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 Third Quarter of the fiscal year ending March 31, 2023
Company name:IMAGICA GROUP Inc.

Securities code:

6879

Filing date: February 7, 2023
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):
February 7, 2023
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 Third Quarter of the fiscal year ending March 31, 2023
(April 1, 2022 – December 31, 2022)(1) Consolidated Operating Results(Percentage represents change from the same period of the previous fiscal year.)Net sales

9 months ended Dec. 31, 2022
9 months ended Dec. 31, 2021
(Note) Comprehensive income:Operating income

Net income attributableto owners of the parent

Ordinary income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

68,200

22.6

2,740

41.4

2,391

(2.3)

1,763

(28.3)

55,618

(5.2)

1,938

－

2,448

－

2,460

－

3rd quarter ended December 31, 2022: 4,635 millions of yen / 54.5 %3rd quarter ended December 31, 2021: 3,000 millions of yen /－%Diluted earnings
per share ofcommon stock

Earnings per share ofcommon stock
Yen

Yen

9 months ended Dec. 31, 2022

39.61

－

9 months ended Dec. 31, 2021

55.42

－

(2) Consolidated Financial Position
Total assets

As of Dec. 31, 2022
As of March 31, 2022
(Reference) Shareholders’ equity:

Net assets

Shareholders' equity
ratio to total assets

Millions of yen

Millions of yen%

84,78037,85941.2

73,38434,025

42.4

As of December 31, 2022: 34,964 millions of yen
As of March 31, 2022: 31,149 millions of yen

2. Dividends
Dividend per share
1st quarter- end

2nd quarter- end

3rd quarter- end

Year-end

Annual

yen

yen

yen

yen

yen

Year ended March 31,2022

－

0.00

－

15.00

15.00

Year ending March 31,2023

－

0.00

－
15.00

15.00

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

Changes 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)

3,800

39.2

85.59

(Note) Changes in earnings forecast from the latest disclosed information： Yes*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 December 31, 2022

44,741,467 shares

As of March 31, 2022

44,741,467 shares

As of March 31, 2022

345,938 shares

2) Number of treasury stock at the end of fiscal year
As of December 31, 2022

156,042 shares

3) Average number of shares
As of December 31, 2022

44,508,174 shares

As of December 31, 2021

44,391,917 shares*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 ............................................................................................................. 4(3)

Explanation of consolidated forecasts and other forward-looking information .......................................................... 4
Quarterly Consolidated Financial Statements .................................................................................................. 5

2.
(1)

Quarterly Consolidated Balance Sheets ..................................................................................................... 5(2)

Quarterly Consolidated Statements of Income and Statements of Comprehensive Income ............................................ 7(3)

Notes related to quarterly consolidated financial statements ............................................................................. 9(Notes regarding ongoing concern assumption) ............................................................................................... 9(Notes in the event of significant changes in shareholders' equity) .......................................................................... 9(The application of specific accounting of the consolidated quarterly financial statements) .............................................. 9(Changes in accounting policies) ................................................................................................................. 9(Segment information and others) ............................................................................................................ 10

1

1. Qualitative Information on Results in this Quarter(1) Explanation of operating results① Overview of the third 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.
During the third quarter of the consolidated fiscal year ending March 31 2023, net sales were 68,200 million yen (up 22.6% year
on year), operating income was 2,740 million yen (up 41.4% year on year), ordinary income was 2,391 million yen (down 2.3% year
on year), and net income attributable to owners of the parent was 1,763 million yen (down 28.3% year on year). Ordinary income
decreased due to the recording of 748 million yen in non-operating income, including subsidy income, in the previous year. The
decrease in net income attributable to owners of the parent was due to an increase in income taxes compared to the previous year.
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 third quarter of the consolidated fiscal year ending March 31, 2023, are based on the newclassification.
1) Content Creation businessNet sales for the third quarter of the consolidated fiscal year were 17,731 million yen (up 14.2% year on year) and operating
income was 285 million yen (up 21.7% year on year).
Net sales of feature films and dramas remained strong due to an increase in the number of projects from the previous fiscal year.
In the third quarter in particular, sales increased significantly due to the recording of a major project for a video streaming service
provider. In commercial production, the number of orders for projects has struggled to meet expectations from the third quarter.
The gross margin for animation productions is improving due to strict per-production profit management and the streamlining ofproduction. In the live entertainment business, orders were robust.
These developments resulted in an increase in sales and profit for the overall Content Creation business segment.

22) Production Services businessNet sales for the third quarter of the consolidated fiscal year were 39,645 million yen (up 33.1% year on year) and operating
income was 2,147 million yen (up 92.3% year on year).
In domestic E2E services*, post-production services for feature films, drama series, and feature animations remained strong.
Orders for digital cinema services also increased. In addition, net sales remained strong in the areas of encoding and localization,
including compression and conversion of video files, as we continued to secure orders from video streaming service providers.
In overseas E2E services, demand for localization for video streaming service providers remained strong, and foreign exchange
effects also contributed to a significant increase in sales.
In post-production services, etc. for TV programs and TV commercials, the number of orders for TV commercials has struggled tomeet expectations since the third quarter.
In game production and human talent services, etc., orders for game 3DCG production, debugging, and other services remained
strong.
As a result, net sales and income grew for the overall Production Services business.
* 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 theInternet.
* Overseas E2E services have a settlement date of December 31, so E2E earnings from January 1, 2022, to September 30, 2022,
are reflected in the results for the third quarter of the consolidated fiscal year ending March 31, 2023.
3) Imaging Systems & Solutions businessNet sales for the third quarter of the consolidated fiscal year were 12,635 million yen (up 7.2% year on year) and operating
income was 1,184 million yen (up 15.7% year on year).
In high-speed cameras, net sales increased year on year as the impact of the semiconductor shortage began to ease and productshipments began to recover. In Broadcast Imaging Systems & Solutions, net sales failed to grow due to low orders for projects. In
the Optical Measurement Business, net sales of both optical elements and optical measurement systems increased in line withrecovery in capital investments. Sales of online delivery of TV commercials remained strong, and sales of 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.

3(2) Explanation of financial position① Assets
Current assets increased by 3,098 million yen (7.5%) from the end of the previous consolidated fiscal year to 44,165 million yen.
This was mainly due to a decrease in cash and deposits and an increase in inventory assets, including work in process for
production.
Non-current assets increased by 8,297 million yen (25.7%) from the end of the previous consolidated fiscal year to 40,614
million yen.
This is mainly due to an increase in lease assets resulting from the start of application of U.S. lease accounting standards and anincrease in goodwill resulting from the foreign currency translation effect.
As a result, total assets increased by 11,395 million yen (15.5%) from the end of the previous consolidated fiscal year to 84,780
million yen.
② Liabilities
Current liabilities increased by 3,466 million yen (10.7%) from the end of the previous consolidated fiscal year to 35,745 million
yen.
This was primarily due to increases in contract liabilities and short-term loans payable, amid a decrease in notes and accounts
payable.
Non-current liabilities increased by 4,095 million yen (57.8%) from the end of the previous consolidated fiscal year to 11,175
million yen.
This was primarily due to an increase in lease obligations included under Non-current liabilities in others, net, amid a decrease inlong-term loans payable.
As a result, total liabilities increased by 7,561 million yen (19.2%) from the end of the previous consolidated fiscal year to 46,920
million yen.
③ Net assets
Net assets increased by 3,834 million yen (11.3%) from the fiscal year ended March 31, 2022 to 37,859 million yen.
This was primarily due to an increase in retained earnings and foreign currency translation adjustments.

(3) Explanation of consolidated forecasts and other forward-looking information
Revisions have been made to the full-year financial forecast figures for the fiscal year ending March 31, 2023 from the forecast
announced on May 13, 2022. For details, see the "Notice Concerning the Recording of Extraordinary Profit/Loss and Revision ofConsolidated Financial Forecast" released today (February 7, 2023).

4

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

December 31, 2022

AssetsCurrent assets
Cash and deposits

6,420,308

5,098,713

Notes and accounts receivable - trade, and contract assets

18,849,395

18,268,693

Inventories

13,613,658

17,749,330

Other

2,223,017

3,101,787

Allowance for doubtful accounts(39,570)(52,974)

41,066,808

44,165,551

5,448,367

5,412,989

832,609847,416

1,705,807

1,705,807

303,675

5,413,316

Other

1,878,964

2,751,787

Total Property, plant and equipment

10,169,425

16,131,317

11,482,801

13,253,339

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

2,596,822

Total Intangible assets

13,835,572

15,850,162

2,670,687

2,649,847

385,838

496,023

Lease and guarantee deposits

2,066,324

2,184,050

Deferred tax asset

Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates

3,051,529

3,087,596

Other

286,596377,613

Allowance for doubtful accounts(148,462)(162,041)

Total Investments and other assets

8,312,513

8,633,090

Total Non-current assets

32,317,511

40,614,570

73,384,320

84,780,121

Total assets5

(Thousands of yen)March 31, 2022

December 31, 2022

Liabilities
Current liabilities
Notes and accounts payable- trade

8,884,981

6,479,181

Short-term loans payable

4,170,485

5,706,579

Accounts payable

1,824,055

1,233,400

Income taxes payable

850,863

226,673

Contract liabilities

8,373,707

12,539,184

Provision for bonuses

1,594,260

585,525

3,717

700

584,309627,061

Provision for loss on order received
Provision for loss on litigation

41,401－Other

5,951,109

8,346,724

Total current liabilities

32,278,892

35,745,031

4,019,743

3,441,885

208,183

303,295

Asset retirement obligations

Non-current liabilities
Long-term loans payable
Long-term accounts payable-other
Deferred tax liabilities

396,815440,763

Net defined benefit liabilities

1,311,241

1,309,286

Asset retirement obligations

636,938

641,706

Other

507,067

5,038,518

7,079,990

11,175,455

39,358,882

46,920,487

Capital stock

3,306,002

3,306,002

Capital surplus

13,223,561

13,020,018

Retained earnings

13,785,809

14,881,363

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

Treasury stock(351,569)(158,530)

Total shareholders’ equity

29,963,804

31,048,854

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

610,074

559,164

Revaluation reserve for land

(17,933)(17,933)

Foreign currency translation adjustment

595,800

3,377,105

Re-measurements of defined benefit plans(2,483)(2,767)

1,185,458

3,915,569

Non-controlling Interests

2,876,174

2,895,210

Total Net assets

34,025,437

37,859,634

Total liabilities and Net assets

73,384,320

84,780,121

Total accumulated other comprehensive income6(2) Quarterly Consolidated Statements of Income and Statements of Comprehensive Income
Quarterly Consolidated Statements of Income
9 months ended
December 31, 2021

(Thousands of yen)

9 months ended
December 31, 2022

Net sales

55,618,324

68,200,306

Cost of sales

39,227,628

49,003,240

Gross profit

16,390,696

19,197,066

Selling, general and administrative expenses

14,452,390

16,456,158

Operating income

1,938,305

2,740,907

Interest income

814

1,433

Dividend income

22,24026,117

Rent income

49,131

50,483109－

Non-operating income

Equity in earnings of affiliates
Other

676,449

89,438

Total non-operating income

748,746

167,473

152,391

191,203－

6,572

17,101

160,660

Other

68,679158,478

Total non-operating expenses

238,172

516,915

Ordinary income

2,448,879

2,391,464

4,560

7,070

417,882

132,878

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

Extraordinary income
Gain on sales of non-current assets
Gain on sale of shares of subsidiaries and associates
Compensation for forced relocation－

416,055

Other

436,359

29,909Total extraordinary income

858,802585,913

Loss on retirement of non-current assets

64,692

3,785

Office transfer related expenses

477,468

61,862Extraordinary losses－

170,228

Other

17,803

19,156

Total extraordinary losses

559,965

255,032

Net income before income tax

Extra retirement payments

2,747,716

2,722,345

Income taxes

180,998

838,911Net income

2,566,717

1,883,433

Net income attributable to non-controlling interests
Net income attributable to owners of the parent

7

106,482

120,3212,460,235

1,763,112

Quarterly Consolidated Statements of Comprehensive Income
9 months ended
December 31, 2021

(Thousands of yen)
Net income

2,566,717

9 months ended
December 31, 2022
1,883,433

Other comprehensive income
Valuation difference on available-for-sale securities(436,099)(42,791)

Foreign currency translation adjustment

870,289

2,794,869

Re-measurements of defined benefit plans

(502)

(284)

433,687

2,751,793

3,000,405

4,635,227

Comprehensive income attributable to owners of parent

2,890,964

4,493,223

Comprehensive income attributable to non-controllinginterests

109,440

142,003

Total other comprehensive income
Comprehensive income(Breakdown)8(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 third 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 third 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.

9

(Segment information and others)
I.

[Segment Information]
For the 9 months ended December 31, 2021 (from April 1, 2021 to December 31, 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

15,399,522

28,903,97811,304,452

55,607,953

131,354872,984

477,810

1,482,149

15,530,876

29,776,962

11,782,263

57,090,102

234,869

1,116,667

1,023,675

2,375,213

Adjustments(Note 1)

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

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

10,371

55,618,324(1,482,149)－(1,471,778)

55,618,324(436,907)

1,938,305

Notes:
1.
The segment income adjustment of (436,907) thousand yen consists of income/loss related to the Company of 766,218 thousand
yen and elimination of inter-segment transactions of (1,203,125) thousand yen.
2.
Segment income is adjusted against operating income on the quarterly consolidated financial statements.

10

II.

For the 9 months ended December 31, 2022 (from April 1, 2022 to December 31, 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
Total
Segment income

17,627,671

38,473,727

12,087,135

68,188,534

104,249

1,171,442

547,877

1,823,569

17,731,921

39,645,169

12,635,012

70,012,103

285,810

2,147,007

1,184,033

3,616,851

Adjustments(Note 1)

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

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers
Total
Segment income

11,772

68,200,306(1,823,569)－(1,811,796)

68,200,306(875,944)

2,740,907

Notes:
1.
Adjustment of segment income of (875,944) thousand yen consists of income/loss related to the Company of 1,192,718 thousand
yen and elimination of inter-segment transactions of (2,068,662) thousand yen.
2.
Segment income is adjusted against operating income 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
EEX Inc.), which was previously included in "Adjustments," was reclassified to the Content Creation business segment because of
an increase in its importance.
"Information regarding net sales and income (loss) by reportable segment" for the third quarter of the previous fiscal year ispresented based on the new classification.

11