Avex : Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2024

Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2024

(Japanese Accounting Standards)

August 10, 2023

Avex Inc.

Tokyo Stock Exchange, Prime Market

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 10, 2023

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, 2024

(April 1, 2023 to June 30, 2023)

(1) Consolidated operating results

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

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

million yen

%

million yen

%

million yen

%

million yen

%

First Quarter of Fiscal Year

31,973

12.3

1,881

(17.8)

1,985

(11.8)

2,704

61.4

Ending March 31, 2024

First Quarter of Fiscal Year

28,473

46.6

2,288

772.1

2,250

977.1

1,675

-

Ended March 31, 2023

(Note) Comprehensive income

First Quarter of Fiscal Year Ending March 31, 2024:

¥1,424 million (14.8%)

First Quarter of Fiscal Year Ended March 31, 2023:

¥1,240 million (435.5%)

Profit per share

Diluted profit per share

yen

yen

First Quarter of Fiscal Year

59.90

-

Ending March 31, 2024

First Quarter of Fiscal Year

37.21

-

Ended March 31, 2023

(2) Consolidated financial position

Total assets

Net assets

Shareholders' equity ratio

million yen

million yen

%

As of June 30, 2023

105,415

59,055

55.3

As of March 31, 2023

108,915

58,838

53.3

(Reference) Shareholders' equity

As of June 30, 2023:

¥58,305 million

As of March 31, 2023:

¥58,074 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, 2023

-

25.00

-

25.00

50.00

Year ending March 31, 2024

-

Year ending March 31, 2024

25.00

-

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, 2024 (April 1, 2023 to March 31, 2024)

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

	Operating profit		Profit attributable to	Profit per share
		owners of parent
Year ending	million yen	%		million yen	%	Yen
March 31, 2024	2,000	(40.9)		2,200	(19.8)	48.73
(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, 2024

• 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: None

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, 2023:	45,558,800 shares
As of March 31, 2023:	45,558,800 shares
b. Treasury stock at end of term
As of June 30, 2023:	410,382 shares
As of March 31, 2023:	410,302 shares
c. Average number of share (quarter-to-date)
First Quarter of Fiscal Year Ending March 31, 2024:	45,148,490 shares
First Quarter of Fiscal Year Ended March 31, 2023:	45,029,976 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 business results and other forward-looking statements 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, 2024

1. Qualitative Information on Consolidated Results, etc. for the First Quarter of Fiscal Year Ending March 31, 2024

(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, 2020	31, 2021	31, 2022	31, 2023	31, 2024
Net sales	29,028	14,108	19,417	28,473	31,973
Cost of sales	20,475	8,795	12,537	17,947	20,881
Gross profit	8,552	5,313	6,880	10,526	11,092
Gross profit margin	29.5%	37.7%	35.4%	37.0%	34.7%
Personnel expenses	2,836	2,633	2,545	3,241	3,606
Sales promotion and advertising	1,453	953	1,332	1,745	1,625
expenses
General expenses	3,896	2,780	2,739	3,251	3,978
Total SG&A expenses	8,186	6,367	6,617	8,237	9,210
Operating profit (loss)	366	(1,054)	262	2,288	1,881
Operating margin	1.3%	-%	1.4%	8.0%	5.9%

In the entertainment industry, to which the Group belongs, the production of music software, including music videos, was up 20.2% year on year, to 116,969 million yen (January to June 2023; according to a survey by the Recording Industry Association of Japan). Sales of paid music downloads were up 12.7% year on year, to 28,309 million yen (January to March 2023; according to a survey by the Recording Industry Association of Japan). In the video-related market, sales of video software increased 2.2% year on year, to 57,074 million yen (January to June 2023; according to a survey by the Japan Video Software Association).

In this business environment, with the aim of clarifying the social significance of its presence as a company, the Group defined a new corporate philosophy: "Making impossible entertainment , possible," and announced the avex vision 2027, a medium-term management plan developed based on this philosophy, in May 2022. Under the priority strategy: "Seek to discover and develop 'beloved' intellectual property in many different regions and fields," which was set out in the medium-term management plan, the Group stepped up its investment to discover, develop, create and acquire new IP in each business field.

In the first quarter under review, consolidated net sales increased to 31,973 million yen (up 12.3% year on year) due to higher sales in the music business. However, consolidated operating profit decreased to 1,881 million yen (down 17.8% year on year), chiefly reflecting rises in personnel and general expenses due to recovering sales activities, while consolidated profit attributable to owners of parent came to 2,704 million yen (up 61.4% year on year) due mainly to the posting of a gain on sales of investment securities as extraordinary income.

(2) Summary of Financial Position

Assets totaled 105,415 million yen at the end of the first quarter under review after a decrease of 3,499 million yen from the end of the previous consolidated fiscal year. This was chiefly attributable to decreases of 2,181 million yen in cash and deposits and 2,143 million yen in notes and accounts receivable - trade respectively, which more than offset an increase of 1,192 million yen in property, plant and equipment.

Liabilities were reduced by 3,716 million yen from the end of the previous consolidated fiscal year, to 46,360 million yen. This was chiefly attributable to a decline of 3,328 million yen in accounts payable - other.

Net assets increased 216 million yen from the end of the previous consolidated fiscal year, to 59,055 million yen. This was mainly due to increases of 1,542 million yen in retained earnings and 205 million yen in foreign currency translation adjustment respectively, which more than offset a decrease of 1,534 million yen in valuation difference on available-for-sale securities.

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Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2024

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

With respect to consolidated financial results forecasts for the fiscal year ending March 31, 2024, there is no change in the forecasts presented in a "Announcement Regarding Posting of Extraordinary Profit and Revision to Business Results" announced on May 25, 2023.

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, 2024

2. Quarterly Consolidated Financial Statements and Key Notes

(1) Quarterly Consolidated Balance Sheets

			(Unit: million yen)
		As of March 31, 2023	As of June 30, 2023
(Assets)
Current assets
Cash and deposits	48,143	45,962
Notes and accounts receivable - trade	22,206	20,063
Merchandise and finished goods	1,172	1,167
Programs and works in progress	2,801	3,139
Raw materials and supplies	221	224
Other	12,020	13,305
Allowance for doubtful accounts	(350)	(383)
Total current assets	86,217	83,478
Non-current assets
Property, plant and equipment
Buildings and structures, net	2,110	2,079
Land	1,548	2,580
Other, net	892	1,083
Total property, plant and equipment	4,551	5,744
Intangible assets	3,505	3,483
Investments and other assets
Investment securities	9,228	7,238
Other	5,465	5,525
Allowance for doubtful accounts	(54)	(54)
Total investments and other assets	14,640	12,709
Total non-current assets	22,697	21,937
Total assets	108,915	105,415
(Liabilities)
Current liabilities
Notes and accounts payable - trade	3,434	2,903
Current portion of long-term borrowings	3	3
Accounts payable - other	25,679	22,351
Income taxes payable	1,482	1,051
Refund liabilities	2,168	1,908
Provision for bonuses	884	364
Other	14,450	15,994
Total current liabilities	48,104	44,577
Non-current liabilities
Long-term borrowings	6	5
Liabilities for retirement benefits	529	535
Other	1,436	1,241
Total non-current liabilities	1,972	1,782
Total liabilities		50,076	46,360

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