AOI TYO : 〔Delayed〕Summary of Consolidated Financial Results (Japanese Accounting Standards) for the 2nd Quarter of the Fiscal Year Ending December 31, 2021

Summary of Consolidated Financial Results (Japanese Accounting Standards)

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

August 13, 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:	August 13, 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 Second Quarter (from January 1, 2021 to June 30, 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

%

Q2 FY2021

29,025

19.1

1,686

－

1,668

－

891

－

Q2 FY2020

24,367

-20.5

-881

－

-1,047

－

-956

－

(Note) Comprehensive income

Q2 FY2021: 1,072 million yen (-%)

Q2 FY2020: -1,133 million yen (-%)

Net income per share

Diluted net income

per share

Yen

Yen

Q2 FY2021

37.96

37.88

Q2 FY2020

-40.76

－

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Million yen

Million yen

%

Q2 FY2021

53,154

20,986

38.9

FY2020

48,682

20,231

40.9

(For reference) Shareholders' equity Q2 FY2021: 20,683 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	－	0.00	－		12.00	12.00
FY2021	－	0.00
FY2021 (forecast)			－		0.00	0.00

(Note) Revisions to dividends forecast published most recently: No

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

As stated in Notice Regarding Results of the Tender Offer by Studio Cruise Co., Ltd. for Shares etc. and the Changes of Parent Company and the Largest Shareholder as a Major Shareholder, published July 6, 2021, and Announcement of Extraordinary General Meeting of Shareholders for Share Consolidation as well as Abolishment of Provision Concerning Share Unit Number and Partial Amendments to the Articles of Incorporation, published July 30, 2021, the Company will become a wholly owned subsidiary of Studio Cruise Co., Ltd. by means of a reverse stock split, subsequent to which said shares are scheduled to be delisted. Accordingly, we have not provided a consolidated results forecast for the fiscal year ending December 2021 herein

* Notes

(1) Important changes in subsidiaries for the second 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)

Q2 FY2021 24,566,447 shares

FY2020

24,566,447 shares

1. Number of treasury stock at end of period

Q2 FY2021 1,082,069 shares

FY2020

1,088,298 shares

1. Average number of issued shares

Q2 FY2021 23,481,643 shares

Q2 FY2020 23,459,787 shares

(Note)

The number of treasury stock includes the 405,500 shares for Q2 FY2021 and 411,200 shares for FY2020 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

As stated in Notice Regarding Results of the Tender Offer by Studio Cruise Co., Ltd. for Shares etc. and the Changes of Parent Company and the Largest Shareholder as a Major Shareholder, published July 6, 2021, and Announcement of Extraordinary General Meeting of Shareholders for Share Consolidation as well as Abolishment of Provision Concerning Share Unit Number and Partial Amendments to the Articles of Incorporation, published July 30, 2021, the Company will become a wholly owned subsidiary of Studio Cruise Co., Ltd. by means of a reverse stock split, subsequent to which said shares are scheduled to be delisted. Accordingly, we have not provided a consolidated results forecast for the fiscal year ending December 2021 herein.

Attachments

1. Qualitative Information on Results in the Second Quarter	2
(1)	Discussion of operating results	2
(2)	Discussion of financial position	3
(3)	Discussion of consolidated results forecasts	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)	Quarterly consolidated cash flows	8
(4)	Notes to Quarterly Consolidated Financial Statements	10
	(Notes on the premise of a going concern)	10
	(Notes in the event of significant changes in shareholders' equity)	10
	(Segment Information)	11
	(Significant Subsequent Events)	12

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1. Qualitative Information on Results in the Second Quarter

(1) Discussion of operating results

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

During the second quarter of the current consolidated fiscal year, the manufacturing industry continued to recover despite the impact of COVID-19, reflecting the upward trend in exports to China and other Asian countries, as well as an uptick in exports to Europe and the United States. On the other hand, consumer spending has inconsistent due to the spread of COVID-19 and multiple extensions of the declaration of a state of emergency.

Despite the situation, group business operations were not affected significantly by COVID-19, as we took measures to prevent the spread of the virus and normalized operations. Order intake returned to pre-COVID-19 levels in conjunction with the gradual recovery in the domestic advertising market. At the same time, we are working ahead of schedule on the cost reduction measures set forth in our medium-term plan.

As a result, the AOI TYO Group recorded net sales of ¥29,025 million for the consolidated second quarter, representing an 19.1% increase compared to year-ago quarter. Operating profit amounted to ¥1,686 million (¥881 million of operating loss in the same period of prior fiscal year), while ordinary profit amounted to ¥1,668 million (¥1,047 million of ordinary loss in the same period of prior fiscal year), and profit attributable to owners of parent amounted to ¥891 million (¥956 million of loss attributable to owners of parent in the same period of prior fiscal year). Selling, general and administrative expenses included ¥105 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 ¥21,141 million (up 13.7% year on year) for the current consolidated second quarter. Segment profit was ¥2,607 million (up 211.5% year on year).

Sales and profit increased year on year due to a recovery in orders for commercial production and other projects from advertising companies, the postponement and cancellation of projects in the year-ago quarter due to COVID-19, and a decrease in various expenses as a result of our cost reduction measures.

(2) Communication Design Business

The Communication Design Business recorded net sales of ¥7,883 million (up 36.4% year on year) for the current consolidated second quarter. Segment profit was ¥331 million (¥338 million of segment loss in the same period of prior fiscal year).

In January of this year, we merged five companies to form xpd Inc. to provide better all-around execution of services, from video to digital solutions, PR, events, space design, and more in the advertising and marketing solutions domain. In addition to an increase in orders received through direct transactions, an area of focus for the company, we saw a recovery in demand via the use of online technology in our events business, which experienced numerous postponements and cancellations in the year-ago period. These factors combined for a year-on-year increase in sales and profits for the Communication Design Business.

2

1. Discussion of financial position
   (Overview of Assets, Liabilities and Net assets)
   Total assets as of the end of the consolidated second quarter amounted to ¥53,154 million, a ¥4,472 million increase compared to the end of the prior consolidated fiscal year. This increase was mainly due to increases in cash and deposits of ¥5,787 million and electronically recorded monetary claims of ¥484 million, compared to decrease in notes and accounts receivable of ¥1,251 million.

Liabilities increased by ¥3,716 million compared with the end of the prior fiscal year to ¥32,168 million. Although long- term loans payable and accounts payable decreased ¥1,784 million and ¥1,330 million, respectively, short-term loans increased ¥6,500 million.

Net assets amounted to ¥20,986 million, an increase of ¥755 million compared to the end of the prior consolidated fiscal year. This was mainly due to an increase of ¥891 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.

(Overview of Cash Flows)

Cash and cash equivalents (hereinafter referred to as "net cash") as of the end of the consolidated second quarter increased by ¥5,830 million compared with the end of the previous fiscal year to ¥16,533 million. Net cash provided by (used in) respective activities during the consolidated second quarter are as follows.

(Cash Flows from Operating Activities)

Cash flows from operating activities amounted to ¥2,478 million, compared to cash from operating activities of ¥2,494 million for the prior fiscal year. This result was mainly due to profit before income taxes of ¥1,695 million, decrease in trade receivables of ¥773 million, decrease in trade payables of ¥1,341 million.

(Cash Flows from Investing Activities)

Cash used in investing activities amounted to ¥591 million, compared to ¥365 million for the prior fiscal year. The main cash inflow was ¥258 million in proceeds from refund of leasehold and guarantee deposits, while the main cash outflow was due to ¥686 million in purchase of property, plant and equipment, ¥219 million in payments for asset retirement obligations.

(Cash Flows from Financing Activities)

Cash used in financing activities amounted to ¥3,920 million compared to cash from financing activities of ¥2,057 million for the prior fiscal year. This result was mainly due to ¥6,500 million in cash proceeds from short-term loans, ¥2,195 million in outlays for repayments of long-term loans payable, and ¥280 million in outlays for dividends paid.

(3) Discussion of consolidated results forecasts

As stated in Notice Regarding Results of the Tender Offer by Studio Cruise Co., Ltd. for Shares etc. and the Changes of Parent Company and the Largest Shareholder as a Major Shareholder, published July 6, 2021, and Announcement of Extraordinary General Meeting of Shareholders for Share Consolidation as well as Abolishment of Provision Concerning Share Unit Number and Partial Amendments to the Articles of Incorporation, published July 30, 2021, the Company will become a wholly owned subsidiary of Studio Cruise Co., Ltd. by means of a reverse stock split, subsequent to which said shares are scheduled to be delisted. Accordingly, we have not provided a consolidated results forecast for the fiscal year ending December 2021 herein.

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