AOI TYO : 〔Delayed〕Summary of Consolidated Financial Results (Japanese Accounting Standards) for the First Quarter of the Fiscal Year Ending December 31, 2021

Summary of Consolidated Financial Results (Japanese Accounting Standards)

for the First Quarter of the Fiscal Year Ending December 31, 2021

May 14, 2021

Company name:	AOI TYO Holdings Inc.
Stock Exchange:	Tokyo Stock Exchange
Code:	3975
URL:	https://aoityo.com/en/
Representatives:	Yasuhito Nakae, Representative Director
Inquiries:	Satoshi Yuzurihara, Director Tel: [phone]

Scheduled date of submission of quarterly report:	May 14, 2021
Scheduled date of commencement of dividend payment:	-
Supplementary documents for quarterly results:	Yes
Quarterly results briefing:	No

(Rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter (from January 1, 2021 to March 31, 2021)

(1) Consolidated operating results				(The percentages are year-on-year changes.)
	Net sales		Operating income	Ordinary income	Profit attributable to
		owners of parent
	Million yen		%	Million yen	%	Million yen	%	Million yen		%
Q1 FY2021	14,193		8.8	923	693.2	923	－	403		－
Q1 FY2020	13,049		-15.7	116	-81.6	5	-99.1	-32		－

(Note) Comprehensive income	Q1 FY2021: 593 million yen (-%) Q1 FY2020: -226 million yen (-%)
		Net income per share	Diluted net income�
		per share
		Yen	Yen
Q1 FY2021		17.17	17.13
Q1 FY2020		-1.40	－
(2) Consolidated financial position
		Total assets	Net assets	Equity ratio
		Million yen	Million yen	%
Q1 FY2021		51,300	20,513	39.4
FY2020		48,682	20,231	40.9

(For reference) Shareholders' equity Q1 FY2021: 20,217 million yen FY2020: 19,925 million yen

2. Dividends

		Dividends per share
	End of Q1	End of Q2	End of Q3		Year end	Annual
	Yen	Yen	Yen		Yen	Yen
FY2020	－	－	－		12.00	12.00
FY2021	－
FY2021 (forecast)		0.00	－		0.00	0.00

(Note) Revisions to dividends forecast published most recently: Yes

3. Consolidated Financial Forecast for FY2021 (January 1, 2021 to December 31, 2021)

(The percentages are year-on-year changes.)

	Net sales		Operating income	Ordinary income	Profit attributable to	Net income per share
							owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	56,500	10.3	1,600	－	1,500	－	700	－	29.81

(Note) Revisions to financial forecast published most recently: Yes

* Notes

(1) Important changes in subsidiaries for the first quarter under review (Changes is specified subsidiaries resulting in

change in scope of consolidation):	No
New: ― companies	Excluded: ― companies

1. Application of accounting treatment specific to the preparation of quarterly consolidated financial statements: Not applicable
2. Changes in accounting policies, and changes or restatements of accounting estimates

(i)	Changes in accounting policies due to revisions to accounting standards etc.	:	Not applicable
(ii)	Changes in accounting policies other than (i)	:	Not applicable
(iii)	Changes in accounting estimates:	:	Not applicable
(iv)	Restatements of accounting estimates:	:	Not applicable

1. Number of issued shares (common stock)
2. 1. Number of issued shares (including treasury stock)

Q1 FY2021 24,566,447 shares

FY2020

24,566,447 shares

1. Number of treasury stock at end of period

Q1	FY2021	1,086,556 shares	FY2020	1,088,298 shares
(iii) Average number of issued shares
Q1	FY2021	23,479,650 shares	Q1 FY2020	23,456,609 shares

(Note)

The number of treasury stock includes the 411,200 shares that Trust & Custody Services Bank, Ltd. (trust account E) holds as trust property related to a Board Benefit Trust system.

• This summary of financial results is not subject to review by a certified public accountant or certified public accounting firm.
• Explanation on the proper use of results forecasts and other notes

The forward-looking statements, including results forecasts, in this document are based on information that AOI TYO Holdings has obtained at the time of publication and certain assumptions that it believes to be reasonable. Actual results may differ materially from the forecasts due to a variety of reasons. For more about assumptions underlying earnings forecasts and cautions regarding the use of earnings forecasts, see 1. Qualitative Information on Results (3) Description of Information on Outlook on P.3 of Attachments.

Attachments

1. Qualitative Information on Results in the First Quarter	2
(1)	Description of Results of Operations	2
(2)	Description of Financial Position	2
(3)	Description of Information on Outlook	3
2. Quarterly Consolidated Financial Statements and Major Notes	4
(1)	Quarterly consolidated balance sheets	4
(2)	Quarterly consolidated statements of income and statements of comprehensive income	6
(3)	Notes to Quarterly Consolidated Financial Statements	8
	(Notes on the premise of a going concern)	8
	(Notes in the event of significant changes in shareholders' equity)	8
	(Segment Information)	9
	(Significant Subsequent Events)	10

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1. Qualitative Information on Results in the First Quarter

(1) Discussion of operating results

Any forward-looking statements below are based on AOI TYO Group judgments as of the end of the first quarter of the current consolidated fiscal year.

During the consolidated first quarter, the Japanese economy faced challenges with no sign to the end of COVID-19. However, the overall tone of the economy has begun to recover. While business sentiment in the manufacturing industry improved due to the increase in exports and the depreciation of the yen, business sentiment in industries related to consumer spending, including accommodations, restaurants, and personal services, weakened again due to another declaration of a state of emergency in January of this year.

The AOI TYO Group began measures to prevent the spread of COVID-19 in filming, editing, and other production operations in the previous year. As a result, we experienced almost no projects that were postponed or canceled in the first quarter of the current fiscal year, in contrast to April and May of last year. Our trend toward business recovery, beginning in the fourth quarter of the fiscal year ending December 31, 2020, has continued.

As a result, the AOI TYO Group recorded net sales of ¥14,193 million for the consolidated first quarter, representing an 8.8% increase compared to year-ago quarter. Operating profit amounted to ¥923 million (693.2% increases), while ordinary profit amounted to ¥923 million representing increases of 17,216.5%, and profit attributable to owners of parent amounted to ¥403 million (¥32 million of loss attributable to owners of parent in the same period of prior fiscal year). Selling, general and administrative expenses included ¥52 million in amortization of goodwill associated with M&A activity.

Until recently, the AOI TYO Group operated as a single segment, the Advertising Video Production Business. In January of this year, the group conducted a major organizational restructuring based on our medium-term plan. We reduced the number of consolidated subsidiaries by 10, and we changed our reportable segments into the Content Production Business (responsible for traditional advertising video production) and the Communication Design Business (responsible for the design and execution of communications based on direct transactions with advertisers).

Operating results by segment were as follows.

(1) Content Production Business

The Content Production Business recorded net sales of ¥10,235 million (up 4.4% year on year) for the current consolidated first quarter. Segment profit was ¥1,360 million (up 95.0%).

This result was due to signs of recovery in project orders from major advertising companies in connection with the gradual recovery in the Japanese advertising market. Another contributing factor was the postponed and canceled projects that occurred in the year-ago quarter. Segment profit also rose year on year. This increase was due to the increase in net sales, a decrease in cost of sales stemming from an increase in the period-end balance of labor costs and expenses recorded in relation to work in process compared to the beginning of the period, and a decrease in various expenses as a result of cost reduction measures implemented under our medium-term plan, which we began implementing ahead of schedule in the prior fiscal year.

(2) Communication Design Business

The Communication Design Business recorded net sales of ¥3,958 million (up 21.9% year on year) for the current consolidated first quarter. Segment profit was ¥236 million (up 199.6% ).

Sales and profits rose in the advertising and marketing solutions domain through an increase in direct transactions with advertisers and media sales. Here, we merged five companies in January of this year, establishing xpd Inc. to provide

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better all-around execution of services, from video to digital solutions, PR, events, space design, and more.

(2) Discussion of financial position

Total assets as of the end of the consolidated first quarter amounted to ¥51,300 million, a ¥2,617 million increase compared to the end of the prior consolidated fiscal year. This increase was mainly due to increases in cash and deposits of ¥2,697 million, notes and accounts receivable of ¥251 million and property, plant and equipment of ¥274 million, compared to decrease in electronically recorded monetary claims of ¥310 million.

Liabilities increased by ¥2,336 million compared with the end of the prior fiscal year to ¥30,787 million. Although long- term loans payable decreased ¥890 million, accounts payable and advances received increased ¥3,000 million and ¥407 million, respectively.

Net assets amounted to ¥20,513 million, an increase of ¥281 million compared to the end of the prior consolidated fiscal year. This was mainly due to an increase of ¥403 million in retained earnings by the posting of net income attributable to shareholders of the parent company, despite a decrease of ¥286 million by the payment of dividends.

(3) Discussion of consolidated results forecasts

See Revisions to Full-Year Consolidated Performance Forecasts, published on May 14, 2021, for more about AOI TYO Group consolidated earnings forecasts for the fiscal year ending December 2021.

Our earnings forecast for the consolidated second quarter of the fiscal year ending December 31, 2021, remains undecided, as it is difficult to make a reasonable calculation at this time due to another declaration and subsequent extension of a state of emergency in Japan. This development raises the possibility of the postponements or cancellations of projects due to COVID-19.

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