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©2016 Avex Group Holdings Inc. 1
Financial Highlights
Q2 Results of FY 2016 (Fiscal year ending March 31, 2017)
November 10, 2016
7860:Avex Group Holdings Inc.
Consolidated Results
©2016 Avex Group Holdings Inc. 2
©2016 Avex Group Holdings Inc. 3
75.6
(billions of yen)
FY2014
Q2
FY2015
Q2
FY2016
Q2
FY2016 Q2 Highlights –Net Sales
7 billion yen (+10.3%) increase YoY
78.7
68.6
©2016 Avex Group Holdings Inc.
68.6
75.6
(billions of yen)
FY2016 Q2 Highlights –Net Sales Change by Segments
Sales increased due to strong sales of physical products in
the Video Business and increase of live-related sales in the
Management & Live Business
FY2015
Q2
FY2016
Q2 Music Video Management
& Live
Others
+
Adjustment
-1.0
+3.6
+3.8 +0.6
+7.0
4
©2016 Avex Group Holdings Inc.
FY 2016
Q2
Video
29%
22.8
Music
30%
23.7
Management
&
Live
39%
30.2
(Based on the amounts before elimination of inter-segment transactions)
(billions of yen)
FY2016 Q2 Highlights –Net Sales composition ratio by Segments
Management
&
Live
37%
26.4
Others
2%
1.4
Music
34%
24.8
Video
27%
19.1
FY 2015
Q2 5
Others
2%
1.4
©2016 Avex Group Holdings Inc. 6
(billions of yen)
FY2016 Q2 Highlights –Operating Income
FY2015
Q2
FY2014
Q2 FY2016
Q2
2.9
1.5 billion yen (+110.2%) increase YoY
1.4
1.7
©2016 Avex Group Holdings Inc. 7
+0.0
1.4
2.9
FY2015
Q2
FY2016
Q2 Music Video Management
& Live
Others
+
Adjustment
(billions of yen)
Operating Income increased due to strong sales of high profit
margin physical products and decreased Ads & Promo
expenses in digital video distribution
FY2016 Q2 Highlights –Operating Income Change by Segments
-1.3
+3.2 -0.3
+1.5
©2016 Avex Group Holdings Inc. 8
FY2016 Q2 Highlights –Net Income Attributable to Owners of Parent
(billions of yen)
Net Income turned positive due to
increased Operating Income
0
FY2015
Q2
FY2014
Q2
FY2016
Q2
0.4
-0.3
0.6
©2016 Avex Group Holdings Inc. 9
Results by Segments
©2016 Avex Group Holdings Inc. 10
Music Business Highlights
(billions of yen)
(billions of yen)
FY 2015 Q2 FY 2016 Q2 rate FY 2015 Q2 FY 2016 Q2 rate FY 2015 Q2 FY 2016 Q2 rate
Net Sales 15.5 14.4 -7.2% 5.7 5.9 +4.2% 1.5 1.3 -11.9%
Gross Profit 5.8 4.3 -26.2% 3.0 2.9 -4.4% 0.5 0.5 -1.2%
GPM 37.7% 29.9% -7.8pt 54.2% 49.7% -4.5pt 35.4% 39.7% +4.3pt
Sub-
Segments
Music Package Digital Music Distribution Music Publishing
Net Sales and Operating Income decreased due to
decreased sales of physical products & etc.
Music Business FY 2015 Q2 FY 2016 Q2 YoY rate
Net Sales 24.8 23.7 -1.0 -4.1%
Gross Profit 9.7 8.1 -1.6 -16.5%
Gross Profit Margin 39.3% 34.2% -5.1pt -
Operating Income 1.5 0.1 -1.3 -87.8%
Operating Margin 6.4% 0.8% -5.6pt -
(billions of yen)
Video Business Highlights
©2016 Avex Group Holdings Inc. 11
(billions of yen)
Video Business FY 2015 Q2 FY 2016 Q2 YoY rate
Net Sales 19.1 22.8 +3.6 +18.8%
Gross Profit 3.1 5.7 +2.6 +85.0%
Gross Profit Margin 16.2% 25.3% +9.1pt -
Operating Income -1.1 2.0 +3.2 -
Operating Margin - 9.1% - -
Net Sales and Operating Income increased due to strong
sales of high profit margin physical products and decreased
Ads & Promo expenses in digital video distribution
FY 2015 Q2 FY 2016 Q2 rate FY 2015 Q2 FY 2016 Q2 rate
Net Sales 16.0 14.6 -9.0% 5.1 10.3 +102.5%
Gross Profit 1.8 2.2 +19.0% 1.9 4.4 +123.4%
GPM 11.6% 15.2% +3.6pt 38.5% 42.4% +3.9pt
Sub-
Segments
Digital Video Distribution Video Package
4.53 4.75 4.79 4.994.57 4.62
0.640.59 0.56
0.53
0.5 0.47
0
1
2
3
4
5
6
©2016 Avex Group Holdings Inc. 12
5.17 5.36 5.35 5.51
5.10
©2016 Avex Group Holdings Inc. 12
Video Business Highlights: Number of Video Distribution Subscribers
(millions of people) (millions of people)
5.08
FY 2016
Q1 FY 2015
Q1 Q2 Q3 Q4 Q2 FY 2016
Q1
FY 2015
Q1 Q2 Q3 Q4 Q2
©2016 Avex Group Holdings Inc. 13
Management & Live Business Highlights
(billions of yen)
(billions of yen)
FY 2015 Q2 FY 2016 Q2 rate FY 2015 Q2 FY 2016 Q2 rate FY 2015 Q2 FY 2016 Q2 rate FY 2015 Q2 FY 2016 Q2 rate
Net Sales 15.0 17.9 +19.7% 6.5 7.9 +21.4% 5.7 6.7 +16.4% 2.3 2.4 +1.7%
Gross Profit 1.7 1.6 -7.0% 2.2 2.2 -1.7% 2.2 2.6 +19.1% 0.7 0.7 -2.0%
GPM 11.5% 9.0% -2.5pt 34.9% 28.3% -6.6pt 39.2% 40.1% +0.9pt 30.6% 29.4% -1.2pt
Merchandising Fan ClubSub-
Segments
Live Concerts Management
Net Sales increased mainly due to increase of
live-related sales
Management & Live FY 2015 Q2 FY 2016 Q2 YoY rate
Net Sales 26.4 30.2 +3.8 +14.4%
Gross Profit 6.9 7.1 +0.1 +2.4%
Gross Profit Margin 26.4% 23.7% -2.7pt -
Operating Income 1.4 1.1 -0.3 -25.5%
Operating Margin 5.6% 3.6% -2.0pt -
©2016 Avex Group Holdings Inc. 14
Management & Live Business Highlights: Number of Concerts
Number of concerts & audiences have both increased
Venue Size FY 2015 Q2 FY 2016 Q2 YoY
Stadium class 9 8 -1
Arena class 89 78 -11
Hall & Live
House class255 334 +79
Total 353 420 +67
Audience 1.13M People 1.41M People +0.27M People
Concert Ticket
Average Price8,769yen 8,411yen -358yen
©2016 Avex Group Holdings Inc. 15
Reference Data
©2016 Avex Group Holdings Inc. 16
Consolidated Income Statement
Consolidated Income Statement (millions of yen)
FY 2016 Guidance
FY 2015 Q2 *Guidance FY 2016 Q2 YoYVS
GuidanceFY 2016
Net Sales 68,606 73,666 75,648 +7,042 +1,982 155,000
Cost of Sales 48,425 55,106 54,231 +5,805 -874 110,700
Gross Profit 20,181 18,560 21,417 +1,236 +2,857 44,299
Gross Profit Margin 29.4% 25.2% 28.3% -1.1pt +3.1pt 28.6%
Personnel Expenses 5,492 5,729 6,394 +902 +665 12,571 Sales promotion
& Advertising Expenses5,941 4,519 4,334 -1,606 -184 11,226
General Expenses 7,335 7,204 7,720 +384 +516 14,501
Total SG&A Expenses 18,768 17,453 18,449 -319 +996 38,299
Operating Income 1,412 1,106 2,967 +1,555 +1,860 6,000
Operating Margin 2.1% 1.5% 3.9% +1.8pt +2.4pt 3.9%
Ordinary Income 201 463 2,455 +2,253 +1,992 5,000
Net Incomeattributable to owners of the parent
-308 -135 672 +980 +807 2,300
*Guidance was made public
on May 11, 2016
FY 2015 Q2 *Guidance FY 2016 Q2 YoYVS
GuidanceFY 2016
Net Sales 24,802 25,402 23,783 -1,018 -1,619 61,800
Cost of Sales 15,051 - 15,644 +592 - -
Gross Profit 9,751 8,607 8,139 -1,611 -468 24,501
Gross Profit Margin 39.3% 33.9% 34.2% -5.1pt +0.3pt 39.6%
Personnel Expenses 1,327 - 1,475 +148 - - Sales Promotion
& Advertising Expenses3,214 - 2,787 -426 - -
General Expenses 1,333 - 1,341 +8 - -
GMF 2,291 - 2,340 +49 - -
Total SG&A Expenses 8,166 7,461 7,945 -220 +483 17,911
Operating Income 1,584 1,146 193 -1,390 -952 6,589
Operating Margin 6.4% 4.5% 0.8% -5.6pt -3.7pt 10.7%
FY 2016 Guidance
©2016 Avex Group Holdings Inc. 17
Music Business
Music Business Income Statement (millions of yen)
★
★GMF=Group Management Fee
*Guidance was made public
on May 11, 2016
Music Business: Results by Sub-Segments
©2016 Avex Group Holdings Inc. 18
Music Package
Digital Music Distribution
Music Publishing
(millions of yen)
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 5,710 5,950 +239
Gross Profit 3,093 2,957 -136
Gross Profit Margin 54.2% 49.7% -4.5pt
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 1,583 1,394 -188
Gross Profit 560 553 -6
Gross Profit Margin 35.4% 39.7% +4.3pt
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 15,587 14,472 -1,114
Gross Profit 5,869 4,331 -1,538
Gross Profit Margin 37.7% 29.9% -7.8pt
Music Business: Results by Sub-Segments
©2016 Avex Group Holdings Inc. 19
Other Businesses of Music
(millions of yen)
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 1,969 2,019 +50
Gross Profit 1,101 1,190 +88
Gross Profit Margin 55.9% 58.9% +3.0pt
2015 2016 YoY
Music Package
Market (Jan.- Sep.)185,419 177,050 -4.5%
Digital Music Distribution
Market (Jan.- Jun.)22,881 25,662 +12.2%
Music Market Data (Reference: Recording Industry Association of Japan)
Music Business: Indicators
©2016 Avex Group Holdings Inc. 20
Music Business: Indicators
FY 2015 Q2 FY 2016 Q2
Average Price (¥) 2,915 3,483
Units (thousands) 2,170 1,488
Average Price (¥) 767 896
Units (thousands) 4,609 3,325
Average Price (¥) 6,090 5,965
Units (thousands) 299 523
Average Price (¥) 318 271
Downloads (thousands) 720 497
Average Price (¥) 263 258
Downloads (thousands) 4,956 4,063
Average Price (¥) 123 109
Downloads (thousands) 4,480 4,365
Average Price (¥) 262 237
Downloads (thousands) 5,197 5,628
ARPU (¥) 342 381
Subscribers (thousands) 283 198*Music Package indicators consist of titles released in FY2016 and do not include back catalogs.
M
u
s
i
c
P
a
c
k
a
g
e
Albums
Singles
DVDs / Blu-ray Discs
D
i
s
t
r
i
b
u
t
i
o
n
D
i
g
i
t
a
l
M
u
s
i
c
Feature phone(Ringtones/Video Ringtones)
Smartphone(Ringtones/Video Ringtones)
Ring-back tones
PC downloads
mu-mo
*
©2016 Avex Group Holdings Inc. 21
CD Albums
CD Singles
DVDs / Blu-ray Discs
Music Business: Key Titles Released in FY2016 Q2(Apr.-Sep.)
*Total Copies as of Sep. 30, 2016
Artist TitleCopies
(thousands)*
SKE48 Kinnoai,Ginnoai 428
Kis-My-Ft2 Sha la la☆Summer Time 330
EXILE ATSUSHI Beautiful Gorgeous Love -Exclusive Ver.- 251
Artist TitleCopies
(thousands)*
EXILE EXILE LIVE TOUR 2015 ”AMAZING WORLD” 248
Artist TitleCopies
(thousands)*
Various Artists HiGH & LOW ORIGINAL BEST ALBUM 406
Kis-My-Ft2 I SCREAM 319
EXILE EXTREME BEST 280
FY 2016 Guidance
FY 2015 Q2 *Guidance FY 2016 Q2 YoYVS
GuidanceFY 2016
Net Sales 19,195 21,164 22,804 +3,609 +1,640 42,800
Cost of Sales 16,082 - 17,044 +961 - -
Gross Profit 3,113 3,365 5,760 +2,647 +2,394 6,928
Gross Profit Margin 16.2% 15.9% 25.3% +9.1pt +9.4pt 16.2%
Personnel Expenses 341 - 438 +96 - -
Sales Promotion
& Advertising Expenses2,338 - 1,289 -1,049 - -
General Expenses 387 - 449 +62 - -
GMF 1,242 - 1,501 +258 - -
Total SG&A Expenses 4,310 3,841 3,678 -632 -163 7,658
Operating Income -1,197 -476 2,081 +3,279 +2,558 -729
Operating Margin - - 9.1% - - -
Video Business
©2016 Avex Group Holdings Inc. 22
Video Business Income Statement
★
(millions of yen)
★GMF=Group Management Fee
*Guidance was made public
on May 11, 2016
FY 2015 Q2 FY 2016 Q2
ARPU (¥) 473 479
Subscribers (millions of people) 5.35 5.10
dTV 4.75 4.62
BeeTV 0.59 0.47
ARPU (¥) 467 467
Subscribers (millions of people) 1.24 0.62
Average Price (¥) 5,532 5,345
Units (thousands) 227 584
dTV+BeeTV
UULA
DVDs / Blu-ray Discs*
©2016 Avex Group Holdings Inc. 23
Digital Video Distribution
Video Package
Video Business: Indicators
※ Less than 1 yen rounded up *DVDs / Blu-ray Discs indicators consist of titles released in FY2016 and do not include back catalogs.
※
Video Business: Results by Sub-Segments (millions of yen)
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 16,091 14,649 -1,441
Gross Profit 1,868 2,223 +354
Gross Profit Margin 11.6% 15.2% +3.6pt
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 5,122 10,373 +5,250
Gross Profit 1,971 4,402 +2,431
Gross Profit Margin 38.5% 42.4% +3.9pt
FY 2015 Q2 *Guidance FY 2016 Q2 YoYVS
GuidanceFY 2016
Net Sales 26,436 27,804 30,238 +3,801 +2,434 53,000
Cost of Sales 19,449 - 23,080 +3,630 - -
Gross Profit 6,986 6,479 7,158 +171 +678 12,581
Gross Profit Margin 26.4% 23.3% 23.7% -2.7pt +0.4pt 23.7%
Personnel Expenses 1,394 - 1,524 +129 - - Sales Promotion
& Advertising Expenses344 - 347 +3 - -
General Expenses 1,695 - 1,878 +182 - -
GMF 2,073 - 2,306 +233 - -
Total SG&A Expenses 5,507 5,529 6,056 +548 +527 11,498
Operating Income 1,479 950 1,101 -377 +150 1,083
Operating Margin 5.6% 3.4% 3.6% -2.0pt +0.2pt 2.0%
FY 2016 Guidance
©2016 Avex Group Holdings Inc. 24
Management & Live Business
Management & Live Business Income Statement
★
(millions of yen)
★GMF=Group Management Fee
*Guidance was made public
on May 11, 2016
(millions of yen)
©2016 Avex Group Holdings Inc. 25
Management
Merchandising
Live Concerts
Fan Club
Management & Live Business: Results by Sub-Segments
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 6,528 7,923 +1,395
Gross Profit 2,280 2,242 -37
Gross Profit Margin 34.9% 28.3% -6.6pt
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 5,762 6,709 +946
Gross Profit 2,259 2,689 +430
Gross Profit Margin 39.2% 40.1% +0.9pt
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 15,011 17,970 +2,958
Gross Profit 1,733 1,612 -120
Gross Profit Margin 11.5% 9.0% -2.5pt
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 2,372 2,413 +40
Gross Profit 725 710 -14
Gross Profit Margin 30.6% 29.4% -1.2pt
FY 2015 Q2 FY 2016 Q2
Concert Ticket Average Price(¥) 8,769 8,411
Fan Club Subscribers (thousands of people) 921 936
Other Businesses of Management & Live
©2016 Avex Group Holdings Inc. 26
Management & Live Business Indicators
Management & Live Business: Results by Sub-Segments
(millions of yen)
FY 2015 Q2 FY 2016 Q2 YoY
Net Sales 335 170 -164
Gross Profit 57 3 -53
Gross Profit Margin 17.1% 2.3% -14.8pt
※ From this fiscal year, subscriber numbers do not include fan clubs operated under commission basis. Conditions applied to this fiscal year have been applied to previous fiscal year for fair comparison.
※
FY 2015 Q2 *Guidance FY 2016 Q2 YoYVS
GuidanceFY 2016
Net Sales 1,460 1,505 1,450 -10 -55 3,204
Cost of Sales 751 - 695 -55 - -
Gross Profit 709 771 754 +44 -17 1,612
Gross Profit Margin 48.6% 51.2% 52.0% +3.4pt +0.8pt 50.3%
Personnel Expenses 257 - 350 +93 - - Sales Promotion
& Advertising Expenses165 - 122 -43 - -
General Expenses 386 - 351 -35 - -
GMF 248 - 307 +59 - -
Total SG&A Expenses 1,057 1,251 1,131 +74 -120 2,491
Operating Income -347 -480 -377 -29 +103 -878
Operating Margin - - - - - -
FY 2016 Guidance
©2016 Avex Group Holdings Inc. 27
Other Businesses
Other Businesses Income Statement
★
(millions of yen)
★GMF=Group Management Fee
*Guidance was made public
on May 11, 2016
©2016 Avex Group Holdings Inc. 28
Consolidated Balance Sheet
Consolidated Balance Sheet (millions of yen)
Mar.31, 2016 Sep.30, 2016 Mar.31, 2016 Sep.30, 2016
Current Assets 63,620 57,143 Current Liabilities 55,478 49,294
Cash and Deposits 21,107 22,358 Notes & Accounts
Payable-trade2,020 1,871
Notes & Accounts
Receivable-trade21,271 17,959 Short-term Debt 9,220 9,040
Inventories 8,526 6,419 Accounts Payable-
Other24,356 19,832
Others 12,714 10,405 Allowance for
Returned Goods4,163 4,119
Others 15,718 14,431
Noncurrent Assets 47,588 47,537 Noncurrent Liabilities 3,337 2,944
Tangible & Intangible
Assets37,611 37,147
Liabilities for retirement
benefits2,126 1,873
Total Investments &
Other Assets9,976 10,390 Others 1,210 1,070
Investment Securities 5,310 5,853 Total Liabilities 58,816 52,239
Others 4,666 4,536 Total Net Assets 52,392 52,442
Total Assets 111,208 104,681Total Liabilities &
Net Assets111,208 104,681
(millions of yen)
©2016 Avex Group Holdings Inc. 29
Consolidated Cash Flow Statement
Consolidated Cash Flow Statement
(millions of yen)
FY 2015 Q2 FY 2016 Q2 YoY
Net Cash provided by Operating Activities -4,493 4,771 +9,265
Net Cash provided by Investing Activities -3,060 -1,979 +1,081
Net Cash provided by Financing Activities -4,675 -1,554 +3,120
-12,229 1,237 +13,466
-7,553 2,792 +10,346
-25 12 +38
-12,254 1,250 +13,505
25,699 21,107 -4,592
13,445 22,358 +8,912Cash and cash equivalents at end of period
Cash Flow
Free Cash Flow
Effect of exchange rate change
on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
©2016 Avex Group Holdings Inc. 30
Cautionary statement concerning forward-looking statements
The forecasts for operating results and others contained in this release
were prepared by management based on currently available data and
information. Therefore, the forecasts include potential risks and uncertain
elements. In particular, in the Group’s business domain there are factors
other than general economic conditions that may affect our performance.
Please note, therefore, that actual results may greatly differ from the
forecasts.
Inquiries
Avex Group Holdings Inc.
Stocks & IR
+81-3-5545-9332
*Unless otherwise noted, the figures in this material are cutoff from fractions, and percentages (%) are
rounded.