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In the Music Business, despite an increase in net sales mainly from live concerts, e-commerce, and merchandising, operating profit decreased. This was caused by a lower gross profit rate resulting from changes in the sales mix and aggressive investment in IP creation.
In the Anime & Visual Content Business, net sales increased due to higher overseas sales and non-package sales at events. However, the segment posted a loss chiefly due to changes in the sales mix.
The Digital Business reported declines in sales and profit due mainly to the dissolution of a joint venture company for the digital video distribution service.
The Other Businesses segment achieved higher net sales largely due to increased royalty income; however, operating profit fell chiefly owing to increases in the cost of sales and SG&A expenses.

FY2023, the second year of Medium-term Management Plan "avex vision 2027" is over. Under the plan, the Company is making aggressive investments focused on "seek to discover and developing talent," which is the basis of the Company's value creation, aiming to build a system that enables it to achieve long-term growth.

Looking back at progress as of the end of FY2023, overall, our efforts to discover and develop IP for future growth are going well in all areas. However, we recognize that there are issues to be addressed in terms of monetization, including slower-than-planned progress and excessive expenditure on the development of avex IP as well as delays in the creation of big hits in the Anime & Visual Content Business.

In light of these factors, we have revised our numerical targets under the Medium-term Management Plan "avex vision 2027". We have lowered our previous targets for FY2024 and FY2026, and we do not aim to achieve operating profit of 15.0 billion yen, which was initially the target for FY2026, before FY2027 and will continue investing in IP development in the meantime.

To strengthen corporate governance and further drive the Medium-term Management Plan "avex vision 2027," the Company established the "Nomination and Compensation Committee," giving the "Compensation Committee," which was established in FY2011 to consider compensation for Directors, an additional role relating to the nomination of Directors. The Nomination and Compensation Committee consists of a majority of Independent Outside Directors, with the chairperson selected from among the Independent Outside Directors through consultation. The Nomination and Compensation Committee discusses the appointment and dismissal of our Directors and the compensation paid to the Directors and ensures greater transparency and reasonableness in the decision process.

Furthermore, ahead of the Ordinary General Meeting of Shareholders held in June 2024, the Company's Board of Directors selected two candidates for Independent Outside Director, who were appointed by resolution of the Ordinary General Meeting of Shareholders. The Company will strive to further improve the effectiveness of the Board of Directors by ensuring greater board diversity in terms of professional background, age, gender and skills.

Looking at the forecast for the fiscal year ending March 2025, fewer major title releases and large-scale live performances are likely and the Company plans to continue making investments in the development of IP; however, the Company expects that some of the IP it has invested in will start being monetized and that profit in the Anime business will increase. On this basis, the operating profit forecast is 2.0 billion yen (an increase of 58.1% year on year). Our forecast for profit attributable to owners of parent is 3.3 billion yen (an increase of 234.3% year on year) because we expect to record extraordinary income associated with the sale of business announced in March.

In accordance with our payout policy of maintaining a consolidated payout ratio of at least 35% and paying a minimum annual dividend of 50 yen per share, we have set an annual dividend of 50 yen per share for the fiscal year ended March 2024. For the fiscal year ending March 2025, we are planning to pay an annual dividend of 50 yen per share in accordance with this policy.

Based on the capital allocation policy disclosed in Medium-term Management Plan "avex vision 2027" and in consideration of our business environment and outlook, we decided to acquire treasury shares to improve shareholder returns and capital efficiency while securing sufficient funds for investing for the medium to long term. This will be our biggest ever buyback, with an upper limit of 3 million shares on the total number of shares to be acquired (approx. 6.6% of the total number of outstanding shares) and an upper limit of 4.5 billion yen on the total amount of shares to be acquired.