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 Second Quarter of the fiscal year ending March 31, 2022
Company name:IMAGICA GROUP Inc.

Securities code:

6879

Filing date: November 1, 2021
Stock exchange listing: Tokyo 1st section
URL:

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

Representative:
Nobuo Fuse, Representative Director, President
Inquiries:
Masakazu Morita, Director, Managing Executive Officer
Quarterly report filing date (as planned):
November 1, 2021
Dividend payment date (as planned):－
Supplemental material of quarterly results:
Yes
Convening briefing of quarterly results:
Yes

Tel:+81-3-5777-6295(Millions of yen, rounded down)
1. Consolidated Financial Results for the Second Quarter of the fiscal year ending March 31, 2022
(April 1, 2021 – September 30, 2021)(1) Consolidated Operating Results(Percentage represents change from the same period of the previous fiscal year.)Net sales

6 months ended Sept 30, 2021
6 months ended Sept 30, 2020

(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%

33,846

(5.6)

431

－

999

－

1,694

－

35,835(24.4)(2,628)－(2,928)－(1,952)－

2nd quarter ended September 30, 2021: 2,328 millions of yen /－%2nd quarter ended September 30, 2020: (2,435) millions of yen /－%Diluted earnings
per share ofcommon stock

Earnings per share ofcommon stock
Yen

Yen

6 months ended Sept 30, 2021

38.17

－

6 months ended Sept 30, 2020

(44.05)－(2) Consolidated Financial Position
Total assets

Net assets

Shareholders' equity
ratio to total assets

Millions of yen

Millions of yen%

As of Sept 30, 2021

64,53332,58346.2

As of March 31, 2021

60,446

29,832

45.4(Reference) Shareholders’ equity:

As of September 30, 2021: 29,817 millions of yen
As of March 31, 2021: 27,450 millions of yen

English Translation
2. Dividends
Dividend per share

1st quarter- end

2nd quarter- end

Year ended March 31,2021

－

0.00

Year ending March 31,2022

－

0.00

yen

3rd quarter- end

yenYear-end

yen

Year ending March 31,2022(Forecast)

Annual

yen

yen

－

0.00

0.00

－

5.00

5.00

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

3. Consolidated forecast for the fiscal year ending March 31, 2022
(April 1, 2021 - March 31, 2022)(Percentage represents change from the same period of the previous fiscal year.)Net sales

Fiscal year ending Mar.2022(Note)

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

75,000(13.5)

1,500

－

2,000

－

2,000

(42.1)

45.06

Changes in earnings forecast from the latest disclosed information： None

*Notes:(1) Material changes in subsidiaries during this period (changes in scope of consolidations resulting from change insubsidiaries): Yes(2) The application of specific accounting of the consolidated quarterly financial statements: No(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: Yes
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 September 30, 2021

44,741,467 shares

As of March 31, 2021

44,741,467 shares

As of March 31, 2021

353,231 shares

2) Number of treasury stock at the end of fiscal year
As of September 30, 2021

345,844 shares

3) Average number of shares
As of September 30, 2021

44,390,071 shares

As of September 30, 2020

44,312,754 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. 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 Second Quarter, (3)Explanation of Consolidated Forecasts and Other Forward-looking Information” on page 4 of the supplemental material.

English Translation

Table of Contents
Qualitative Information on Results in the Second 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 to Quarterly Consolidated Statements .............................................................................................. 9(Notes regarding ongoing concern assumption) ............................................................................................... 9(Notes concerning material changes in the amount of shareholders’ equity) .............................................................. 9(Changes in accounting policies, etc.)...........................................................................................................9(Segment information and others) ............................................................................................................ 111

English Translation

1.

Qualitative Information on Results in the Second Quarter(1) Explanation of Operating Results(Overview of the second quarter of consolidated fiscal year ending March 31, 2022)
The business environment surrounding the IMAGICA GROUP saw changes in the social environment due to the novel coronavirus (COVID-19)
pandemic, in addition to rapid technological innovations. These factors are bringing about many changes in our imaging-related businesses such as
the emergence of the online live market and video streaming market. The IMAGICA GROUP formulated G-EST 2025, our new mid-term plan, basedon our view that these changes present growth opportunities. We have positioned fiscal year ending March 31, 2022, the initial year of this plan, as
the year in which we will build the foundation for transforming into a highly profitable business, and are pursuing initiatives aimed at achieving theplan in each business segment.
The Group’s financial performance for the first half of consolidated fiscal year ending March 31, 2022 resulted in net sales of 33,846 million yen(down 5.6% year-on-year), an operating income of 431 million yen (compared to an operating loss of 2,628 million yen in the first half of theprevious fiscal year), and an ordinary income of 999 million yen by posting non-operating income including subsidy income of 631 million yen(compared to an ordinary loss of 2,928 million yen in the first half of the previous fiscal year). Net profit attributable to owners of the parent was
1,694 million yen by posting extraordinary income (compared to a loss of 1,952 million yen in the first half of the previous fiscal year).
The decline in net sales resulted from the implementation of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, revised on
March 31, 2020; hereafter, the “Revenue Recognition Accounting Standard”) and related guidance from the beginning of the first quarter ofconsolidated fiscal year ending March 31, 2022, and the sales of all shares held in SDI Media Group, Inc. at the end of last fiscal year, removing itfrom consolidation.
See “(Changes in accounting policies, etc.),” and “(Segment information and others), [Segment Information], 2. Notes concerning changes inreportable segments” under “2. Quarterly Consolidated Financial Statements, (3) Notes to Quarterly Consolidated Statements” for further details on
the impact of the implementation of the Revenue Recognition Accounting Standard and related guidance on the financial status and operating
results of the IMAGICA GROUP.

(Performance by business segment)
The financial results by business segment are as follows.
One subsidiary (IMAGICA LIVE Corp.), which was previously included in the Production Services business segment, was reclassified to the Imagining
Systems & Solutions business segment from the first quarter of consolidated fiscal year ending March 31, 2022. The consolidated fiscal year
comparisons for the first quarter are based on the new classification.
1) Content Creation
The financial performance of the Content Creation business segment in the first half of consolidated fiscal year ending March 31, 2022 resulted in
net sales of 8,833 million yen (up 22.9% year-on-year) and an operating income of 13 million yen (compared to an operating loss of 712 million yen
in the first half of the previous fiscal year).
For feature films, TV dramas, TV animation and other productions, the number of orders received was in line with the forecast and sales were
healthy. For TV commercials and other advertising, the number of orders received kept recovering, and orders were also strong for online streamingof live music performances and shooting music videos.
The above factors resulted in an increase in both sales and operating income in the Content Creation business segment.

2

English Translation

2) Production Services
The financial performance of the Production Services business segment in the first half of consolidated fiscal year ending March 31, 2022 resulted in
net sales of 18,458 million yen (down 9.0% year-on-year) and an operating income of 202 million yen (compared to an operating loss of 2,172
million yen in the first half of the previous fiscal year).
Domestic E2E services*1 saw growth in the number of productions delivered to video streaming service providers, due in part to collaboration with
Pixelogic Holdings LLC, which became a consolidated subsidiary last fiscal year. Orders for video file compression, conversion, and other encoding
and localization services also grew. In addition, the performance of services for digital cinemas is recovering thanks to the reopening of movie
theaters. Furthermore, we received orders for post-production services for feature films, drama series, animation, large-scale live music
performances, etc., so sales were healthy.
International E2E services, including Pixelogic Holdings LLC, saw substantial sales growth due to firm orders for localization for video streaming
service providers, despite a decrease in orders for digital cinema services, owing to the postponement of the release of feature films in Europe andthe U.S.
In post-production services for TV programs and TV commercials, etc.*2, orders for services for large-scale events of TV programs contributed, andsales grew from the previous year. Thanks to the recovery of the advertisement market, the sales of services for TV commercials remained
favorable, and the demand for the online delivery system grew.
In game production, human talent services, etc.*3, the situation of corporate recruitment activities in the field of the creative talent dispatch andreferral business remained harsh, but the number of orders for game production-related services, such as 3DCG production and debugging, washealthy.
Sales for the Production Services business segment as a whole declined due to the sale of all shares held in SDI Media Group, Inc. at the end of last
fiscal year, removing the subsidiary from consolidation. However, the structural reform completed last fiscal year led to improvement in gross profit
and the operating income.
*1 E2E 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 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.
*2 As part of the restructuring of the Production Services business, the description of services collectively called “media and post-production
services” up to last fiscal year has been revised to “E2E services” and “post-production services for TV programs and TV commercials, etc.”*3 The names of “human talent services” and “digital content” used up to last fiscal year have been revised to “game production, human talent
services, etc.”* Companies in the international E2E services area have a fiscal year-end of December 31. The financial performance for this area during the second
quarter of fiscal year ending March 31, 2022 therefore reflects the results for January 1 through June 30, 2021.
3) Imaging Systems & Solutions
The financial performance of the Imaging Systems & Solutions business segment in the first half of consolidated fiscal year ending March 31, 2022
resulted in net sales of 7,321 million yen (down 18.1% year-on-year) and an operating income of 486 million yen (down 4.1% year-on-year).
High-speed cameras saw a rebound in demand in Asia, Europe, and the U.S., despite continued sluggish sales in Japan. Projects for broadcastingstations were still sluggish, due to the decline in the number of transactions, the postponement of order placement in the third and fourth quarters,
etc. The online delivery system for TV commercials continued to see strong sales due to expansion in market needs, while video and image
processing LSI saw strong domestic and overseas sales.
Moreover, IMAGICA LIVE Corp. was included in the Imaging Systems & Solutions business in the first quarter of consolidated fiscal year ending
March 31, 2022 due to segment reclassification. It achieved growth in both orders and sales of live sports relay and streaming services for archived
videos.
The full amount of compensation received from customers for sale of mobile communication lines was previously recognized as revenue. However,
the implementation of the Revenue Recognition Accounting Standard and related guidance has resulted in a decrease in net sales due to the change
in the method of recognizing revenue for the net amount after amounts paid to suppliers are deducted from the total amount of the sale.
The above factors resulted in a decrease in sales and profit in the Imaging Systems & Solutions business segment.

3

English Translation(2) Explanation of Financial Position(Assets)
Current assets increased by 2,845 million yen (9.3%) from the end of the previous consolidated fiscal year to 33,286 million yen. This was mainly due
to a decrease in notes and accounts receivable-trade, and contract assets, while inventories increased.
Non-current assets increased by 1,242 million yen (4.1%) from the end of the previous consolidated fiscal year to 31,247 million yen. This was
mainly due to a decrease in stocks of subsidiaries and affiliates, while construction in progress, lease and guarantee deposits and deferred tax asset
increased.
Consequently, total assets increased by 4,087 million yen (6.8%) from the end of the previous consolidated fiscal year to 64,533 million yen.
(Liabilities Statement)
Current liabilities increased by 2,079 million yen (9.4%) from the end of the previous consolidated fiscal year to 24,196 million yen. This was mainly
due to a decrease in short-term loans payable, while contract liabilities and notes and accounts payable - trade increased.
Non-current liabilities decreased by 742 million yen (8.7%) from the end of the previous consolidated fiscal year to 7,753 million yen. This was
mainly due to a decrease in long-term loans payable.
The above factors resulted in total liabilities of 31,950 million yen, an increase of 1,337 million yen (4.4%) from the end of the previous consolidated
fiscal year.
(Net Assets)
Net assets increased by 2,750 million yen (9.2%) from the end of the previous consolidated fiscal year to 32,583 million yen. This was mainly due toan increase in retained earnings and foreign currency translation adjustment.

(3) Explanation of Consolidated Forecasts and Other Forward-looking Information
Regarding the full-year forecasts for fiscal year ending March 31, 2022, there is no change to the revised earnings forecast announced on August 3,
2021. When calculating annual operating income, the amortization of goodwill, etc.* amounting to about 1.6 billion yen was included in expenses.
*Amortization of goodwill, etc. = Goodwill amortization + amortization of intangible fixed assets in the wake of M&A

4

English Translation

2.

Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Thousands of yen)

September 30, 2021

March 31, 2021

AssetsCurrent assets
Cash and deposits

6,908,657

6,414,020

Notes and accounts receivable- trade

15,159,083－－

13,685,840

Inventories

6,499,812

11,318,195

Other

1,918,018

1,915,843

Allowance for doubtful accounts(44,735)(47,628)

30,440,836

33,286,272

Buildings and structures

3,065,365

2,950,179

Machinery and equipment

85,810357,817

1,705,819

1,705,819

Notes and accounts receivable - trade, and contract assets

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

Land
Lease Assets

475,187

389,131

Construction in progress

526,880

1,320,463

Other

1,365,805

1,431,023

Total Property, plant and equipment

7,224,868

8,154,435

12,048,747

12,363,532

Intangible assets
Goodwill
Other2,464,367

2,711,436

Total Intangible assets

14,513,115

15,074,969

Investment securities

3,163,483

2,612,777

Stocks of subsidiaries and affiliates

1,095,950

459,556

Lease and guarantee deposits

1,641,911

2,179,863

Deferred tax asset

2,154,662

2,579,181

Other

328,808

302,479

Allowance for doubtful accounts(117,446)(115,761)

Investments and other assets

Total Investments and other assets

8,267,369

8,018,095

Total Non-current assets

30,005,354

31,247,500

60,446,190

64,533,773

Total assets

5English Translation(Thousands of yen)March 31, 2021

September 30, 2021

Liabilities
Current liabilities
Notes and accounts payable- trade5,416,309

6,902,229

Short-term loans payable

7,402,726

5,205,534

Accounts payable

1,212,857

1,152,178

Income taxes payable

211,609265,396

Advances received

2,811,112－

Contract liabilities－

5,560,091

977,286

920,542

Provision for bonuses
Provision for loss on order received

79,660－

Provision for loss on litigation

531,408

536,462

Other

3,474,389

3,654,318

Total current liabilities

22,117,359

24,196,753

5,384,905

4,590,498

Long-term accounts payable-other

148,018

210,810Net defined benefit liabilities

550,324

513,146

1,219,724

1,268,064

Asset retirement obligations

627,722655,993Other

565,200

515,005

8,495,895

7,753,519

30,613,255

31,950,273

Non-current liabilities
Long-term loans payable

Deferred tax liabilities

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

3,306,002

3,306,002

Capital surplus

13,238,832

13,230,722

Retained earnings

10,966,151

12,750,433

Treasury stock(361,659)(351,496)

Total shareholders’ equity

27,149,326

28,935,663

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

880,107699,430

Revaluation reserve for land

(17,933)(17,933)

Foreign currency translation adjustment(559,947)

201,516

Re-measurements of defined benefit plans
Total accumulated other comprehensive income
Stock acquisition right(688)(1,023)

301,538

881,989

11,484

11,484Non-controlling Interests

2,370,585

2,754,362

Total Net assets

29,832,935

32,583,500

Total liabilities and Net assets

60,446,190

64,533,773

6

English Translation(2) Quarterly Consolidated Statements of Income and Statements of Comprehensive Income
Quarterly Consolidated Statements of Income
6 months ended
September 30, 2020

(Thousands of yen)

6 months ended
September 30, 2021

Net sales

35,835,183

33,846,057

Cost of sales

28,213,928

23,987,688

Gross profit

7,621,255

9,858,368

Selling, general and administrative expenses

10,249,792

9,426,616

Operating income (loss)(2,628,536)

431,751

Interest income

134,751

558

Dividend income

15,40814,041

Subsidy income

39,461

631,626

Non-operating income

－

1,196

Foreign exchange gains

12,017

5,669

Other

63,696

62,179Total non-operating income

265,336715,273

Interest expenses

152,274

101,087

Equity in earnings of affiliates

Non-operating expenses
Equity in losses of affiliates

339,691－

Other

73,494

46,422

Total non-operating expenses

565,460

147,510(2,928,661)

999,514

Gain on sales of non-current assets

1,194

813

Gain on sales of investment securities－

414,702

Gain on sale of shares of subsidiaries and associates－

357,963

121,825－

Ordinary income (loss)
Extraordinary income

Compensation for forced relocation
Other
Total extraordinary income

216

20,081

123,236

793,560

Extraordinary losses
263－

Loss on retirement of non-current assets

29,036

10,946

Office transfer related expenses

5,296

224,131

Loss on sales of non-current assets

Other84,142

2,131

Total extraordinary losses

118,738

237,210(2,924,162)

1,555,865

Net income (loss) before income tax
Income taxes
Net income (loss)
Net income (loss) attributable to non-controlling interests
Net income (loss) attributable to owners of the parent

7(436,957)(191,788)(2,487,205)

1,747,654(535,049)

53,311(1,952,155)

1,694,342

English Translation

Quarterly Consolidated Statements of Comprehensive Income
6 months ended
September 30, 2020

(Thousands of yen)

6 months ended
September 30, 2021

(2,487,205)

1,747,654

Valuation difference on available-for-sale securities

219,140(178,691)

Deferred gains or losses on hedges(5,897)－(161,240)

759,64455(335)

52,058580,617(2,435,146)

2,328,271

Comprehensive income attributable to owners of parent(1,825,815)

2,274,794

Comprehensive income attributable to non-controllinginterests(609,330)

53,477

Net income (loss)
Other comprehensive income

Foreign currency translation adjustment
Re-measurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)

8English Translation(3) Notes to Quarterly Consolidated Statements(Notes regarding ongoing concern assumption)
No relevant matters to be noted.
(Notes concerning material changes in the amount of shareholders’ equity)
No relevant matters to be noted.
(Changes in accounting policies, etc.)(Changes in accounting policies)(Changes accompanying implementation of the Accounting Standard for Revenue Recognition and related guidance)
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, revised March 31, 2020; hereafter, the “Revenue
Recognition Accounting Standard”) and related guidance were implemented from the beginning of the first quarter ofconsolidated fiscal year ending March 31, 2022. Under this standard, the amount the company expects to receive in
exchange for goods and services is recognized as revenue when control over the promised goods or services is transferred tothe customer. The main changes from implementation of the Revenue Recognition Accounting Standard and related
guidance are as follows:(1) Recognition of revenue on product export sales
For export sales of imaging equipment, etc., revenue was previously recognized when the goods cleared customs. Thishas changed to the method of recognizing revenue once control over the asset is deemed to have transferred to thecustomer, according to the transaction terms.
(2) Recognition of revenue on transactions involving multiple fulfillment obligations in a single contract
In the Content Creation business, revenue on transactions involving multiple fulfillment obligations in a single contract
was previously recognized once all obligations were completely fulfilled in cases where the obligations were highlyinterrelated. For transactions in which the customer performs an inspection for each of the fulfillment obligations, thishas changed to the method of recognizing revenue for each fulfilled obligation once the customer has performed theinspection and deemed each individual obligation fulfilled.
(3) Recognition of revenue on agency transactions
For mobile communication lines, revenue was previously recognized on the total amount of the sale received from thecustomer. This has changed to the method of recognizing revenue for the net amount after deducting payments to
suppliers from the full amount. This resulted from determining the company’s role (provided directly or as an agent) inproviding the goods or services to the customer.
The implementation of the Revenue Recognition Accounting Standard and related guidance follows the transitional
treatment in the exception clause of Paragraph 84 of the Revenue Recognition Accounting Standard. The new accounting
standard was applied to the balance of retained earnings from the beginning of the period and retained earnings were
adjusted for the cumulative impact assuming application of the new accounting standard retroactively before the beginningof the accounting period for the first quarter of consolidated fiscal year ending March 31, 2022.
However, we have applied the method specified in Paragraph 86 of the Revenue Recognition Accounting Standard and have
not retroactively applied the new accounting policy to contracts for which nearly all of the revenue recognized prior to thebeginning of the first quarter of consolidated fiscal year ending March 31, 2022, was handled according to the previous
accounting method.
These changes resulted in a decrease in retained earnings at the beginning of the first quarter of consolidated fiscal year
ending March 31, 2022 of 9,934 thousand yen. It also resulted in decreases of 3,110,514 thousand yen in net sales and3,114,572 thousand yen in cost of sales for the second quarter of the fiscal year ending March 31, 2022. The operating
income, ordinary income and net income before income tax increased by 4,058 thousand yen, respectively.
Due to implementation of the Revenue Recognition Accounting Standard and related guidance, “Notes and accounts
receivable-trade,” which was presented in “Advances received” in the Quarterly Consolidated Balance Sheets for theprevious fiscal year, is included in “Notes and accounts receivable-trade, and contract assets” from the first quarter ofconsolidated fiscal year ending March 31, 2022. Likewise, “Advance received,” which was presented in “Current liabilities,” isincluded “Contract liabilities” from the first quarter of consolidated fiscal year ending March 31, 2022. In accordance withthe transitional treatment specified in Paragraph 89-2 of the Revenue Recognition Accounting Standard, the new method ofpresentation has not been retroactively applied to the previous consolidated fiscal year.

9English Translation(Changes accompanying implementation of the Accounting Standard for Fair Value Measurement)
The Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019; hereafter, “Fair Value AccountingStandard”) and related guidance were implemented from the beginning of the first quarter of consolidated fiscal year ending
March 31, 2022. In accordance with the transitional treatment specified in Paragraph 19 of the Fair Value AccountingStandard and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the
new accounting policy specified in the Fair Value Accounting Standard and related standards were applied prospectively. Thechange did not have any impact on the quarterly consolidated financial statements.
(Changes in accounting policies that are difficult to differentiate from changes in accounting estimates)
The IMAGICA GROUP and its domestic subsidiaries have mainly used the declining balance method of depreciation forproperty, plant, and equipment (excluding lease assets). We have changed this to the straight-line depreciation method fromthe first quarter of consolidated fiscal year ending March 31, 2022.
In light of the change from an era in which state-of-the-art equipment functions and editing services were strengths to an
era in which we are called upon to perform an integrated range of complex work in a secure environment for worldwide
simultaneous release, the IMAGICA GROUP response up to fiscal year ended March 31, 2021 included revising theinternational strategy, undertaking structural reform and Group business reorganization, using fixed assets effectively, andinvigorating creative talent by establishing an office environment that accommodates new workstyles.
We took advantage of the opportunity presented by implementing the measures mentioned above to consider the status ofproperty, plant, and equipment use. This revealed that the risk of rapid technological and economic obsolescence is now
lower and property, plant, and equipment can be expected to operate stably over the remaining useful life, based on our
New Mid-Term Plan "G-EST 2025.” We therefore decided that the equal allocation of costs under the straight-line
depreciation method is a more reasonable reflection of the actual usage of property, plant, and equipment.
Compared to the previous method, this change resulted in an increase of 70,035 thousand yen in the operating income,ordinary income and net income before income tax, respectively, for the first half of consolidated fiscal year ending March
31, 2022.

10

English Translation(Segment information and others)
I.

[Segment Information]
For the 6 months ended September 30, 2020 (from April 1, 2020 to September 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

7,165,162

19,933,289

8,730,958

35,829,410

25,170342,810206,364

574,344

Total

7,190,332

20,276,099

8,937,323

36,403,755

Segment income (loss)(712,178)(2,172,271)

506,900(2,377,550)

Adjustments(Note 1)

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

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers

5,773

35,835,183(574,344)

－

Total

(568,571)

35,835,183

Segment income (loss)(250,986)(2,628,536)

Notes:
1.
The segment income (loss) adjustment of (250,986) thousand yen consists of 1,338,912 thousand yen in income of the Company andintersegment transaction eliminations of (1,589,898) thousand yen.
2.
The segment income (loss) adjustment is based on the operating loss item in the Quarterly Consolidated Statements of Income.

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English TranslationII.

For the 6 months ended September 30, 2021 (from April 1, 2021 to September 30, 2021)
1.

Information regarding net sales and profit (loss) by reportable segment(Thousands of yen)Content Creation

Production
Services

Imaging Systems &Solutions

Sub total

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

8,745,027

17,931,664

6,978,803

33,655,496

88,505

526,427

342,277

957,2098,833,532

18,458,092

7,321,080

34,612,705

13,832

202,234

486,246

702,313

Adjustments(Note 1)

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

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers

190,561

33,846,057(957,209)

－

Total

(766,648)

33,846,057

Segment income(270,561)

431,751

Notes:
1.
The segment income adjustment of (270,561) thousand yen consists of 844,751 thousand yen in income of the Company and intersegment
transaction eliminations of (1,115,313) thousand yen.
2.
The segment income adjustment is based on the operating income item in the Quarterly Consolidated Statements of Income.

2.

Notes concerning changes in reportable segments(Changes in reportable segments)
One consolidated subsidiary (IMAGICA LIVE Corp.) was previously included in the Production Services segment. It has been reclassified andincluded in the Imaging Systems & Solutions segment from the first quarter of consolidated fiscal year ending March 31, 2022.
The figures provided in “Information regarding net sales and profit (loss) by reportable segment” for the second quarter of the previous
consolidated fiscal year show the figures after the changes to the reportable segments were made.
(Changes in accounting policies)
As stated in “Changes in accounting policies,” the Revenue Recognition Accounting Standard and related guidance were implemented fromthe beginning of the first quarter of consolidated fiscal year ending March 31, 2022. The changes in the method of accounting for revenue
recognition also resulted in the same changes in the method of calculating business segment income or loss.
Compared to the previous method, this change resulted in an increase of 18,988 thousand yen in sales for Content Creation, an increase of
5,424 thousand yen in sales for Production Services, and a decrease of 3,134,926 thousand yen in sales for Imaging Systems & Solutions. It
also decreased segment income by 1,366 thousand yen for Content Creation and increased by 5,424 thousand yen for Production Services
for the first half of consolidated fiscal year ending March 31, 2022.
(Change in property, plant, and equipment depreciation method)
As stated in “Changes in accounting policies that are difficult to differentiate from changes in accounting estimates,” the Group and its
domestic consolidated subsidiaries previously used the declining balance method for depreciating property, plant, and equipment(excluding lease assets). The method of depreciation was changed to the straight-line method from the first quarter of consolidated fiscal
year ending March 31, 2022.
Compared to the previous method, this change resulted in increases of 5,254 thousand yen in the segment income for Content Creation,
19,919 thousand yen in the segment income for Production Services, 29,475 thousand yen in the segment income for Imaging Systems &Solutions, and 15,386 thousand yen in adjustments, respectively, for the first half of consolidated fiscal year ending March 31, 2022.

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