Summary of Consolidated Financial Results (Japanese Accounting Standards)
for Fiscal Year Ended December 31, 2020

February 19, 2021
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, Director Tel: +81-3-5495-7575
Scheduled date of General Shareholders’ Meeting
March 25, 2021
Scheduled date of commencement of dividend payment:
March 26, 2021
Scheduled date of filing of securities report:
March 25, 2021
Supplementary documents for quarterly results:
Yes
Quarterly results briefing:
Yes (for institutional investors and analysts)(Rounded down to the nearest million yen)

1. Consolidated Financial Results for Fiscal Year Ended December 31, 2020 (January 1, 2020 to December 31,
2020)(1) Consolidated operating results(The percentages are year-on-year changes.)
Net sales

Operating income

Ordinary income

Profit attributable toowners of parent

Million yen%

Million yen%

Million yen%

Million yen%

FY202051,087

-21.7

-727

‒

-1,149‒-2,552‒FY201965,229

0.7

2,118

-38.3

1,763

-47.0

-1,280(Note) Comprehensive income

FY2020: -2,727 million yen (-%)

FY2019: -1,433 million yen (‒-%)

Net income per
share

Diluted net income
per share

Return on equity(ROE)

Ordinary income aspercentage of total assets

Operating incomeon sales

Yen

Yen

%

%

%

FY2020FY2019-108.81-54.50-(Reference) Equity in earnings of affiliates

-11.9
-5.3

-2.3
3.2

FY2020: -440 million yen

-1.4
3.2

FY2019: -159 million yen(2) Consolidated financial position
Total assets

Net assets

Million yen

FY2020FY201948,68253,352(Reference) Shareholders’ equity

Equity ratio

Million yen

Net assets per share%

20,231
23,363

Yen

40.9
43.0

FY2020: 19,925 million yen

848.70977.76FY2019: 22,935 million yen(3) Consolidated cash flow

Cash flows from operating Cash flows from investing Cash flows from financing Cash and cash equivalents
activities
activities
activities
at end of period
Million yen

FY2020FY2019Million yen

2,892
1,198

Million yen-843-1,561Million yen

-397
-336

10,7039,060

2. Dividends
Dividends per share
End of Q1

FY2019FY2020
FY2021 (forecast)

Yen

‒
‒
‒

End of Q2

End of Q3

Yen

Yen

8.00
0.00
0.00

‒
‒
‒

Year end
Yen

12.00
12.00
12.00

Annual
Yen

20.00
12.00
12.00

Total
dividends

Payout ratio(consolidated)

Million yen

%

477
286

73.7

Ratio ofdividends to
net assets(consolidated)

%

2.0
1.3

3. Consolidated Financial Forecast for FY2021 (January 1, 2021 to December 31, 2021)
Net sales

Operating income

Ordinary income

Million yen

%

Yen

400

－

17.05

:

No

(2) 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:Not applicable(iii) Changes in accounting estimates::

Not applicable(iv) Restatements of accounting estimates::

Not applicable

Full year

Million yen%

Million yen%

Million yen%

53,000

3.7

900

－

800

－

(The percentages are year-on-year changes.)
Profit attributable to
Net income per shareowners of parent* Notes(1) Important changes in subsidiaries for FY2020 under review(Changes is specified subsidiaries resulting in change in scope of consolidation)
New:― companies
Excluded:― companies(ii)

Changes in accounting policies other than (i)(3) Number of issued shares (common stock)(i)
Number of issued shares (including treasury stock)
FY2020(ii)

FY201924,566,447 shares

FY20191,109,564 shares

FY201923,495,396 shares

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

24,566,447 shares
1,088,298 shares

Average number of issued shares
FY202023,462,748 shares(Note)
Treasury stock includes shares that Custody Bank of Japan, Ltd. (trust account E) holds as trust property related to a
Board Benefit Trust system (FY2020: 411,200 shares; 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 (4) Future Outlook on P.4 of Attachments.
・AOI TYO Holdings will hold an earnings briefing for institutional investors and analysts on March 3, 2021. Afterthe conclusion of this meeting, the group will publish the materials distributed on the AOI TYO Holdings
corporate website as quickly as possible.

Attachments
1.

2.
3.

Qualitative Information on Results(1) Discussion of Operating Results(2) Discussion of Financial Position(3) Discussion of Cash Flows(4) Future Outlook
Basic Policy Regarding Selection of Accounting Standards
Consolidated Financial Statements and Major Notes(1) Consolidated Balance Sheets(2) Consolidated Statements of Income and Statements of Comprehensive Income(3) Consolidated Statements of Changes in Shareholders’ Equity(4) Consolidated Statements of Cash Flows(5) Notes on the Consolidated Financial Statements(Notes Regarding Assumption of Going Concern)(Segment Information)(Per-share Indicators)(Significant Subsequent Events)

―1―

2
2
3
3
4
5
6
6
10
13
15
17
17
17
17
17

1. Qualitative Information on Results(1) Discussion of operating results
Any forward-looking statements below are based on AOI TYO Group judgments as of the end of the current consolidated
fiscal year.
During the consolidated fiscal year under review, restrictions on travel outside the home and business activities were
imposed in Japan and overseas intermittently to prevent the spread of COVID-19. In Japan, production shifted in an
upward trend, mainly in production machinery, as external demand continued to pick up beginning in the summer. In
addition, business confidence in the non-manufacturing sector experienced a temporary recovery at the beginning ofautumn in response to increased consumer movement stemming from eased attitudes toward travel outside the home. The
pace of economic recovery is expected to slow, as the level of activity remains sluggish due to the reemergence of
COVID-19 infections. The advertising market in Japan declined overall as corporations reduced their advertisingexpenditures. We saw a significant decrease in TV commercials, while we expect internet advertising to decline only
marginally.
In response to the spread of COVID-19, the AOI TYO Group began implementing anti-infection measures in February
2020. Under the declaration of a statement of emergency between April and May 2020, we closed our filming and editing
studios temporarily and requested advertising companies and advertisers to postpone filming. After the declaration of thestate of emergency was lifted, we moved to resume operations, signing an advisory contract with a medical coordinationcompany to resume operations and creating our own work guidelines. In this way, we have continued to conduct filming
and editing operations while taking measures to prevent the spread of infection.
Amid these circumstances, the AOI TYO Group discussed the ideal future state of the group from the dual perspectivesof (1) integrated Group management and (2) businesses and organizations following our business development policy to
dig deeper, expand wider. These discussions led to the formulation of a medium-term plan, published on August 24, 2020,
which we have moved quickly to implement.
Net sales for the consolidated fiscal year in each group business were significantly lower year on year. In addition to
the direct impact of the suspensions and postponements of filming and editing operations under the declaration of a stateof emergency, Video Advertising Business orders from major advertising companies experienced a notable decrease.
Further, continued cancellations and postponements of various events in the Advertisement-Related Business and adecrease in orders in the Solutions Business due to restraints on sales activities under the emergency declaration. These
factors combined to drive full-year performance lower. However, although net sales for the stand-alone consolidated
fourth quarter continued to decrease year on year in the company's Advertisement-Related Business (including events
business sales which continue to be impacted negatively by COVID-19) and Overseas Business, net sales in the Video
Advertising and Solutions Businesses were nearly level with the same period in the prior fiscal year.
In terms of profits, AOI TYO Holdings engaged in strict cost reductions related to travel expenses, entertainment
expenses, and other costs to achieve up to ¥2.0 billion in cost reductions ahead of schedule as described in our mediumterm plan. Further, the company improved effective profit margin which had declined temporarily due to the impact of
cost billings for projects that had been canceled or postponed due to the impact of COVID-19. As a result of these andother factors, the company recorded net operating income for the second half, as opposed to a net operating loss during
the first half of the fiscal year.
We organized our consolidated subsidiaries into the Content Production Business and the Communication Design
Business based on our medium-term plan, engaging in a major reorganization that eliminated 10 consolidated
subsidiaries. At the same time, we decided to continue encouraging employees to work from home, first implemented in
February 2020, supporting diverse work styles while protecting the health and safety of employees. In connection withthis policy, the group has also moved forward with office consolidations and reductions*. As a result, the AOI TYOGroup recorded ¥946 million in business restructuring expenses, consisting of a related loss on disposal of property, plantand equipment, restoration costs, and rent expenses, etc., for the period in question. Further, due to the impact of the
spread of COVID-19 at an AOI TYO Holdings consolidated subsidiary, a discrepancy has occurred between the business―2―

plan at the time of investment and actual results. Therefore, the company recorded an impairment of goodwill in theamount of ¥300 million.
*Number of locations to be eliminated: 17 (including relocations to reduce floor space and partial returns of space)
As a result, the AOI TYO Group recorded net sales of ¥51,087 million for the consolidated fiscal year ended December
2020, representing a 21.7% decrease compared to the prior year. Operating loss amounted to ¥727 million (¥2,118
million of operating profit in the same period of prior fiscal year), while ordinary loss amounted to ¥1,149 million(¥1,763 million of ordinary profit in the same period of prior fiscal year) and loss attributable to owners of parent
amounted to ¥2,552 million (¥1,280 million of loss attributable to owners of parent in the same period of prior fiscal
year). Selling, general and administrative expenses included ¥323 million in amortization of goodwill associated with
M&A activity.

(2) Discussion of financial position
Total assets at the end of the consolidated fiscal year decreased by ¥4,669 million compared with the end of the priorfiscal year to ¥48,682 million. This decrease was mainly due to decreases in notes and accounts receivable of¥3,651million, electronically recorded monetary claims of ¥850 million and total property, plant and equipment of ¥827
million, although cash and deposits increased ¥1,702 million.
Liabilities decreased by ¥1,537 million compared with the end of the prior fiscal year to ¥28,451 million. Although longterm loans payable and current portion of long-term loans payable increased ¥2,102 million and ¥1,300 million,
respectively, short-term loans payable decreased ¥3,200 million.
Net assets amounted to ¥20,231 million, a decrease of ¥3,132 million compared to the end of the prior consolidated fiscal
year. Retained earnings decreased ¥2,552 million due to loss attributable to owners of parent. At the same time, the AOI
TYO Group paid ¥286 million in dividend payments.

(3) Discussion of cash flows
Cash and cash equivalents (“Cash”) amounted to ¥10,703 million as of the end of the consolidated fiscal year,
representing an increase of ¥1,642 million compared to the prior consolidated fiscal year.
The state of cash flow by segment for the fiscal year under review is as follows.
Cash Flows From Operating Activities
Cash flows from operating activities amounted to ¥2,892 million, compared to cash from operating activities of ¥1,198
million for the prior fiscal year. This result was mainly due to decrease in trade receivables of ¥4,484 million, decrease intrade payables of ¥1,532 and loss before income taxes of ¥2,457.
Cash Flows From Investing Activities
Cash used in investing activities amounted to ¥843 million, compared to ¥1,561 million for the prior fiscal year. The
main cash inflow was ¥144 million in proceeds from refund of leasehold and guarantee deposits, while the main cash
outflow was due to ¥447 million in purchase of property, plant and equipment, ¥283 million in payments of leasehold andguarantee deposits, and ¥235 million in payments for investments in capital.
Cash Flows From Financing Activities
Cash used in financing activities amounted to ¥397 million compared to cash from financing activities of ¥336 million
for the prior fiscal year. This result was mainly due to ¥7,200 million in cash proceeds from long-term loans payable,¥3,200 million decrease in short-term loans payable, and ¥3,793 million in outlays for repayments of long-term loans
payable.
―3―

(4) Future outlook① External environment (including the impact of COVID-19) and group initiatives
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 implementing remote video editing methods as another means to normalize operations. We
continue to encourage employees to work from home and are reducing the size of our office space. In January 2021, asecond state of emergency was declared due to a third wave COVID-19 infections. Since we already had measures inplace to prevent the spread of infection in filming, editing, and other operations as described above, almost no projects
were canceled or postponed as had been the previous case.
While the domestic advertising market fell sharply in 2020 due to the impact of COVID-19, we expect moderate
positive growth in 2021 and beyond. However, GDP growth rate will remain low and it will take a considerable amountof time for the market to recover to pre-COVID-19 levels. In addition, the reinstatement of the emergency declaration
will continue to slow personal consumption due to restraints on unnecessary travel and requests for shortened businesshours. There are also concerns that worsening employment income will weigh down the market, which may be anotherfactor delaying recovery in the advertising market.
Amid these circumstances, on August 24, 2020, we published the AOI TYO Group medium-term plan covering the five
year period from fiscal 2021 through fiscal 2025. The plan defines three key measures: (1) Reforming
business/organizational structures; (2) Clarifying initiatives in each business; and (3) Deepening and strengthening groupmanagement. Our earnings plan for fiscal 2025 calls for net sales of ¥68 billion, operating income of ¥4.4 billion, and
KPIs of ¥5.7 billion in EBITDA and 10% or greater ROE. In January 2021, we restructured our organizations into twobusinesses, the Content Production Business and the Communication Design Business, and we have accelerated ourefforts to reduce costs.
During the fiscal year ending December 2021, our Content Production Business will increase the frequency of
proposals and strengthen sales to secure stable orders from major advertising companies. In addition, the business will
engage in new sales activities to strengthen our customer base, targeting foreign advertising companies, online
advertising companies, consulting firms, platform providers, etc. At the same time, the Content Production Business will
focus on developing a structure for low- to medium-unit price digital video production, which is a segment we expect
will grow in the future. Meanwhile, the Communication Design Business will establish new management and humanresources systems to strengthen coordination among the departments that have been consolidated in our organizational
restructuring. At the same time, the business will enhance lacking functions to grow our direct business with advertisers.
② Future outlook

Based on the preceding, we forecast FY2021 consolidated earnings to be ¥53,000 million in net sales, ¥900 million in
operating profit, ¥800 million in ordinary profit, and ¥400 million in profit attributable to owners of parent. These
forecasts reflect a gradual recovery in net sales and cost reduction efforts.
Given the current declaration of a state of emergency and the uncertain outlook for the timing of a slow-down in the
spread of COVID-19, it is difficult to calculate a reasonable short-term earnings forecast. Accordingly, we have left ourconsolidated earnings forecast for the first half of the fiscal year ending December, 2021, as undecided. We will announce
our forecasts as soon as a reasonable calculation becomes possible.
Based on the earnings forecast above, we have established a dividend forecast for the fiscal year ending December, 2021,
at ¥12 per share (interim dividend of ¥0 per share and year-end dividend of ¥12 per share), which is the same amount as
in the prior fiscal year. This dividend amounts to a consolidated dividend payout ratio of 73.7%, reflecting a stable―4―

dividend to the greatest extent possible while maintaining our policy of a 30% or greater consolidated dividend payout
ratio.

2. Basic Policy Regarding Selection of Accounting Standards
AOI TYO Group prepares consolidated financial statements according to the Japanese accounting standards inconsideration of comparability between fiscal years and between companies. We will consider the adoption of theInternational Financial Reporting Standards (IFRS) as appropriate, taking into account conditions in Japan and abroad.

―5―

3. Consolidated Financial Statements and Major Notes(1) Consolidated balance sheets(Unit: thousand yen)

FY2019(December 31, 2019)

FY2020(December 31, 2020)

AssetsCurrent assets
Cash and deposits

9,111,122

10,813,819

Notes and accounts receivable - trade16,873,97813,222,465

Electronically recorded monetary claims - operating

4,413,564

3,562,775

7,301

8,267

Work in process

4,510,288

4,331,475

Other

1,125,296

1,108,034

Allowance for doubtful accounts(37,727)(31,847)

36,003,823

33,014,989

5,142,068

4,791,118

Accumulated depreciation(2,773,935)(3,075,909)

Buildings and structures, net

2,368,133

1,715,208

Machinery, equipment and vehicles

1,024,383

1,001,381

Accumulated depreciation(846,805)(877,518)

Machinery, equipment and vehicles, net

177,577

123,862

Tools, furniture and fixtures

2,854,794

2,373,860

Accumulated depreciation(2,046,931)(1,740,608)

807,862

633,252

3,606,822

3,593,652

717,898

620,208(658,957)(585,182)

Leased assets, net

58,94035,025Construction in progress

65,312

156,459

7,084,649

6,257,460

Goodwill

4,010,215

3,375,272

Software161,589

210,209

Other

103,479

15,9944,275,284

3,601,476

Merchandise and finished goods

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

Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation

Total property, plant and equipment
Intangible assets

Total intangible assets―6―

(Unit: thousand yen)

FY2019(December 31, 2019)

FY2020(December 31, 2020)

Investments and other assets
Investment securities

1,787,051

1,081,036

Deferred tax assets

1,328,303

1,533,026

Leasehold and guarantee deposits

1,522,658

1,661,033

Other

2,125,874

2,303,819

Allowance for doubtful accounts(775,409)(770,326)

Total investments and other assets

5,988,478

5,808,588

17,348,413

15,667,526

53,352,237

48,682,515

Total non-current assets
Total assets―7―

(Unit: thousand yen)

FY2019(December 31, 2019)

FY2020(December 31, 2020)

Liabilities
Current liabilities
Accounts payable - trade

8,697,200

7,144,690

Short-term borrowings

3,200,0000Current portion of long-term borrowings

3,073,876

4,374,787

Accounts payable - other

661,603832,283

Income taxes payable

428,710

172,515

Accrued consumption taxes

551,961

356,049

Advances received

899,779

720,753

Provision for bonuses

72,660218,448

Other

757,366

924,210

18,343,158

14,743,739

Long-term borrowings

6,672,675

8,774,895

Long-term deposits received

3,501,199

3,501,199

46,09822,630261,883

259,435

254,811247,750Retirement benefit liability

267,504

343,303

Asset retirement obligations

491,279

442,737

Other

149,711

115,407

11,645,165

13,707,359

29,988,323

28,451,099

Share capital

5,000,000

5,000,000

Capital surplus

12,172,896

12,111,198

Retained earnings

7,056,711

4,217,210

Treasury shares(1,259,085)(1,233,609)

Total shareholders' equity

22,970,523

20,094,798

Valuation difference on available-for-sale securities

10,693(109,116)

Foreign currency translation adjustment(44,141)(59,597)

Remeasurements of defined benefit plans(1,945)(231)

Total accumulated other comprehensive income(35,393)(168,945)

Total current liabilities
Non-current liabilities

Deferred tax liabilities
Provision for retirement benefits for directors(and other officers)
Provision for share-based remuneration for directors(and other officers)

Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income―8―

(Unit: thousand yen)

FY2019(December 31, 2019)

FY2020(December 31, 2020)

Share acquisition rights

86,27442,855

Non-controlling interests

342,508

262,707

23,363,913

20,231,415

53,352,237

48,682,515

Total net assets
Total liabilities and net assets―9―(2) Consolidated statements of income and statements of comprehensive income
Consolidated statements of income(Unit: thousand yen)

FY2019(January 1, 2019December 31, 2019)

FY2020(January 1, 2020December 31, 2020)

Net sales

65,229,849

51,087,544

Cost of sales

53,514,621

43,867,259

Gross profit

11,715,227

7,220,284

Remuneration for directors (and other officers)

1,484,604

1,307,296

Salary and bonus

2,718,118

2,387,323

Retirement benefit expenses

54,38549,026

Provision for share-based remuneration for directors (andother officers)

57,696

6,749

Outsourcing expenses

560,977

670,376

Commission expenses

577,609

151,768

Provision of allowance for doubtful accounts

15,203

6,865

Depreciation

250,382

218,023

Amortization of goodwill

320,115

323,332

Other

3,557,688

2,826,727

Total selling, general and administrative expenses

9,596,781

7,947,490

2,118,445(727,206)

Interest income

7,234

2,467

Dividend income

21,886

16,279Subsidy income－

279,784

Insurance return

42,061

42,385

Other

108,807

124,729

Total non-operating income

179,989

465,646

Interest expenses

76,31083,327

Commission expenses

170,381

164,824

159,466

440,406

23,676

124,546

Other

105,243

74,610Total non-operating expenses

535,078

887,714

1,763,356(1,149,274)

Selling, general and administrative expenses

Operating profit (loss)
Non-operating income

Non-operating expenses

Share of loss of entities accounted for using equity
methodLoss on retirement of non-current assets

Ordinary profit (loss)―10―

(Unit: thousand yen)

FY2019(January 1, 2019December 31, 2019)

FY2020(January 1, 2020December 31, 2020)

Extraordinary income
Gain on sales of non-current assets

－

6,279

323,073

3,321－

34,201

3,672

34,560326,745

78,362

1,207,313

300,20965,374－

1,157,265

86,439279,462－－

946,707

Loss on sales of shares of subsidiaries and associates

34,635－

Other

12,91653,5882,756,967

1,386,944

Loss before income taxes(666,865)(2,457,856)

Income taxes - current

1,200,964

289,252

Income taxes - deferred(600,476)(177,710)

Total income taxes

600,487

111,542(1,267,352)(2,569,398)

13,139(16,406)(1,280,492)(2,552,992)

Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Gain on reversal of share acquisition rights
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on liquidation of subsidiaries and associates
Business restructuring expenses

Total extraordinary losses

LossProfit (loss) attributable to non-controlling interests
Loss attributable to owners of parent―11―

Consolidated statements of comprehensive income(Unit: thousand yen)

FY2019(January 1, 2019December 31, 2019)
Profit (loss)

FY2020(January 1, 2020December 31, 2020)(1,267,352)(2,569,398)

Valuation difference on available-for-sale securities(157,171)(119,809)

Foreign currency translation adjustment(12,002)(30,911)

448

1,713

2,737

(8,885)(165,987)(157,893)(1,433,340)(2,727,292)

Comprehensive income attributable to owners of parent(1,448,017)(2,706,290)

Comprehensive income attributable to non-controllinginterests

14,676(21,002)

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―12―(3) Consolidated statements of changes in shareholders’ equity
FY 2019 (January 1, 2019–December 31, 2019)(Unit: thousand yen)
Shareholders' equity

Balance at beginning of current
periodCapitalstock

CapitalsurplusRetainedearnings

Treasuryshares5,000,000

12,106,819

9,055,601(1,190,097)

Changes of items during period
Dividends of surplus(718,397)

Profit (loss) attributable toowners of parent

Change in ownership interestof parent due to transactions
with non-controlling interests
Net changes of items otherthan shareholders' equity
Total changes of items during
periodBalance at end of current period(1,280,492)(79,943)(79,943)

10,955

3,049(7,905)

Disposal of treasury shares

24,972,324(718,397)(1,280,492)

Purchase of treasury shares

Total
shareholders'equity73,98273,982－

66,076(1,998,889)

5,000,000

12,172,896

7,056,711(68,988)(1,259,085)(2,001,800)
22,970,523

Accumulated other comprehensive income

Balance at beginning of current
periodValuation
Total
Share
Foreign
Remeasuredifference on
accumulated acquisition
currency
ments
availableotherrightstranslationof defined
for-salecomprehensive
adjustment benefit planssecurities
income167,873(23,287)(2,393)

142,193

92,723

Noncontrollin
g interests

Total net
assets472,685

25,679,925

Changes of items during period
Dividends of surplus(718,397)

Profit (loss) attributable toowners of parent(1,280,492)

Purchase of treasury shares(79,943)

3,049

Disposal of treasury shares
Change in ownership interestof parent due to transactions
with non-controlling interests
Net changes of items otherthan shareholders' equity
Total changes of items during
periodBalance at end of current period

73,982(157,180)(20,853)

448(177,586)(6,449)(130,176)(314,211)(157,180)(20,853)

448(177,586)(6,449)(130,176)(2,316,012)

10,693(44,141)(1,945)(35,393)

86,274

342,508

23,363,913―13―

FY2020 (January 1, 2020-December 31, 2020)(Unit: thousand yen)
Shareholders' equity

Balance at beginning of current
periodCapitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotalshareholders'equity5,000,000

12,172,896

7,056,711(1,259,085)

22,970,523

Changes of items during period
Dividends of surplus
Profit (loss) attributable toowners of parent(286,509)(286,509)(2,552,992)(2,552,992)

Purchase of treasury shares(3,394)

Disposal of treasury shares
Change in ownership interestof parent due to transactions
with non-controlling interests
Net changes of items otherthan shareholders' equity
Total changes of items during
periodBalance at end of current period

(728)

(728)

26,20422,809(58,303)(58,303)－(61,698)(2,839,501)

25,475(2,875,724)

5,000,000

12,111,198

4,217,210(1,233,609)

20,094,798

Accumulated other comprehensive income

Balance at beginning of current
periodValuation
Total
Share
Foreign
Remeasuredifference on
accumulated acquisition
currency
ments
other
availablerights
translationof defined comprehensive
for-saleadjustment benefit plansincomesecurities
10,693(44,141)(1,945)(35,393)

86,274

Noncontrollin
g interests

Total net
assets342,508

23,363,913

Changes of items during period
Dividends of surplus(286,509)

Profit (loss) attributable toowners of parent(2,552,992)

Purchase of treasury shares(728)

22,809

Disposal of treasury shares
Change in ownership interestof parent due to transactions
with non-controlling interests
Net changes of items otherthan shareholders' equity
Total changes of items during
periodBalance at end of current period(58,303)(119,809)(15,455)

1,713(133,552)(43,419)(79,801)(256,773)(119,809)(15,455)

1,713(133,552)(43,419)(79,801)(3,132,497)(109,116)(59,597)(231)(168,945)

42,855

262,707

20,231,415―14―

(4) Consolidated statements of cash flows(Unit: thousand yen)
FY 2019(January 1, 2019December 31, 2019)

FY 2020(January 1, 2020December 31, 2020)

Cash flows from operating activities
Loss before income taxes(666,865)(2,457,856)

Depreciation

1,167,950

826,004

Impairment loss

1,207,313

300,209

Amortization of goodwill

320,115

323,332

Increase (decrease) in allowance for doubtful accounts

52,044(10,052)

Increase (decrease) in provision for bonuses(34,332)

145,788

8,113(2,448)57,696(7,061)

Increase (decrease) in retirement benefit liability(5,160)75,801

Interest and dividend income(29,120)(18,747)

Interest expenses

76,31083,327

Share of loss (profit) of entities accounted for using equity method

159,466

440,406

Commission expenses

170,381

164,824

Loss (gain) on sales of investment securities(257,698)(3,321)

Loss (gain) on valuation of investment securities

1,157,265

86,439Loss (gain) on sales of shares of subsidiaries and associates

34,635(34,201)

Loss on liquidation of subsidiaries and associates

279,462--

946,707

Decrease (increase) in trade receivables(485,653)

4,484,610

Decrease (increase) in inventories(295,780)

187,113

Increase (decrease) in trade payables

666,645(1,532,639)

Increase (decrease) in accounts payable - other86,332

94,037

Increase (decrease) in accrued consumption taxes

173,678(194,023)

Increase (decrease) in advances received(224,755)(167,536)

Decrease (increase) in other assets(599,979)(239,417)

Increase (decrease) in other liabilities

96,053(4,793)

Other, net(4,691)(310,816)

Subtotal

3,109,426

3,175,686

Interest and dividends received

36,344

18,747

Proceeds from insurance income

6,532

7,511

(80,967)(81,723)

Income taxes paid

(1,873,019)(227,364)

Net cash provided by (used in) operating activities

1,198,316

2,892,857

Increase (decrease) in provision for retirement benefits for directors(and other officers)
Increase (decrease) in provision for share-based remuneration for
directors (and other officers)

Business restructuring expenses

Interest paid

―15―

(Unit: thousand yen)
FY 2019(January 1, 2019December 31, 2019)

FY 2020(January 1, 2020December 31, 2020)

Cash flows from investing activities
Purchase of property, plant and equipment(813,431)(447,805)

Proceeds from sales of property, plant and equipment

12,61783,022

Purchase of intangible assets(84,578)(76,992)

Purchase of investment securities(399,333)(23,630)

Proceeds from sales of investment securities

503,208

12,546

Payments into time deposits(189,869)(87,115)

Payments of leasehold and guarantee deposits(54,128)(283,303)

Proceeds from refund of leasehold and guarantee deposits

138,806

144,761

Proceeds from maturity of insurance funds

81,77896,648(266,382)(235,971)(188,141)-(181,819)

-

-

1,096

(119,865)(26,447)(1,561,137)(843,190)

Net increase (decrease) in short-term borrowings(2,318,500)(3,200,000)

Proceeds from long-term borrowings

5,850,000

7,200,000

Repayments of long-term borrowings(2,786,830)(3,793,841)

Purchase of treasury shares(80,086)(728)

Dividends paid

(705,122)(280,416)-(117,110)Commission fee paid

(170,381)(164,824)

Other, net(125,633)(40,445)

Net cash provided by (used in) financing activities(336,555)(397,366)

Effect of exchange rate change on cash and cash equivalents(14,803)(9,503)

Net increase (decrease) in cash and cash equivalents(714,181)

1,642,797

Cash and cash equivalents at beginning of period

9,790,600

9,060,407

Decrease in cash and cash equivalents resulting from exclusion ofsubsidiaries from consolidation(16,011)-

Cash and cash equivalents at end of period

9,060,407

10,703,205

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

Payments from changes in ownership interests in subsidiaries that
do not result in change in scope of consolidation―16―

(5) Notes on the consolidated financial statements(Notes regarding assumption of going concern)
Not applicable(Segment information)
As the AOI TYO Group consists of a single Advertising Business segment, we have omitted separate disclosure herein.
(Per-share indicators)
FY 2020(January 1, 2020-December 31, 2020)

FY 2019(January 1, 2019-December 31, 2019)
Net assets per share

977.76yen Net assets per share

848.70yen

Net income per share(54.50)yen Net income (loss) per share(108.81)yen－ Diluted net income per share－

Diluted net income per share(Note 1) Although the Company has dilutive shares, we have not presented diluted net income per share for the current
consolidated fiscal year, since the Company has a diluted net loss per share.
(Note 2) Basis for calculating net income per share and fully diluted net income per share is as shown below.

FY 2019(January 1,2019–
December 31, 2019)

FY 2020(January 1,2020–
December 31, 2020)

Net income per share
Profit (loss) attributable to owners of parent(thousand yen)Amount not attributable to common shareholders(thousand yen)
Net income (loss) attributable to owners of parent
pertaining to common shares (thousand yen)
Average number of common shares issued(thousand shares)(1,280,492)(2,552,992)－－(1,280,492)(2,552,992)

23,49523,462*To calculate net income per share, those AOI TYO Holdings shares remaining in trust that are posted as treasury shares areincluded in treasury shares deducted in the calculation of average number of shares during the term. To calculate net assets per
share, these same shares are also included in the number of treasury shares deducted from the year-end number of shares issued. A
total of 418,900 shares and 413,569 shares of treasury stock noted above were deducted for the purpose of calculating net income
per share for the prior consolidated fiscal year and current consolidated fiscal year, respectively. At total of 418,900 shares and411,200 shares of treasury stock noted above were deducted for the purpose of calculating net assets per share for the priorconsolidated fiscal year and current consolidated fiscal year, respectively.

(Significant subsequent events)(Transactions involving entities under common control, etc.)
Pursuant to a resolution passed at a board of directors meeting held October 19, 2020, the company split off
certain operations (incorporation-type company split) of consolidated subsidiary TYO Inc. ("Former TYO”),
transferring the operations in question to the newly established TYO Inc. on January 4, 2021. The company also
conducted an absorption-type merger between consolidated subsidiaries and name change, with Former TYO
becoming the surviving company. The company also conducted an absorption-type merger between consolidated
subsidiaries and name change, with consolidated subsidiary Digital Garden, Inc. becoming the surviving company.
1. Overview and purpose of transaction
In line our medium-term plan covering the five-year period from fiscal 2021 through fiscal 2025, the AOI TYOGroup has engaged in a major organizational restructuring. We have shifted from our legacy business structure
focusing on the Advertising Video Production Business to a dual-business structure with clear initiatives assigned
to each. This structure will consist of the Content Production Business, which will handle traditional advertising―17―

video production focused primarily on orders from advertising companies, and the Communication Design
Business, which will handle the design and execution of communications, focusing on directly transacting withadvertisers. In addition, we will consolidate post-production subsidiaries within the Content Production Business
into one company, with Digital Garden serving as the surviving company. We will consolidate subsidiaries within
the Communications Design Business that conduct solutions, PR, and events into one company, with Former
TYO serving as the surviving company. In this way, we intend to deepen and strengthen group management while
reducing costs.
2. Reorganization summary(1) Incorporation-type split① Name of company to be split and business lines/scope businesses involved in the split
Name
Former TYO
Advertising
video production services for advertising
Business lines
companies, etc.
Net sales¥13,560 million (FYE December 2020)② Date of company split
January 4, 2021
③ Legal form of company split
Incorporation-type split with Former TYO as the split company and TYO, Inc. serving as the successor
company④ Details of allocations related to the incorporation-type split
At the time of the incorporation-type split, the newly established company issued 1,000 shares of common
stock, all of which were allocated to Former TYO. At the same time, Former TYO delivered all allocatedshares to 100% parent company AOI TYO Holdings as dividends from surplus.
(2) Absorption-type merger with the Former TYO as the surviving company① Name and description of business of the combined companies; assets and liabilities to be taken over
Name

Former TYO

Quark tokyo
Inc.

ZEO
Corporation

TYO Digital
Works, Inc.

TYO Public
Relations, Inc.

Business lines

Creativeplanning andproduction of
all advertisingcontent

Marketingsolutions,content
planning andproduction

Marketingcommunications

Web
advertisingproduction

Generalservices related
to public
relations andPR activities

Assets to be¥978million ¥1,245 million¥303 million¥97 million
taken overLiabilities to¥182 million ¥1,147 million¥114 million¥166 million
be taken over
② Date of business combination
January 4, 2021
Legalform of business combination③
An absorption-type merger, with Former TYO as the surviving company and consolidated subsidiaries Quark
tokyo Inc., ZEO Corporation, TYO Digital Works, Inc., TYO Public Relations, Inc. becoming the absorbed
companies. Quark tokyo Inc., ZEO Corporation, TYO Digital Works, Inc., TYO Public Relations, Inc. havebeen dissolved.
④ Name of the company after the merger
Former TYO changed its corporate name to xpd, Inc. on January 4, 2021.

―18―

(3) Absorption-type merger with Digital Garden, Inc. as the surviving company① Name and description of business of the combined companies; assets and liabilities to be taken over
Name

Digital Garden, Inc.

Media Garden, Inc.

TTR, Inc.

Business lines

Planning andproduction of digital
editing and CG

Filming studio andequipment rental

Video postproduction
business

Assets to betaken overLiabilities tobe taken over－

¥926 million¥2,005 million－¥330 million¥655 million② Date of business combination
January 4, 2021
③ Legal form of business combination
An absorption-type merger with Digital Garden, Inc. as the surviving company and consolidated subsidiaries
Media Garden, Inc. and TTR Inc. becoming the absorbed companies. Media Garden, Inc. and TTR, Inc. havebeen dissolved.
④ Name of the company after the merger
Digital Garden, Inc. changed its corporate name to TREE Digital Studio, Inc. on January 4, 2021.
3. Overview of accounting treatment
These transactions will be treated as transactions under common control in accordance with Accounting Standard
for Business Combinations (ASBJ Statement No. 21, January 16, 2019) and Implementation Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ
Guidance No. 10, January 16, 2019).

―19―