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 and theCompany 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.

Consolidated financial results (Japanese Accounting Standards)
for the Third Quarter of the fiscal year ending March 31, 2022
Company name:IMAGICA GROUP Inc.

Securities code:

6879

Filing date: February 4, 2022
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):
February 4, 2022
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 Third Quarter of the fiscal year ending March 31, 2022
(April 1, 2021 – December 31, 2021)(1) Consolidated Operating Results(Percentage represents change from the same period of the previous fiscal year.)Net sales

9 months ended Dec. 31, 2021
9 months ended Dec. 31, 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%

55,618

(5.2)

1,938

－

2,448

－

2,460

－

58,670(13.0)(2,369)－(2,729)

－

(663)

－

3rd quarter ended December 31, 2021: 3,000 millions of yen /－%3rd quarter ended December 31, 2020: (1,135) millions of yen /－%Diluted earnings
per share ofcommon stock

Earnings per share ofcommon stock
Yen

Yen

9 months ended Dec. 31, 2021

55.42

－

9 months ended Dec. 31, 2020

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

Shareholders' equity
ratio to total assets

Millions of yen

Millions of yen%

69,512

33,23243.8

60,446

29,83245.4

As of Dec 31, 2021
As of March 31, 2021
(Reference) Shareholders’ equity:

Net assets

As of December 31, 2021: 30,423 millions of yen
As of March 31, 2021: 27,450 millions of yen

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

yen

Year ending March 31,2022(Forecast)(Note) Changes in dividends forecast from the latest disclosed information: None

3rd quarter- end

yenYear-endyen

Annual

yen

0.00

0.00

10.00

10.00

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

77,000(11.2)

2,000

－

2,500

－

2,500

(27.6)

56.32

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 December 31, 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 December 31, 2021

345,938 shares

3) Average number of shares
As of December 31, 2021

44,391,917 shares

As of December 31, 2020

44,338,006 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 Third Quarter, (3)Explanation of Consolidated Forecasts and Other Forward-looking Information” on page 4 of the supplemental material.

Table of Contents
1.

Qualitative Information on Results in the Third Quarter.................................................................................................................... 2(1)

Explanation of Operating Results ..................................................................................................................................................... 2(2)

Explanation of Financial Position ..................................................................................................................................................... 4(3)

Explanation of Consolidated Forecasts and Other Forward-looking Information ............................................................................ 4

2.

Quarterly Consolidated Financial Statements..................................................................................................................................... 5(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

1. Qualitative Information on Results in the Third Quarter(1) Explanation of Operating Results(Overview of the third 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 imagingrelated businesses such as the emergence of the online live market and video streaming market. The IMAGICA GROUP formulated GEST 2025, our new mid-term plan, based on 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 ahighly profitable business, and are pursuing initiatives aimed at achieving the plan in each business segment.
The Group’s financial performance for the third quarter of consolidated fiscal year ending March 31, 2022 resulted in net sales of
55,618 million yen (down 5.2% year-on-year), an operating income of 1,938 million yen (compared to an operating loss of 2,369
million yen in the third quarter of the previous fiscal year), and an ordinary income of 2,448 million yen by posting non-operating
income including subsidy income of 641 million yen (compared to an ordinary loss of 2,729 million yen in the third quarter of theprevious fiscal year). Net profit attributable to owners of the parent was 2,460 million yen (compared to a loss of 663 million yen in
the third quarter 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, March 31, 2020; hereafter, the “Revenue Recognition Accounting Standard”) and related guidance from the beginning of the firstquarter of consolidated 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 it from consolidation.
See “(Changes in accounting policies, etc.)” and “(Segment information and others)” 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 third quarter are based on the new classification.
1) Content Creation
The financial performance of the Content Creation business segment in the third quarter of consolidated fiscal year ending March 31,
2022 resulted in net sales of 15,284 million yen (up 10.0% year-on-year) and an operating income of 177 million yen (compared to an
operating loss of 562 million yen in the third quarter of the previous fiscal year).
For feature films, TV dramas, TV animation and other productions, the delivery of some feature films was postponed until the fourth
quarter, but some dramas for video streaming service providers were delivered, so sales were healthy. For TV commercials, thenumber of orders received was on a track to recovery, and profitability improved. Orders were also strong for online streaming of 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) Production Services
The financial performance of the Production Services business segment in the third quarter of consolidated fiscal year ending March
31, 2022 resulted in net sales of 29,776 million yen (down 6.3% year-on-year) and an operating income of 1,116 million yen(compared to an operating loss of 2,340 million yen in the third quarter of the previous fiscal year).
For domestic E2E services*1, orders for services for video streaming service providers (video file compression, conversion, and otherencoding and localization services) were healthy, due in part to collaboration with Pixelogic Holdings LLC (hereafter, PXL), whichbecame a consolidated subsidiary last fiscal year. In addition, the number of orders for digital cinema services for Japanese and nonJapanese works recovered, as the number of feature films increased. We continuously secured orders for post-production services forfeature films and animation works.
For international E2E services, PXL kept receiving a healthy number of orders for localization from video streaming service providers.
Also, as theaters in Europe and the U.S. were reopened, the sales of digital cinema services got back on a recovery track.
In post-production services for TV programs and TV commercials, etc. *2, the sales of services for TV commercials remained favorable,
and the demand for the online delivery system grew thanks to the recovery of the advertisement market.
In game production, human talent services, etc. *3, the number of orders for game production-related services, such as 3DCG
production and debugging, was healthy.

2

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 andthe healthy performance of E2E services inside and outside Japan led to improvement in profit.
*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 thesethrough 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 postproduction 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 third quarter of fiscal year ending March 31, 2022 therefore reflects the results for January 1 through September 30, 2021.
3) Imaging Systems & Solutions
The financial performance of the Imaging Systems & Solutions business segment in the third quarter of consolidated fiscal year
ending March 31, 2022 resulted in net sales of 11,782 million yen (down 15.6% year-on-year) and an operating income of 1,023
million yen (up 17.0% year-on-year).
Regarding systems for broadcasting stations, demand remained sluggish. On the other hand, the sales of high-speed cameras wereon a track to recovery in Japan and grew from the previous year in other Asian countries, Europe, and the U.S. 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, in particular in North America and South Korea.
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. The number of orders for live sports relay and streaming services forarchived videos was healthy.
The full amount of compensation received from customers for sale of mobile communication lines was previously recognized asrevenue. However, the implementation of the Revenue Recognition Accounting Standard and related guidance has resulted in a yearon-year 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. However, demand still remains healthy.
The above factors resulted in a decrease in sales and an increase in profit in the Imaging Systems & Solutions business segment.

3(2) Explanation of Financial Position(Assets)
Current assets increased by 6,373 million yen (20.9%) from the end of the previous consolidated fiscal year to 36,814 million yen.
This was mainly due to an increase in inventories.
Non-current assets increased by 2,692 million yen (9.0%) from the end of the previous consolidated fiscal year to 32,698 million yen.
This was mainly due to an increase in buildings and structures.
Consequently, total assets increased by 9,066 million yen (15.0%) from the end of the previous consolidated fiscal year to 69,512
million yen.
(Liabilities Statement)
Current liabilities increased by 6,664 million yen (30.1%) from the end of the previous consolidated fiscal year to 28,782 million yen.
This was mainly due to a decrease in short-term loans payable, while contract liabilities and accounts payable increased.
Non-current liabilities decreased by 998 million yen (11.8%) from the end of the previous consolidated fiscal year to 7,497 million
yen. This was mainly due to a decrease in long-term loans payable.
The above factors resulted in total liabilities of 36,279 million yen, an increase of 5,666 million yen (18.5%) from the end of theprevious consolidated fiscal year.
(Net Assets)
Net assets increased by 3,399 million yen (11.4%) from the end of the previous consolidated fiscal year to 33,232 million yen. Thiswas mainly due to an 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 announcedon December 24, 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

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

December 31 2021

March 31, 2021

AssetsCurrent assets
Cash and deposits

6,908,657

6,014,666

Notes and accounts receivable- trade

15,159,083－－

16,034,856

Inventories

6,499,812

12,721,501

Other

1,918,018

2,097,436

Notes and accounts receivable - trade, and contract assets

Allowance for doubtful accounts(44,735)(54,242)

30,440,836

36,814,218

Buildings and structures

3,065,365

5,283,098

Machinery and equipment

85,810771,260

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

Land1,705,819

1,705,819

Lease Assets

475,187368,614

Construction in progress

526,880

207,959

Other

1,365,805

1,690,637

Total Property, plant and equipment

7,224,868

10,027,389

Goodwill

12,048,747

12,134,414

Other

2,464,367

2,675,788

Total Intangible assets

14,513,115

14,810,202

Investment securities

3,163,483

2,412,511

Stocks of subsidiaries and affiliates

1,095,950

457,886

Lease and guarantee deposits

1,641,911

2,195,714

Deferred tax asset

2,154,662

2,613,416

Intangible assets

Investments and other assets

Other

328,808

297,308

Allowance for doubtful accounts(117,446)(116,393)

Total Investments and other assets

8,267,369

7,860,444

Total Non-current assets

30,005,354

32,698,036

60,446,190

69,512,254

Total assets5

(Thousands of yen)March 31, 2021

December 31, 2021

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

6,579,603

Short-term loans payable

7,402,726

5,520,120

Accounts payable

1,212,857

2,861,044

Income taxes payable

211,609333,896

Advances received

2,811,112－－

7,905,097

Provision for bonuses

977,286

739,017

Provision for loss on order received

79,66019,771

Contract liabilities

531,408

549,662

Other

Provision for loss on litigation

3,474,389

4,274,011

Total current liabilities

22,117,359

28,782,224

5,384,905

4,297,724

148,018

209,429

Non-current liabilities
Long-term loans payable
Long-term accounts payable-other
Net defined benefit liabilities
Deferred tax liabilities
Asset retirement obligations
Other

550,324

540,646

1,219,724

1,291,468

627,722654,548565,200

503,456

8,495,895

7,497,274

30,613,255

36,279,498

Capital stock

3,306,002

3,306,002

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

13,238,832

13,220,501

Retained earnings

10,966,151

13,516,326

Treasury stock(361,659)(351,569)

Total shareholders’ equity

27,149,326

29,691,260

880,107442,022

Revaluation reserve for land

(17,933)(17,933)

Foreign currency translation adjustment(559,947)

309,369(688)(1,190)

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

Re-measurements of defined benefit plans

301,538

732,267

Stock acquisition right

Total accumulated other comprehensive income

11,484－Non-controlling Interests

2,370,585

2,809,227

Total Net assets

29,832,935

33,232,755

Total liabilities and Net assets

60,446,190

69,512,254

6

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

Quarterly Consolidated Statements of Income
9 months ended
December 31, 2020

(Thousands of yen)

9 months ended
December 31, 2021

Net sales

58,670,351

55,618,324

Cost of sales

45,738,026

39,227,628

Gross profit

12,932,325

16,390,696

Selling, general and administrative expenses

15,302,107

14,452,390

Operating income (loss)(2,369,782)

1,938,305

Non-operating income
Interest income

198,568

814

Dividend income

23,40722,240Subsidy income

52,290641,165

－

109

Other

90,606

84,416

Total non-operating income

364,872

748,746

Interest expenses

227,305

152,391

Equity in losses of affiliates

344,200－

Foreign exchange losses

48,944

17,101

Other

103,863

68,679Total non-operating expenses

724,314238,172(2,729,224)

2,448,879

Gain on sales of non-current assets

2,770

4,560

Gain on sales of investment securities－

414,702

Gain on sale of shares of subsidiaries and associates－

417,882

2,091,698－

Equity in earnings of affiliates

Non-operating expenses

Ordinary income (loss)
Extraordinary income

Gain on step acquisitions
Other
Total extraordinary income

122,042

21,657

2,216,511

858,802

Extraordinary losses
263－

Loss on retirement of non-current assets

40,41164,692

Office transfer related expenses

22,316477,468

Loss on sales of non-current assets

Other

91,63917,803

Total extraordinary losses

154,631559,965

Net income (loss) before income tax(667,344)

2,747,716

Income taxes

502,486

180,998(1,169,831)

2,566,717

Net income (loss) attributable to non-controlling interests(506,432)

106,482

Net income (loss) attributable to owners of the parent(663,398)

2,460,235

Net income (loss)

7

Quarterly Consolidated Statements of Comprehensive Income
9 months ended
December 31, 2020

(Thousands of yen)
Net income (loss)

9 months ended
December 31, 2021

(1,169,831)

2,566,717

Valuation difference on available-for-sale securities

264,180(436,099)

Foreign currency translation adjustment(229,996)

870,289

(136)

(502)

Other comprehensive income

Re-measurements of defined benefit plans
Total other comprehensive income

34,046433,687(1,135,784)

3,000,405

Comprehensive income attributable to owners of parent(555,069)

2,890,964

Comprehensive income attributable to non-controllinginterests(580,714)

109,440

Comprehensive income(Breakdown)8(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 to thecustomer. The main changes from implementation of the Revenue Recognition Accounting Standard and related guidance areas 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 treatmentin the exception clause of Paragraph 84 of the Revenue Recognition Accounting Standard. The new accounting standard wasapplied 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 beginning of 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 4,558,109 thousand yen in net sales and4,555,322 thousand yen in cost of sales for the third quarter of the fiscal year ending March 31, 2022. The operating income,ordinary income and net income before income tax decreased by 2,787 thousand yen, respectively.
Due to implementation of the Revenue Recognition Accounting Standard and related guidance, “Notes and accounts
receivable-trade,” which was presented in “Current assets” in the Quarterly Consolidated Balance Sheets for the previous
fiscal year, is included in “Notes and accounts receivable-trade, and contract assets” from the first quarter of consolidated
fiscal year ending March 31, 2022. Likewise, “Advances received,” which was presented in “Current liabilities,” is included“Contract liabilities” from the first quarter of consolidated fiscal year ending March 31, 2022. In accordance with thetransitional 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.
(Changes accompanying implementation of the Accounting Standard for Fair Value Measurement)

9

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 Accounting Standard
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 103,023 thousand yen in the operating income,ordinary income and net income before income tax, respectively, for the third quarter of consolidated fiscal year ending March
31, 2022.

10

(Segment information and others)
I.

[Segment Information]
For the 9 months ended December 31, 2020 (from April 1, 2020 to December 31, 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
Total
Segment income(loss)

13,828,736

31,158,125

13,671,066

58,657,927

60,220625,920

291,626

977,767

13,888,956

31,784,046

13,962,692

59,635,695(562,949)(2,340,684)

874,759(2,028,875)

Adjustments(Note 1)

Amount in the
Quarterly
Consolidated
Statements ofIncome (Note 2)

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

12,42358,670,351(977,767)－(965,343)

58,670,351

Segment income(340,907)(2,369,782)(loss)
Notes:
1.
The segment income (loss) adjustment of (340,907) thousand yen consists of 1,250,985 thousand yen in income of the Company
and intersegment transaction eliminations of (1,591,892) thousand yen.
2.
The segment income (loss) adjustment is based on the operating loss item in the Quarterly Consolidated Statements of Income.
2.

Information on assets by reportable segment
In the third quarter of consolidated fiscal year ending March 31, 2022, we acquired more shares of Pixelogic Holdings LLC, which
had been an equity-method affiliate, and included it and its 4 subsidiaries in the scope of consolidation. Accordingly, the assets inthe “Production Services” business segment increased 13,530,580 thousand yen between the end of the previous consolidated
fiscal year and the end of the third quarter of consolidated fiscal year ending March 31, 2022. Here, the amount of said assets
reflects the important revision to the initial allocation of the acquisition cost due to the provisional accounting for businesscombination.

3.

Information on impairment losses, goodwill, etc. by reportable segment(Important change in goodwill amount)In the third quarter of consolidated fiscal year ending March 31, 2022, we acquired more shares of Pixelogic Holdings LLC, which
had been an equity-method affiliate, and included it and its 4 subsidiaries in the scope of consolidation. Accordingly, the goodwill
in the “Production Services” business segment increased 11,856,512 thousand yen. Here, said goodwill amount reflects theimportant revision to the initial allocation of the acquisition cost due to the provisional accounting for business combination.

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II.

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

15,057,014

28,903,97811,304,452

55,265,445

227,424

872,984

477,810

1,578,219

15,284,438

29,776,962

11,782,263

56,843,664

177,340

1,116,667

1,023,675

2,317,683

Adjustments(Note 1)

Amount in the
Quarterly
Consolidated
Statements ofIncome (Note 2)

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

352,878

55,618,324(1,578,219)－(1,225,340)

55,618,324(379,377)

1,938,305

Notes:
1.
The segment income adjustment of (379,377) thousand yen consists of 768,753 thousand yen in income of the Company andintersegment transaction eliminations of (1,148,131) 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 and included 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 third quarter of theprevious 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 from the beginning of the first quarter of consolidated fiscal year ending March 31, 2022. The changes in themethod 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 45,462 thousand yen in sales for Content Creation, adecrease of 1,554 thousand yen in sales for Production Services, and a decrease of 4,602,017 thousand yen in sales for
Imaging Systems & Solutions. It also decreased segment income by 1,233 thousand yen for Content Creation and by 1,554
thousand yen for Production Services for the third quarter 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,” theGroup 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 thefirst quarter of consolidated fiscal year ending March 31, 2022.
Compared to the previous method, this change resulted in increases of 7,977 thousand yen in the segment income forContent Creation, 30,699 thousand yen in the segment income for Production Services, 41,251 thousand yen in the segment
income for Imaging Systems & Solutions, and 23,093 thousand yen in adjustments, respectively, for the third quarter ofconsolidated fiscal year ending March 31, 2022.

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