English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

Consolidated financial results (Japanese Accounting Standards)
for the Second Quarter of the fiscal year ending March 31, 2018
Company name:Imagica Robot Holdings Inc.

Filing date: November 7, 2017
Stock exchange listings: Tokyo 1st section

Securities code:

6879

URL:

https://www.imagicarobot.jp/en/

Representative:
Makoto Tsukada, President
Inquiries:
Masakazu Morita, Director and Executive Officer
Quarterly report filing date(as planned):
November 7, 2017
Dividend payment date(as planned):－
Supplemental material of quarterly－
results:
Convening briefing of quarterly results:－

Tel:+81-3-6741-5742(In millions of yen)

1. Consolidated Financial Results for the Second Quarter ending September 30, 2017
(April 1, 2017 - September 30, 2017)(1) Consolidated Operating Results(Percentage represents change from the same period of the previous fiscal year.)Net sales

Operating income

Net income attributableto owners of the parent

Ordinary income

Millions of yen%

Millions of yen%

Millions of yen%

Millions ofyen%

6months ending September 30, 201742,263

6.7

1,131

395.8

1,218

347.2

1,856

566.0

6months ended September 30, 2016

39,615

33.1

228

－

272

－

278

906.4

(Note) Comprehensive income: 2st quarter ending September 30, 2017：2,091 millions of yen /－%2st quarter ended September 30, 2016：(1,442) millions of yen /－%Earnings per shareof common stock

Diluted earnings
per share ofcommon stock

yen

yen

6 months ending September 30, 2017

41.69

－

6 months ended September 30, 2016

6.26

－

(2) Consolidated Financial Position
Total assets

2st quarter ending September 30, 2017
Year ended March 31, 2017

(Reference) Shareholdersʼ equity:

Net assets

Shareholders' equity
ratio to total assets

Millions of yen

Millions of yen%

66,03431,60842.6

68,20729,94138.6

2st quarter ending September 30, 2017: 28,157 millions of yen
Year ended March 31, 2017: 26,313 millions of yen

2. Dividends
1st quarter- end

Dividend per share

2nd quarter- end

3rd quarter- end

Year ended March 31,2017

－

0.00

－

10.00

10.00

Year ending March 31,2018

－

0.00
－

10.00

10.00

yen

Year ending March 31,2018(Forecast)

yen

0.00

yen

(Note) Changes in dividends forecast from the latest disclosed information: No

Year-endyen

Annualyen

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

3. Consolidated forecast for the fiscal year ending March 31, 2018
(April 1, 2017 - March 31, 2018)(Percentage represents change from the same period of the previous fiscal year.)Net sales

Operating income

Millions of yen
Year ending March 31,2018%

87,9000.4

Millions of yen

%

1,800

0.7

Ordinary income
Millions of yen%

1,800 (10.6)

Net income
attributableto owners of theparentEarnings per
shareof commonstock

Millions of yen

%

yen

2,300

34.7

51.6

(Note) Changes in earnings forecast from the latest disclosed information： Yes(Reference) It is included goodwill amortization 1.4 billion yen due to the acquisition as an expense in the operating income.

* Notes(1) Material changes in subsidiaries during this period (Changes in scope of consolidations resulting
from change is subsidiaries): Yes
Name of subsidiaries newly consolidated: IMAGICA TV Corporation(2) Applying of specific accounting of the consolidated quarterly financial statements: None
(3) Changes in accounting policies, accounting estimates and retrospective
1) Changes in accounting policies based on revisions of accounting standards: None
2) Changes in accounting policies other than ones based on revisions of accounting standard: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
(4) Number of issued and outstanding shares (common stock)1) Number of issued and outstanding shares at the end of fiscal year (including treasury stock)
As of September 30, 201744,531,567 shares

As of March 31, 201744,531,567 shares

108 shares

As of March 31, 2017108 shares

44,531,459 shares

As of June 30, 2016

44,531,459 shares

2) Number of treasury stock at the end of fiscal year
As of September 30, 2017

3) Average number of shares
As of September 30, 2017(Explanation about the appropriate usage of business prospects and other special notes)
・The above-mentioned business forecasts were based on the information available as of the date of therelease of this report.
・Future events may cause the actual results to be significantly different from the forecasts.
(Disclaimer)This document is a translation of the Japanese original. The Japanese original has been disclosed inJapan in accordance with Japanese accounting standards and the Financial Instruments andExchange Act. This document does not contain or constitute any guarantee and the Company will notcompensate any losses and/or damage stemming from actions taken based on this document. In thecase that there is any discrepancy between the Japanese original and this document, the Japaneseoriginal is assumed to be correct.

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

1. Qualitative Information on Results in the Second Quarter(1) Explanation of operating results(Summary of this second quarter)

During the cumulative consolidated second quarter, the Japanese economy saw further improvements inthe production activities of enterprises amid a recovery in exports. While seasonal factors held back therecovery in personal consumption, the employment and income situation remained strong.
Against this backdrop, the Group expanded business broadly in the Content Creation segment, andrallied its collective energies in an effort to enhance its profitability and financial structure.
Consequently, the consolidated performance for the cumulative consolidated second quarter was asfollows: Net sales was 42,263 million yen (up 6.7% year-on-year), operating income was 1,131 million
yen (up 395.8% year-on-year), ordinary income was 1,218 million yen (up 347.2% year-on-year), andnet income attributable to owners of the parent was 1,856 million yen (up 566.0% year-on-year).
The Group recorded 2,177 million yen in extraordinary income, which represents the gain on the salesof subsidiaries/affiliatesʼ stock following the complete divesture of Imagica TV Corp on April 3, 2017.

(Performance by Business segments)
From the cumulative consolidated first quarter, the Group reorganized its reportable segments from six tofour segments. The new segments are: Content Creation (formerly Video Software), Production Services(combines the former Video Technology Services and Human Resources Consulting segments), Media
Localization, and Imaging Systems & Solutions. Accordingly, as regards the following year-on-yearchanges, the figures for the equivalent period of the previous year were reclassified to reflect the segment
reorganization.
(The Group discontinued the Broadcasting segment after it sold Imagica TV, a core company of thesegment, on April 3, 2017).
1) Content Creation
The Content Creation segment saw an increase in TV drama and TV animation productions and strong
performance in projection mapping video and live music performance videos, contributing significantly tohigher net sales. Operating income, however, declined 289 million yen year-on-year due to year-on-year
decreases in distribution from production committee and TV commercial productions during the firstquarter.
Consequently, for the cumulative consolidated second quarter, the segment posted net sales of 10,705
million yen (up 18.0% year-on-year) and operating income of 277 million yen (down 51.1% year-onyear).
2) Production Services
Previous fiscal yearʼs strong performance in encoding services for OTT platforms and digital cinema
services continued in this quarter, contributing to an increase in net sales and operating income. As
regards post-production, orders were favorable in each market.
The human resources consulting business performed well, while the growing demand for smartphonegames led to an increase in net sales in the game CG production and debugging businesses.
Consequently, for the cumulative consolidated second quarter, the segment posted net sales of 13,642
million yen (up 10.0% year-on-year) and operating income of 611 million yen (up 71.4% year-on-year).
3) Media Localization
The Media Localization segment reported significant improvements in its performance. In the U.S., OTT
platforms-oriented business performed well, contributing significantly to higher revenue. The segment
also benefitted from a formidable improvement in operating losses. This improvement was attributable toa revenue-driven increase in gross income; it also reflected the discontinuation of the temporary sales andgeneral administrative expenses that arose in the equivalent period of the previous year.
Consequently, for the cumulative consolidated second quarter, the segment posted net sales of 12,235
million yen (up 19.5% year-on-year) and operating income of 25 million yen (compared to operating
losses of 1,024 million yen in the equivalent period of the previous year).
The closing date for SDI Media Group, Inc. and its subsidiary is December 31. Accordingly, as far as theabove segment results are concerned, the cumulative consolidated second quarter represents a six month
period from January 1 to June 30, 2017.

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

4) Imaging Systems & Solutions
The Imaging Systems & Solutions saw slight year-on-year decreases in net sales and operating income.
A factor behind this result was the fact that the delivery of optical measurement cameras was set for thethird quarter onward. The professional video equipment business performed well, with an increase insales of imported systems driven by the shift from HD to 4K in the live broadcasting sector, and anincrease in orders for the companyʼs exclusive text-superimposition system and maintenance service.
Consequently, for the cumulative consolidated second quarter, the segment posted net sales of 6,419
million yen (up 11.7% year-on-year) and operating income of 440 million yen (up 22.9% year-on-year).

Explanation of financial position(Assets Statement)

Current assets declined 363 million yen (0.9%) from the end of the previous consolidated fiscal year, to38,343 million yen. The main cause of this decline was a decrease in notes and accounts receivable, which
offset an increase in cash and deposits.
Non-current assets declined 1,809 million yen (6.1%) from the end of the previous consolidated fiscal
year, to 27,691 million yen. This main cause of this decline was a decrease in deferred tax asset.
Consequently, total assets declined 2,172 million yen (3.2%) from the end of the previous consolidated
fiscal year, to 66,034 million yen.
(Liabilities Statement)
Current liabilities declined 2,020 million yen (8.3%) from the end of the previous consolidated fiscal year,
to 22,252 million yen. The main cause of this decline was a decrease in notes and accounts payable.
Non-current liabilities declined 1,818 million yen (13.0%) from the end of the previous consolidated fiscal
year, to 12,173 million yen. The main cause of this decline was a decrease in long-term loans payable andnet defined benefit liabilities.
Consequently, total liabilities declined 3,839 (10.0%) from the end of the previous consolidated fiscal year,
to 34,426 million yen.
(Net Assets)
Net assets rose 1,666 million yen (5.6%) from the end of the previous consolidated fiscal year, to 31,608
million yen. The main cause of this rise was an increase in retained earnings.

(2) Explanation of consolidated forecasts

We have revised consolidated forecast for fiscal year ending March 31, 2018 that was announced on
August 3, 2018, based on the recent performance trend. Please refer to the press release “Revision on
consolidated forecast” that was announced today for more information.

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

2. Quarterly Consolidated Financial Statements(1) Quarterly consolidated balance sheets

Year ended March

2st quarter ending

31, 2017

September 30, 2017

AssetsCurrent assets
Cash and deposits

8,716,936

Notes and accounts receivable- trade17,648,525

14,761,829

Inventories

9,909,273

10,122,880

Deferred tax asset

10,722,861

929,336

800,747

1,561,625

1,990,102(59,198)(55,168)

38,706,498

38,343,253

Buildings and structures

3,872,655

3,760,011

Machinery and equipment

233,414202,364

2,943,085

2,943,085

Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

Land
Construction in progress

79,696

61,376Other

2,554,998

2,513,404

Total Property, plant and equipment

9,683,850

9,480,243
1,265,600

Intangible assets
Software1,380,473

Goodwill

7,203,768

6,616,056

Other

4,422,632

3,986,234

Total Intangible assets

13,006,874

11,867,891

3,718,646

4,424,014

Investments and other assets
Investment securities

475,571497,543

Lease and guarantee deposits

Stocks of subsidiaries and affiliates

1,186,175

1,099,059

Deferred tax asset

1,137,903

106,024

482,494439,751

Other
Allowance for doubtful accounts(190,640)(222,999)

Total Investments and other assets

6,810,152

6,343,394

Total Non-current assets

29,500,876

27,691,528

68,207,375

66,034,781

Total assets

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

Year ended March

2st quarter ending

31, 2017

September 30, 2017

Liabilities
Current liabilities
Notes and accounts payable- trade

6,722,108

Short-term loans payable

4,793,499

4,467,697
4,677,433

Accounts payable

3,234,345

3,195,798

Income taxes payable

1,235,608

791,385

Provision for bonuses

1,394,256

886,382

113,70752,434

Provision for directors compensations based on profit

92,734

69,483

Other

Provision for loss on order received

6,687,338

8,112,091

Total current liabilities

24,273,600

22,252,705

8,735,073

7,489,746

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

216,815

625,922

Deferred tax liabilities

1,036,147

1,017,463

Net defined benefit liabilities

2,070,931

1,185,365

Other

1,933,232

1,855,482

Total non-current liabilities

13,992,200

12,173,979

Total Liabilities

38,265,800

34,426,685

Net assets
Shareholdersʼ equity
Capital stock

3,244,915

3,244,915

Capital surplus

15,189,280

15,190,196

Retained earnings

7,256,468

8,667,483

Treasury stock
Total shareholdersʼ equity

(42)

(42)

25,690,622

27,102,552

1,080,094

1,582,393

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

(17,933)(17,933)

Foreign currency translation adjustment(443,718)(513,128)

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

4,308

4,038

622,752

1,055,370

Non-controlling Interests

3,628,199

3,450,173

Total Net assets

29,941,574

31,608,096

Total liabilities and Net assets

68,207,375

66,034,781

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

(2) Quarterly consolidated statements of income and statements of comprehensive income

Quarterly consolidated statements of income
6months ended

6months ending

September 30, 2016

September 30, 2017

Net sales

39,615,116

42,263,840

Cost of sales

27,672,284

30,727,333

Gross profit

11,942,831

11,536,506

Selling, general and administrative expenses

11,714,645

10,405,269

228,185

1,131,237

Operating income
Non-operating income
Interest income

3,405

2,212

Dividend income

36,296

26,165Equity in earnings of affiliates

22,58820,972Foreign exchange gains-

58,133

Other

152,299

73,140Total non-operating income

214,589

180,623

Interest expenses

67,95376,893Foreign exchange losses

80,842-

Other

21,463

16,359Total non-operating expenses

170,259

93,252

Ordinary income

272,515

1,218,608

3,923

0

Non-operating expenses

Extraordinary income
Gain on sales of non-current assets
Gain on step acquisitions
Gain on sales of subsidiaries and affiliates' stocks

190,403--2,177,929

Other

20,492-

Total extraordinary income

214,819

2,177,929

Extraordinary losses
Loss on sales of non-current assets

234

165

Loss on retirement of non-current assets

25,1408,295

Impairment loss

19,09814,139276

14,15031,19434,905

Loss on valuation of investment securities
Provision of allowance for doubtful accounts for
subsidiaries and affiliates
Loss on valuation of stocks of subsidiaries and affiliates
Other

187,324

-

160

6,657

Total extraordinary losses

263,429

78,313

Income before income taxes

223,906

3,318,224

Income taxes

361,254

1,570,170

Profit (loss)(137,348)

1,748,053

Profit (loss) attributable to non-controlling interests(416,073)(108,275)

278,724

1,856,329

Profit (Loss) attributable to owners of parent

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

Quarterly consolidated statements of income

Profit (Loss)

6months ended

6months ending

September 30, 2016

September 30, 2017

(137,348)

1,748,053(68,451)

502,341(35)-(1,249,926)(158,208)

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Re-measurements of defined benefit plans

13,463(270)

Total other comprehensive income(1,304,948)

343,862

Comprehensive income(1,442,297)

2,091,916(406,533)

2,288,947(1,035,763)(197,030)

Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

(3) Quarterly consolidated cash flow statement
6months ended

6months ending

September 30, 2016

September 30, 2017

Cash flows from operating activities
Income before income taxes

223,906

3,318,224

Depreciation and Amortization

1,341,315

1,297,248

Amortization of goodwill

431,007431,766

Increase (decrease) in net defined benefit liabilities

56,295(828,647)

78,64541,305

Increase (decrease) in provision for bonuses

Increase (decrease) in allowance for doubtful accounts(237,453)(452,513)

Interest and dividend income(39,702)(28,377)

Interest expenses
Equity in (earnings) losses of affiliates
Loss (gain) on sales of non-current assets
Loss (gain) on sales of socks of subsidiaries and affiliates
Decrease (increase) in notes and accounts receivabletrade
Decrease (increase) in inventories

67,95376,893(22,588)(20,972)

21,4518,460-(2,177,929)

3,377,376

2,396,658(3,483,417)(615,953)(974,590)(1,851,226)

Other, net

755,804

1,724,242

Subtotal

1,596,004

3,319,181

Increase (decrease) in notes and accounts payable-trade

Interest and dividend income received

47,48826,549(73,284)(77,427)

Income taxes (paid) and refund(232,029)(1,381,572)

Net cash provided by (used in) operating activities

1,338,178

1,886,730(1,058,553)(725,436)

Interest expenses paid

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Payments for sales of investments in subsidiaries resulting
in change in scope of consolidation
Purchase of stocks of subsidiaries and affiliates
Other, net
Net cash provided by (used in) investing activities

38,771

1,307(200,203)(233,347)(4,294,199)--

2,941,715(5,000)(1,000)180,172

2,499(5,339,012)

1,985,739

782,670(220,836)

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

3,000,000-

Repayments of long-term loans payable(945,396)(1,115,856)

Cash dividends paid

(667,971)(445,314)

Others, net(186,123)(126,427)

Net cash provided by (used in) financing activities

1,983,178(1,908,435)(244,106)

41,884

Net increase (decrease) in cash and cash equivalents(2,261,762)

2,005,919

Cash and cash equivalents at beginning of period

12,048,741

8,715,927

453,683-

10,240,662

10,721,846

Effect of exchange rate change on cash and cash
equivalents

Increase (decrease) in cash and cash equivalents resulting
from change of scope of consolidation
Cash and cash equivalents at end of period

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

(4) Notes to quarterly consolidated statements
I.

Segment information

For the six months ended September 30,2016 (from April 1,2016 to September 30,2016)
Information about operating revenue and profit (loss) by reportable segment
Content

Production

Media

Creation

Services

Localization

Imaging
Systems &Sub total

Solutions

Net sales
Sales toexternal

9,068,285

11,996,078

10,200,177

5,406,092

36,670,633

2,178

401,255

42,253340,924786,6129,070,464

12,397,333

10,242,431

5,747,016

37,457,245

567,079

356,634(1,024,624)

358,628

257,717customers
Inter-segment
sales ortransfers
Total
Segment profit(loss)

Amount in the
Other

Adjustments(Note 1)

(Note 2)quarterly
consolidated
statement ofincome(Note 3)

Net sales
Sales toexternal

2,890,665

53,81739,615,116

1,152(787,764)-

2,891,817(733,947)

39,615,116

129,776(159,308)

228,185

customers
Inter-segment
sales ortransfers
Total
Segment profit(loss)
Notes:
1.

The “Other” category is for operating segments that are not included among the reportable segments,
and it shows data pertaining to divested subsidiaries.

2.

The Segment profit (loss) adjustment of (159,308) thousand yen consists of 1,165,140 thousand yen in
profits of holding companies (consolidated financial statement-submitting companies) and intersegment
transaction eliminations of (1,324,449) thousand yen.

3.

The segment profit (loss) adjustment is based on the operating income item in the quarterly
consolidated statements of income.

English translation
This is a translation of the original release in Japanese. In the event of any discrepancy, the original release shall prevail.

II.

For the six months ending September 30,2017 (from April 1,2017 to September 30,2017)
Information about operating revenue and profit (loss) by reportable segment
Imaging

Content

Production

Media

Creation

Services

Localization

10,570,915

13,337,053

12,084,964

6,196,640

42,189,574

135,023

305,671

150,329

222,907813,932

10,705,939

13,642,725

12,235,294

6,419,547

43,003,506

277,217611,147(25,263)

440,823

1,303,924

Systems &Sub total

Solutions

Net sales
Sales toexternalcustomers
Intersegment
sales ortransfers
Total
Segment profit(loss)

Amount in the
Adjustments(Note 2)quarterly
consolidated
statement ofincome(Note 3)

Net sales
Sales toexternal

74,26642,263,840

customers
Inter-segment
sales or(813,932)transfers
Total
Segment profit(loss)(739,666)

42,263,840(172,686)

1,131,237

Notes:
1.

The Segment profit (loss) adjustment of (172,686) thousand yen consists of 1,080,200 thousand yen
in profits of holding companies (consolidated financial statement-submitting companies) andintersegment transaction eliminations of (1,252,887) thousand yen.

2.

The segment profit (loss) adjustment is based on the operating income item in the quarterly
consolidated statements of income.