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, 2023
Company name:IMAGICA GROUP Inc.

Securities code:

6879

Filing date: November 2, 2022
Stock exchange listing: Tokyo Prime
URL:

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

Representative:
Nobuo Fuse, Representative Director, President
Inquiries:
Masakazu Morita, Director, Senior Managing Executive Officer
Quarterly report filing date (as planned):
November 2, 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 Second Quarter of the fiscal year ending March 31, 2023
(April 1, 2022 – September 30, 2022)(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 of yen%

6 months ended Sept 30, 2022

41,589

22.9

1,411

227.0

1,336

33.7

799

(52.8)

6 months ended Sept 30, 2021

33,846

(5.6)

431

－

999

－

1,694

－

(Note) Comprehensive income:2nd quarter ended September 30, 2022: 2,750 millions of yen / 18.1 %2nd quarter ended September 30, 2021: 2,328 millions of yen /－%Diluted earnings
per share ofcommon stock

Earnings per share ofcommon stock
Yen

Yen

6 months ended Sept 30, 2022

17.98

－

6 months ended Sept 30, 2021

38.17

－

(2) Consolidated Financial Position
Total assets

As of Sept 30, 2022
As of March 31, 2022
(Reference) Shareholders’ equity:

Net assets

Shareholders' equity
ratio to total assets

Millions of yen

Millions of yen%

83,88335,92539.5

73,38434,025

42.4

As of September 30, 2022: 33,132 millions of yen
As of March 31, 2022: 31,149 millions of yen

2. Dividends

Dividend per share

1st quarter- end

2nd quarter- end

Year ended March 31,2022

－

0.00

Year ending March 31,2023

－

0.00

yen

3rd quarter- end

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

Year-endyen

Annual

yen

yen

－

15.00

15.00

－

15.00

15.00

Changes in dividends forecast from the latest disclosed information: None

3. Consolidated forecast for the fiscal year ending March 31, 2023
(April 1, 2022 - March 31, 2023)(Percentage represents change from the same period of the previous fiscal year.)Net sales

Fiscal year ending March 31,
2023

Operating income

Net income
attributableto owners of theparentOrdinary income

Earnings per
shareof commonstock

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

yen

88,000

9.7

3,600

5.3

3,300

(16.1)

2,100(23.0)

47.30(Note) 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): None
(2) The application of specific accounting of the consolidated quarterly financial statements: Yes(3) Changes in accounting policies, accounting estimates and retrospective
1) Changes in accounting policies based on revisions of accounting standards: Yes
2) Changes in accounting policies other than ones based on revisions of accounting standards: Yes
3) Changes in accounting estimates: None
4) Retrospective restatement: None
(4) Number of issued and outstanding shares (common stock)1) Number of issued and outstanding shares at the end of fiscal year (including treasury stock)
As of September 30, 2022

44,741,467 shares

As of March 31, 2022

44,741,467 shares

As of March 31, 2022

345,938 shares

2) Number of treasury stock at the end of fiscal year
As of September 30, 2022

155,842 shares

3) Average number of shares
As of September 30, 2022

44,469,282 shares

As of September 30, 2021

44,390,071 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 useof financial forecasts, please refer to “1. Qualitative Information on Results in the Second Quarter, (3) Explanation of Consolidated
Financial Forecast and Forward-looking Statements” on page of the supplemental material.

Table of Contents
Qualitative Information on Results in this Quarter ............................................................................................. 2

1.
(1)

Explanation of operating results..............................................................................................................2(2)

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

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

2.
(1)

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

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

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

1

1. Qualitative Information on Results in this Quarter(1) Explanation of operating results① Overview of the second quarter of the consolidated fiscal year ending March 31, 2023
In the imaging-related business, the Group's main business domain, the market environment is undergoing dizzying changes,
including rapid technological innovation, the emergence of online live shows and new forms of entertainment utilizing themetaverse due to social changes caused by the COVID-19 pandemic, and fiercer competition among video streaming service
providers.
Viewing this environment as an opportunity for growth, the Group has launched its mid-term plan "G-EST 2025." In the fiscal
year ending March 31, 2023, the second year of the plan, we plan to "continue to build the foundation for conversion to a highprofitability Group" and will maintain our efforts to promote various initiatives based on our four key strategies.
During the second quarter of the consolidated fiscal year ending March 31, 2023, net sales were 41,589 million yen (up 22.9%
year on year), operating income was 1,411 million yen (up 227.0% year on year), ordinary income was 1,336 million yen (up 33.7%
year on year), and net income attributable to owners of the parent was 799 million yen (down 52.8% year on year). The decrease in
net income attributable to owners of the parent was due to an increase in income taxes compared to the previous year.
② Performance by business segment
Financial results by business segment are as follows.
Effective from the first quarter of the consolidated fiscal year ending March 31, 2023, one consolidated subsidiary (IMAGICA EEXInc.), which was previously included in "Adjustments," was reclassified to the Content Creation business segment because of anincrease in its importance.
Comparisons and analyses for the second quarter of the consolidated fiscal year ending March 31, 2023, are based on the newclassification.
1) Content Creation businessNet sales for the second quarter of the consolidated fiscal year were 9,045 million yen (up 0.6% year on year), and operating
income was 46 million yen (up 19.0% year on year).
In feature films and dramas, the number of projects increased from the previous fiscal year, and net sales remained steady. In
production of TV commercials, orders showed movement toward recovery from the previous year. The gross margin ratio foranimation productions is improving due to strict per-production profit management and the streamlining of production. In the live
entertainment business, orders were robust.
These developments resulted in an increase in sales and profit for the overall Content Creation business segment.

22) Production Services businessNet sales for the second quarter of the consolidated fiscal year were 25,596 million yen (up 38.7% year on year), and operating
income was 1,192 million yen (up 489.7% year on year).
In domestic E2E services*, post-production services for feature films, drama series, and feature animations were firm. Orders for
digital cinema services also increased. In addition, net sales remained strong in the areas of encoding and localization, including
compression and conversion of video files, as we continued to secure orders from video streaming service providers.
In overseas E2E services, both net sales and profit grew significantly due to continued strong demand for localization for video
streaming service providers.
In post-production services for TV programs and TV commercials, net sales remained solid due to an increase in live
broadcasting and distribution projects for live events and sports events, despite difficulties attributable to the rebound fromlarge-scale event projects in the previous fiscal year.
In game production and human talent services, etc., orders for game 3DCG production, debugging, and other services remained
strong.
As a result, net sales and income grew for the overall Production Services business.
* E2E services: End-to-end services. Refers to an integrated end-to-end (E2E) service that covers the entire post-production
process for feature films, dramas, animation, and other audio/video content through to media services for localization(subtitling/dubbing) and distribution of these through all kinds of media, including theaters, TV, and video streaming via theInternet.
* Overseas E2E services have a settlement date of December 31, so E2E earnings from January 1, 2022, to June 30, 2022, arereflected in the results for the second quarter of the consolidated fiscal year ending March 31, 2023.
3) Imaging Systems & Solutions businessIn terms of performance for the second quarter of the consolidated fiscal year, net sales were 8,212 million yen (up 12.2% year
on year), and operating income was 712 million yen (up 46.6% year on year).
For the high-speed camera business, orders were received steadily partly due to the release of two new models, but shipment
delays continued due to the impact of semiconductor shortages. Sales increased in the Broadcast Imaging Systems & Solutions
segment, with contribution from a large project that was ordered in the first quarter. In the Optical Measurement Business, net
sales of both optical elements and optical measurement systems increased significantly in line with the recovery in capital
investments. Sales of online delivery of TV commercials remained strong, and robust sales of image processing LSIs continued inJapan and overseas (especially in Asia).
Therefore, net sales and income rose for the overall Imaging Systems & Solutions business.

3(2) Explanation of financial position① Assets
Current assets increased by 3,443 million yen (8.4%) from the end of the previous consolidated fiscal year to 44,510 million yen.
This was primarily due to a decrease in cash and deposits and an increase in inventory assets.
Non-current assets increased by 7,055 million yen (21.8%) from the end of the previous consolidated fiscal year to 39,372
million yen. This was primarily due to an increase in lease assets and an increase in goodwill attributable to foreign currencytranslation effects.
As a result, total assets increased by 10,499 million yen (14.3%) from the end of the previous consolidated fiscal year to 83,883
million yen.
② Liabilities
Current liabilities increased by 4,536 million yen (14.1%) from the end of the previous consolidated fiscal year to 36,815 million
yen.
This was primarily due to increases in contract liabilities and short-term loans payable, amid a decrease in notes and accounts
payable.
Non-current liabilities increased by 4,062 million yen (57.4%) from the end of the previous consolidated fiscal year to 11,142
million yen. This was primarily due to an increase in lease obligations included under Non-current liabilities in Others, net, amid adecrease in long-term loans payable.
As a result, total liabilities increased by 8,599 million yen (21.8%) from the end of the previous consolidated fiscal year to 47,958
million yen.
③ Net assets
Net assets increased by 1,899 million yen (5.6%) from the end of the previous consolidated fiscal year to 35,925 million yen.
This was primarily due to an increase in foreign currency translation adjustments.

(3) Explanation of consolidated forecasts and other forward-looking information
There are no revisions to the full-year forecasts for the consolidated fiscal year ending March 31, 2023, from those announced
on May 13, 2022.

4

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

September 30, 2022

AssetsCurrent assets
Cash and deposits

6,420,308

4,752,136

Notes and accounts receivable - trade, and contract assets

18,849,395

17,789,699

Inventories

13,613,658

18,968,207

Other

2,223,017

3,058,334

Allowance for doubtful accounts(39,570)(57,800)

41,066,808

44,510,577

5,448,367

5,469,488

832,609798,706

1,705,807

1,705,807

303,675

5,169,238

Other

1,878,964

2,164,010

Total Property, plant and equipment

10,169,425

15,307,251

11,482,801

12,959,037

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Land
Lease Assets

Intangible assets
Goodwill
Other

2,352,770

2,553,012

Total Intangible assets

13,835,572

15,512,049

2,670,687

2,643,098

385,838

502,002

Lease and guarantee deposits

2,066,324

2,127,186

Deferred tax asset

Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates

3,051,529

3,093,418

Other

286,596345,967

Allowance for doubtful accounts(148,462)(158,014)

Total Investments and other assets

8,312,513

8,553,659

Total Non-current assets

32,317,511

39,372,961

73,384,320

83,883,538

Total assets5

(Thousands of yen)March 31, 2022

September 30, 2022

Liabilities
Current liabilities
Notes and accounts payable- trade

8,884,981

7,118,552

Short-term loans payable

4,170,485

5,495,351

Accounts payable

1,824,055

1,144,759

Income taxes payable

850,863336,202

Contract liabilities

8,373,707

14,135,909

Provision for bonuses

1,594,260

814,406

3,717

3,096

584,309685,213

Provision for loss on order received
Provision for loss on litigation

41,401－Other

5,951,109

7,082,337

Total current liabilities

32,278,892

36,815,830

4,019,743

3,683,409

208,183

291,506

Asset retirement obligations

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

396,815

436,551

Net defined benefit liabilities

1,311,241

1,287,528

Asset retirement obligations

636,938

642,600

Other

507,067

4,800,723

7,079,990

11,142,318

39,358,882

47,958,149

Capital stock

3,306,002

3,306,002

Capital surplus

13,223,561

13,020,018

Retained earnings

13,785,809

13,917,901

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

Treasury stock(351,569)(158,379)

Total shareholders’ equity

29,963,804

30,085,543

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

610,074

565,116

Revaluation reserve for land

(17,933)(17,933)

Foreign currency translation adjustment

595,800

2,502,576

Re-measurements of defined benefit plans(2,483)(2,814)

1,185,458

3,046,946

Non-controlling Interests

2,876,174

2,792,899

Total Net assets

34,025,437

35,925,388

Total liabilities and Net assets

73,384,320

83,883,538

Total accumulated other comprehensive income6(2) Quarterly Consolidated Statements of Income and Statements of Comprehensive Income
Quarterly Consolidated Statements of Income
6 months ended
September 30, 2021

(Thousands of yen)

6 months ended
September 30, 2022

Net sales

33,846,057

41,589,200

Cost of sales

23,987,688

29,497,045

Gross profit

9,858,368

12,092,154

Selling, general and administrative expenses

9,426,616

10,680,221

431,751

1,411,932

Interest income

558

640

Dividend income

14,041

16,712Rent income

32,77632,193Equity in earnings of affiliates

1,196

－

Operating income
Non-operating income

Foreign exchange gains

5,669

46,133

Other

661,02957,855

Total non-operating income

715,273

153,536

101,087

113,758

－

524

Other

46,422

114,350

Total non-operating expenses

147,510

228,632

Ordinary income

999,514

1,336,836

Gain on sales of non-current assets

813

7,001

Compensation for forced relocation－

277,370

Non-operating expenses
Interest expenses
Equity in losses of affiliates

Extraordinary income

Other792,747

34,168

Total extraordinary income

793,560

318,540Extraordinary losses
Loss on retirement of non-current assets

10,946

1,894

Office transfer related expenses

224,13150,263－

170,228Extra retirement payments
Other

2,131

12,320237,210

234,707

1,555,865

1,420,669

Income taxes(191,788)

548,238

Net income

1,747,654

872,430

53,311

72,7801,694,342

799,650

Total extraordinary losses
Net income before income tax

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

7

Quarterly Consolidated Statements of Comprehensive Income
6 months ended
September 30, 2021

(Thousands of yen)
Net income

1,747,654

6 months ended
September 30, 2022
872,430

Other comprehensive income
Valuation difference on available-for-sale securities(178,691)(36,838)

Foreign currency translation adjustment

759,644

1,915,588

Re-measurements of defined benefit plans

(335)

(330)

580,617

1,878,418

2,328,271

2,750,849

Comprehensive income attributable to owners of parent

2,274,794

2,661,138

Comprehensive income attributable to non-controllinginterests

53,47789,711

Total other comprehensive income
Comprehensive income(Breakdown)8(3) Notes related to quarterly consolidated financial statements(Notes regarding ongoing concern assumption)
No relevant matters to be noted.
(Notes in the event of significant changes in shareholders' equity)
No relevant matters to be noted.
(The application of specific accounting of the consolidated quarterly financial statements)(Calculation of tax expenses)
Tax expenses are calculated by rationally estimating the effective tax rate after applying tax effect accounting to net income
before income tax for the consolidated fiscal year that includes the current second quarter and multiplying net income before
income taxes for the quarter by the estimated effective tax rate.
However, if the calculation of tax expenses using this estimated effective tax rate leads to obviously irrational results, thestatutory effective tax rate is used after adjusting income/loss before income taxes for material differences that do not fallunder temporary differences.
(Changes in accounting policies)(1) Adoption of FASB Accounting Standards Codification (ASC) No. 842, "Leases"
As of the beginning of the first quarter of the consolidated fiscal year ending March 31, 2023, ASC No. 842, "Leases,"
was adopted for foreign consolidated subsidiaries that have adopted U.S. GAAP.
In principle, therefore, all leases of lessees are recorded as assets and liabilities. When applying this standard, theCompany follows transitional treatment and recognizes the cumulative effect of a change in accounting policy at the dateof adoption.
As a result, "Lease assets (net)" under property, plant, and equipment, "Other" under current liabilities, and "Other"under non-current liabilities increased 3,002,985 thousand yen, 384,364 thousand yen, and 2,735,036 thousand yen,respectively, at the beginning of the first quarter of the current fiscal year. The effect on retained earnings at the
beginning of the first quarter of the current consolidated fiscal year and the effect on the quarterly consolidated
statement of income for the second quarter of the current consolidated fiscal year are immaterial.
(2) Change in method for calculating tax expenses
Previously, with the exception of some consolidated subsidiaries, tax expenses were calculated using the basic method.
However, in order to further improve the efficiency of the Company and its consolidated subsidiaries' quarterly
accounting operations, effective from the first quarter of the current consolidated fiscal year, the Company has changed
the method it uses to calculate tax expenses to rationally estimating the effective tax rate after applying tax effectaccounting to net income before income taxes for the consolidated fiscal year and then multiplying the estimatedeffective tax rate and net income before income taxes for the quarter.
Since the impact of this change is immaterial, it has not been retrospectively applied.

9

(Segment information and others)
I.

[Segment Information]
For the 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

8,927,902

17,931,664

6,978,803

33,838,371

65,967526,427

342,277

934,672

8,993,870

18,458,092

7,321,080

34,773,043

39,372

202,234

486,246

727,853

Adjustments(Note 1)

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

Net sales
Sales to externalcustomers
Inter-segment sales
or transfers

7,685

33,846,057(934,672)

－

Total

(926,986)

33,846,057

Segment Income(296,101)

431,751

Notes:
1.
The segment income adjustment of (296,101) thousand yen consists of income/loss related to the Company of 874,051 thousand
yen and elimination of inter-segment transactions of (1,170,153) thousand yen.
2.
Segment income is adjusted against operating income on the quarterly consolidated financial statements.

10

II.

For the 6 months ended September 30, 2022 (from April 1, 2022 to September 30, 2022)
1. Information regarding net sales and profit (loss) by reportable segment(Thousands of yen)Content Creation

Production
Services

Imaging Systems &Solutions

Sub total

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

9,029,270

24,727,181

7,823,188

41,579,640

16,549868,927

389,104

1,274,581

9,045,820

25,596,109

8,212,292

42,854,222

46,8701,192,524

712,740

1,952,135

Adjustments(Note 1)

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

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

9,559

41,589,200(1,274,581)－(1,265,022)

41,589,200(540,202)

1,411,932

Notes:
1.
Adjustment of segment income of (540,202) thousand yen consists of income/loss related to the Company of 1,365,953 thousand
yen and elimination of inter-segment transactions of (1,906,156) thousand yen.
2.
Segment income is adjusted against operating income on the quarterly consolidated financial statements.
2. Note concerning changes in reportable segments
Effective from the first quarter of the consolidated fiscal year ending March 31, 2023, one consolidated subsidiary (IMAGICA
EEX Inc.), which was previously included in "Adjustments," was reclassified to the Content Creation business segment because of
an increase in its importance.
"Information regarding net sales and income (loss) by reportable segment" for the second quarter of the previous fiscal year ispresented based on the new classification.

11