Summary of Consolidated Financial Results (Japanese Accounting Standards)
for the Second Quarter of the Fiscal Year Ending December 31, 2020

August 14, 2020

Company name:
AOI TYO Holdings Inc.
Stock Exchange:
Tokyo Stock Exchange
Code:
3975
URL:
http://aoityo.com/en/
Representatives:
Yasuhito Nakae, Representative Director
Inquiries:
Satoshi Yuzurihara, Executive Director Tel: +81-3-3779-8415
Scheduled date of submission of quarterly report:
August 14, 2020
Scheduled date of commencement of dividend payment:
Supplementary documents for quarterly results:
Yes
Quarterly results briefing:Yes(Rounded down to the nearest million yen)

1. Consolidated Financial Results for the Second Quarter (from January 1, 2020 to June 30 2020)(1) Consolidated operating results(The percentages are year-on-year changes.)
Net sales
Q2 FY2020
Q2 FY2019(Note) Comprehensive income

Operating income

Million yen%

24,36730,636-20.5-0.7

Million yen

Ordinary income
%

-881
816

－
-53.2

Q2 FY2020: -1,133 million yen (-%)
Diluted net income�per share

Yen

Yen

-40.76
10.95-1,047637%

Million yen

-956
257

－
-62.1

%

－
-78.0

Q2 FY2019: 66 million yen (-94.0%)

Net income per share
Q2 FY2020
Q2 FY2019

Million yen

Profit attributable toowners of parent

－
10.91

(2) Consolidated financial position
Total assets

Net assets

Million yen

Q2 FY2020
FY201949,57353,352(For reference) Shareholders’ equity

Equity ratio

Million yen%

21,951
23,363Q2 FY2020: 21,560 million yen

43.5
43.0

FY2019: 22,935 million yen

2. Dividends
Dividends per share
End of Q1
Yen

End of Q2
Yen

End of Q3
Yen

Year end

AnnualYen

Yen

FY2019
8.00
12.00
20.00
－
－
FY20200.00－
FY2020 (forecast)－－－(Note)
1. Revisions to dividends forecast published most recently: No
2.The Company's Articles of Incorporation stipulate that the record dates for dividends are the end of the second quarterand the end of the fiscal year; however, the dividend forecast for the end of the fiscal year has not yet been determined.

3. Consolidated Financial Forecast for FY2020 (January 1, 2020 to December 31, 2020
Though the full-year results forecast for the fiscal year ending December 2020 remain undecided, we are currently in the
final adjustment stage, analyzing the current business environment and order trends as we assess the impact of COVID19. We will promptly announce our results forecasts once their calculations are completed.

* Notes(1) Important changes in subsidiaries for the second quarter under review (Changes is specified subsidiaries resulting inchange in scope of consolidation):No
New: ― companies
Excluded: ― companies(2) Application of accounting treatment specific to the preparation of quarterly consolidated financial statements:
Not applicable(3) Changes in accounting policies, and changes or restatements of accounting estimates(i)
Changes in accounting policies due to revisions to accounting standards etc. :Not applicable(ii)

Changes in accounting policies other than (i):Not applicable(iii)

Changes in accounting estimates::

Not applicable(iv)

Restatements of accounting estimates::

Not applicable(4) Number of issued shares (common stock)(i)
Number of issued shares (including treasury stock)
Q2 FY2020(ii)

FY201924,566,447 shares

FY20191,109,564 shares

Q2 FY201923,528,173 shares

Number of treasury stock at end of period
Q2 FY2020(iii)

24,566,447 shares
1,102,452 shares

Average number of issued shares
Q2 FY2020

23,459,787 shares(Note)The number of treasury stock includes the shares that Trust & Custody Services Bank, Ltd. (trust account E) holds astrust property related to a Board Benefit Trust system.
(Q2 FY2020: 411,200 shares, Q2 FY2019: 418,900 shares)* This summary of financial results is not subject to review by a certified public accountant or certified public
accounting firm.
* Explanation on the proper use of results forecasts and other notes
The forward-looking statements, including results forecasts, in this document are based on information that AOITYO Holdings has obtained at the time of publication and certain assumptions that it believes to be reasonable.
Actual results may differ materially from the forecasts due to a variety of reasons. For more about assumptions
underlying earnings forecasts and cautions regarding the use of earnings forecasts, see 1. Qualitative Information
on Results (3) Discussion of consolidated results forecasts on P.3 of Attachments.
* AOI TYO Holdings will hold an earnings briefing for institutional investors and analysts on September 2, 2020.
After the conclusion of this meeting, the group will publish the materials distributed on the AOI TYO Holdings
corporate website as quickly as possible.

Attachments
1. Qualitative Information on Results in the Second Quarter(1) Discussion of operating results(2) Discussion of financial position(3) Discussion of consolidated results forecasts
2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheets(2) Quarterly consolidated statements of income and statements of comprehensive income(3) Quarterly consolidated statements of cash flows(4) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern)(Notes in the event of significant changes in shareholders’ equity)

―1―

2
2
2
3
5
5
7
9
10
10
10

1. Qualitative Information on Results in the Second Quarter(1) Discussion of operating results
Any forward-looking statements below are based on AOI TYO Group judgments as of the end of the second quarter ofthe current consolidated fiscal year.
During the consolidated second quarter, COVID-19 became a global epidemic, bringing constraints on domestic andoverseas economic activities and leading to an extremely severe economic state.
As much of the AOI TYO Group's film production and editing processes for commercial production fall under the Three
C’s (closed, crowded, close-contact spaces that are to be avoided), we have begun as of February to adopt measures in a
stepwise fashion to prevent the spread of infection. Under the Japanese government's state of emergency declaration, we
took measures such as shifting employees to working from home in principle, temporarily suspending operations atfilming and editing studios, requesting postponements to advertising companies and advertisers involved in filming
projects. Further, a number of projects were postponed, and some were suspended. After the state of emergency was lifted
on May 25, we applied new standards for safety in production work, and, in addition to a series of information fromnational and local governments and various domestic and overseas film production guideline examples, we have enteredinto an advisory contract with a medical coordination company, drafting our own guidelines for production work. We also
restarted filming and editing operations, taking a number of measures to prevent the spread of COVID-19. For example,
during filming, we have required attendance of a hygiene management team which includes healthcare professionals,
mandated health checks, and are regularly conducting and checking disinfection and ventilation. However, we wereunable to catch up to work delays with only the month of June remaining, and many projects were delayed to the third
quarter.
Under these circumstances, though net sales for the second consolidated quarter of the current fiscal year were nearly
unchanged year-on-year in the Solutions Business, net sales fell dramatically in the Video Advertising Business, withdecreases also in Advertising-Related Businesses due to the suspension and postponement of various events. As a result,consolidated net sales were ¥24,367 million, a decrease of ¥6,269 million compared to the prior year. Of this decrease insales, we can identify ¥5,400 million (of which approximately 70% was postponed to the third quarter or later) related topostponements or cancellations of projects due to COVID-19. Order volumes also fell sharply during the consolidated
second quarter due to future uncertainty from the spread of COVID-19 and suspension of economic activity during thestate of emergency. The balance of order volumes as of the end of the consolidated second quarter was ¥14,029 million,
down ¥1,090 million year-on-year.
Sales declines had a significant impact on profits. Operating losses, ordinary losses, and net losses were all recorded forthe quarter, despite elimination of costs related to restructuring at poorly performing subsidiaries and software recorded
as impairment loss in the prior year.
As a result, the AOI TYO Group recorded net sales of ¥24,367 million for the consolidated second quarter, representing a
20.5% decrease compared to year-ago quarter. Operating loss amounted to ¥881 million (¥816 million of operating profit
in the same period of prior fiscal year), while ordinary loss amounted to ¥1,047 million (¥637 million of ordinary profit
in the same period of prior fiscal year), and loss attributable to owners of parent amounted to ¥956 million (¥257 million
of profit attributable to owners of parent in the same period of prior fiscal year). Selling, general and administrative
expenses included ¥169 million in amortization of goodwill associated with M&A activity.

(2) Discussion of financial position
Total assets as of the end of the consolidated second quarter amounted to ¥49,573 million, a ¥3,778 million decrease
compared to the end of the prior consolidated fiscal year. This decrease was mainly due to a decrease in notes andaccounts receivable of 8,846 million yen, compared to increases in cash and deposits of ¥4,196 million and electronicallyrecorded monetary claims of ¥1,628 million.
Liabilities decreased by 2,365 million yen compared with the end of the prior fiscal year to 27,622 million yen. Although
long-term loans payable increased ¥4,281 million, short-term loans payable and accounts payable decreased ¥3,200―2―

million and ¥4,637 million, respectively.
Net assets amounted to ¥21,951 million, a decrease of ¥1,412 million compared to the end of the prior consolidated fiscal
year, mainly due to decrease in retained earnings of ¥956 million by the net loss attributable to shareholders of the parent
company and ¥286 million by dividend payments
Cash and cash equivalents amounted to ¥13,225 million as of the end of the consolidated second quarter, a ¥4,164
million increase compared to the end of the prior consolidated fiscal year.
The following paragraphs summarize cash flow activity through the six-month period ending June 2020.
Cash Flows from Operating Activities
Cash used in operating activities amounted to ¥2,494 million compared to net cash used of ¥259 million in the same
period of the previous fiscal year. This result was mainly due to a decrease of ¥7,201 million in trade receivable,
combined with a decrease of ¥4,624 million in trade payable and ¥1,161 million of the net loss attributable toshareholders of the parent company
Cash Flows from Investing Activities
Cash used in investing activities amounted to ¥365 million, compared to ¥642 million in the year-ago period. This
result was mainly due to ¥262 million in outlays for the purchase of property, plant and equipment and ¥155 million in
payments for investments in capital. These outlays were offset in part by proceeds of ¥81 million in sales of investment
securities.
Cash Flows from Financing Activities
Cash flows from financing activities amounted to ¥2,057 million, compared to ¥2,820 million in the year-ago period.
This result was mainly due to ¥7,200 million in proceeds from long-term loans payable, offset by a ¥3,200 million
decrease in short-term loans payable and ¥1,544 million in repayments of long-term loans payable.

(3) Discussion of consolidated results forecasts① Response to and Impact of COVID-19
After the state of emergency was lifted on May 25, we applied new standards for safety in production work, and, in
addition to a series of information from national and local governments and various domestic and overseas film
production guideline examples, we have entered into an advisory contract with a medical coordination company, drafting
our own guidelines for production work. During filming, we have also required attendance of a hygiene management
team which includes healthcare professionals, and we are taking a number of other measures to prevent the spread of
COVID-19 in filming and editing work, such as health checks, and regularly conducting and checking disinfection andventilation. Further, we are also implementing remote video editing methods.
However, while there is still uncertainty as to when the spread of COVID-19 will subside, it is assumed that efforts toprevent the spread of infection, such as voluntary closures of commercial facilities and voluntary at-home quarantine,
will continue to suppress economic activity in the future. Also, with deterioration of corporate profits and the economy
both in Japan and overseas, there is significant potential for an immediate reduction in corporate demand for advertising;
therefore, though order volumes will be lowest in the consolidated second quarter, we believe it would be difficult to
expect a broad recovery in order volumes in the consolidated third and fourth quarters.
On the other hand, as the pace of change accelerates over the medium term in the evolution of information andcommunication technologies, diversification of media, and transformation of behavior patterns in a post-corona society, it
is certain that there will be growing needs for planning and production of video-centric communication tools in order todeepen engagement between companies and consumers. These changes present an opportunity for expansion of what the
AOI TYO Group is asked to handle, and we are presently exploring a medium-term business strategy that includes cost―3―

reductions.
As of the end of June 2020, AOI TYO Holdings maintains a high level of consolidated cash and deposits, at ¥13,307
million, and a high current ratio of 277.2%. Further, we have concluded commitment lines with a number of financial
institutions for a combined ¥12 billion (¥0 billion outstanding as of June 2020). We have also secured long-term loans of¥7,200 million during the second consolidated quarter for the fiscal year to ensure sufficient liquidity.

② Future Outlook
In the Notice Regarding Delay of Financial Results Announcement for Q1 of FY2020 and Revision to Q2 and Fullyear Forecast, announced on April 28, 2020, we had temporarily retracted our full-year consolidated results forecast andset the forecast as undecided. However, we are now, as stated above, in the final adjustment stage and are analyzing thecurrent business environment and order trends, as well as formulating medium to long-term business strategies. As soon
as the calculations for our consolidated results forecast are completed, we plan to make another announcement, which
will include medium to long-term business planning.

―4―2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheets(Unit: thousand yen)
FY 2019(December 31, 2019)

Q2 FY2020(June 30, 2020)

AssetsCurrent assets
Cash and deposits

9,111,122

13,307,381

Notes and accounts receivable - trade16,873,9788,027,285

Electronically recorded monetary claims - operating

4,413,564

6,042,472

7,301

7,162

Work in process

4,510,288

4,344,798

Other

1,125,296

875,017

Allowance for doubtful accounts(37,727)(31,424)

36,003,823

32,572,693

Land

3,606,822

3,593,652

Other

3,477,826

3,243,452

Total property, plant and equipment

7,084,649

6,837,105

Software161,589

204,465

Goodwill

4,010,215

3,711,847

103,479

15,9944,275,284

3,932,307

Investment securities

1,787,051

1,530,951

Deferred tax assets

1,328,303

1,679,914

Lease and guarantee deposits

1,522,658

1,536,489

Other

2,125,874

2,250,632

Allowance for doubtful accounts(775,409)(766,445)

5,988,478

6,231,541

Total non-current assets

17,348,413

17,000,954

Total assets

53,352,237

49,573,647

Merchandise and finished goods

Total current assets
Non-current assets
Property, plant and equipment

Intangible assets

Other
Total intangible assets
Investments and other assets

Total investments and other assets―5―

(Unit: thousand yen)
FY 2019(December 31, 2019)

Q2 FY2020(June 30, 2020)

Liabilities
Current liabilities
Accounts payable - trade

8,697,200

4,059,792

Short-term loans payable

3,200,000-

Current portion of long-term loans payable

3,073,876

4,444,085

Advances received

899,779

1,,704,247

Income taxes payable

428,710

168,407

Provision for bonuses

72,66082,339

Other

1,970,931

1,292,445

Total current liabilities

18,343,158

11,751,317

Long-term loans payable

6,672,675

10,953,762

Long-term deposits received

3,501,199

3,501,199

Provision for directors' retirement benefits

261,883

253,293

Provision for management board incentive plan trust

254,811241,000

Net defined benefit liability

267,504

290,884

Asset retirement obligations

491,279

468,177

Other

195,809

162,954

Total non-current liabilities

11,645,165

15,871,271

Total liabilities

29,988,323

27,622,589

Capital stock

5,000,000

5,000,000

Capital surplus

12,172,896

12,173,895

Retained earnings

7,056,711

5,814,067

Treasury shares(1,259,085)(1,249,840)

Total shareholders' equity

22,970,523

21,738,122

Valuation difference on available-for-sale securities

10,693(98,643)

Foreign currency translation adjustment(44,141)(77,409)

Remeasurements of defined benefit plans(1,945)(1,304)

Total accumulated other comprehensive income(35,393)(177,357)

Share acquisition rights

86,27485,410Non-controlling interests

342,508

304,882

Total net assets

23,363,913

21,951,058

Total liabilities and net assets

53,352,237

49,573,647

Non-current liabilities

Net assets
Shareholders' equity

Accumulated other comprehensive income―6―(2) Quarterly consolidated statements of income and statements of comprehensive income
Quarterly consolidated statements of income
Consolidated second quarter(Unit: thousand yen)
Q2 FY 2019
(January 1, 2019 –June 30, 2019)

Q2 FY2020(January 1, 2020 –June 30, 2020)

Net sales

30,636,633

24,367,278

Cost of sales

24,900,706

21,163,971

Gross profit

5,735,926

3,203,306

Selling, general and administrative expenses

4,919,224

4,084,431

816,702(881,125)

Interest income

4,699

1,541

Dividend income

13,847

7,448

Insurance return

28,68832,971

Other

56,39993,155

Total non-operating income

103,634

135,117

Interest expenses

36,95741,605

Commission fee

81,19080,649

Share of loss of entities accounted for using equity method

69,57890,577

Other

94,842

88,763

Total non-operating expenses

282,568

301,595

637,768(1,047,603)

-

6,038

281,355

3

2,448

864

283,803

6,905

11,235--

116,673

Loss on liquidation of subsidiaries and associates

279,462-

Loss on sales of investment securities

64,824

-

-

4,496

Total extraordinary losses

355,522

121,170

Profit (loss)before income taxes

566,049(1,161,867)

Income taxes - current

378,826

126,735

Income taxes - deferred(48,042)(312,841)

Total income taxes

330,784(186,106)

Profit (loss)

235,265(975,761)

Loss attributable to non-controlling interests(22,425)(19,626)

Profit (loss) attributable to owners of parent

257,691(956,134)

Operating profit
Non-operating income

Non-operating expenses

Ordinary profit (loss)
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Loss on sales of shares of subsidiaries and associates
Impairment loss

Other

―7―

Quarterly consolidated comprehensive statements of income
Consolidated second quarter(Unit: thousand yen)
Q2 FY 2019
(January 1, 2019 –June 30, 2019)

Profit (loss)

Q2 FY2020(January 1, 2020 –June 30, 2020)

235,265(975,761)

Valuation difference on available-for-sale securities(138,250)(109,336)

Foreign currency translation adjustment(25,823)(43,387)571

640(5,712)(5,533)(169,215)(157,617)

66,050(1,133,378)

Comprehensive income attributable to owners of parent

87,094(1,108,089)

Comprehensive income attributable to non-controllinginterests(21,043)(25,289)

Other comprehensive income

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to―8―

(3) Quarterly consolidated statements of cash flows(Unit: thousand yen)
Q2 FY2020(January 1, 2020 June 30, 2020)

Q2 FY2019(January 1, 2019 June 30, 2019)

Cash flows from operating activities
Profit (loss) before income taxes

566,049(1,161,867)

Depreciation

562,430

398,219-

116,673

Amortization of goodwill

152,724

169,174

Increase (decrease) in allowance for doubtful accounts(5,227)(13,967)

Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors' retirement
benefits
Increase (decrease) in provision for share-based
remuneration for directors
Increase (decrease) in net defined benefit liability

3,938

9,706

7,362

(8,590)24,737(13,811)

5,709

23,380Interest and dividend income(18,546)(8,990)Interest expenses

36,95741,605

Commission fee

81,19080,649Loss (gain) on sales of investment securities(216,531)(3)

Loss on liquidation of subsidiaries and associates
Loss (gain) on sales of shares of subsidiaries andassociates

279,462-

11,235-Decrease (increase) in trade receivables

881,890

7,201,404

Decrease (increase) in inventories(351,671)

162,236

Increase (decrease) in trade payables(1,061,963)(4,624,825)

Increase (decrease) in accounts payable - other(16,321)(283,270)

Increase (decrease) in accrued consumption taxes

33,028(297,112)

Increase (decrease) in advances received

265,600

810,368

Decrease (increase) in other assets(625,498)

49,496

Increase (decrease) in other liabilities

68,718(154,224)

Other, net

36,503

131,343

Subtotal

721,779

2,627,595

Interest and dividend received

22,292

8,990

Proceeds from insurance income

4,804

5,070

Interest expenses paid

(42,065)(39,140)

Income taxes paid

(966,594)(107,827)

Net cash provided by (used in) operating activities(259,783)

2,494,688

Impairment loss

―9―

Q2 FY2019(January 1, 2019 June 30, 2019)(Unit: thousand yen)
Q2 FY2020(January 1, 2020 June 30, 2020)

Cash flows from investing activities
Purchase of property, plant and equipment(394,489)(262,084)

8,937

81,771

Purchase of intangible assets(27,795)(13,863)

Purchase of investment securities(398,445)(150)

Proceeds from sales of investment securities

428,455

3

Payments for investments in capital(161,900)(155,407)

Payments into time deposits(220,673)(37,317)

Payments for leasehold and guarantee deposits(37,605)(46,263)

Proceeds from refund of leasehold and guarantee deposits

136,033

32,072(38,088)-(38,614)-

101,940

35,267(642,246)(365,972)

Net increase (decrease) in short-term loans payable(1,039,000)(3,200,000)

Proceeds from long-term loans payable

5,800,000

7,200,000

Repayments of long-term loans payable(1,225,543)(1,544,555)

Cash dividends paid

(517,196)(278,868)

Purchase of treasury shares(79,650)(394)

Commission fee paid

(81,190)(80,649)

Other, net(36,869)(38,025)

Net cash provided by (used in) financing activities

2,820,549

2,057,506

Effect of exchange rate change on cash and cash equivalents(17,102)(21,608)

Net increase (decrease) in cash and cash equivalents

1,901,417

4,164,613

Cash and cash equivalents at beginning of period

9,790,600

9,060,407

Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation(16,011)-

11,676,006

13,225,021

Proceeds from sales of property, plant and equipment

Purchase of shares of subsidiaries resulting in change inscope of consolidation
Payments for sales of shares of subsidiaries resulting inchange in scope of consolidation
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities

Cash and cash equivalents at end of period(4) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern)
Not applicable.
(Notes in the event of significant changes in shareholders’ equity)
Not applicable―10―