ＩＭＡＧＩＣＡ　ＧＲＯＵＰ（6879） – [Delayed] Consolidated financial results (Japanese Accounting Standards) for the fiscal year ended March 31, 2022

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 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, the Japanese original is assumed to be correct.Consolidated financial results (Japanese Accounting Standards) for the fiscal year ended March 31, 2022 IMAGICA GROUP Inc. 6879 Nobuo Fuse, President Masakazu Morita, Director and Managing Executive Officer Company name: Securities code: Representative: Inquiries: Scheduled date for ordinary general meeting of shareholders: Scheduled date for commencement of dividend payment: Expected date of filing of annual securities report:Supplemental material of quarterly results: Convening briefing of quarterly results: June 28, 2022 June 14, 2022 June 28, 2022 Yes Yes 1. Consolidated Financial Results for the fiscal year ended March 31, 2022(April 1, 2021 – March 31, 2022)(1) Consolidated Operating ResultsFiling date: May 13, 2022 Stock exchange URL: listing: Tokyo Prime https://www.imagicagroup.co.jp/en/ Tel:+81-3-5777-6295 (Millions of yen, rounded down) Net sales Operating income Ordinary income Net income attributable to owners of the parent (Percentage represents change from the same period of the previous fiscal year.) Millions of yen % Millions of yen Millions of yen % Millions of yen % Fiscal year ended Mar.2022 80,184 (7.5) 3,417 Fiscal year ended Mar.2021 (1,084) (Note) Comprehensive income: Fiscal year 2022: 3,753 millions of yen /7.5% 86,727 (7.8) Fiscal year 2021: 3,490 millions of yen /-% 3,934 (1,343) – – 2,729 (21.0) 3,454 420.2 Net profit attributable to owners of parent per share Diluted net profit attributable to owners of parent per share Return on equity net income Total asset ordinary income ratio Operating income ratio Fiscal year ended Mar.2022 Fiscal year ended Mar.2021 yen 61.49 77.89 % 9.3 13.2 % 5.9 (2.2) (Reference) Equity in net income of affiliates: Fiscal year ended March 31, 2022 : (7) millions of yen Fiscal year ended March 31, 2021 : (340) millions of yen (2) Consolidated Financial Position% – – yen – – Total assets Net assets Millions of yen Millions of yen 73,384 60,446 34,025 29,832 Year ended March 31, 2022: 31,149 millions of yen Year ended March 31, 2021: 27,450 millions of yen Shareholders’ equity ratio to total assets Net assets per share of common stock % 42.4 45.4 % 4.3 (1.3) yen 701.63 618.43 As of March 31, 2022 As of March 31, 2021 (Reference) Shareholders’ equity: (3) Consolidated Cash FlowsCash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash and cash equivalents at the end of the period Fiscal year ended Mar.2022 Fiscal year ended Mar.2021 Millions of yen Millions of yen Millions of yen Millions of yen 7,414 (592) (3,928) (1,364) (4,183) 1,469 6,419 6,856 2. Dividends Fiscal year ended Mar.2021 Fiscal year ended Mar.2022 Fiscal year ending Mar.2023 (Forecast) English Dividend per share 1st quarter- end yen 2nd quarter – end yen 3rd quarter – end yen Year-end Annual Dividends total (Annual) Dividend payout ratio (Consolidated) Dividends to Net Assets (Consolidated) – – – 0.00 0.00 0.00 – – – yen Millions of yen yen 0.00 0.00 – 665 15.00 15.00 15.00 15.00 % – 24.4 31.7 % – 2.3 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 Operating income Ordinary income Net income attributable to owners of the parent Earnings per share of common stock % Millions of yen Fiscal year ending Mar.2023 *Notes: (1) Material changes in subsidiaries during this period (changes in scope of consolidations resulting from change in 2,100 (23.0) Millions of yen Millions of yen Millions of yen 88,000 3,600 3,300 (16.1) 5.3 9.7 % % % yen 47.30 subsidiaries): Yes (Name) IMAGICA Lab.Inc. (2) 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 standard: Yes 3) Changes in accounting estimates: Yes 4) Retrospective restatement: None (3) 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 March 31, 2022 44,741,467 shares As of March 31, 2021 44,741,467 shares 2) Number of treasury stock at the end of fiscal year As of March 31, 2022 345,938 shares As of March 31, 2021 353,231 shares 3) Average number of shares As of March 31, 2022 44,392,807 shares As of March 31, 2021 44,350,392 shares (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 the release 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 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 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, the Japanese original is assumed to be correct. Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 1. Overview of Operating Results (1) Overview of operating results for the current period ① Overview for the current consolidated fiscal year The environment surrounding the IMAGICA GROUP was marked by various changes including rapidly unfolding technological innovation and changes in the social environment due to the Covid-19 pandemic. These factors caused changes in our imaging related businesses with the emergence of the live streaming market and video streaming market. Seeing these changes as opportunities for growth, the Group devised the new mid-term plan “G-EST2025”. The fiscal year ending March 2022, the first fiscal year in the mid-term plan, was positioned as the year in which we would “build the foundation for transforming into a highly profitable business” while adopting various approaches toward our four basic strategies. As a result, the Group’s sales for the consolidated fiscal year were 80,184 million yen (down 7.5% year-over-year), due to factors such as the sale at the end of the previous fiscal year of all shares in the SDI Media Group, Inc., which had been a consolidated subsidiary, while operating income was 3,417 million yen (compared to an operating loss of 1,084 million in the same period of the previous year) and ordinary income was 3,934 million yen (compared to an ordinary loss of 1,343 million yen in the same period of the previous year). These results show that income increased significantly compared to the previous fiscal year. On the other hand, net income attributable to parent company shareholders for the current period was 2,729 million yen (down 21.0% year-over-year) due to special losses including impairment losses of 120 million yen. ② Performance by business segment Financial results by business segment are as follows. This consolidated fiscal year one consolidated subsidiary (Imagica Live, Ltd.) which was previously in the Production Service business segment was reclassified to the Imaging Systems & Solutions business segment. Comparisons and analyses for the current consolidated fiscal year are based on conditions after the reclassification. 1) Content Creation business The Content Creation segment this consolidated fiscal year saw sales of 21,674 million yen (up 9.4% year-over-year) and operating income of 582 million yen (compared to an operating loss of 440 million yen in the same period of the previous year). The theater movies category saw strong sales due to delivery of dramas for video streaming service providers in addition to theater movies and TV animations. Orders for production of commercials recovered and profitability improved. Besides video streaming, live music event recordings also improved, while orders for making music videos were robust. These developments resulted in improved Content Creation income and profits. ― 2 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 2) Production Services business Production Services business for the current fiscal year saw sales of 42,080 million yen (down 10.4% year-over-year) with operating income of 1,726 million yen (compared to an operating loss of 2,223 million yen for the same period of the previous year). In domestic E2E services*1, which saw a tie-up with Pixelogic Holdings LLC (PXL) consolidated from the previous fiscal year and other developments, service orders for video streaming service providers (video file compression, conversion, and other encoding, localization) performed well. Orders for digital cinema services for Japanese and non-Japanese works increased significantly, as the number of feature films increased. . We continue to secure orders for post-production services for feature films and animation works. In overseas E2E services, PXL continues to receive strong orders for localization services from video streaming service providers, while sales of digital cinema services are on the rise due to the reopening of theaters in Europe and the US. In post-production services for TV programs and TV commercials*2 sales of services for TV commercials did well and demand for online submissions expanded as the advertising market recovered. In game production and personnel services etc.*3, game production-related services enjoyed strong orders for 3D computer graphics and debugging. Sales for Production Services business overall decreased due to the sale at the end of the previous fiscal year of all shares in the SDI Media Group, Inc., a consolidated subsidiary, but profits were up significantly due to strong domestic and overseas E2E services and the effects of the structural reforms implemented in the previous fiscal year. *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 through 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 postproduction services” up to last fiscal year has been changed to “E2E services” and “post-production services for TV programs *3 The descriptions of “personnel services” and “digital content” used up to last fiscal year have been changed to “game *Overseas E2E services have a settlement date of December 31, so their performance from January 1, 2021 to December 31, and TV commercials, etc.” production, personnel services, etc.” 2021 is reflected in the current consolidated fiscal year. 3) Imaging Systems & Solutions business The Imaging Systems & Solutions business in the current consolidated fiscal year saw sales of 17,639 million yen (down 16.0% year-over-year) and operating income of 1,740 million yen (down 14.9% year-over-year). Systems for broadcasting stations struggled to secure orders due to stagnating demand and restrictions on sales activities due to Covid-19, and while sales of high-speed cameras struggled in Japan in the first half though recovered in the second, sales continued strongly in the rest of Asia, and Europe and America. The online delivery system for TV commercials continued to post good sales in an expanding market, as sales of video and image processing LSI’s continued strongly in Japan and overseas (particularly in the rest of Asia). Imagica Live, Ltd., which changed segments this consolidated fiscal year to the Imaging Systems & Solutions business, posted solid orders for sports-related live relays and archive video distribution operations, etc. Mobile communications line sales were down due to the application of revenue recognition accounting standards. This resulted in lower income and profits for the Imaging Systems & Solutions business. ― 3 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 (2) Overview of financial situation for the current period ① Assets inventory assets and accounts receivable. the previous fiscal year to 32,317 million yen. Current assets increased 10,625 million yen (34.9%) to 41,066 million yen. This was primarily due to increases in Primarily as a result of increases in buildings and structures, fixed assets increased 2,312 million yen (7.7%) from As a result, total assets increased to 12,938 million yen (21.4%) from the previous fiscal year to 73,384 million yen. ② Liabilities Current liabilities increased 10,161 million yen (45.9%) from the previous fiscal year to 32,278 million yen mainly due to increases in contract liabilities, notes and accounts payable. Fixed liabilities decreased 1,415 million yen (16.7%) from the previous fiscal year to 7,079 million yen, primarily due to a decrease in long-term loans payable. As a result, total liabilities increased 8,745 million yen (28.6%) from the previous fiscal year to 39,358 million yen. Net assets increased to 4,192 million yen (14.1%) from the previous fiscal year to 34,025 million yen. The ratio of shareholder’s ③ Net assets equity to total assets is now 42.4%. (3) Overview of cash flow for the current perod Cash and cash equivalents (hereafter, cash) at the end of this consolidated fiscal year decreased 437 million yen (6.4%) from the previous fiscal year to 6,419 million yen. Cash flows this consolidated fiscal year and the reasons are as follows. 1) Cash flow from operating activities Funds obtained through operating activities were 7,414 million yen (592 million were used in the same period of the previous year). This occurred despite a decrease in funds due to increased inventory assets primarily due to increasing contract liabilities, notes and accounts payable. 2) Cash flows for investment activities year to 3,928 million yen. Funds used as a result of investment activities increased 2,564 million yen (187.9 %) from the previous consolidated fiscal This was mainly caused by a decrease in funds due to the acquisition of tangible fixed assets. 3) Cash flow from financing activities Funds used for finance activities amounted to 4,183 million yen (1,469 million yen acquired in the same period of the previous year). Primarily this was caused by a decrease in funds due to the repayment of short-term and long-term loans payable. (Reference) Trends in cash flow related indicators Fiscal year ending March 2018 Fiscal year ending March 2019 Fiscal year ending March 2020 Fiscal year ending March 2021 Fiscal year ending March 2022 Shareholders’ equity ratio to total assets Shareholders’ equity ratio on a market price basis (%) Ratio of cash flow to interest-bearing liabilities Interest coverage ratio 41.7 76.0 38.9 45.5 40.3 25.1 45.4 39.7 42.4 43.3 358.2 10,625.2 162.4 (2,282.9) 117.2 26.0 0.4 21.4 (1.7) 35.5 *Shareholders’ equity ratio: Shareholders’ equity/total assets Shareholders’ equity ratio on a market price basis: Total market value of shares/total assets Ratio of cash flow to interest-bearing liabilities: Interest-bearing liabilities/operating cash flow interest coverage ratio: Operating cash flow/interest payments. ― 4 ― Notes: 1. All indicators are calculated using financial figures on a consolidated basis. Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 2. Market capitalization is calculated by multiplying the closing share price at the end of the period by the number of shares outstanding (less treasury stock) at the end of the period. 3. Cash flow from operating activities is the cash flow from operating activities in the consolidated statements of cash flow. Interest-bearing debt includes all liabilities on the consolidated balance sheets for which interest is paid. Interest payments are based on the amount of interest paid in the consolidated statements of cash flows. The fiscal year ending March 2023, the second year of the G-EST2025 mid-term plan, is positioned as the year for “continuing to build the foundation for conversion to a high profitability Group”. Going forward, we intend to continue implementing the four (4) Future outlook basic strategies in the mid-term plan. 1. Expand “Global E2E” business ・ Focus continues on services for video streaming service providers which remain strong ・ Make up-front investments for growth 2. Establish a new Live Entertainment business ・ Strengthen alliances with key companies in hybrid live and high-definition live viewing ・ Develop new projects in experiential theme parks 3. Generate Additional Business Value in the Imaging Systems & Solutions business ・ Expand revenue in high-speed cameras, online delivery system for TV commercials, and video networks for cardiovascular equipment ・ Improve profits from systems for broadcasting stations ・ Expand optical measurements business 4. Complete Transformation in the “Transformational business” ・ Promote business development using proprietary intellectual property ・ Expand content production for video streaming service providers ・ Further cost control over production of movie theater movies, TV animations and TV dramas Our efforts using the basic strategies have resulted in consolidated performance forecasts for the fiscal year ending March 2023 projecting sales of 88,000 million yen, operating income of 3,600 million yen, ordinary income of 3,300 million yen and net income attributable to parent company shareholders of 2,100 million yen. Operating income includes approximately 1,600 million yen of amortization of goodwill and other expenses*. We assume that the impact of the novel coronavirus on business performance will continue for a certain period of time in the fiscal year ending March 2023, but the situation will gradually improve. Specific details on the progress of the mid-term plan “G-EST 2025” will be disclosed at the financial results briefing to be held (*Amortization of goodwill and other expenses equals amortization of good will plus amortization of intangible fixed assets associated with M&A.) on May 17, 2022. The Group considers the return of profits to shareholders an important management objective. Our basic policy is to distribute earnings in line with consolidated results. We target a consolidated payout ratio of 30% and aim to maintain stable dividends and increase the level of dividends. If any special factor, such as an extraordinary gain or loss, significantly impacts the net income of a given fiscal year, our general policy is to take the special factor into consideration in determining dividends, after consideration of all aspects, including provision of stable dividends to shareholders, future business development, and retained earnings. Based on the above the year-end dividend (forecast) for the fiscal year ending March 2023 will be ¥15 per share. 2. Basic policy for the selection of accounting standards Considering comparability of consolidated financial statements over time, the Group will continue to use the Japanese accounting standards in the immediate future. Meanwhile, the Group plans to appropriately decide the adoption of the International Financial Reporting Standards (IFRS) after considering developments regarding accounting standards in Japan and abroad. ― 5 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 March 31, 2021 March 31 2022 6,908,657 15,159,083 － － － 6,499,812 1,918,018 (44,735) 30,440,836 3,065,365 85,810 1,705,819 475,187 1,892,686 7,224,868 12,048,747 2,464,367 14,513,115 3,163,483 1,641,911 2,154,662 1,424,759 (117,446) 8,267,369 30,005,354 60,446,190 6,420,308 － 353,710 18,321,433 174,250 13,613,658 2,223,017 (39,570) 41,066,808 5,448,367 832,609 1,705,807 303,675 1,878,964 10,169,425 11,482,801 2,352,770 13,835,572 2,670,687 2,066,324 3,051,529 672,435 (148,462) 8,312,513 32,317,511 73,384,320 3. Consolidated Financial Statements (1) Consolidated Balance Sheets (Thousands of yen) Assets Current assets Cash and deposits Notes and accounts receivable- trade Notes receivable – trade Accounts receivable – trade Contract assets Inventories Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures Machinery and equipment Total Property, plant and equipment Land Lease Assets Other Intangible assets Goodwill Other Total Intangible assets Investments and other assets Investment securities Lease and guarantee deposits Deferred tax asset Other Allowance for doubtful accounts Total Investments and other assets Total Non-current assets Total assets ― 6 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 March 31, 2021 March 31 2022 (Thousands of yen) Liabilities Current liabilities Notes and accounts payable- trade Short-term loans payable Accounts payable Income taxes payable Advances received Contract liabilities Asset retirement obligations Provision for bonuses Provision for loss on order received Provision for loss on litigation Other Total current liabilities Non-current liabilities Long-term loans payable Long-term accounts payable-other Net defined benefit liabilities Deferred tax liabilities Asset retirement obligations Other Total non-current liabilities Total Liabilities Net assets Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Revaluation reserve for land Foreign currency translation adjustment Re-measurements of defined benefit plans Total accumulated other comprehensive income Stock acquisition right Non-controlling Interests Total Net assets Total liabilities and Net assets ― 7 ― 5,416,309 7,402,726 1,212,857 211,609 2,811,112 － － 977,286 79,660 531,408 3,474,389 22,117,359 5,384,905 148,018 550,324 1,219,724 627,722 565,200 8,495,895 30,613,255 3,306,002 13,238,832 10,966,151 (361,659) 27,149,326 880,107 (17,933) (559,947) (688) 301,538 11,484 2,370,585 29,832,935 60,446,190 8,884,981 4,170,485 1,824,055 850,863 － 8,373,707 41,401 1,594,260 3,717 584,309 5,951,109 32,278,892 4,019,743 208,183 396,815 1,311,241 636,938 507,067 7,079,990 39,358,882 3,306,002 13,223,561 13,785,809 (351,569) 29,963,804 610,074 (17,933) 595,800 (2,483) 1,185,458 － 2,876,174 34,025,437 73,384,320 (2) Consolidated Statements of Income and Statements of Comprehensive Income Consolidated Statements of Income Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 Fiscal year 2020 Fiscal year 2021 Selling, general and administrative expenses (Thousands of yen) Net sales Cost of sales Gross profit Operating income (loss) Non-operating income Interest income Dividend income Subsidy income Foreign exchange gains Other Total non-operating income Non-operating expenses Interest expenses Equity in losses of affiliates Other Total non-operating expenses Ordinary income (loss) Extraordinary income Gain on sales of non-current assets Gain on sales of investment securities Gain on sale of shares of subsidiaries and associates Compensation for forced relocation Gain on step acquisitions Other Total extraordinary income Extraordinary losses Loss on sales of non-current assets Loss on retirement of non-current assets Impairment loss Business restructuring expenses Office transfer related expenses Other Total extraordinary losses Net income before income tax Income Taxes Current Income Taxes Deferred (loss) Income taxes Net income Net income (loss) attributable to non-controlling interests Net income attributable to owners of the parent ― 8 ― 86,727,250 66,144,342 20,582,908 21,667,668 (1,084,760) 211,506 35,623 159,998 80,382 123,818 611,329 339,794 340,681 189,668 870,144 (1,343,575) 3,790 － 4,936,083 121,825 2,076,728 － 7,138,428 263 50,714 410,443 1,716,210 21,166 41,214 2,240,013 3,554,839 774,733 (128,541) 646,191 2,908,647 (545,990) 3,454,638 80,184,157 56,797,356 23,386,800 19,969,029 3,417,771 1,203 22,240 667,109 46,132 138,752 875,437 204,657 7,224 146,855 358,737 3,934,471 4,690 414,702 417,882 438,754 － 25,077 1,301,107 － 102,982 1,280,371 － 586,397 67,513 2,037,265 3,198,313 1,351,725 (1,018,408) 333,317 2,864,995 135,277 2,729,718 Consolidated Statements of Comprehensive Income Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 (Thousands of yen) Net income Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Re-measurements of defined benefit plans Total other comprehensive income Comprehensive income (Breakdown) Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests Fiscal year 2020 Fiscal year 2021 2,908,647 690,975 (109,391) 393 581,977 3,490,624 4,117,494 (626,869) 2,864,995 (266,504) 1,156,758 (1,795) 888,458 3,753,454 3,613,638 139,815 ― 9 ― (3) Consolidated Statements of Cash Flow Statement Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 Fiscal year 2020 Fiscal year 2021 (Thousands of yen) Cash flows from operating activities Income before income taxes Depreciation and Amortization Amortization of goodwill Impairment loss Increase (decrease) in net defined benefit liabilities Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Interest and dividend income Subsidy income Interest expenses Equity in (earnings) losses of affiliates Loss (gain) on step acquisitions Loss (gain) on sales of investment securities Loss (gain) on sales of socks of subsidiaries and affiliates Loss (gain) on sales of non-current assets Compensation for forced relocation Office transfer related expenses Business restructuring expenses Decrease (increase) in notes and accounts receivable-trade Decrease (increase) in trade receivables and contract assets Decrease (increase) in inventories Increase (decrease) in notes and accounts payable-trade Increase (decrease) in advance payment Increase (decrease) in contract liabilities Other, net Subtotal Interest and dividend income received Subsidies received Interest expenses paid Proceeds from compensation for forced relocation Office transfer related expenses paid Business restructuring expenses paid Income taxes paid Net cash provided by (used in) operating activities Cash flows from investing activities Payments into time deposits Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Proceeds from sale of investment securities Purchase of shares of subsidiaries resulting in change in scope of consolidation Proceeds from sale of shares of subsidiaries resulting in change in scope of consolidation Payments of leasehold and guarantee deposits Other, net Net cash provided by (used in) investing activities ― 10 ― 3,554,839 2,757,520 871,375 410,443 (19,166) 7,930 (272,580) (249,299) (159,998) 339,794 340,681 (2,076,728) － (4,936,083) (1,635,027) 47,187 (121,825) 21,166 1,716,210 (52,438) － 2,741,123 26,013 － (792,888) 2,518,250 248,536 159,535 (354,142) 121,825 (17,082) (1,400,653) (1,868,750) (592,481) (394,699) (1,500,380) 5,302 (709,320) 5,000 (60,000) 5,859,020 (23,298) (4,545,874) (1,364,250) 3,198,313 2,059,069 1,406,351 1,280,371 62,677 22,559 585,000 (23,443) (667,109) 204,657 7,224 － (414,702) (417,882) 98,292 (438,754) 586,397 － － (1,992,676) (6,770,229) 2,431,249 － 5,393,275 344,666 6,955,306 22,585 22,617 (209,152) 1,858,926 (530,888) (315,537) (389,105) 7,414,751 － (3,996,470) 11,277 (612,816) 944,982 － 417,882 (546,979) (146,229) (3,928,354) Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 Fiscal year 2020 Fiscal year 2021 (Thousands of yen) Cash flows from financing activities Net increase (decrease) in short-term loans payable Proceeds from long-term loans payable Repayment of long-term loans payable Cash dividends paid Proceeds from share issuance to non-controlling shareholders Others, net Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Increase (decrease) in cash and cash equivalents resulting from change in scope of consolidation Cash and cash equivalents at end of period 3,596,512 4,939,764 (4,048,685) (221,365) － (2,797,224) 1,469,000 2,723 (485,008) 7,327,842 14,119 6,856,953 (2,023,493) － (1,974,386) － 267,500 (453,581) (4,183,962) 211,125 (486,439) 6,856,953 48,693 6,419,206 ― 11 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 (4) Notes to consolidated financial statements (Notes on premise of a going concern) None. (Changes in accounting policy etc.) (Changes in accounting policy) (Changes accompanying application of Accounting Standards for Recognizing Revenue etc.) The Accounting Standards for Recognizing Revenue, (Corporate Accounting Standard No. 29, March 31, 2020; hereafter “Revenue Recognition Accounting Standards”) were applied from the start of this consolidated fiscal year. These standards prescribe that payment expected to be received in exchange for a good or service is recognized as revenue at the point in time when control of the good or service is transferred to the customer. This resulted in the following changes to recognition of revenue. (1) Recognition of revenue from product export sales Previously the Company recognized revenue from export sales of imaging equipment etc., at the time of export customs clearance. This has changed and the revenue is now recognized when it is determined that control of the asset has been transferred to the customer in accordance with the terms of the transaction. (2) Revenue recognition for transactions with multiple performance obligations in one contract In our Content Creation business, in the case of transactions with multiple performance obligations in a single contract we previously recognized revenue when all performance obligations were completed if they were highly interrelated. Now however, in the case of items for which the service is determined to be complete after the customer conducts an acceptance inspection, we have changed to a method in which that determination is made for each individual performance obligation and the revenue is deemed received at the point in time at which the inspection is completed. (3) Revenue recognition for transactions conducted by agent Previously we recognized revenue from sales of mobile communications lines based on the total amount received from the customer. However, as a result of determining the role (principal or agent) used in provision of goods or services to the customer, we have changed to a method that recognizes revenue as the net amount obtained after deducting amounts paid to the supplier from the total. When applying the Revenue Recognition Accounting Standards an amount representing the cumulative effect after retroactive application of the new accounting policy prior to the start of the current fiscal year is added to or subtracted from retained earnings at the start of the current fiscal year in accordance with the requirements of the proviso of paragraph 84 of the Standards on how to handle the transition. However applying the provisions of paragraph 86 of the Standards, the new accounting policy was not applied retroactively to contracts for which almost the entire amount of revenue was recognized according to the previous method that was being used before the start of the current consolidated fiscal year. The “Notes and accounts receivable” that were stated in “Current assets” in the consolidated balance sheets for the previous consolidated fiscal year, are, from this consolidated fiscal year, shown included in “Notes receivable”, “Accounts receivable”, and “Contract assets” and are shown as “Current liabilities”. “Advances received” are included under “Contract liabilities” from this fiscal year onward. In addition, while in the consolidated statements of cash flow for the previous fiscal year, the “increase/decrease in notes and accounts receivable-trade” (increase) are stated in the “cash flow from operating activities”, from this consolidated fiscal year these are included in “increase/decrease of notes and accounts receivable-trade and contract assets” (increase). The “increase/decrease of advanced payments” (decrease) are included in “increase/decrease of contract liabilities” (decrease) from this consolidated fiscal year. However in accordance with the provisions for transitional treatment prescribed in the Revenue Recognition Accounting Standards paragraph 89-2, no reclassification has been made for the previous consolidated fiscal year using the new statement method. As a result the retained earnings at the start of this consolidated fiscal year decreased 9,934 thousand yen. Also, compared to the situation prior to application of the Revenue Recognition Accounting Standards, sales for this consolidated fiscal year decreased 5,947,684 thousand yen while the cost of sales decreased 5,936,563 thousand yen, with operating income, ordinary income and net profit before tax adjustments etc. each decreasing 11,120 thousand yen. The impact on per-share Information is stated in the relevant sections. ― 12 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 (Changes in line with application of “Accounting Standards for Calculation of Market Value”) “Accounting Standards for Calculation of Market Value” (Corporate Accounting Standard No. 30, July 4, 2019; hereafter “Market Value Calculation Accounting Standards”) were applied from the start of this consolidated fiscal year. It was decided that going forward the new accounting policy that prescribes market value accounting standards etc. would be applied in accordance with the transitional treatment prescribed in the Market Value Accounting Standards paragraph 19 and paragraph 44-2 of the Financial Product Accounting Standards (Corporate Accounting Standard No. 10, July 4, 2019). This change has not impacted the consolidated financial statements. (Changes in accounting policy that are difficult to distinguish from changes in accounting estimates) Previously, the Company and its domestic consolidated subsidiaries mainly used the declining balance method for depreciation and amortization of tangible fixed assets (excluding leased assets), but from this consolidated fiscal year we changed to the straight-line method. Responding to the transition from an era in which state-of-the-art equipment functionality and editing services were our strengths to an era that demands consistent performance of complex tasks in a secure environment for simultaneous worldwide distribution, prior to the fiscal year ending March 2021 the Group made changes to its overseas strategy, carried out structural reforms and a whole Group reorganization and began making more effective use of fixed assets, while reinvigorating our human resources by creating an office environment suited to new ways of working. Taking implementation of the above measures as an opportunity, we examined the actual use of our tangible fixed assets. The result led us to believe that the risk of technological and economic obsolescence was low. Further, based on the new G-EST2025 medium-term management plan we expect our assets to continue stable operations over their useful lives. We therefore decided to adopt the straight-line depreciation method which distributes costs uniformly, more rationally reflecting how those assets are used. The changes we implemented brought results. Operating income, ordinary income and net profit before tax adjustments etc. for this period each increased 143,917 thousand yen compared to what the previous method would have produced. ― 13 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 (Segment information and other items) [Segment information] 1. Overview of reportable segments (1) Method for determining reportable segments The reportable segments of the Group are constituent units of the Company and its consolidated subsidiaries for which separate financial information is available and which are subject to periodic review by the Board of Directors for the purpose of determining the allocation of management resources and evaluating performance. The Group is engaged in a wide range of businesses in the Content Creation field, and has three reportable segments: Content Creation business, Production Services business and Imaging Systems & Solutions business. The Content Creation business plans and produces movie theater movies, TV dramas, animations, and web-related videos. It also produces commercials and Internet and other advertisements, and is involved in publishing and production of music videos as well as providing integrated production services in the space surrounding video such as live music and events. The Production Services business segment offers one-stop global video technology services from shooting to editing and distribution, including services such as shooting, relays, program/commercial/PR/etc., video and audio editing, digital synthesis, virtual effects and computer graphics production, digital cinema, localization and distribution, as well as offering game production and personnel services. The Imaging Systems & Solutions business segment operates in areas such as developing, manufacturing, importing, selling, and providing maintenance services for cutting edge hardware and software related to video and imaging and developing and selling video and image processing LSIs. (2) Note concerning changes in reportable segments (Reporting Segments changed) From this consolidated fiscal year one consolidated subsidiary (Imagica Live, Ltd.) that had previously been classified under Production Service business was reclassified into the Imaging Systems & Solutions business segment. Relevant “information for each reportable segment including net sales, profit or loss, assets, liabilities, and other items” for the previous consolidated fiscal year is disclosed based on the new classification. (Changes in accounting policy) As described in “Changes in accounting policy”, the Revenue Recognition Accounting Standards were applied from the start of this consolidated fiscal year and as the method of accounting used for recognizing revenue was changed, the method for calculating profits and losses for each business segment was changed in the same manner. As a result of these changes, in comparison to accounting under the previous method, net sales for this consolidated fiscal year increased 70,401 thousand yen in the Content Creation business segment, decreased 12,612 thousand yen in the Production Services business segment and decreased 6,005,472 thousand yen in the Imaging Systems & Solutions business segment. Profits increased 1,492 thousand yen in the Content Creation business segment and decreased 12,612 thousand yen in the Production Services business segment. (Change in depreciation and amortization method used for tangible fixed assets) As stated in “Changes in accounting policy that are difficult to distinguish from changes in accounting estimates”, the Company and its domestic consolidated subsidiaries have changed the depreciation and amortization method for tangible fixed assets (excluding leased assets) from the declining-balance method to the straight-line method from the current fiscal year. As a result of this change this consolidated fiscal year profits increased 10,542 thousand yen in the Content Creation business segment, 42,347 thousand yen in the Production Services business segment, 60,085 thousand yen in the Imaging Systems & Solutions business segment, and 30,941 thousand yen as “Adjustments”. 2. Method for calculating sales, profit or loss, assets, liabilities, and other items for each reportable segment The accounting methods for reportable business segments are generally the same as those used in consolidated financial statements. Profits of reportable segments are based on operating income. Intersegment sales or transfers are based on prevailing market prices. ― 14 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 3. Information concerning sales, profit or loss, assets, liabilities and other items Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021) Content Creation Production Services Imaging Systems & Solutions (Thousands of yen) Sub total 19,630,096 46,037,741 20,603,612 86,271,450 179,763 936,209 403,158 1,519,131 19,809,860 46,973,950 21,006,771 87,790,582 (440,895) (2,223,448) 2,046,577 (617,766) Net sales Sales to external customers Inter-segment sales or transfers Total Segment income (loss) Net sales Sales to external customers Inter-segment sales or transfers Total Segment income (loss) Adjustments (Note 1) Amount in the Quarterly Consolidated Statements of Income (Note 2) 455,800 86,727,250 (1,519,131) － (1,063,331) 86,727,250 (466,994) (1,084,760) Notes: 1. Adjustments are as follows. (1) Sales to outside customers Include new business-related income and real estate rental income. (2) The (466,994) thousand yen segment profit or loss (loss) adjustment consists mainly of a 1,130,385 thousand yen profit related to the Company and (1,597,379) thousand yen of elimination of intersegment transactions. (3) The amount of 6,615,705 thousand yen as an adjustment for segment assets includes corporate assets of 15,179,695 thousand yen not allocated to reportable segments and elimination of intersegment transactions amounting to (8,563,990) thousand yen. Corporate assets consist mainly of cash and deposits and fixed assets such as investment (4) An adjustment for depreciation and amortization of 113,279 thousand yen includes 136,418 thousand yen depreciation and amortization related to corporate assets and elimination of intersegment transactions of (23,138) securities. thousand yen. (5) An adjustment of 46,273 thousand yen increasing tangible and intangible fixed assets includes acquisition of corporate assets of 47,117 thousand yen and elimination of intersegment transactions of (844) thousand yen. 2. Segment profit and loss (loss) is adjusted with operating loss in the consolidated financial statements. ― 15 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 Current consolidated fiscal year (April 1, 2021 to March 31, 2022) Content Creation Production Services Imaging Systems & Solutions (Thousands of yen) Sub total 21,328,985 40,902,341 16,981,276 79,212,603 345,204 1,178,645 658,710 2,182,560 21,674,190 582,216 42,080,986 1,726,100 17,639,986 1,740,806 81,395,164 4,049,124 Net sales Sales to external customers Inter-segment sales or transfers Segment income Total Net sales Sales to external customers Inter-segment sales or transfers Total Segment income Adjustments (Note 1) Amount in the Quarterly Consolidated Statements of Income (Note 2) 971,553 80,184,157 (2,182,560) (1,211,006) (631,352) － 80,184,157 3,417,771 Notes: 1. Adjustments are as follows. (1) Sales to outside customers Include new business-related income and real estate rental income. (2) The adjustment of segment profits amounting to (631,352) thousand yen mainly includes profits of 666,930 thousand yen related to the Company and elimination of intersegment transactions of (1,298,283) thousand yen (3) The 1,155,918 thousand yen adjustment for segment assets includes corporate assets of 15,472,585 thousand yen not allocated to a reportable segment and inter-segment elimination of (14,316,666) thousand yen. Corporate assets consist mainly of cash and deposits and fixed assets such as investment securities. (4) The 92,419 thousand yen adjustment for depreciation and amortization includes depreciation and amortization of 111,104 thousand yen related to corporate assets and elimination of inter-segment transactions of (18,684) thousand yen. (5) An adjustment increase in tangible and intangible fixed assets of 267,853 thousand yen includes acquisition of corporate assets of 270,299 thousand yen and elimination of inter-segment transactions of (2,446) thousand yen. 2. Segment profits are adjusted with operating income in the consolidated statements of income. ― 16 ― (Per-share information) Net assets per share Net income per share Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 Fiscal Year 2020 (April 1, 2020 to March 31, 2021) Fiscal Year 2021 (April 1, 2021 to March 31, 2022) 618.43 yen 77.89 yen 701.63 yen 61.49 yen Notes: 1. As there are no residual shares that could dilute stock value diluted net income per share is not shown. 2. As stated in “Changes in accounting policy”, the “Revenue Recognition Accounting Standards” have been applied. This had only a minor impact on net income per share for the current fiscal year. 3. Net income per share is calculated on the following basis. Fiscal Year 2020 (April 1, 2020 to March 31, 2021) Fiscal Year 2021 (April 1, 2021 to March 31, 2022) Net income per share Net income (thousands of yen) attributable to parent company shareholders Amount not attributable to ordinary shareholders (thousands of yen) Net income (thousands of yen) attributable to shareholders of the parent company for common stock 3,454,638 2,729,718 － － 3,454,638 2,729,718 Average number of shares of common stock during period (shares) 44,350,392 44,392,807 Stock acquisition rights by resolution of the Board of Directors meeting of July 11, 2019 Third series of stock acquisition rights 42,901 stock acquisition rights (4,290 thousand shares of common stock) Fourth series of stock acquisition 40,000 stock acquisition rights (4,000 shares of common stock) Stock acquisition rights by resolution of the Board of Directors on July 11, 2019 Third series of stock acquisition rights 42,901 stock acquisition rights (4,290 thousand shares of common stock) Fourth series of stock acquisition rights 40,000 stock acquisition rights (4,000 shares of common stock) The above stock acquisition rights were acquired and canceled on All have been acquired and canceled. Fiscal Year 2020 Fiscal Year 2021 (April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022) 29,832,935 2,382,070 (11,484) (2,370,585) 34,025,437 2,876,174 － (2,876,174) 27,450,865 31,149,262 44,388,236 44,395,529 Summary of potential stock not included in the calculation of diluted net income per share due to the absence of a dilutive effect. 4. Basis for calculating net assets per share is as follows. Total net assets (thousands of yen) Amount deducted from total net assets (thousands of yen) (of which, stock acquisition rights (thousands of yen)) (of which, non-controlling interest (thousands of yen)) Net assets at period end related to common shares (thousands of yen) Number of shares of common stock at end of period used for calculating net assets per-share ― 17 ― Imagica Group, Ltd. (6879), Financial Statements for Fiscal Year ending March 31, 2022 (Significant subsequent events) No relevant matters to be noted. 4. Others, net (1) Changes in executives Will be disclosed when decided. ― 18 ―