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 First Quarter of the fiscal year ending March 31, 2021
Company name:IMAGICA GROUP Inc.

Securities code:

6879

Filing date: August 4, 2020
Stock exchange listing: Tokyo 1st section
URL:

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

Representative:
Nobuo Fuse, President
Inquiries:
Masakazu Morita, Director and Managing Executive Officer
Quarterly report filing date (as planned):
August 4, 2020
Dividend payment date (as planned):－
Supplemental material of quarterly results:
Yes
Convening briefing of quarterly results:
No

Tel:+81-3-6741-5742(Millions of yen, rounded down)
1. Consolidated Financial Results for the First Quarter of the fiscal year ending March 31, 2021
(April 1, 2020 – June 30, 2020)(1) Consolidated Operating Results(Percentage represents change from the same period of the previous fiscal year.)Net sales

3 months ended June 30, 2020
3 months ended June 30, 2019
(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%

16,855(22.5)(1,868)－(1,942)－(1,213)－

21,747

12.3

(681)

－

(841)

－

586

－

1st quarter ended June 30, 2020: (1,413) millions of yen /－%1st quarter ended June 30, 2019: 32 millions of yen /－%Diluted earnings
per share ofcommon stock

Earnings per share ofcommon stock
Yen

Yen

3 months ended June 30, 2020

(27.41)－3 months ended June 30, 2019

13.32

－

(2) Consolidated Financial Position
Total assets

Net assets

Shareholders' equity
ratio to total assets

Millions of yen

Millions of yen%

As of June 30, 2020

57,922

25,796

40.9

As of March 31, 2020

62,15427,47840.3(Reference) Shareholders’ equity:

As of June 30, 2020: 23,701 millions of yen
As of March 31, 2020: 25,066 millions of yen

English Translation

2. Dividends

Dividend per share

1st quarter- end

2nd quarter- end

Year ended March 31,2020

－

0.00

－

5.00

5.00

Year ending March 31,2021

－
－

－

－

－

yen

Year ending March 31,2021(Forecast)(Note)

3rd quarter- end

yen

yen

Year-endyen

Annualyen

Changes in dividends forecast from the latest disclosed information: None

The financial forecast for the fiscal year ending March 2021 has not yet been determined because the impact from the spread of the novel coronavirus
makes it difficult to calculate a reasonable forecast. The financial forecast will be disclosed once it becomes possible to calculate it.

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
to calculate it.

*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: None
(3) 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 standards: None
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, 2020

44,741,467 shares

As of March 31, 2020

44,741,467 shares

468,341 shares

As of March 31, 2020

468,341 shares

44,273,126 shares

As of June 30, 201944,053,226 shares

2) Number of treasury stock at the end of fiscal year
As of June 30, 2020

3) Average number of shares
As of June 30, 2020

*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. For preconditions of the assumptions and special instructions regarding
the appropriate use of financial forecasts, please refer to “1. Qualitative Information on Results in the First Quarter, (3)Explanation of Consolidated Financial Forecast and Forward-looking Statements” on page 3 of the supplemental material.

English Translation

Table of Contents
Qualitative Information on Results in the First 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 to Quarterly Consolidated Statements .............................................................................................. 8(Notes regarding ongoing concern assumption) ............................................................................................... 8(Notes on the event of material changes in the amount of shareholders’ equity) ......................................................... 8(Segment information and others) ..............................................................................................................81

English Translation

1.

Qualitative Information on Results in the First Quarter(1) Explanation of operating results(Overview of the first quarter of consolidated fiscal year ending March 31, 2021)
During the first quarter of consolidated fiscal year ending March 31, 2021, a State of Emergency was declared to prevent the spreadof the novel coronavirus. The resulting restrictions on the various business activities of the IMAGICA GROUP were unavoidable andhad a substantial impact on operating results. The Group’s financial performance for the first quarter of fiscal year ending March 31,
2021 resulted in net sales of 16,855 million yen (down 22.5% year-on-year), an operating loss of 1,868 million yen (compared to an
operating loss of 681 million yen in the first quarter of the previous fiscal year), an ordinary loss of 1,942 million (compared to an
ordinary loss of 841 million yen in the first quarter of the previous fiscal year), and a net loss attributable to owners of the parent of
1,213 million yen (compared to a profit of 586 million yen in the first quarter of the previous fiscal year).

(Performance by business segment)
The financial results by business segment are as follows.
Please note that Production Services and Media Localization were integrated from the first quarter of consolidated fiscal year
ending March 31, 2021, thereby reducing the four reportable segments to three: Content Creation, Production Services, andImaging Systems & Solutions.
1)Content Creation

The financial performance of the Content Creation Business Segment in the first quarter of consolidated fiscal year ending March
31, 2021 resulted in net sales of 2,932 million yen (down 62.6% year-on-year) and an operating loss of 469 million yen (compared toan operating loss of 31 million yen in the first quarter of the previous fiscal year).
Showings of feature film productions of both anime and live action films were postponed to the second quarter and later, causing
the posting of net sales for multiple films to be delayed to a later fiscal period. The filming and recording of multiple TVcommercials and live music performances were also suspended or postponed. Conditions also caused changes in television
broadcasting schedules in addition to a decrease in the number of TV animation series produced. The above factors resulted in a
decline in sales and an expansion of the operating loss in the Content Creation Business Segment.
2)

Production Services

The financial performance of the Production Services Business Segment in the first quarter of consolidated fiscal year ending March
31, 2021 resulted in net sales of 10,578 million yen (down 4.3% year-on-year) and an operating loss of 1,369 million yen (compared
to an operating loss of 786 million yen in the first quarter of the previous fiscal year).
While this segment continued to secure orders for post-production services for TV programs, it saw a decline in volumes of postproduction for films and commercials, distribution of cinema and other digital content, shooting and archiving services.
Orders for international media services remained firm and benefited from continued efforts to reduce fixed costs for production.
In the human talent services, the Company maintained net sales from creative talent dispatch on par with the previous quarter byhaving creative talent transition to telecommuting and other measures. However, growth in talent referrals suffered due tovoluntary restraints on corporate hiring activities. Job fairs for students were also suspended and the operating rate in the
debugging business fell.
The above factors resulted in a decline in sales and an expansion of the operating loss in the Production Services Business Segment.
* Companies in the international media services area have a fiscal year-end of December 31. The financial performance for this area

during the first quarter of fiscal year ending March 31, 2021 therefore reflects the results for January 1 through March 31, 2020.
The impact from the novel coronavirus pandemic was therefore minimal.

2

English Translation

3)

Imaging Systems & Solutions

The financial performance of the Imaging Systems & Solutions Business Segment in the first quarter of consolidated fiscal year
ending March 31, 2021 resulted in net sales of 3,522 million yen (up 11.7% year-on-year) and operating income of 55 million yen(down 65.5% year-on-year).
Projects for broadcasting stations were delayed to the second quarter and later in the video systems business area. In the imaging
business area, sales of high-speed cameras slumped in Asia, Europe, and the U.S., and were delayed to the second quarter and laterin Japan. The mobile solutions area saw firm sales in contrast, due to increased domestic demand for mobile data communications.
Sales were also steady for video and image processing LSI for Taiwan and China. The above factors resulted in an increase in sales
and a decrease in profit in the Imaging Systems & Solutions Business Segment.
(2) Explanation of Financial Position(Assets)
Current assets decreased by 4,326 million yen (or 12.3%) from the end of the previous consolidated fiscal year to 30,969 million
yen. This was mainly due to a fall in notes and accounts receivable- trade.
Non-current assets increased by 94 million yen (or 0.4%) from the end of the previous consolidated fiscal year to 26,953 million
yen.
This increase was mainly due to an increase in stocks of deferred tax asset, which more than compensated for the decrease instocks of subsidiaries and affiliates and goodwill.
Consequently, total assets declined by 4,231 million yen (or 6.8%) from the end of the previous fiscal year to 57,922 million yen.
(Liabilities)
Current liabilities decreased by 2,340 million yen (9.1%) from the end of the previous consolidated fiscal year to 23,421 million yen.
This decrease was mainly due to a decrease in notes and accounts payable-trade, income taxes payable, and provision for bonuses,
which more than compensated for an increase in advance payments.
Non-current liabilities decreased by 208 million yen (2.3%) from the end of the previous consolidated fiscal year to 8,705 million
yen.
This decrease was mainly due to a decrease in long-term loans payable, which more than compensated for an increase in deferred
tax liabilities.
The above factors resulted in total liabilities of 32,126 million yen, a decrease of 2,549 million yen (7.4%) from the end of theprevious consolidated fiscal year.
(Net Assets)
Net assets declined by 1,682 million yen (6.1%) from the end of the previous consolidated fiscal year to 25,796 million yen.
This was mainly due to a decrease in retained earnings and non-controlling Interests.
(3) Explanation of consolidated forecasts and other forward-looking information
During the first quarter of consolidated fiscal year ending March 31, 2021, a State of Emergency was declared to prevent the spreadof the novel coronavirus. The resulting restrictions on the various business activities of the IMAGICA GROUP were unavoidable andhad a substantial impact on operating results. Although we have seen signs of a gradual resumption of business activities after theState of Emergency declaration was lifted in May, we expect it will take some time for the business environment to improve, due toconcerns over a second wave of infections, and other factors.
The financial forecast for the fiscal year ending March 2021 has not yet been determined because the conditions noted difficult to
calculate a reasonable forecast. The financial forecast will be disclosed once it becomes possible to calculate it.
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 bythese changes in the 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 otherinitiatives to transform our business model and create new businesses.

3English Translation

2.

Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Thousands of yen)March 31, 2020

June 30, 2020

AssetsCurrent assets
Cash and deposits

7,339,777

6,007,476

Notes and accounts receivable- trade16,609,098

11,506,579

Inventories

9,734,028

10,988,919

Other

1,665,660

2,518,822

Allowance for doubtful accounts(53,471)(52,793)

35,295,092

30,969,004

Buildings and structures

3,343,459

3,255,971

Machinery and equipment

133,153

125,887

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

1,705,819

1,705,819

Lease Assets

Land735,973

716,108

Construction in progress

341,285

390,546

Other

1,563,637

1,526,779

Total Property, plant and equipment

7,823,328

7,721,111

Intangible assets
Software1,242,332

1,192,016

Goodwill

3,167,870

3,038,312

Other

4,085,856

3,929,836

Total Intangible assets

8,496,059

8,160,164

Investment securities

2,296,170

2,526,989

Investments and other assets
Stocks of subsidiaries and affiliates

2,691,296

2,541,760

Long-term loans receivable

1,986,264

1,975,453

Lease and guarantee deposits

1,466,390

1,455,985

Deferred tax asset

1,852,835

2,342,540

Other375,336

356,422

Allowance for doubtful accounts(128,070)(126,455)

Total Investments and other assets

10,540,222

11,072,695

Total Non-current assets

26,859,610

26,953,972

62,154,703

57,922,976

Total assets

4English Translation(Thousands of yen)March 31, 2020

June 30, 2020

Liabilities
Current liabilities
Notes and accounts payable- trade

6,060,774

3,910,465

Short-term loans payable

5,004,318

4,690,144

Accounts payable

3,027,865

2,755,188

Income taxes payable

1,504,588

250,856

Advance payment

4,939,345

7,164,919

Provision for bonuses

1,245,383

712,766

Provision for directors compensations based on profit

106,568－

Provision for loss on order received

218,878

230,892

Other

3,654,716

3,706,319

Total current liabilities

25,762,438

23,421,552

Non-current liabilities
Long-term loans payable

5,510,940

5,120,757

Long-term accounts payable-other

174,097

148,018

Deferred tax liabilities

283,312423,035

Net defined benefit liabilities

1,233,649

1,263,432

Other

1,711,796

1,750,119

Total non-current liabilities

8,913,796

8,705,363

34,676,235

32,126,915

Total Liabilities
Net assets
Shareholders’ equity
Capital stock

3,306,002

3,306,002

Capital surplus

14,871,552

14,871,552

Retained earnings

7,730,081

6,295,384

Treasury stock(479,516)(479,516)

Total shareholders’ equity

25,428,120

23,993,424

Valuation difference on available-for-sale securities

187,009350,842

Revaluation reserve for land

(17,933)(17,933)

Foreign currency translation adjustment(529,312)(624,474)

Re-measurements of defined benefit plans(1,082)(833)(361,318)(292,398)

Accumulated other comprehensive income

Total accumulated other comprehensive income
Stock acquisition right

11,484

11,484Non-controlling Interests

2,400,180

2,083,550

Total Net assets

27,478,467

25,796,060

Total liabilities and Net assets

62,154,703

57,922,976

5

English Translation(2) Quarterly Consolidated Statements of Income and Statements of Comprehensive Income

Quarterly Consolidated Statements of Income
3 months ended
June 30, 2019

(Thousands of yen)

3 months ended
June 30, 2020

Net sales

21,747,863

16,855,763

Cost of sales

16,853,006

13,497,809

Gross profit

4,894,857

3,357,953

Selling, general and administrative expenses

5,576,601

5,226,879

Operating loss

(681,744)(1,868,925)

Interest income

12,09664,811Dividend income

13,37014,702－58,145Non-operating income

Foreign exchange gains
Other

59,11845,350Total non-operating income

84,584

183,009

Non-operating expenses
Interest expenses

83,544

79,383Equity in losses of affiliates

1,340

135,767

Foreign exchange losses

134,491－

Other

24,512

41,101

Total non-operating expenses

243,888

256,251

Ordinary loss

(841,047)(1,942,167)

1,647,502

659

7,750

－

1,655,252

659

－

263

Extraordinary income
Gain on sales of non-current assets
Other
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets

9,202

4,948

Impairment loss－

73,135

Other－

12,069Total extraordinary losses

9,202

90,418Net income (loss) before income tax

805,001(2,031,926)

Income taxes

700,540(621,680)

Net income (loss)

104,461(1,410,245)

Net loss attributable to non-controlling interests(482,219)(196,914)

Net income (loss) attributable to owners of the parent

586,680(1,213,331)

6

English Translation

Quarterly Consolidated Statements of Comprehensive Income
3 months ended
June 30, 2019

(Thousands of yen)

Net income (loss)

3 months ended
June 30, 2020

104,461(1,410,245)

Other comprehensive income
Valuation difference on available-for-sale securities(90,353)

163,833

Deferred gains or losses on hedges

1,346

－

Foreign currency translation adjustment

18,017(167,523)

Re-measurements of defined benefit plans

(881)

248

Total other comprehensive income(71,870)(3,441)

Comprehensive income

32,590(1,413,687)

Comprehensive income attributable to owners of parent

498,071(1,144,411)

Comprehensive income attributable to non-controllinginterests(465,480)(269,275)(Breakdown)

7English Translation(3) Notes to Quarterly Consolidated Statements(Notes regarding ongoing concern assumption)
No relevant matters to be noted.
(Notes on the event of material changes in the amount of shareholders’ equity)
No relevant matters to be noted.
(Segment information and others)
I.

[Segment Information]
For the 3 months ended June 30, 2019 (from April 1, 2019 to June 30, 2019)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)

7,797,163

10,851,764

3,096,478

21,745,406

32,957

197,235

58,091

288,284

7,830,120

11,049,000

3,154,570

22,033,690(31,313)(786,565)

160,982(656,896)

Adjustments(Note 1)

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

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers

2,457

21,747,863(288,284)

－

Total

(285,827)

21,747,863

Segment income (loss)(24,847)(681,744)

Notes:
1.
The segment income (loss) adjustment of (24,847) thousand yen consists of 1,612,944 thousand yen in incomes of holding companies(consolidated financial statement-submitting companies) and intersegment transaction eliminations of (1,637,791) thousand yen.
2.
The segment income (loss) adjustment is based on the operating loss item in the Quarterly Consolidated Statements of Income.

8English TranslationII.

For the 3 months ended June 30, 2020 (from April 1, 2020 to June 30, 2020)
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

2,932,062

10,476,851

3,444,040

16,852,955

30

102,046

78,731

180,808

Total

2,932,093

10,578,898

3,522,772

17,033,763

Segment income (loss)(469,437)(1,369,404)

55,473(1,783,368)

Adjustments(Note 1)

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

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers

2,808

16,855,763(180,808)

－

Total

(178,000)

16,855,763

Segment income (loss)(85,557)(1,868,925)

Notes:
1.
The segment income (loss) adjustment of (85,557) thousand yen consists of 1,493,674 thousand yen in incomes of holding companies(consolidated financial statement-submitting companies) and intersegment transaction eliminations of (1,579,231) thousand yen.
2.
The segment income (loss) adjustment is based on the operating loss item in the Quarterly Consolidated Statements of Income.

2.

Note concerning changes in reportable segments
The IMAGICA GROUP previously had four business segments: Content Creation, Production Services, Media Localization, and Imaging Systems &Solutions. The Production Services and Media Localization business segments were integrated from the first quarter of consolidated fiscal year
ending March 31, 2021, thereby reducing the number of reportable business segments to three: Content Creation, Production Services, andImaging Systems & Solutions.
The figures provided in “Information regarding net sales and profit (loss) by reportable segment” for the first quarter of the previous
consolidated fiscal year show the figures after the changes to the reportable segments were made.

9