

Capital surplus

14,816,170

14,871,552

Retained earnings

7,286,290

7,730,081

Treasury stock(489,754)(479,516)

Total shareholders’ equity

24,857,620

25,428,120

Valuation difference on available-for-sale securities

741,443

187,009

Deferred gains or losses on hedges(1,346)－

Revaluation reserve for land

(17,933)(17,933)

Foreign currency translation adjustment(442,700)(529,312)

Re-measurements of defined benefit plans

12,919(1,082)

Total accumulated other comprehensive income

292,382(361,318)

Accumulated other comprehensive income－

11,484Non-controlling Interests

2,747,397

2,400,180

Total Net assets

27,897,401

27,478,467

Total liabilities and Net assets

64,725,520

62,154,703

Stock acquisition right7

English Translation(2)

Consolidated Statements of Income and Statements of Comprehensive Income

Consolidated Statements of Income
Fiscal year ended
March 31,2019(Thousands of yen)

Fiscal year ended
March 31,2020

Net sales

90,212,331

94,090,704

Cost of sales

66,595,086

70,321,653

Gross profit

23,617,245

23,769,050

Selling, general and administrative expenses

22,690,582

22,417,329

926,663

1,351,721

Interest income

17,149189,665

Dividend income

55,95843,486

Rent income

63,102

71,181Equity in earnings of affiliates

20,157－

Foreign exchange gains

3,382

－

Other

125,553

84,241

Total non-operating income

285,303

388,574

328,027

337,478

Equity in losses of affiliates－

597,858

Foreign exchange losses－

193,201

Operating income
Non-operating income

Non-operating expenses
Interest expenses

Other

94,924

195,455

Total non-operating expenses

422,951

1,323,993

Ordinary income

789,014416,302

Gain on sales of non-current assets

21,8171,650,783

Gain on sales of investment securities

369,51030,063Extraordinary income

Other
Total extraordinary income

－

7,750

391,328

1,688,596

Extraordinary losses
Loss on sales of non-current assets

24,322－

Loss on retirement of non-current assets

31,53635,639Impairment loss
Goodwill amortization
Loss on valuation of stocks of subsidiaries and affiliates
Other

12,266220,351

2,290,323－

296,324－

221,260

102,250

Total extraordinary losses

2,876,033

358,240

Income before income taxes (loss)(1,695,690)

1,746,657

Income Taxes Current

1,535,509

2,190,709

Income Taxes Deferred (loss)(405,507)(553,874)

Income taxes

1,130,002

1,636,835

Net profit (loss)(2,825,692)

109,822Net loss attributable to non-controlling interests(815,631)(554,234)

Net profit (Loss) attributable to owners of parent(2,010,061)

664,0578

English Translation

Consolidated Statements of Comprehensive income
Fiscal year ended
March 31,2019(Thousands of yen)
Net profit (Loss)

Fiscal year ended
March 31,2020(2,825,692)

109,822(950,923)(555,045)

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

(958)

1,346

Foreign currency translation adjustment(387)(79,554)

Re-measurements of defined benefit plans
Total other comprehensive income
Comprehensive income

8,976(14,001)(943,292)(647,254)(3,768,984)(537,431)(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

9(2,958,800)

10,357(810,184)(547,788)

English Translation(3)

Consolidated Statements of Cash Flow Statement
Fiscal year ended
March 31,2019(Thousands of yen)

Fiscal year ended
March 31,2020

Cash flows from operating activities
Income before income taxes (loss)(1,695,690)

1,746,657

Depreciation and Amortization

2,887,997

2,777,709

Amortization of goodwill

3,220,942

576,956

Impairment loss

12,266220,351

Increase (decrease) in net defined benefit liabilities

110,165(114,517)

Increase (decrease) in allowance for doubtful accounts(4,073)

11,869

Increase (decrease) in provision for bonuses(382,966)

143,999

Interest and dividend income(73,107)(233,151)

Interest expenses

328,027

337,478

Equity in (earnings) losses of affiliates(20,157)

597,858

Loss (gain) on sales of investment securities(363,503)(16,412)

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

247,317(7,750)Loss (gain) on sales of non-current assets

34,040(1,615,143)

Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade(976,766)

2,248,159(3,399,043)

1,528,726

949,284(480,136)

Increase (decrease) in advanced payment

2,474,295(482,079)

Increase (decrease) in consumption taxes payable or receivable(879,589)

1,115,632

207,739(715,304)

Increase (decrease) in account payable
Other, net(1,107,520)

764,244

Subtotal

1,569,656

8,405,147

Interest and dividend income received

74,673

232,698(329,026)(325,682)(1,197,909)(1,337,915)

117,394

6,974,248

Payments of short-term loans receivable(609,326)(15,000)

Collection of short-term loans receivable－

583,446

Long-term loan advances－(1,791,800)

Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities

Purchase of property, plant and equipment(1,177,430)(1,468,069)

Proceeds from sales of property, plant and equipment

309,772

2,674,252

Purchase of intangible assets(653,733)(881,215)

Purchase of investments in affiliates(147,781)(2,975,955)

Proceeds from sales of investments in affiliates

401,551－

Other, net
Net cash used in investing activities

10456,246(423,124)(1,420,700)(4,297,465)

English Translation(Thousands of yen)

Fiscal year ended
March 31,2019

Fiscal year ended
March 31,2020

Cash flows from financing activities
Net increase (decrease) in short-term loans payable

471,552

245,688

Proceeds from long-term loans payable－

1,090,500

Repayment of long-term loans payable(2,490,726)(2,473,788)

Purchase of treasury stock(512,001)－

Cash dividends paid

(445,314)(220,266)

Purchase of investments in subsidiaries do not result in change inscope of consolidation(775,680)(7,828)Proceeds from share issuance to non-controlling shareholders

447,500

267,500

Repayments of finance lease obligations(422,351)(445,758)

Others, net
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents(33,026)

252,457(3,760,046)(1,291,495)(1,357)(124,518)

Net increase (decrease) in cash and cash equivalents(5,064,711)

1,260,768

Cash and cash equivalents at beginning of period

11,131,784

6,067,073

Cash and cash equivalents at end of period

6,067,073

7,327,842

11

English Translation(4) Notes to consolidated statements(Segment information and others)
I.

[Segment information]
Fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)
Information regarding net sales, profit (loss) and assets by reportable segment(Thousands of yen)
Production
Services

Content Creation
Net sales
Sales to externalcustomers
Inter-segment
sales or transfers
Total

Sub total

26,570,985

24,630,007

15,600,909

90,015,416

216,044958,784

286,387345,670

1,806,886

23,429,559

27,529,770

24,916,394

15,946,579

91,822,303

43,355

677,699(1,257,694)

1,896,925

1,360,286

16,036,756

11,484,445

17,872,463

12,057,441

57,451,107

Amount in thequarterly consolidated
statement of income(Note 2)Adjustments(Note 1)Other
Net sales
Sales to externalcustomers
Inter-segment
sales or transfers

Imaging Systems &Solutions

23,213,514

Segment profit (loss)
Segment Assets

Media Localization－

196,915

90,212,331－(1,806,886)

－

Total

－

(1,609,971)

90,212,331

Segment profit (loss)－(433,622)

926,663

Segment Assets－

7,274,413

64,725,520

Notes:
1.
Adjustments is as follows(1)
Sales to external customers is income from real estate and building management.
(2)
The Segment profit (loss) adjustment of (433,622) thousand yen consists of 776,274 thousand yen in profits of holding companies(consolidated financial statement-submitting companies) and intersegment transaction eliminations of (1,209,897) thousand yen.
(3)
The adjustment of 7,274,413 thousand yen to segment assets was calculated by subtracting the 9,642,431 thousand yen in eliminations
for intersegment transactions from the 16,916,844 thousand yen in total company assets that are not allocated by segment. Total
company assets mainly consist of cash and deposits and non-current assets such as investment securities of the holding company (thecompany that submits the consolidated financial statements).
2.
The segment profit (loss) adjustment is based on the operating income item in the quarterly consolidated statements of income.

12English Translation

II.

Fiscal year ended March 31, 2020 (from April 1, 2019 to March 31, 2020)
Information regarding net sales, profit (loss) and assets by reportable segment(Thousands of yen)
Production
Services

Content Creation
Net sales
Sales to externalcustomers
Inter-segment
sales or transfers

Media Localization

Imaging Systems &Solutions

Sub total

25,938,151

25,461,130

22,584,951

20,015,927

94,000,161

267,442

1,096,469

75,164535,816

1,974,892

Total

26,205,594

26,557,600

22,660,115

20,551,744

95,975,054

Segment profit (loss)(359,560)

431,944(768,691)

2,714,477

2,018,170

Segment Assets

14,781,406

11,722,662

16,649,222

10,906,017

54,059,308

Other(Note 1)
Net sales
Sales to externalcustomers
Inter-segment
sales or transfers
Total

Amount in thequarterly consolidated
statement of income(Note 3)Adjustments(Note 2)－90,542

94,090,704－(1,974,892)－－(1,884,350)

94,090,704

Segment profit (loss)(11,316)(655,131)

1,351,721

Segment Assets

3,879,439

4,215,955

62,154,703

Notes:
1.
The Other segment includes business segments that are not included in reportable segments and consists of businesses operated by overseas
consolidated subsidiaries and affiliates to which the equity method is applied.
2.
Adjustments is as follows(1)
Sales to external customers consists of revenue related to new business development and real estate rental income, among other sources.
(2)
The Segment profit (loss) adjustment of (655,131) thousand yen consists of 1,037,565 thousand yen in profits of holding companies(consolidated financial statement-submitting companies) and intersegment transaction eliminations of (1,692,697) thousand yen.
(3)
The adjustment of 4,215,955 thousand yen to segment assets was calculated by subtracting the 10,484,555 thousand yen in eliminations
for intersegment transactions from the 14,700,511 thousand yen in total company assets that are not allocated by segment. Total
company assets mainly consist of cash and deposits and non-current assets such as investment securities of the holding company (thecompany that submits the consolidated financial statements).
3.
The segment profit (loss) adjustment is based on the operating income item in the quarterly consolidated statements of income.

13