Avex Inc. TSE:7860

Avex : FY2025 Audited Financial Statements

Published August 28, 2025 at 4:27 a.m. UTC

Source: MarketScreener

Avex Inc. and Consolidated Subsidiaries

Consolidated Financial Statements for the Year Ended March 31, 2025, 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

https://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, 2025, 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, 2025, 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 Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were 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 these matters.

Member of

Deloitte Touche Tohmatsu Limited

Judgment regarding the recoverability of deferred tax assets

The key audit matter and the basis of our determination

How the key audit matter was addressed in the audit

In the Group's consolidated balance sheet as of March 31, 2025, deferred tax assets were recorded for ¥5,183 million (4.9% of total assets).

As described in Note 12, "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

¥5,481 million, which consisted of total deferred tax assets of ¥9,120 million and a valuation allowance of ¥3,638 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.

For the above reasons, we have determined the appropriateness of management's judgment on the recoverability of deferred tax assets based on future sales projections 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 projections, market trends, we performed the following audit procedures, among others:

We evaluated the design and operating effectiveness of controls related to the recoverability of deferred tax assets, including the setting of key assumptions regarding future forecasts that form the basis for estimated taxable income based on profitability.
Regarding the process by which management assessed the recoverability of deferred tax assets, we performed the following procedures:
1. We examined the occurrence of taxable income and relevant documentation to evaluate the appropriateness of the classification of the company.
2. To evaluate the appropriateness of the expected reversal of future deductible temporary differences at the end of the period, we inquired management about the key assumptions used in future forecasts and inspected the minutes of the Board of Directors and other decision-making bodies meeting.
3. We inspected scheduling tables of Avex Inc. (hereinafter "the Company") and examined the appropriateness of offsetting the estimated amount of future taxable income exclusive of reversing temporary differences and carryforwards with future deductible temporary differences.
Regarding the estimated amount of pre-adjustment taxable income for temporary differences, we performed the following procedures:
1. We examined the approval of business plan figures by inspecting the minutes of the Board of Directors' meetings.
2. We examined the consistency between the business plan approved by the Board of Directors and the documentation related to the recoverability of deferred tax assets.

(3) Regarding the business plan, we performed the following procedures:

―We compared past business plan figures with actual results, and in the case of shortfalls, we examined the reasons and tested whether they were reflected in the current estimated taxable income.

―We inquired of management and inspected relevant documentation about the sales plans for live performances and events included in the future business projections and market trends in the live entertainment market.

―We examined whether the key assumptions were consistent with historical results.

Evaluation of the acquisition cost related to the additional acquisition of interests in S10 Entertainment & Media LLC

The key audit matter and the basis of our determination

How the key audit matter was addressed in the audit

In the Group's consolidated balance sheet as of March 31, 2025, investment securities were recorded for ¥9,839 million, of which the acquisition cost of S10 Entertainment & Media LLC (hereinafter referred to as "S10") is ¥2,779 million, accounting for 2.6% of total assets. Additionally, as described in Note 3, "Significant Accounting Estimates," to the consolidated financial statements, the Company has acquired additional equity interests in S10 for the year ended March 31, 2025, and has included it within the scope of equity method accounting.

In determining the acquisition cost of S10's equity interests using external specialists, the Company calculated S10's entity value using an income approach (DCF method). This assessment is based on business plan and future cash flows, developed using key assumptions such as the number and value of future contracts and market trends, and the weighted average cost of capital.

Therefore, the valuation of S10's entity value does not only involve subjective judgment of the management but also requires advanced expertise.

In determining the acquisition cost of the equity interests in S10, we performed the following audit procedures, among others:

Examination of the Reasonableness of the Business Plan:
- To understand the purpose and economic rationale of the transaction, we inquired of management about the purpose and background of acquiring the equity interests in S10, and inspected the minutes of the Board of Directors' meetings and contracts.
- We examined the consistency between the future business plan that served as the basis for the future cash flows used in the valuation and the business plan approved by the Board of Directors.
- We inquired of management about the key assumptions of the business plan, such as the number and value of future contracts and market trends, and examined their feasibility through performing a trend analysis based on past performance and analyses of the business environment, such as the music market.

For the above reasons, we have determined evaluation of the acquisition cost related to the additional acquisition of investments in S10 as a key audit matter due to its significance for the audit year ended March 31, 2025.

Examination of the Reasonableness of the Work of Specialists Used by Management:
- We evaluated the competence, capability, and objectivity of the external specialists used by management in determining the acquisition cost.
- To examine whether the valuation methods adopted by the Company align with general valuation practices, we involved our valuation specialists to assist us examine the valuation methods used by the Company in calculating the entity value of S10 underlying the determination of the acquisition cost.

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.

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.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes 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, 2025, which were charged by us and our network firms to Avex Inc. and its subsidiaries were ¥71 million and ¥7 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 8, 2025

Avex Inc. and Consolidated Subsidiaries

Consolidated Balance Sheet

March 31, 2025

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

ASSETS	2025	2024	2025
CURRENT ASSETS:
Cash and cash in banks (Notes 16 and 19)	¥ 35,690	¥ 47,075	$ 238,697
Notes and accounts receivable—trade (Notes 4 and 16)	22,952	22,700	153,504
Inventories:
Merchandise and finished products	910	845	6,086
Work in process	3,683	3,356	24,632
Raw materials and supplies	315	300	2,106
Advance payments—trade	1,471	1,468	9,838
Prepaid expenses	1,917	1,895	12,821
Prepaid royalties	2,789	2,381	18,653
Accounts receivable—other (Note 16)	5,641	3,705	37,727
Other	2,654	3,353	17,750
Allowance for doubtful accounts	(253)	(621)	(1,692)
Total current assets	77,774	86,463	520,157
PROPERTY, PLANT AND EQUIPMENT: Land	2,690	2,580	17,990
Buildings and structures—net	4,214	2,513	28,183
Other property—net	1,595	1,548	10,667
Total property, plant and equipment	8,500	6,642	56,848
INVESTMENTS AND OTHER ASSETS: Investment securities (Notes 3, 5 and 16)	9,839	8,214	65,803
Intangible assets (Note 6)	2,660	2,167	17,790
Deferred tax assets (Notes 3 and 12)	5,183	4,582	34,664
Asset for retirement benefits (Note 8)	42		280
Other assets	3,583	1,841	23,963
Allowance for doubtful accounts	(1,624)	(22)	(10,861)

Total investments and other assets 19,685 16,782 131,654

TOTAL ¥ 105,960 ¥ 109,887 $ 708,667

Avex Inc. and Consolidated Subsidiaries

Consolidated Balance Sheet

March 31, 2025

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

LIABILITIES AND EQUITY		2025		2024	2025
CURRENT LIABILITIES:
Notes and accounts payable—trade (Note 16)	¥	2,972	¥	1,762	$ 19,876
Current portion of long-term loans (Notes 7 and 16)		3		3	20
Accounts payable—other (Note 16)		29,511		31,163	197,371
Accrued royalties (Note 16)		6,790		6,746	45,411
Income taxes payable (Note 16)		2,105		1,050	14,078
Refund liabilities		1,323		1,705	8,848
Advances received (Note 11)		4,097		2,014	27,401
Provision for bonuses		310		561	2,073
Other		5,719		6,581	38,249
Total current liabilities		52,834		51,587	353,357
LONG-TERM LIABILITIES:
Long-term loans (Notes 7 and 16)			3
Liability for retirement benefits (Note 8)			381
Other	2,013		1,815		13,463
Total long-term liabilities	2,013		2,200		13,463
COMMITMENTS AND CONTINGENT LIABILITIES

(Notes 15 and 17)

EQUITY (Notes 9 and 10):

Shareholders' equity:

Common stock—authorized, 184,631,000 shares;

issued, 45,792,500 shares in 2025 and
45,663,400 shares in 2024	4,755	4,678	31,801
Capital surplus	5,649	5,598	37,780
Retained earnings	43,677	44,746	292,114
Treasury stock—at cost, 3,410,680 shares in 2025
and 410,546 shares in 2024	(4,933)	(590)	(32,992)
Total	49,149	54,432	328,711
Accumulated other comprehensive income:
Unrealized gain on available-for-sale securities	700	795	4,681
Foreign currency translation adjustments	(49)	(98)	(327)
Defined retirement benefit plans	308	60	2,059
Total	960	757	6,420
Noncontrolling interests	1,003	910	6,708
Total equity	51,112	56,099	341,840
TOTAL	¥ 105,960	¥ 109,887	$ 708,667
See notes to consolidated financial statements.

Avex Inc. and Consolidated Subsidiaries

Consolidated Statement of Income

Year Ended March 31, 2025

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

	2025	2024	2025
NET SALES (Note 11)	¥ 131,691	¥ 133,387	$ 880,758
COST OF SALES	95,852	94,097	641,064
Gross profit	35,839	39,289	239,693
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 13)	37,658	38,024	251,859

Operating (loss) income (1,819) 1,265 (12,165)

OTHER INCOME (EXPENSES):

Interest income	51	21	341
Dividend income	19	14	127
Interest expense	(5)	(6)	(33)
Commission fee	(36)	(37)	(240)
Equity in earnings of associated companies	310	13	2,073
Gain on valuation of investment securities		224
Compensation income		38
Loss on valuation of investment securities	(243)	(49)	(1,625)
Foreign exchange losses	(23)	(344)	(153)
Gain on sales of shares of subsidiaries	4,520		30,230
Gain on change in equity	1,965	64	13,142
Gain on sales of investment securities		1,675
Loss on impairment of long-lived assets (Note 6)	(496)	(132)	(3,317)
Loss on disaster Compensation for damage (Note 14)	(159)	(160)	(1,063)
Other—net	(319)	178	(2,133)
Other income—net	5,581	1,499	37,326
INCOME BEFORE INCOME TAXES	3,762	2,764	25,160
INCOME TAXES (Note 12): Current	3,068	1,354	20,518
Deferred	(648)	230	(4,333)
Total income taxes	2,420	1,584	16,185
NET INCOME	1,342	1,180	8,975
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	203	193	1,357
NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT	¥ 1,138	¥ 987	$ 7,611

Avex Inc. and Consolidated Subsidiaries

Consolidated Statement of Income

Year Ended March 31, 2025

	Yen	U.S. Dollars
	2025 2024	2025
PER SHARE OF COMMON STOCK (Notes 2.u and 21): Basic net income	¥ 26.11 ¥ 21.83	$0.17
Cash dividends applicable to the year	50.00 50.00	0.33

See notes to consolidated financial statements.

Avex Inc. and Consolidated Subsidiaries

Consolidated Statement of Comprehensive Income

Year Ended March 31, 2025

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

	2025	2024	2025
NET INCOME	¥ 1,342	¥ 1,180	$ 8,975
OTHER COMPREHENSIVE INCOME (LOSS) (Note 18): Unrealized loss on available-for-sale securities	(94)	(1,733)	(628)
Foreign currency translation adjustments	(1)	94	(6)
Defined retirement benefit plans	208	246	1,391
Share of other comprehensive income (loss) in associates	91	(45)	608
Total other comprehensive income (loss)	203	(1,438)	1,357
COMPREHENSIVE INCOME (LOSS)	¥ 1,545	¥ (257)	$ 10,333
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the parent	¥ 1,341	¥(451)	$8,968
Noncontrolling interests	203	193	1,357

See notes to consolidated financial statements.

Avex Inc. and Consolidated Subsidiaries

Consolidated Statement of Changes in Equity

Year Ended March 31, 2025

Millions of Yen

Accumulated Other Comprehensive Income

Shareholders' Equity

Unrealized Gain on

Foreign Currency

Defined Retirement

	Common Stock	Capital Surplus	Retained Earnings	Treasury Stock	Total	Available-for- Sale Securities	Translation Adjustments	Benefit Plans	Total	Noncontrolling Interests	Total Equity
BALANCE, APRIL 1, 2023	¥ 4,599	¥ 5,526	¥ 46,343	¥ (590)	¥ 55,878	¥ 2,538	¥ (182)	¥ (160)	¥ 2,195	¥ 764	¥ 58,838
Issuance of new stock	78	78			156						156
Net income attributable to owners of the parent			987		987						987
Cash dividends, ¥50 per share			(2,260)		(2,260)						(2,260)
Change in scope of equity method Change in ownership interest of parent due to transactions with noncontrolling interests		(6)	(323)		(323) (6)						(323) (6)
Net change in the year						(1,743)	83	221	(1,438)	145	(1,292)
BALANCE, MARCH 31, 2024	4,678	5,598	44,746	(590)	54,432	795	(98)	60	757	910	56,099
Issuance of new stock	77	77			155						155
Net income attributable to owners of the parent			1,138		1,138						1,138
Cash dividends, ¥50 per share			(2,207)		(2,207)						(2,207)
Purchase of treasury stock Change in ownership interest of parent due to transactions with noncontrolling interests		(26)		(4,342)	(4,342) (26)						(4,342) (26)
Net change in the year						(94)	49	248	203	92	295
BALANCE, MARCH 31, 2025	¥ 4,755	¥ 5,649	¥ 43,677	¥ (4,933)	¥ 49,149	¥ 700	¥ (49)	¥ 308	¥ 960	¥ 1,003	¥ 51,112

Thousands of U.S. Dollars (Note 1)

Accumulated Other Comprehensive Income

Shareholders' Equity

Unrealized Gain on

Foreign Currency

Defined Retirement

	Common Stock	Capital Surplus	Retained Earnings	Treasury Stock	Total	Available-for- Sale Securities	Translation Adjustments	Benefit Plans	Total	Noncontrolling Interests	Total Equity
BALANCE, MARCH 31, 2024	$ 31,286	$ 37,439	$ 299,264	$ (3,945)	$ 364,044	$ 5,317	$ (655)	$ 401	$ 5,062	$ 6,086	$ 375,193
Issuance of new stock	514	514			1,036						1,036
Net income attributable to owners of the parent			7,611		7,611						7,611
Cash dividends, $0.33 per share			(14,760)		(14,760)						(14,760)
Purchase of treasury stock Change in ownership interest of parent due to transactions with noncontrolling interests		(173)		(29,039)	(29,039) (173)						(29,039) (173)
Net change in the year						(628)	327	1,658	1,357	615	1,972
BALANCE, MARCH 31, 2025	$ 31,801	$ 37,780	$ 292,114	$ (32,992)	$ 328,711	$ 4,681	$ (327)	$ 2,059	$ 6,420	$ 6,708	$ 341,840
See notes to consolidated financial statements.

- 12 -

Avex Inc. and Consolidated Subsidiaries

Consolidated Statement of Cash Flows

Year Ended March 31, 2025

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

2025 2024 2025

OPERATING ACTIVITIES:

Income before income taxes	¥ 3,762	¥ 2,764	$ 25,160
Adjustments for: Depreciation	1,607	1,772	10,747
Loss on impairment of long-lived assets	496	132	3,317
Interest and dividend income	(70)	(35)	(468)
Interest expense	5	6	33
Loss (gain) on sales of investment securities	90	(1,675)	601
Equity in earnings of associated companies	(310)	(13)	(2,073)
Gain on change in equity	(1,965)	(64)	(13,142)
(Gain) loss on sale of shares of subsidiaries	(4,520)	14	(30,230)
Loss (gain) on valuation of investment securities	246	(174)	1,645
Share based compensation expenses	155	156	1,036
Compensation income		(38)
Compensation for damage Changes in assets and liabilities: Increase in trade accounts receivable	(448)	160 (416)	(2,996)
Increase in inventories	(1,025)	(305)	(6,855)
Increase in advance payments—trade	(3)	(355)	(20)
Increase in prepaid royalties	(445)	(149)	(2,976)
Increase (decrease) in trade accounts payable	1,539	(1,708)	10,292
(Increase) decrease in accounts receivable—other	(1,992)	1,782	(13,322)
(Decrease) increase in other accounts payable	(1,224)	5,672	(8,186)
Increase (decrease) in accrued royalties	76	(1)	508
Increase (decrease) in advances received	2,242	(1,049)	14,994
Decrease in refund liabilities	(382)	(463)	(2,554)
Increase in allowance for doubtful accounts	1,233	239	8,246
Decrease in provision for bonuses	(249)	(328)	(1,665)
(Decrease) increase in liability for retirement benefits	(85)	201	(568)
Other—net	(2,360)	117	(15,783)
Subtotal	(3,626)	6,240	(24,250)
Interest and dividends received	79	250	528
Interest paid	(5)	(6)	(33)
Proceed from compensation		38
Compensation paid for damage		(160)
Income taxes—refunded	1,122	109	7,504
Income taxes—paid	(2,246)	(2,780)	(15,021)
Net cash (used in) provided by operating activities— (Forward)	¥ (4,675)	¥ 3,691	$ (31,266)

Avex Inc. and Consolidated Subsidiaries

Consolidated Statement of Cash Flows

Year Ended March 31, 2025

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

	2025	2024	2025
Net cash (used in) provided by operating activities—(Forward)	¥ (4,675)	¥ 3,691	$ (31,266)
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(2,694)	(2,293)	(18,017)
Purchases of intangible assets	(2,132)	(1,265)	(14,258)
Proceed from sales of intangible assets		1,271
Purchases of investment securities	(1,603)	(1,534)	(10,720)
Proceed from sales of investment securities	729	1,906	4,875
Proceeds from collection of loans receivable	2,000		13,376
Payments for lease and guarantee deposits	(105)	(228)	(702)
Proceeds from collection of lease and guarantee deposits	3	3	20
Payments into time deposits		(276)
Proceeds from withdrawal of time deposits	141	138	943
Proceeds from sale of shares of subsidiaries	4,650		31,099
Payments for sale of shares of subsidiaries resulting in
change in scope of consolidation		(8)
Other—net	(58)	(111)	(387)
Net cash provided by (used in) investing activities	928	(2,399)	6,206
FINANCING ACTIVITIES: Repayments of long-term loans	(3)	(3)	(20)
Repayments of lease obligations	(92)	(75)	(615)
Proceeds from share issuance to noncontrolling shareholders	2,899		19,388
Purchases of treasury stock	(4,358)		(29,146)
Purchase of shares not resulting in change in scope of
consolidation	(337)	(8)	(2,253)
Dividends paid	(2,206)	(2,258)	(14,753)
Dividends paid to noncontrolling shareholders	(13)	(13)	(86)
Net cash used in financing activities	(4,111)	(2,360)	(27,494)
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS	55	(142)	367
NET DECREASE IN CASH AND CASH EQUIVALENTS	(7,803)	(1,210)	(52,186)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	46,933	48,143	313,891
DECREASE IN CASH AND CASH EQUIVALENTS RESULTING
IN CHANGE IN SCOPE OF CONSOLIDATION	(3,439)		(23,000)
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 19)	¥ 35,690	¥ 46,933	$ 238,697
See notes to consolidated financial statements.

Avex Inc. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

Year Ended March 31, 2025

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and in accordance with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to the application and disclosure requirements of IFRS Accounting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2024 consolidated financial statements to conform to the classifications used in 2025.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Avex Inc. (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥149.52 to $1, the approximate rate of exchange at March 31, 2025. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
Japanese yen figures less than a million yen are rounded down to the nearest million, except for per share data.
U.S. dollar figures less than a thousand dollars are rounded down to the nearest thousand, except for per share data.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Consolidation—The consolidated financial statements as of March 31, 2025, include the accounts of the Company and its 32 significant (34 in 2024) subsidiaries (together, the "Avex Group").
  Consolidation of the remaining subsidiaries would not have a material effect on the accompanying consolidated financial statements.
  Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Avex Group has the ability to exercise significant influence are accounted for by the equity method.
  (Consolidated Subsidiaries) Avex Entertainment Inc.
  Avex Live Creative Inc. Avex Music Creative Inc.
  Avex Alliance & Partners Inc. Avex Music Publishing Inc.
  Avex Classics International Inc. Avex Fan Marketing Inc.
  Avex Technologies Inc. Avex Management Inc. Avex Clan Inc.
  Avex Styles Inc.
  Avex Management Agency Inc. Avex Creator Agency Inc.
  Avex Creative Factory Inc. fuzz, Inc.
  Virtual Avex Inc. LIVESTAR Inc.
  Avex Pictures Inc.
  Avex Animation Labels Inc. FLAGSHIP LINE, Inc.
  Avex Film Labels Inc. aNCHOR Inc.
  The Anime Times Company AVEX AY FACTORY LLC.
  Avex ASUNARO Company Inc. Avex Asia Pte. Ltd.
  Avex China Inc. Avex Hong Kong Ltd. Avex Taiwan Inc.
  Avex Saudi Arabia LLC Avex USA Inc.
  Avex Music Group LLC*2
  *1 THINKR Inc. was excluded from the scope of consolidation in the year ended March 31, 2025, due to a decrease in the Avex Group's ownership ratio as a result of a third-party allotment of new shares. Subsequently, the Avex Group transferred all of its shares of THINKR Inc. as a result of a share buyback on the part of that company.
  *2 The company name of Avex USA Partners, LLC was changed to Avex Music Group LLC in the year ended March 31, 2025.
  Investments in six (five in 2024) associated companies are accounted for by the equity method. (Associated Companies Accounted for by Equity Method)
  Memory-Tech Holdings Inc. AWA Co. Ltd.
  HI&max Inc.
  SANRIO SOUTH EAST ASIA Pte. Ltd.
  Fashion Freak Show International Ltd. S10 Entertainment & Media LLC*
  * S10 Entertainment & Media LLC was included in the scope of equity method in the year ended March 31, 2025, due to increase in voting rights ratio.
  Investments in the remaining associated companies are stated at cost. If the equity method of accounting had been applied to the investments in these companies, the impact on the accompanying consolidated financial statements would be immaterial.
  The excess of the cost of acquisition over the fair value of the net assets of an acquired subsidiary at the date of acquisition is amortized over 5 years.
  All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Avex Group is also eliminated.
  Accounts of subsidiaries whose year-ends differ from March 31 have been consolidated using pro forma financial information prepared as of March 31.
2. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements—Under Accounting Standards Board of Japan ("ASBJ") Practical Issues Task Force ("PITF") No. 18, "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements," the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated financial statements. However, financial statements prepared by foreign subsidiaries in accordance with either IFRS Accounting Standards or generally accepted accounting principles in the United States of America (Financial Accounting Standards Board Accounting Standards Codification) tentatively may be used for the consolidation process, except for the following items that should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill;
  (b) scheduled amortization of actuarial gain or loss of pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized development costs of R&D; and
  (d) cancellation of the fair value model of accounting for property, plant and equipment and investment properties and incorporation of the cost model of accounting.
3. Unification of Accounting Policies Applied to Foreign Associated Companies for the Equity Method—ASBJ Statement No. 16, "Accounting Standard for Equity Method of Accounting for Investments," requires adjustments to be made to conform the associate's accounting policies for similar transactions and events under similar circumstances to those of the parent company when the associate's financial statements are used in applying the equity method, unless it is impracticable to determine such adjustments. In addition, financial statements prepared by foreign associated companies in accordance with either IFRS Accounting Standards or generally accepted accounting principles in the United States of America tentatively may be used in applying the equity method if the following items are adjusted so that net income is accounted for in accordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or loss of pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized development costs of R&D; and (d) cancellation of the fair value model of accounting for property, plant and equipment and investment properties and incorporation of the cost model of accounting.
4. Business Combinations—Business combinations are accounted for using the purchase method. Acquisition-related costs, such as advisory fees or professional fees, are accounted for as expenses in the periods in which the costs are incurred. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, an acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that would have affected the measurement of the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for the business combination had been completed at the acquisition date. The acquirer recognizes any bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed have been identified after a review of the procedures used in the purchase price allocation. A parent's ownership interest in a subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of noncontrolling interest is adjusted to reflect the change in the parent's ownership interest in its subsidiary while the parent retains its controlling interest in its subsidiary. Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is accounted for as capital surplus as long as the parent retains control over its subsidiary.
5. Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash and exposed to insignificant risk of changes in value.
  Cash equivalents include time deposits, certificates of deposit, commercial paper and bond funds, all of which mature or become due within three months of the date of acquisition.
6. Inventories—Merchandise, finished products and supplies are stated at the lower of cost, determined by the moving average cost method, or net selling value.
  Raw materials are stated at the lower of most recent purchase price, which approximates cost determined by the first-in, first-out method, or net selling value.
  Work in process (including the right to use audiovisual) is stated at the lower of cost, determined by the specific identification method, or net selling value.
  Valuation losses due to declines in profitability included in cost of sales for the years ended March 31, 2025 and 2024, were ¥2,662 million ($17,803 thousand) and ¥2,231 million, respectively.
7. Marketable and Investment Securities—Marketable and investment securities classified as available for sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity.
  Nonmarketable available-for-sale equity securities are stated at cost determined by the moving-average method. For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.
  Investments in limited partnerships are accounted for by the equity method.
8. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment of the Company and its consolidated domestic subsidiaries is computed by the declining-balance method based on the estimated useful lives of the assets, while the straight-line method is applied to buildings (excluding accompanying facilities) acquired after April 1, 1998, and building improvements and structures acquired after April 1, 2016.
  Depreciation of property, plant and equipment of consolidated foreign subsidiaries is computed by the straight-line method.
  The range of useful lives is principally from 3 to 43 years for buildings and structures and from 2 to 20 years for other.
  Accumulated depreciation of property, plant and equipment as of March 31, 2025 and 2024, was
  ¥7,176 million ($47,993 thousand) and ¥6,592 million, respectively.
9. Long-Lived Assets—The Avex Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
10. Intangible Assets—Intangible assets are amortized by the straight-line method over the estimated useful life (2–5 years).
11. Leases—The Avex Group leases certain tools, furniture and fixtures and vehicles as finance leases that do not transfer ownership of the leased property to the lessee. Finance leases that do not transfer ownership of the leased property to the lessee are depreciated by the straight-line method over the terms of the respective leases with no residual value.
12. Allowance for Doubtful Accounts—The allowance for doubtful accounts is stated in amounts considered to be appropriate based on the Company's past credit loss experience and a valuation of potential losses in the receivables outstanding.
13. Provision for Bonuses—Provision for bonuses is provided for the bonus payments to employees in estimated bonus amounts attributable to the current fiscal year.
14. Retirement and Pension Plans—The Avex Group (excluding certain consolidated subsidiaries) has defined benefit pension plans.
  Additional retirement benefits are paid in certain circumstances.
  The Company accounts for the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. The projected benefit obligations are attributed to periods on a benefit formula basis. Actuarial gains and losses and past service costs that are yet to be recognized in profit or loss are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects and are recognized in profit or loss over 1 year and 11 years, respectively, no longer than the expected average remaining service period of the employees. The discount rate is determined using a single weighted-average discount rate reflecting the estimated timing and amount of benefit payment.
15. Stock Options—Compensation expense for employee stock options which were granted on and after May 1, 2006, is recognized based on the fair value at the date of grant and over the vesting period as consideration for receiving goods or services in accordance with ASBJ Statement
  No. 8, "Accounting Standard for Share-based Payment." Stock options granted to nonemployees are accounted for based on the fair value of either the stock option or the goods or services received. In the balance sheet, the stock option is presented as a stock acquisition right as a separate component of equity until exercised.
16. Net Sales—The Avex Group recognizes revenue in accordance with that core principle by applying the following steps:
  Step 1: Identify the contracts with a customer
  Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price
  Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
  The Avex Group provides a wide variety of goods and services, including through its music business, anime & visual content business and overseas business.
  In the sale of products and merchandise, the Avex Group determines that control of products transfers to the customer at the time of shipment, and recognizes revenue at the time of shipment. However, for products and merchandise shipped before the release date, the Avex Group recognizes revenue at the time of sale according to accepted business practices since the time from shipment to delivery is very short.
  For products and merchandise sold where the Avex Group determines its role is that of an agent, it recognizes revenue as the net amount obtained by deducting the amount of payment to a third party from the total amount of the consideration.
  Regarding the holding of live events, the Avex Group determines that services promised transfer to customers and performance obligations are satisfied at the time the event is held. Thus, the Avex Group recognizes revenue at the time of the event.
  Various types of music and other distribution are classified as transactions that grant licenses to customers. With respect to sales or usage-based royalties received from customers, the Avex Group recognizes revenue from such distribution at the time the customer records revenue in connection with the license or the licensee uses the license.
17. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted income tax rates to the temporary differences.
  The Avex Group files a tax return under the group tax sharing system.
18. Foreign Currency Transactions—All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statement of income to the extent that they are not hedged by forward exchange contracts.
19. Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historical rate. Differences arising from such translation are shown as "Foreign currency translation adjustments" under accumulated other comprehensive income in a separate component of equity. Revenue and expense accounts of consolidated foreign subsidiaries are translated into yen at the average exchange rate.
20. Derivatives and Hedging Activities—The Avex Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange. Foreign exchange forward contracts are utilized by the Avex Group to reduce foreign currency exchange risks. The Avex Group does not enter into derivatives for trading or speculative purposes.
  Derivative financial instruments are classified and accounted for as follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated statement of income; and (2) for derivatives used for hedging purposes, if such derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.
  Foreign currency forward contracts applied for forecasted transactions are measured at fair value, but the unrealized gains/losses are deferred until the underlying transactions are completed.
21. Per Share Information—Basic net income per share is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the period, retroactively adjusted for stock splits.
  Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common stock. Diluted net income per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of the year (or at the time of issuance) with an applicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.
  Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective fiscal years, including dividends to be paid after the end of the year.
22. Accounting ChangeAccounting Standards Related to Current Income Taxes Etc.—Effective from the start of the year ended March 31, 2025, the Avex Group has applied ASBJ Statement No. 27, October 28, 2022, "Accounting Standard for Current Income Taxes" (hereinafter referred to as "Revised Accounting Standard 2022").
  The amendment to categories in which current income taxes are recorded (taxes on other comprehensive income) follows the transitional treatment prescribed in the proviso of Paragraph 20-3 of Revised Accounting Standard 2022 and the transitional treatment prescribed in proviso (2) of Paragraph 65-2 of ASBJ Guidance No. 28, October 28, 2022, "Guidance on Accounting Standard for Tax Effect Accounting" (hereinafter referred to as "Revised Guidance 2022"). There is no impact on the consolidated 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 are deferred for tax purposes, the Avex Group has adopted Revised Guidance 2022 from the beginning of the year ended March 31, 2025, and has applied this change in accounting policies retrospectively. Hence, the 2024 consolidated financial statements have been modified retrospectively. There is no impact on the 2024 consolidated financial statements.
23. Change in PresentationConsolidated Statement of Income—"Gain on change in equity" of ¥64 million for the year ended March 31, 2024, which was included in "Other—net" in other income (expenses), has been presented separately to conform to the current year's presentation.Consolidated Statement of Cash Flows—"Increase in allowance for doubtful accounts" of
  ¥239 million, "Gain on change in equity" of ¥(64) million and "(Gain) loss on sale of shares of subsidiaries" of ¥14 million for the year ended March 31, 2024, which were included in "Other— net" in operating activities, have been presented separately to conform to the current year's presentation.
24. Additional InformationAdditional Acquisition of Equity Interest of Associated Company
  In the year ended March 31, 2025, the Company acquired an interest in S10 Entertainment & Media LLC (hereinafter "S10") and consolidated subsidiary Avex Music Group LLC (hereinafter "AMGL") entered into an employment agreement with Brandon Silverstein (hereinafter "Brandon"), CEO of S10, to assume the role of CEO of AMGL. Pursuant to this employment agreement, Brandon assumed the role of CEO of AMGL as of April 1, 2025.
  1. Outline of the business combination
    1. Name of acquired company and its business outline
      Name of the acquired company: S10 Entertainment & Media LLC Business outline: Artist management business
    2. Major reason for the business combination
      S10 was jointly established by the major U.S. management company Roc Nation LLC and Brandon, and is engaged in the management of well-known overseas artists and talent. Its artists have produced numerous global hits, including more than 20 songs that have topped the global charts.
      As potential business synergies became more evident, including the overseas expansion of the activities of artists belonging to the Avex Group, the Group resolved to acquire shares of S10 to expand opportunities for Avex Group artists to expand overseas and to support their activities in a wider range of markets, as well as to accelerate through these efforts the global expansion of intellectual property originating in Japan, deeming that it could expect business growth in global markets.
    3. Date of business combination April 1, 2025
    4. Legal form of business combination
      The acquired company has become a subsidiary based on the substantial control criteria principle.
    5. Name of the company after the combination No change
  2. Acquisition cost of the acquired company and related details of each class of consideration
    March 31, 2025 Millions of Yen
    Thousands of
    U.S. Dollars
    Consideration for acquisition:
    Fair value of the acquiree's interest at
    the date of the business combination ¥ 2,779 $ 18,586
    Acquisition cost ¥ 2,779 $ 18,586
  3. Major acquisition-related costs
    Not applicable
  4. Amount of goodwill incurred, reason for the goodwill incurred, and the method and period of amortization
    Not determined at present
  5. The assets acquired and the liabilities assumed at the acquisition date

Not determined at present

3. SIGNIFICANT ACCOUNTING ESTIMATES
Deferred Tax Assets
(1) Carrying amounts
	Millions of Yen	Thousands of U.S. Dollars
	2025 2024	2025
Deferred tax assets	¥ 5,183 ¥ 4,582	$ 34,664
(2) Information on the significant estimate

As stated in Note 12, "Income Taxes," the Avex Group recorded deferred tax assets determined to be recoverable before being offset against deferred tax liabilities of ¥5,481 million

($36,657 thousand) (total deferred tax assets of ¥9,120 million ($60,995 thousand) and valuation allowance of ¥(3,638) million ($(24,331) thousand)). 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, and should it become necessary to revise the amount of future taxable income, this could have a significant impact on the amount of deferred tax assets recognized in the consolidated financial statements for the following fiscal year.

Valuation of Goodwill for Equity-Method Affiliates

Carrying amounts
The Company acquired an interest in S10 in the year ended March 31, 2025, and recorded
¥2,779 million ($18,586 thousand) as investment securities, including the amount equivalent to goodwill.
Information on the significant estimate

Investment securities in the consolidated balance sheet include amounts equivalent to goodwill for equity-method affiliates. Recoverability of the amounts equivalent to goodwill is determined with reference to future cash flows, based on the business plan prepared by investee companies. Major assumptions of the plans involve the number and amounts of future contracts and market trends.

The assumptions used in these estimates are highly uncertain. If the recoverable amount falls below the book value due to changes in future economic conditions or other factors, it may be necessary to record an impairment loss, which could have a significant impact on the consolidated financial statements for the year ending March 31, 2026.

NOTES AND ACCOUNTS RECEIVABLE
Receivables from contracts with customers, included in notes and receivables—trade, at March 31, 2025 and 2024, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2025 2024 2025
Accounts receivables—trade ¥ 22,952 ¥ 22,700 $ 153,504
MARKETABLE AND INVESTMENT SECURITIES
The costs and aggregate fair values of marketable and investment securities at March 31, 2025 and 2024, were as follows:
Millions of Yen
March 31, 2025 Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Securities classified as available-for-sale—
equity securities ¥ 674 ¥ 1,553 ¥ 2,228
March 31, 2024
Securities classified as available-for-sale—
equity securities ¥ 1,988 ¥ 1,921 ¥ 3,910
Thousands of U.S. Dollars
March 31, 2025 Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Securities classified as available-for-sale—
equity securities $ 4,507 $ 10,386 $ 14,901
Note: "Cost" for the years ended March 31, 2025 and 2024, represents the carrying amount after impairment.
The information for available-for-sale securities which were sold during the year ended March 31, 2025, is not disclosed since the Avex Group did not sell any available-for-sale securities.
The information for available-for-sale securities which were sold during the year ended March 31, 2024, was as follows:
Millions of Yen
March 31, 2024 Proceeds
Realized
Gains
Realized
Losses
Available-for-sale equity securities ¥ 1,643 ¥ 1,642
The impairment losses on available-for-sale securities for the year ended March 31, 2025, were
¥103 million ($688 thousand) (¥103 million ($688 thousand) for unlisted stocks).
The impairment losses on available-for-sale securities for the year ended March 31, 2024, were
¥49 million (¥49 million for unlisted stocks).
Investments in associated companies included in investment securities for the years ended March 31, 2025 and 2024, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2025 2024 2025
Equity securities ¥ 4,613 ¥ 1,407 $ 30,852
LONG-LIVED ASSETS
The Avex Group performs asset groupings in units that facilitate the ongoing assessment of earnings based on reportable segment classifications for business assets, as a minimum unit that generates independent cash flow.
For the year ended March 31, 2025, revising down the book value of asset groups to their recoverable value, the Company recorded an impairment loss of ¥496 million ($3,317 thousand) as other expense for the amount of this downward revision for business assets in the music business and the anime & visual content business since recovery could not be expected in line with the originally anticipated schedule.
The Company measures recoverable amounts based on value in use, which has been assessed to be nil due to the likelihood of negative future cash flow.
Details of the impairment losses for the year ended March 31, 2025, are as follows:
Purpose of Use Location Type of Assets
Millions
of Yen
Thousands of
U.S. Dollars
Business use
Tokyo
Software
¥ 244
$ 1,631
(music business)
Goodwill
176
1,177
Business use Tokyo Software 74 494
(anime & visual content business)
For the year ended March 31, 2024, revising down the book value of asset groups to their recoverable value, the Company recorded an impairment loss of ¥132 million as other expense for the amount of this downward revision for business assets in the music business, etc. since recovery could not be expected in line with the originally anticipated schedule.
Details of the impairment losses for the year ended March 31, 2024, are as follows:
Purpose of Use Location Type of Assets
Millions
of Yen
Business use Tokyo Software, etc. ¥ 132 (music business, etc.)

LONG-TERM DEBT

Long-term debt at March 31, 2025 and 2024, consisted of the following:

Millions of Yen

Thousands of

U.S. Dollars

2025 2024 2025

Long-term loans:

Current portion of long-term loans, with

weighted-average rate of 2.26% (2025)	¥ 3	¥ 3	$ 20
Long-term loans excluding current portion		3
Lease obligation: Current portion of lease obligations	71	67	474
Lease obligations excluding current portion	184	194	1,230
Total	¥ 259	¥ 268	$ 1,732

Annual maturities of long-term debt at March 31, 2025, were as follows:

Millions of Yen

Year Ending

March 31

Long-Term

Loans

Lease

Obligation

2026 ¥3 ¥ 71

2027 51

2028 92

2029 27

2030 and thereafter 13

Thousands of U.S. Dollars

Year Ending March 31	Long-Term Loans	Lease Obligation
2026	$ 20	$ 474
2027		341
2028		615
2029		180
2030 and thereafter		86

For the purpose of obtaining working funds effectively, for the years ended March 31, 2025 and 2024, the Avex Group has entered into commitment lines with four financial institutions.

Information on loan commitment agreements was as follows:

	Millions of Yen	Thousands of U.S. Dollars
	2025 2024	2025
Contract amounts	¥ 11,000 ¥ 11,000	$ 73,568
Borrowings outstanding
Unused balance	¥ 11,000 ¥ 11,000	$ 73,568

RETIREMENT AND PENSION PLANS

The Avex Group (excluding certain consolidated subsidiaries) has defined benefit pension plans. Additional retirement benefits are paid in certain circumstances.

The changes in defined benefit obligation for the years ended March 31, 2025 and 2024, were as follows:

Millions of Yen

Thousands of

U.S. Dollars

	2025	2024	2025
Balance at beginning of year	¥ 5,631	¥ 5,354	$ 37,660
Current service cost	435	413	2,909
Interest cost	33	32	220
Actuarial (gains) losses	(543)	75	(3,631)
Benefits paid	(408)	(244)	(2,728)
Balance at end of year	¥ 5,148	¥ 5,631	$ 34,430

The changes in plan assets for the years ended March 31, 2025 and 2024, were as follows:

Millions of Yen

Thousands of

U.S. Dollars

	2025	2024	2025
Balance at beginning of year	¥ 5,249	¥ 4,825	$ 35,105
Expected return on plan assets	104	96	695
Actuarial (losses) gains	(117)	235	(782)
Contributions from the employer	362	335	2,421
Benefits paid	(408)	(244)	(2,728)
Balance at end of year	¥ 5,190	¥ 5,249	$ 34,711

Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets was as follows:
Millions of Yen
Thousands of
U.S. Dollars
2025 2024 2025
Funded defined benefit obligation ¥ 5,148 ¥ 5,631 $ 34,430
Plan assets (5,190) (5,249) (34,711)
Net (asset) liability arising from defined benefit
obligation ¥ (42) ¥ 381 $ (280)
Millions of Yen
Thousands of
U.S. Dollars
2025 2024 2025
Liability for retirement benefits ¥ 381
Asset for retirement benefits ¥ (42) $ (280)
Net (asset) liability arising from defined benefit
obligation ¥ (42) ¥ 381 $ (280)

The components of net periodic benefit costs for the years ended March 31, 2025 and 2024, were as follows:

Millions of Yen

Thousands of

U.S. Dollars

	2025	2024	2025
Service cost	¥ 435	¥ 413	$ 2,909
Interest cost	33	32	220
Expected return on plan assets	(104)	(96)	(695)
Recognized actuarial (gains) losses	(160)	157	(1,070)
Amortization of prior service cost	31	31	207
Net periodic benefit costs	¥ 235	¥ 537	$ 1,571

Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for the years ended March 31, 2025 and 2024, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2025 2024
2025
Prior service cost
¥ 31 ¥ 31
$ 207
Actuarial losses
265 317
1,772
Total
¥ 296 ¥ 349
$ 1,979

Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of March 31, 2025 and 2024, were as follows:

Millions of Yen

Thousands of

U.S. Dollars

		2025	2024	2025
	Unrecognized prior service cost	¥ 28	¥ 59	$ 187
	Unrecognized actuarial gains	(426)	(160)	(2,849)
	Total	¥ (397)	¥ (100)	$ (2,655)
(7)	Plan assets
	a. Components of plan assets
	Plan assets consisted of the following:
			2025	2024
	General insurance account		33 %	33 %
	Debt investments		26	25
	Alternative investments		20	20
	Equity investments		18	20
	Others		3	2
	Total		100 %	100 %

Alternative investments are mainly investment funds.

b. Method of determining the expected rate of return on plan assets

The expected rate of return on plan assets is determined considering the long-term rates of return which are expected currently and in the future from the various components of the plan assets.

(8) Assumptions used for the years ended March 31, 2025 and 2024, were set forth as follows:

	2025	2024
Discount rate	2.0%	0.6%
Expected rate of return on plan assets	2.0	2.0

EQUITY

Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:

Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders' meeting. Additionally, for companies that meet certain criteria including (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service of the directors being prescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation.
However, the Company does not meet all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.
Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus), depending on the equity account charged upon the payment of such dividends, until the aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts within equity under certain conditions upon resolution of the shareholders.
Treasury Stock and Treasury Stock Acquisition Rights

The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by a specific formula. Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

Business use	Tokyo	Software	¥ 244	$ 1,631
(music business)		Goodwill	176	1,177