Consolidated Financial Summary for the First Nine Months of Fiscal Year Ending March 31, 2022

(Japanese Accounting Standards)

February 10, 2022

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: (03) 6447-5366

Scheduled date to submit the Quarterly Securities Report (Shihanki Houkokusho): February 10, 2022

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 nine-month period of fiscal year ending March 31, 2022

(April 1, 2021 to December 31, 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

%

Nine-Month Period of Fiscal

76,032

39.0

3,926

-

4,012

-

2,407

-

Year Ending March 31, 2022

Nine-Month Period of Fiscal

54,707

(45.5)

(3,610)

-

(3,815)

-

(4,284)

-

Year Ended March 31, 2021

(Note) Comprehensive income

Nine-month period

of fiscal

year ending March 31, 2022: ¥5,150 million (-%)

Nine-month period of fiscal year ended March 31, 2021: -¥3,535 million (-%)

Net income per share

Diluted net income per share

yen

yen

Nine-Month Period of Fiscal

54.67

-

Year Ending March 31, 2022

Nine-Month Period of Fiscal

(98.31)

-

Year Ended March 31, 2021

(2) Consolidated financial position

Total assets

Net assets

Shareholders' equity ratio

million yen

million yen

%

As of December 31, 2021

104,006

63,308

58.2

As of March 31, 2021

105,105

58,339

52.6

(Reference) Shareholders' equity

As of December 31, 2021: ¥60,546 million

As of March 31, 2021: ¥55,306 million

2. Status of dividend payments

Annual dividends

(Record date)

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

-

25.00

-

Year ending March 31, 2022

25.00

50.00

(forecast)

(Note) Revisions to dividend forecasts

published most recently:

None

3. Forecasts for consolidated operating results for the 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

million yen

%

million yen

%

Yen

Year ending March 31, 2022

3,000

-

1,800

(86.0)

40.65

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

- 1 -

  • 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 (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 December 31, 2021:

45,440,100 shares

As of March 31, 2021:

45,343,500 shares

b. Treasury stock at end of term

As of December 31, 2021:

410,034 shares

As of March 31, 2021:

3,927,388 shares

c. Average number of share (quarter-to-date)

Nine-month period of fiscal year ending March 31, 2022:

44,036,807 shares

Nine-month period of fiscal year ended March 31, 2021:

43,581,259 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.

- 2 -

Avex Inc. (7860) Consolidated Financial Summary for Nine-Month Period of Fiscal Year Ending March 31, 2022

1. Qualitative Information on Consolidated Results, etc. for the Nine-Month Period 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

Nine-month period results

ended March

ended March

ended March

ended March

ending March

31, 2018

31, 2019

31, 2020

31, 2021

31, 2022

Net sales

121,075

122,621

100,312

54,707

76,032

Cost of sales

86,050

87,729

71,437

37,368

48,392

Gross profit

35,024

34,891

28,875

17,339

27,640

Gross profit margin

28.9%

28.5%

28.8%

31.7%

36.4%

Personnel expenses

9,843

9,936

8,860

8,047

8,516

Sales promotion and advertising

6,773

6,931

5,932

4,099

5,136

expenses

General expenses

13,754

12,070

11,732

8,803

10,060

Total SG&A expenses

30,372

28,938

26,526

20,950

23,713

Operating income (loss)

4,651

5,952

2,349

(3,610)

3,926

Operating margin

3.8%

4.9%

2.3%

-%

5.2%

In the entertainment industry, to which the Group belongs, the production of music software, including music videos, was down 0.4% year on year, to 193,638 million yen (January to December 2021; according to a survey by the Recording Industry Association of Japan). Sales of paid music downloads were up 14.6% year on year, to 65,916 million yen (January to September 2021; according to a survey by the Recording Industry Association of Japan). In the video-related market, sales of video software fell 0.2% year on year, to 136,926 million yen (January to December 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.

During the nine-month period of the fiscal year under review, consolidated net sales increased to 76,032 million yen (up 39.0% year on year), reflecting a rise in sales from the music business in particular due to the weakened impact of COVID-19. Consolidated operating income came to 3,926 million yen (compared to a consolidated operating loss of 3,610 million yen in the same period of the previous fiscal year). Consolidated profit attributable to owners of parent was 2,407 million yen (compared to a loss attributable to owners of parent of 4,284 million yen in the same period of the previous fiscal year).

(2) Summary of Financial Position

Assets totaled 104,006 million yen at the end of the third quarter under review after a decrease of 1,098 million yen from the end of the previous consolidated fiscal year. This was chiefly attributable to a decrease of 9,707 million yen in cash and deposits, more than offsetting increases of 5,132 million yen and 3,594 million yen in notes and accounts receivable-trade and investment securities, respectively.

Liabilities were reduced by 6,067 million yen from the end of the previous consolidated fiscal year, to 40,698 million yen. This was primarily due to a decrease of 5,613 million yen in income taxes payable.

Net assets increased 4,968 million yen from the end of the previous consolidated fiscal year, to 63,308 million yen. This was mainly due to a decrease of 5,065 million yen in treasury shares (increase in net assets) and an increase of 2,732 million yen in valuation difference on available-for-sale securities, despite a decrease of 2,709 million yen in retained earnings.

- 3 -

Avex Inc. (7860) Consolidated Financial Summary for Nine-Month Period of Fiscal Year Ending March 31, 2022

(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 Interim Period of Fiscal Year Ending March 31, 2022," which was announced on November 4, 2021, remain unchanged because losses are expected to be posted in the fourth quarter of the fiscal year under review.

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

- 4 -

Avex Inc. (7860) Consolidated Financial Summary for Nine-Month Period 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 December 31, 2021

(Assets)

Current assets

Cash and deposits

52,654

42,947

Notes and accounts receivable-trade

14,120

19,252

Merchandise and finished goods

1,366

1,045

Programs and works in progress

4,652

4,202

Raw materials and supplies

300

341

Other current assets

11,904

12,656

Allowance for doubtful accounts

(281)

(350)

Total current assets

84,716

80,095

Noncurrent assets

Property, plant and equipment

Buildings and structures, net

1,082

1,166

Land

1,548

1,548

Other property, plant and equipment, net

479

685

Total property, plant and equipment

3,110

3,400

Intangible assets

3,864

4,145

Investments and other assets

Investment securities

7,143

10,738

Other investments and other assets

6,320

5,810

Allowance for doubtful accounts

(49)

(183)

Total investments and other assets

13,414

16,365

Total noncurrent assets

20,389

23,911

Total assets

105,105

104,006

(Liabilities)

Current liabilities

Notes and accounts payable-trade

1,457

1,995

Current portion of long-term loans payable

54

4

Accounts payable - other

18,341

19,062

Income taxes payable

6,040

427

Provision for bonuses

500

661

Allowance for returned goods

2,892

2,688

Provision for point card certificates

37

60

Provision for contingent loss

225

125

Other current liabilities

15,588

13,413

Total current liabilities

45,138

38,439

Noncurrent liabilities

Long-term loans payable

4

1

Liabilities for retirement benefits

390

425

Other noncurrent liabilities

1,231

1,831

Total noncurrent liabilities

1,626

2,259

Total liabilities

46,765

40,698

- 5 -

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Avex Inc. published this content on 21 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 February 2022 07:00:05 UTC.