Avex Inc. TSE:7860

Avex : 〔Delayed〕Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2025(Japanese Accounting Standards)

Published August 20, 2024 at 1:32 a.m. UTC

Source: MarketScreener

Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2025

(Japanese Accounting Standards)

August 8, 2024

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: 0570(020)050

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, 2025

(April 1, 2024 to June 30, 2024)

(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

First Quarter of Fiscal Year

25,548

20.1)

1,281)

1,236)

1,834

32.2)

Ending March 31, 2025

ሺ

First Quarter of Fiscal Year

31,973

17.8)

11.8)

2,704

Ended March 31, 2024

12.3

1,881

1,985

61.4

2025:

ሺ

(Note) Comprehensive income

First Quarter of Fiscal Year Ending March 31,

¥2,313 million (62.4%)

First Quarter of Fiscal Year Ended March 31, 2024:

¥1,424 million (14.8%)

	Profit per share
	yen
First Quarter of Fiscal Year	40.54
Ending March 31, 2025

First Quarter of Fiscal Year	59.90
Ended March 31, 2024

Diluted profit per share

yen

(2) Consolidated financial position

		Total assets			Net assets	Shareholders' equity ratio
			million yen		million yen	%
As of June 30, 2024		104,355		57,182	53.9
As of March 31, 2024		109,887		56,099	50.2
(Reference) Shareholders' equity		As of June 30, 2024:	¥56,287 million
	As of March 31, 2024:	¥55,189 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, 2024	-	25.00	-	25.00	50.00
Year ending March 31, 2025	-
Year ending March 31, 2025		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, 2025 (April 1, 2024 to March 31, 2025)

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, 2025	2,000		58.1	4,500	355.9	99.44
(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, 2025

Notes
1. Significant changes in the scope of consolidation during the period: None

New: - company (Company name) -

Excluded: - company (Company name) -

Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: None
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, 2024:	45,663,400 shares
As of March 31, 2024:	45,663,400 shares
b. Treasury stock at end of term
As of June 30, 2024:	410,606 shares
As of March 31, 2024:	410,546 shares
c. Average number of share (quarter-to-date)
First Quarter of Fiscal Year Ending March 31, 2025:	45,252,799 shares
First Quarter of Fiscal Year Ended March 31, 2024:	45,148,490 shares

Review by certified public accountant or audit corporation of the attached quarterly consolidated financial statements: None
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, 2025

1. Overview of Operating Results, etc.

(1) Overview of Consolidated Financial Results for the First Quarter Ended June 30, 2024

				(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, 2021	31, 2022	31, 2023	31, 2024	31, 2025
Net sales	14,108	19,417	28,473	31,973	25,548

Cost of sales	8,795	12,537	17,947	20,881	18,526

Gross profit	5,313	6,880	10,526	11,092	7,022

Gross profit margin	37.7%	35.4%	37.0%	34.7%	27.5%

Personnel expenses	2,633	2,545	3,241	3,606	3,194

Sales promotion and advertising	953	1,332	1,745	1,625	1,194
expenses

General expenses	2,780	2,739	3,251	3,978	3,915

Total SG&A expenses	6,367	6,617	8,237	9,210	8,303

Operating profit (loss)	(1,054)	262	2,288	1,881	(1,281)

Operating margin	-%	1.4%	8.0%	5.9%	-%

In the entertainment industry, to which the Group belongs, the production of music software, including music videos, was down 23.2% year on year, to 89,815 million yen (January to June 2024; according to a survey by the Recording Industry Association of Japan). Sales of paid music downloads were up 10.2% year on year, to 31,195 million yen (January to March 2024; according to a survey by the Recording Industry Association of Japan). In the video-related market, sales of video software decreased 22.8% year on year, to 44,052 million yen (January to June 2024; according to a survey by the Japan Video Software Association).

In this business environment, the Group worked to realize the Medium-Term Management Plan "avex vision 2027" by making aggressive investments, with emphasis on "seeking out and cultivating new talent" as the starting point of value creation and by building a structure that will allow it to aim for long-term growth, while at the same time implementing strategic initiatives for overseas markets. In addition, the Group strategically reviewed its business portfolio to clarify the domains it will focus on and to optimize management resources, and sought to lay the foundations for realizing the Medium-term Management Plan.

In the first quarter under review, consolidated net sales were 25,548 million yen (down 20.1% year on year) mainly due to a decrease in the number of large-scale live performances in the Music Business, and the consolidated operating loss came to 1,281 million yen (compared to operating profit of 1,881 million yen in the same period of the previous year), chiefly reflecting rises in the cost of sales and personnel and general expenses linked to continued investment for the creation of IP. Even so, the Group recorded profit attributable to owners of parent of 1,834 million yen (down 32.2% year on year) due to the posting of extraordinary income resulting from the transfer of shares in a subsidiary that conducts the LivePocket Business.

(2) Overview of Financial Position for the First Quarter Ended June 30, 2024

Assets at the end of the first quarter under review decreased 5,532 million yen, to 104,355 million yen from the end of the previous consolidated fiscal year. This was mainly attributable to decreases of 5,590 million yen in cash and deposits and 5,015 million yen in notes and accounts receivable-trade, which more than offset increases of 2,533 million yen in other in current assets and 1,155 million yen in buildings and structures (net).

Liabilities were reduced by 6,614 million yen from the end of the previous consolidated fiscal year, to 47,173 million yen. This was primarily due to a decrease of 7,734 million yen in accounts payable-other, despite an increase of 2,029 million yen in other in the current liabilities.

Net assets increased 1,082 million yen from the end of the previous consolidated fiscal year, to 57,182 million yen. This resulted mainly from an increase of 703 million yen in retained earnings and a rise of 349 million yen in foreign currency translation adjustment.

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Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2025

(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, 2025, there is no change in the forecasts presented in a "Announcement Regarding Revision to Business Results" announced on June 21, 2024. 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, 2025

2. Quarterly Consolidated Financial Statements and Key Notes

(1) Quarterly Consolidated Balance Sheets

			(Unit: million yen)

		As of March 31, 2024	As June 30, 2024
(Assets)
Current assets
Cash and deposits	47,075	41,485
Notes and accounts receivable - trade	22,700	17,684
Merchandise and finished goods	845	1,494
Work in process	3,356	3,407
Raw materials and supplies	300	249
Other	12,806	15,339
Allowance for doubtful accounts	(621)	(674)
Total current assets	86,463	78,986
Non-current assets
Property, plant and equipment
Buildings and structures, net	2,513	3,668
Land	2,580	2,580
Other, net	1,548	1,045
Total property, plant and equipment	6,642	7,294
Intangible assets	2,167	3,105
Investments and other assets
Investment securities	8,214	8,668
Other	6,423	6,323
Allowance for doubtful accounts	(22)	(22)
Total investments and other assets	14,615	14,969
Total non-current assets	23,424	25,369
Total assets	109,887	104,355
(Liabilities)
Current liabilities
Notes and accounts payable - trade	1,762	1,654
Current portion of long-term borrowings	3	3
Accounts payable - other	31,163	23,429
Income taxes payable	1,050	908
Refund liabilities	1,705	1,514
Provision for bonuses	561	35
Other	15,341	17,371
Total current liabilities	51,587	44,916
Non-current liabilities
Long-term borrowings	3	2
Liabilities for retirement benefits	381	387
Other	1,815	1,866
Total non-current liabilities	2,200	2,256
Total liabilities		53,787	47,173

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Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2025

(Unit: million yen)

		As of March 31, 2024	As of June 30, 2024
(Net assets)
Shareholders' equity
Share capital	4,678	4,678
Capital surplus	5,598	5,571
Retained earnings	44,746	45,450
Treasury shares	(590)	(590)
Total shareholders' equity	54,432	55,108
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	795	847
Foreign currency translation adjustment	(98)	250
Remeasurements of defined benefit plans	60	80
Total of accumulated other comprehensive income	757	1,178
Non-controlling interests	910	894
Total net assets	56,099	57,182
Total liabilities and net assets		109,887	104,355

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Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2025

Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income Quarterly Consolidated Statements of Income
(Consolidated First Quarter)

			(Unit: million yen)

		For the first quarter	For the first quarter
		ended June 30, 2023	ended June 30, 2024
Net sales	31,973	25,548
Cost of sales		20,881	18,526
Gross profit	11,092	7,022
Selling, general and administrative expenses
Advertising expenses	1,154	946
Promotion expenses	470	247
Employees' salaries and bonuses	2,010	2,077
Provision for bonuses	330	34
Retirement benefit expenses	115	53
Commission fee	1,596	1,694
Other		3,531	3,249
Total selling, general and administrative expenses		9,210	8,303
Operating profit (loss)	1,881	(1,281)
Non-operating income
Interest income	4	6
Dividend income	3	7
Share of profit of entities accounted for using equity method	26	-
Gain on investments in investment partnerships	0	59
Foreign exchange gains	42	7
Gain on valuation of investment securities	45	2
Other		8	12
Total non-operating income	130	95
Non-operating expenses
Interest expenses	0	0
Share of loss of entities accounted for using equity method		-	21
Loss on valuation of cryptocurrencies	4	10
Other		22	18
Total non-operating expenses		27	51
Ordinary profit (loss)	1,985	(1,236)
Extraordinary income
Gain on sale of shares of subsidiaries		-	4,548
Gain on sales of investment securities	1,624	-
Other		64	-
Total extraordinary income	1,688	4,548
Extraordinary losses
Provision for loss on contracts		-	174
Loss on liquidation of business	20	-
Loss on sales of shares of subsidiaries	14	-
Other		-	53
Total extraordinary losses		34	228
Profit before income taxes		3,639	3,082
Income taxes - current	500	952
Income taxes - deferred		403	238
Total income taxes		903	1,190
Profit		2,735	1,892
Profit attributable to non-controlling interests		31	57
Profit attributable to owners of parent		2,704	1,834
	- 7 -

Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2025

Quarterly Consolidated Statements of Comprehensive Income

(Consolidated First Quarter)

		(Unit: million yen)

	For the first quarter	For the first quarter
	ended June 30, 2023	ended June 30, 2024
Profit	2,735	1,892
Other comprehensive income
Valuation difference on available-for-sale securities	(1,534)	52
Foreign currency translation adjustment	205	332
Remeasurements of defined benefit plans, net of tax	33	(22)
Share of other comprehensive income of associates accounted	(15)	59
for using equity method

Total other comprehensive income	(1,311)	421
Comprehensive income	1,424	2,313
(Comprehensive income attributable to)
Comprehensive income attributable to owners of parent	1,393	2,255
Comprehensive income attributable to non-controlling	31	57
interests

- 8 -

Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2025

Notes Concerning Consolidated Quarterly Financial Statements (Notes Relating to Changes in Accounting Policies)
(Application of Accounting Standard for Current Income Taxes, etc.)
The Company has applied Accounting Standard for Current Income Taxes (Accounting Standards Board of Japan (ASBJ) Statement No. 27, October 28, 2022; hereinafter referred to as the "Revised Accounting Standard 2022") effective from beginning of the first quarter of the fiscal year under review.
The amendment to categories in which current income taxes should be recorded (taxes on other comprehensive income) follows the transitional treatment prescribed in the proviso of paragraph 20-3 of the Revised Accounting Standard 2022 and the transitional treatment prescribed in the proviso (2) of paragraph 65-2 of the Implementation Guidance on Tax Effect Accounting (ASBJ Guidance No. 28, October 28, 2022; hereinafter referred to as the "Revised Implementation Guidance 2022"). The application of the Accounting Standard for Current Income Taxes, etc. mentioned above has no impact on quarterly financial statements.
For the amendment related to the revised accounting treatment for consolidated financial statements when gains or losses on sale of shares in subsidiaries resulting from transactions between consolidated companies were deferred for tax purposes, the Revised Implementation Guidance 2022 has been adopted from the beginning of the first quarter under review. This change in accounting policies is applied retrospectively, and quarterly consolidated financial statements and consolidated financial statements for the previous year are after retrospective application. This change in accounting policies has no impact on the quarterly consolidated financial statements for the same quarter of the previous fiscal year and the consolidated financial statements for the previous fiscal year.
(Notes to Segment Information) [Segment information]

1. Net sales and profit (loss) for each reportable segment and the breakdown of revenue For the first quarter ended June 30, 2023

(Unit: million yen)

		Reportable segments					Quarterly
		Anime &			Other	Total	Adjustments	consolidated
	Music	Visual	Overseas	Subtotal	statement of
	Business	Content	Business	(Note 1)		(Note 2)	income
		Business						(Note 3)
Net sales
Revenue from
contracts with	26,939	3,241	1,778	31,959	13	31,973	-	31,973
customers
Sales to external	26,939	3,241	1,778	31,959	13	31,973	-	31,973
customers

Inter-segment sales	700	188	2	890	128	1,018	(1,018)	-
and transfers

Total	27,639	3,429	1,781	32,850	141	32,991	(1,018)	31,973
Segment profit (loss)	1,751	(20)	165	1,897	(15)	1,881	0	1,881

Notes: 1.The "Other" segment is a business segment not included in any of the reporting segments and includes such businesses as real estate leasing.

2.An adjustment of 0 million yen in segment profit (loss) represents the deduction of intersegment transactions.

3.Segment profit (loss) have been adjusted with operating profit recorded in the consolidated quarterly income statement.

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Avex Inc. (7860) Consolidated Financial Summary for First Quarter of Fiscal Year Ending March 31, 2025

For the first quarter ended June 30, 2024

(Unit: million yen)

		Reportable segments					Quarterly
		Anime &			Other		Adjustments	consolidated
	Music	Visual	Overseas	Subtotal	Total	statement of
	Business	Content	Business	(Note 1)		(Note 2)	income
		Business						(Note 3)
Net sales
Revenue from
contracts with	21,415	3,422	693	25,531	17	25,548	-	25,548
customers
Sales to external	21,415	3,422	693	25,531	17	25,548	-	25,548
customers

Inter-segment sales	948	134	0	1,083	154	1,238	(1,238)	-
and transfers

Total	22,364	3,556	693	26,614	172	26,787	(1,238)	25,548
Segment profit (loss)	(847)	(296)	(147)	(1,291)	(0)	(1,292)	11	(1,281)

(Notes) 1.The category, others, is a business segment not included in reportable segments, which mainly includes the travel business. 2.The segment loss adjustment of 11 million yen is for the elimination of intersegment transactions.

3.Segment loss is adjusted to the operating loss in quarterly consolidated statements of income.

2. Matters relating to changes in reportable segments, etc.

The Group has changed its previous reportable segments. Effective from the first quarter of the fiscal year under review, the reportable segments are Music Business, Anime/Video Business, Overseas Business and Other Businesses, instead of Music Business, Anime/Video Business, Digital Business, Oversea Business and Other Businesses.

The Digital Business has been included in the Music Business following a decline in terms of monetary importance. The segment information for the first three months of the previous fiscal year has been recalculated accordingly.

(Note Regarding Significant Changes in the Amount of Shareholders' Equity) Not applicable

(Notes on Going Concern Assumptions) Not applicable

(Notes on Statement of Cash Flows)

The Company did not prepare quarterly consolidated statements of cash flows for the first quarter under review. Depreciation (including amortization of intangible assets) for the first three months of the fiscal year under review is as follows:

		(Unit: million yen)
	For the first quarter	For the first quarter
	ended June 30, 2023	ended June 30, 2024
Depreciation	412	407

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