Avex : 〔Delayed〕Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2022

Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2022

(Japanese Accounting Standards)

August 5, 2021

Avex Inc.

Tokyo Stock Exchange, First Section

Code No: 7860

(URL https://avex.com/jp/en/)

Representative: Katsumi Kuroiwa, President, CEO

Contact: Shinji Hayashi, Representative Director, CFO

TEL: [phone]

Scheduled date to submit the Quarterly Securities Report (Shihanki Houkokusho): August 6, 2021

Scheduled date for commencement of dividend payments: -

Supplementary documents for financial results: Yes

Financial results briefing: None

Note: All amounts are rounded down to the nearest million yen.

1. Consolidated operating results for the first quarter of fiscal year ending March 31, 2022

(April 1, 2021 to June 30, 2021)

(1) Consolidated operating results

Note: Figures in percentages denote the year-on-year change.

Net sales

Operating income

Ordinary income

Profit (loss) attributable to

owners of parent

million yen

%

million yen

%

million yen

%

million yen

%

First Quarter of Fiscal Year

19,417

37.6

262

-

208

-

11

-

Ending March 31, 2022

First Quarter of Fiscal Year

14,108

(51.4)

(1,054)

-

(1,309)

-

(1,704)

-

Ended March 31, 2021

(Note) Comprehensive income

First Quarter of Fiscal Year Ending March 31, 2022:

¥231 million (-%)

First Quarter of Fiscal Year Ended March 31, 2021:

-¥28 million (-%)

Net income per share

Diluted net income per share

yen

yen

First Quarter of Fiscal Year

0.27

0.27

Ending March 31, 2022

First Quarter of Fiscal Year

(39.18)

-

Ended March 31, 2021

(2) Consolidated financial position

Total assets

Net assets

Shareholders' equity ratio

million yen

million yen

%

As of June 30, 2021

94,863

59,435

59.8

As of March 31, 2021

105,105

58,339

52.6

(Reference) Shareholders' equity

As of June 30, 2021:

¥56,694

million

As of March 31, 2021:

¥55,306 million

2. Status of dividend payments

Annual dividends

End of first quarter

End of second quarter

End of third quarter

End of year

Annual

yen

yen

yen

yen

yen

Year ended March 31, 2021

-

25.00

-

96.00

121.00

Year ending March 31, 2022

-

Year ending March 31, 2022

25.00

-

25.00

50.00

(forecast)

(Note) Revisions to dividend forecasts

published most recently: None

3. Forecasts for consolidated business results for the fiscal year ending March 31, 2022 (April 1, 2021 to March 31, 2022)

Note: Figures in percentages denote the year-on-year change.

	Operating income	Profit (loss) attributable	Net income per share
	to owners of parent
Year ending	million yen	%	million yen	%	Yen
March 31, 2022	1,000	-	0	-	0.00

(Note) Revisions to earnings forecasts published most recently: None

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Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2022

• Notes
• 1. Changes in significant subsidiaries during term under review (changes in specific subsidiaries in conjunction with changes in scope of consolidation): None

New: - company (Company name) -

Excluded: - (Company name) -

1. Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: None
2. Changes in accounting policies and changes in or restatement of accounting estimates
   1. Changes in accounting policies in conjunction with revisions to accounting standards: Yes

2.	Changes in accounting policies other than 1:	None
3.	Changes in accounting estimates:	None
4.	Restatement:	None

(4) Outstanding shares (ordinary shares)
a. Shares outstanding at end of term (including treasury stock)
As of June 30, 2021:	45,343,500 shares
As of March 31, 2021:	45,343,500 shares
b. Treasury stock at end of term
As of June 30, 2021:	423,888 shares
As of March 31, 2021:	3,927,388 shares
c. Average number of share (quarter-to-date)
First Quarter of Fiscal Year Ending March 31, 2022:	42,070,804 shares
First Quarter of Fiscal Year Ended March 31, 2021:	43,495,209 shares

• This financial summary is outside the scope of audit procedures by certified public accountants and audit firm.
• Explanation for forecasts of business results and other notes
  The forecasts for operating results and others contained in this release are based on data and information that the Group has obtained so far and specific assumptions that the Group judges to be reasonable. Please note, therefore, that the actual results and others may greatly differ from the forecasts due to various factors.

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Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2022

1. Qualitative Information on Consolidated Results, etc. for the First Quarter of Fiscal Year Ending March 31, 2022

(1) Summary of Operating Results

(Unit: million yen)

	Fiscal year	Fiscal year	Fiscal year	Fiscal year	Fiscal year
First quarter results	ended March	ended March	ended March	ended March	ending March
	31, 2018	31, 2019	31, 2020	31, 2021	31, 2022
Net sales	32,449	32,276	29,028	14,108	19,417
Cost of sales	22,747	23,623	20,475	8,795	12,537
Gross profit	9,701	8,652	8,552	5,313	6,880
Gross profit margin	29.9%	26.8%	29.5%	37.7%	35.4%
Personnel expenses	3,164	2,934	2,836	2,633	2,545
Sales promotion and advertising	1,764	2,071	1,453	953	1,332
expenses
General expenses	3,611	3,491	3,896	2,780	2,739
Total SG&A expenses	8,540	8,497	8,186	6,367	6,617
Operating income (loss)	1,161	155	366	(1,054)	262
Operating margin	3.6%	0.5%	1.3%	-%	1.4%

In the entertainment industry, to which the Group belongs, the production of music software, including music videos, was up 5.8% year on year, to 88,009 million yen (January to June 2021; according to a survey by the Recording Industry Association of Japan). Sales of paid music downloads were up 13.0% year on year, to 21,191 million yen (January to March 2021; according to a survey by the Recording Industry Association of Japan). In the video-related market, sales of video software fell 2.7% year on year, to 69,527 million yen (January to June 2021; according to a survey by the Japan Video Software Association). The digital video distribution market is expected to continue to grow, given the enhancement of video distribution services and the environmental changes that will improve user convenience, such as responses to TV devices and the dissemination of 5G.

In these business conditions, the Group has been seeking to achieve medium- to long-term growth through working to create strong intellectual properties by discovering and developing artists, talent and creators and reinforcing the lineup of works handled with the planning and development of original works including music, anime productions, video content and the licensing of other companies' works. The Group has also actively facilitated the joint development of new content and the overseas expansion of content owned by the Company in collaboration with promising partners both in Japan and overseas who operate globally.

In the first quarter under review, consolidated net sales increased to 19,417 million yen (up 37.6% year on year), mainly due to a rise in the number of music packaged products sold and the number of live performances and events. Consolidated operating profit came to 262 million yen (compared to a consolidated operating loss of 1,054 million yen posted in the first quarter of the previous fiscal year). Consolidated profit attributable to owners of parent was 11 million yen (compared to a loss of 1,704 million yen posted in the first quarter of the previous fiscal year).

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Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2022

(2) Summary of Financial Position

Assets totaled 94,863 million yen at the end of the first quarter under review after a decrease of 10,241 million yen from the end of the previous consolidated fiscal year. This was chiefly attributable to decreases of 7,051 million yen in cash and deposits and 2,102 million yen in notes and accounts receivable - trade.

Liabilities were reduced by 11,337 million yen from the end of the previous consolidated fiscal year, to 35,428 million yen. This was primarily a result of decreases of 5,632 million yen in income taxes payable and 3,375 million yen in accounts payable - other.

Net assets increased 1,095 million yen from the end of the previous consolidated fiscal year, to 59,435 million yen. This was mainly due to a decrease of 5,045 million yen in treasury shares (increase in net assets), despite a decrease of 3,967 million yen in retained earnings.

(3) Summary of Consolidated Financial Forecasts and Other Future Forecast Information

With respect to the summary of consolidated financial forecasts for the fiscal year ending March 31, 2022, the financial forecasts presented in the "Consolidated Financial Summary for the Year Ended March 31, 2021" announced on May 13, 2021 remain unchanged.

If any revision to the financial forecasts becomes necessary in the future, the Company will promptly disclose it.

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Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2022

2. Quarterly Consolidated Financial Statements and Major Notes

(1) Quarterly Consolidated Balance Sheets

			(Unit: million yen)
		As of March 31, 2021	As of June 30, 2021
(Assets)
Current assets
Cash and deposits	52,654	45,603
Notes and accounts receivable-trade	14,120	12,017
Merchandise and finished goods	1,366	1,217
Programs and works in progress	4,652	4,206
Raw materials and supplies	300	328
Other current assets	11,904	10,815
Allowance for doubtful accounts	(281)	(288)
Total current assets	84,716	73,900
Noncurrent assets
Property, plant and equipment
Buildings and structures, net	1,082	1,197
Land	1,548	1,548
Other property, plant and equipment, net	479	450
Total property, plant and equipment	3,110	3,196
Intangible assets	3,864	3,830
Investments and other assets
Investment securities	7,143	7,116
Other investments and other assets	6,320	6,873
Allowance for doubtful accounts	(49)	(53)
Total investments and other assets	13,414	13,936
Total noncurrent assets	20,389	20,963
Total assets	105,105	94,863
(Liabilities)
Current liabilities
Notes and accounts payable-trade	1,457	1,522
Current portion of long-term loans payable	54	4
Accounts payable - other	18,341	14,966
Income taxes payable	6,040	408
Provision for bonuses	500	53
Allowance for returned goods	2,892	2,636
Provision for point card certificates	37	37
Provision for contingent loss	225	225
Other current liabilities	15,588	13,960
Total current liabilities	45,138	33,813
Noncurrent liabilities
Long-term loans payable	4	3
Liabilities for retirement benefits	390	405
Other noncurrent liabilities	1,231	1,206
Total noncurrent liabilities	1,626	1,614
Total liabilities		46,765	35,428

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