financial highlights q2 results of fy 2016€¦ · management & live business highlights:...

©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



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


(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


+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


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


Results by Segments


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


(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


5.17 5.36 5.35 5.51

5.10


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


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 －


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


Reference Data


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


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


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


Music Business

Music Business Income Statement （millions of yen）

★

★GMF=Group Management Fee


on May 11, 2016

Music Business: Results by Sub-Segments


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


Music Business: Results by Sub-Segments


Other Businesses of Music


FY 2015 Q2 FY 2016 Q2 YoY

Net Sales 1,969 2,019 +50

Gross Profit 1,101 1,190 +88


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


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


Units (thousands) 299 523


Downloads (thousands) 720 497


Downloads (thousands) 4,956 4,063





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

＊


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


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


Video Business Income Statement

★




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


Units (thousands) 227 584

dTV+BeeTV

UULA

DVDs / Blu-ray Discs*


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


FY 2015 Q2 FY 2016 Q2 YoY

Net Sales 5,122 10,373 +5,250

Gross Profit 1,971 4,402 +2,431



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


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


Management & Live Business

Management & Live Business Income Statement

★




on May 11, 2016



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


FY 2015 Q2 FY 2016 Q2 YoY

Net Sales 5,762 6,709 +946

Gross Profit 2,259 2,689 +430


FY 2015 Q2 FY 2016 Q2 YoY

Net Sales 15,011 17,970 +2,958

Gross Profit 1,733 1,612 -120


FY 2015 Q2 FY 2016 Q2 YoY

Net Sales 2,372 2,413 +40



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


Management & Live Business Indicators

Management & Live Business: Results by Sub-Segments


FY 2015 Q2 FY 2016 Q2 YoY

Net Sales 335 170 -164



※ 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.

※


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


Other Businesses

Other Businesses Income Statement

★




on May 11, 2016


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



Consolidated Cash Flow Statement

Consolidated Cash Flow Statement


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


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

[email protected]

*Unless otherwise noted, the figures in this material are cutoff from fractions, and percentages (%) are

rounded.

financial highlights q2 results of fy 2016€¦ · management & live business highlights:...

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