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Avex’s mission is to continue creating and delivering entertainment.

Impact of the COVID-19 (Novel Coronavirus)

The COVID-19 has had a significant impact on the Group. In the Music business in particular, the number of live concerts decreased 177 from the initial plan in the fiscal year ended March 31, 2020 and not a single concert has been held as yet since April in the fiscal year ending March 31, 2021. Although there are some indications of a possible restart due to the lifting of the declaration of a state of emergency, the Company takes the conservative view that it will be a long time before profitability is stabilized given requests for continued restrictions on activities such as live performances that draw large audiences. It also assumes that live performances-related merchandising and sales of music packages such as DVDs of live concerts will be seriously affected. The impact of the infection is not limited to the Music business but also extends to other businesses. For example, the production of content is delayed in the Anime & Visual Content business because production studio operations and dubbing work are affected. In addition, the Company is forced to suspend the operation of the Artist Academy for the time being.

Financial results for the fiscal year ended March 31, 2020

In the fiscal year under review, net sales decreased 15.4% year on year, to 135,469 million yen, mainly due to a fall in sales of music packages and a decline in the number of live concerts in the Music business. Operating income decreased 43.1% year on year, to 4,033 million yen, largely reflecting a decline in sales in the Music business. The loss attributable to owners of parent stood at 1,102 million yen, mainly due to the posting of the COVID-19 related expenses as well as extraordinary losses such as an impairment loss, as opposed to profit attributable to owners of parent amounting to 2,354 million yen in the previous fiscal year.

Initiatives for the distribution of video/audio content

People are expected to establish new lifestyles while keeping in mind the risk of the COVID-19. In this situation, the Company considers that providing video and audio content by way of digital distribution is an important approach in the fiscal year ending March 31, 2021 because it ensures communication without any worries about physical distancing. Based on this assumption, the Group has decided to position i) monetization through the distribution of live video content, ii) the active utilization of distribution platforms, iii) enhancement of content to be distributed and iv) establishment of a new communication scheme for fans, as four important measures to be strengthened. For example, it will step up efforts to post content on distribution platforms including the avex channel, the largest YouTube official corporate channel in Japan, and will actively promote a range of services such as the planning of new online festivals. In addition, the Company will continue to focus efforts on the development of talent for internet content creation, while, in consideration of the business environment affected by the COVID-19, making improvements to conditions for content production through a range of measures such as the development of an anime production technology that is fully remotely controlled by leveraging the AniCast Maker anime production tool. To implement such measures speedily, the Company will integrate its digital platform businesses, and by doing so, seek to accelerate digital transformation and maximize profit.

Measures to strengthen corporate governance

The Company has transitioned to a company with an audit & supervisory committee with a view to strengthening corporate governance and improving operational flexibility through a speedier decision-making process. In addition, it has established a new basic policy to increase the number of independent outside directors to at least one third of the total number of directors, while simultaneously ensuring that the head of the compliance committee is served by an outside director who is considered independent.

Earnings forecast and shareholder returns

Based on the payout policy of maintaining a payout ratio of 35% or higher and paying an annual dividend of 50 yen per share at least, the Company has decided to pay an annual dividend of 50 yen per share for the fiscal year ended March 31, 2020.
With respect to forecasts for financial results and returns for the fiscal year ending March 31, 2021, the Company has left details undecided, given the difficulty in reasonably calculating the impact of the COVID-19 at present. It will make an announcement promptly as soon as it is ready to disclose them. The current payout policy, however, may not be applied, depending on the trend in financial conditions and business results going forward.

The Group’s mission is to continue in creating and delivering entertainments.

Although the Group expects that the impact from COVID-19 will continue for some time, it will work to fulfill its mission by continuing to engage in creative activities and constantly deliver entertainments to users. It believes that these efforts will lead to the creation of new and more evolved entertainments in a post COVID-19 world. We appreciate the continued support of our shareholders.

June, 2020
Chairman: Masato Matsuura
President and CEO:   Katsumi Kuroiwa
CFO: Shinji Hayashi

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