Avex Inc. TSE:7860
Avex : FY2024 Audited Financial Statements
Source: MarketScreener
Avex Inc. and Consolidated Subsidiaries
Consolidated Financial Statements for the Year Ended March 31, 2024, and
Independent Auditor's Report
Deloitte Touche Tohmatsu LLC
Marunouchi Nijubashi Building
3-2-3 Marunouchi
Chiyoda-ku, Tokyo 100-8360
Japan
Tel: +81 (3) 6213 1000
Fax: +81 (3) 6213 1005
www.deloitte.com/jp/en
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of Avex Inc.:
Opinion
We have audited the consolidated financial statements of Avex Inc. and its consolidated subsidiaries (the "Group"), which comprise the consolidated balance sheet as of March 31, 2024, and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, all expressed in Japanese yen.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of March 31, 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements of the current period. The matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the matter.
Member of
Deloitte Touche Tohmatsu Limited
Judgment regarding the recoverability of deferred tax assets
The key audit matter and | How the key audit matter was |
the basis of our determination | addressed in the audit |
In the Group's consolidated balance sheet as of March 31, 2024, deferred tax assets were recorded for ¥4,582 million.
As described in Note 14, "Income Taxes," to the consolidated financial statements, the amount of deferred tax assets that were determined to be recoverable before being offset against deferred tax liabilities was ¥4,843 million, which consisted of total deferred tax assets of ¥8,231 million and valuation allowance of ¥3,388 million.
Additionally, in Note 3, "Significant Accounting Estimates," to the consolidated financial statements, the details of accounting estimates are described as follows.
The amount of deferred tax assets is the amount expected to be recovered in light of future taxable income based on profitability and tax planning, and in light of the scheduling of the fiscal period in which deductible temporary differences are expected to be reversed. In calculating the amount expected to be recovered, future taxable income based on profitability is estimated on the basis of the Group's business plan, which includes key assumptions relating to future sales projections and market trends.
The assumptions used in these estimates may be affected by changes in uncertain economic conditions in the future, and management's judgment on the assumptions may have a material impact on the amount of deferred tax assets recorded.
For the above reasons, we have determined the appropriateness of management's judgment on the recoverability of deferred tax assets based on future sales plans and market trends as a key audit matter.
In examining the appropriateness of management's judgment related to the recoverability of deferred tax assets based on future sales plans, market trends, we performed the following audit procedures, among others:
- We tested the design and operating effectiveness of controls over the accounting division's evaluation process of deferred tax assets specifically regarding the recoverability of deferred tax assets based on business plans approved by the Board of Directors and other decision-making bodies, and the approval of the evaluation, which is performed by a supervising personnel.
- In order to assess the appropriateness of future estimates of taxable income, we performed the following procedures:
—We compared the estimates of taxable income for previous years with the actual results, and evaluated whether there was any bias in the Group's estimates and the accuracy of the Group's business plan development.
—We evaluated whether appropriate approvals were obtained for the future business plan on which future estimates of taxable income will be based.
—Regarding sales plans for live performances and events in future business plans and market trends in the live entertainment market, we inquired of management.
—We evaluated whether management's assumptions were evaluated based on past results. - Regarding the appropriateness of the corporate classification, the appropriateness of the valuation allowance, and the scheduling of the fiscal year in which the future utilization of the deductible temporary difference and others is expected, we evaluated the reasonableness by inspecting the relevant materials and making relevant inquires and others.
Other Information
Other information comprises the information included in the Group's disclosure documents accompanying the audited consolidated financial statements, but does not include the consolidated financial statements and our auditor's report thereon.
We determined that no such information existed and therefore, we did not perform any work thereon.
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Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Audit and Supervisory Committee is responsible for overseeing the Directors' execution of duties relating to the design and operating effectiveness of the controls over the Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks. The procedures selected depend on the auditor's judgment. In addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
- Evaluate whether the overall presentation and disclosures of the consolidated financial statements are in accordance with accounting principles generally accepted in Japan, as well as the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with it all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Audit and Supervisory Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Fees for audit and other services for the year ended March 31, 2024, which were charged by us and our network firms to Avex Inc. and its subsidiaries were ¥78 million and ¥14 million, respectively.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
Deloitte Touche Tohmatsu LLC
August 9, 2024
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Avex Inc. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2024
Thousands of | ||||||||
U.S. Dollars | ||||||||
ASSETS | Millions of Yen | (Note 1) | ||||||
2024 | 2023 | 2024 | ||||||
CURRENT ASSETS: | ||||||||
Cash and cash in banks (Notes 18 and 21) | ¥ | 47,075 | ¥ | 48,143 | $ 310,910 | |||
Notes and accounts receivable—trade (Notes 5 and 18) | 22,700 | 22,206 | 149,924 | |||||
Inventories: | ||||||||
Merchandise and finished products | 845 | 1,172 | 5,580 | |||||
Work in process | 3,356 | 2,801 | 22,164 | |||||
Raw materials and supplies | 300 | 221 | 1,981 | |||||
Advance payments—trade | 1,468 | 1,110 | 9,695 | |||||
Prepaid expenses | 1,895 | 1,516 | 12,515 | |||||
Prepaid royalties | 2,381 | 2,020 | 15,725 | |||||
Accounts receivable—other (Note 18) | 3,705 | 5,463 | 24,469 | |||||
Other | 3,353 | 1,909 | 22,145 | |||||
Allowance for doubtful accounts | (621) | (350) | (4,101) | |||||
Total current assets | 86,463 | 86,217 | 571,052 | |||||
PROPERTY, PLANT AND EQUIPMENT (Note 7): | ||||||||
Land | 2,580 | 1,548 | 17,039 | |||||
Buildings and structures—net | 2,513 | 2,110 | 16,597 | |||||
Other property—net | 1,548 | 892 | 10,223 | |||||
Total property, plant and equipment | 6,642 | 4,551 | 43,867 | |||||
INVESTMENTS AND OTHER ASSETS: | ||||||||
Investment securities (Notes 6 and 18) | 8,214 | 9,228 | 54,250 | |||||
Intangible assets | 2,167 | 3,505 | 14,312 | |||||
Deferred tax assets (Notes 3 and 14) | 4,582 | 3,979 | 30,262 | |||||
Other assets | 1,841 | 1,486 | 12,159 | |||||
Allowance for doubtful accounts | (22) | (54) | (145) | |||||
Total investments and other assets | 16,782 | 18,146 | 110,838 | |||||
TOTAL | ¥ | 109,887 | ¥ | 108,915 | $ 725,757 |
- 5 - | (Continued) |
Avex Inc. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2024
Thousands of | |||||||||
U.S. Dollars | |||||||||
LIABILITIES AND EQUITY | Millions of Yen | (Note 1) | |||||||
2024 | 2023 | 2024 | |||||||
CURRENT LIABILITIES: | |||||||||
Notes and accounts payable—trade (Note 18) | ¥ | 1,762 | ¥ | 3,434 | $ | 11,637 | |||
Current portion of long-term loans (Notes 8 and 18) | 3 | 3 | 19 | ||||||
Accounts payable—other (Note 18) | 31,163 | 25,679 | 205,818 | ||||||
Accrued royalties (Note 18) | 6,746 | 6,660 | 44,554 | ||||||
Income taxes payable (Note 18) | 1,050 | 1,482 | 6,934 | ||||||
Refund liabilities | 1,705 | 2,168 | 11,260 | ||||||
Advances received (Note 13) | 2,014 | 3,032 | 13,301 | ||||||
Provision for bonuses | 561 | 884 | 3,705 | ||||||
Other | 6,581 | 4,757 | 43,464 | ||||||
Total current liabilities | 51,587 | 48,104 | 340,710 | ||||||
LONG-TERM LIABILITIES: | |||||||||
Long-term loans (Notes 8 and 18) | 3 | 6 | 19 | ||||||
Liability for retirement benefits (Note 9) | 381 | 529 | 2,516 | ||||||
Other | 1,815 | 1,436 | 11,987 | ||||||
Total long-term liabilities | 2,200 | 1,972 | 14,530 | ||||||
COMMITMENTS AND CONTINGENT LIABILITIES | |||||||||
(Notes 17 and 19) | |||||||||
EQUITY (Notes 10, 11 and 12): | |||||||||
Shareholders' equity: | |||||||||
Common stock—authorized, 184,631,000 shares; | |||||||||
issued, 45,663,400 shares in 2024 and | |||||||||
45,558,800 shares in 2023 | 4,678 | 4,599 | 30,896 | ||||||
Capital surplus | 5,598 | 5,526 | 36,972 | ||||||
Retained earnings | 44,746 | 46,343 | 295,528 | ||||||
Treasury stock—at cost, 410,546 shares in 2024 | |||||||||
and 410,302 shares in 2023 | (590) | (590) | (3,896) | ||||||
Total | 54,432 | 55,878 | 359,500 | ||||||
Accumulated other comprehensive income: | |||||||||
Unrealized gain on available-for-sale securities | 795 | 2,538 | 5,250 | ||||||
Foreign currency translation adjustments | (98) | (182) | (647) | ||||||
Defined retirement benefit plans | 60 | (160) | 396 | ||||||
Total | 757 | 2,195 | 4,999 | ||||||
Noncontrolling interests | 910 | 764 | 6,010 | ||||||
Total equity | 56,099 | 58,838 | 370,510 | ||||||
TOTAL | ¥ | 109,887 | ¥ | 108,915 | $ | 725,757 |
See notes to consolidated financial statements.
- 6 - | (Concluded) |
Avex Inc. and Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2024
Thousands of | |||||||||
U.S. Dollars | |||||||||
Millions of Yen | (Note 1) | ||||||||
2024 | 2023 | 2024 | |||||||
NET SALES (Note 13) | ¥ | 133,387 | ¥ | 121,561 | $ | 880,965 | |||
COST OF SALES | 94,097 | 82,574 | 621,471 | ||||||
Gross profit | 39,289 | 38,987 | 259,487 | ||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |||||||||
(Note 15) | 38,024 | 35,602 | 251,132 | ||||||
Operating income | 1,265 | 3,385 | 8,354 | ||||||
OTHER INCOME (EXPENSES): | |||||||||
Interest income | 21 | 18 | 138 | ||||||
Dividend income | 14 | 8 | 92 | ||||||
Interest expense | (6) | (9) | (39) | ||||||
Commission fee | (37) | (16) | (244) | ||||||
Equity in earnings of associated companies | 13 | 85 | |||||||
Gain on valuation of investment securities | 224 | 822 | 1,479 | ||||||
Compensation income | 38 | 250 | |||||||
Equity in losses of associated companies | (20) | ||||||||
Foreign exchange losses | (344) | (146) | (2,271) | ||||||
Loss on valuation of cryptocurrencies | (70) | ||||||||
Gain on sales of investment securities | 1,675 | 1,390 | 11,062 | ||||||
Reversal of provision for contingent loss | 50 | ||||||||
Loss on impairment of long-lived assets (Note 7) | (132) | (851) | (871) | ||||||
Compensation for damage (Note 16) | (160) | (1,056) | |||||||
Loss on valuation of investment securities | (49) | (87) | (323) | ||||||
Other—net | 243 | 178 | 1,604 | ||||||
Other income—net | 1,499 | 1,266 | 9,900 | ||||||
INCOME BEFORE INCOME TAXES | 2,764 | 4,651 | 18,255 | ||||||
INCOME TAXES (Note 14): | |||||||||
Current | 1,354 | 1,813 | 8,942 | ||||||
Deferred | 230 | (186) | 1,519 | ||||||
Total income taxes | 1,584 | 1,626 | 10,461 | ||||||
NET INCOME | 1,180 | 3,024 | 7,793 | ||||||
NET INCOME ATTRIBUTABLE TO NONCONTROLLING | |||||||||
INTERESTS | 193 | 281 | 1,274 | ||||||
NET INCOME ATTRIBUTABLE TO OWNERS OF | |||||||||
THE PARENT | ¥ | 987 | ¥ | 2,742 | $ | 6,518 |
- 7 - | (Continued) |
Avex Inc. and Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2024
Yen | U.S. Dollars | |||||
2024 | 2023 | 2024 | ||||
PER SHARE OF COMMON STOCK (Notes 2.u and 23): | ||||||
Basic net income | ¥21.83 | ¥60.80 | $0.14 | |||
Cash dividends applicable to the year | 50.00 | 50.00 | 0.33 |
See notes to consolidated financial statements.
- 8 - | (Concluded) |
Avex Inc. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2024
Thousands of | ||||||
U.S. Dollars | ||||||
Millions of Yen | (Note 1) | |||||
2024 | 2023 | 2024 | ||||
NET INCOME | ¥1,180 | ¥3,024 | $ 7,793 | |||
OTHER COMPREHENSIVE LOSS (Note 20): | ||||||
Unrealized loss on available-for-sale securities | (1,733) | (213) | (11,445) | |||
Foreign currency translation adjustments | 94 | (21) | 620 | |||
Defined retirement benefit plans | 246 | (152) | 1,624 | |||
Share of other comprehensive loss in associates | (45) | (10) | (297) | |||
Total other comprehensive loss | (1,438) | (398) | (9,497) | |||
COMPREHENSIVE (LOSS) INCOME | ¥ (257) | ¥2,626 | $ (1,697) | |||
TOTAL COMPREHENSIVE (LOSS) INCOME | ||||||
ATTRIBUTABLE TO: | ||||||
Owners of the parent | ¥(451) | ¥2,344 | $(2,978) | |||
Noncontrolling interests | 193 | 281 | 1,274 |
See notes to consolidated financial statements.
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