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

November 13, 2020

Company name:
AOI TYO Holdings Inc.
Stock Exchange:
Tokyo Stock Exchange
Code:
3975
URL:
http://aoityo.com/en/
Representatives:
Yasuhito Nakae, Representative DirectorInquiries:
Satoshi Yuzurihara, Executive Director Tel: +81-3-3779-8415
Scheduled date of submission of quarterly report:
November 13, 2020
Scheduled date of commencement of dividend payment:
Supplementary documents for quarterly results:
Yes
Quarterly results briefing:
No(Rounded down to the nearest million yen)

1. Consolidated Financial Results for the Third Quarter (from January 1, 2020 to September 30 2020)(1) Consolidated operating results(The percentages are year-on-year changes.)
Net sales

Operating income

Million yen

Q3 FY2020
Q3 FY2019%34,45046,804(Note) Comprehensive income

-26.4
3.2

Ordinary income

Million yen%-1,2601,153－-51.3

Q3 FY2020: -1,515 million yen (-%)
Diluted net income�per shareYen

Yen-58.3314.81%-1,325921

Million yen-1,368348－-61.2%－-77.1Q3 FY2019: 106 million yen (-92.5%)

Net income per share
Q3 FY2020
Q3 FY2019

Million yen

Profit attributable toowners of parent－14.76(2) Consolidated financial position
Total assets
Q3 FY2020
FY2019(For reference) Shareholders’ equity

Net assets

Million yen

49,43853,352Q3 FY2020: 21,197 million yen

Equity ratio

Million yen%

21,57842.9
23,36343.0
FY2019: 22,935 million yen

2. Dividends
Dividends per share
End of Q1

End of Q2

Yen

End of Q3Yen

FY20198.00－FY2020
0.00－
FY2020 (forecast)(Note) Revisions to dividends forecast published most recently: NoYear end

Yen

AnnualYen－－Yen

12.00

20.00

12.00

12.00

3. Consolidated Financial Forecast for FY2020 (January 1, 2020 to December 31, 2020
Net sales
Million yen

Operating income%Million yen%

Full year
50,000 -23.3-1,400－(Note) Revisions to earnings forecast published most recently: No(The percentages are year-on-year changes.)
Profit attributable to Net income perOrdinary income
owners of parent
shareMillion yen-1,500%－Million yen-1,500%－Yen-63.94

* Notes(1) Important changes in subsidiaries for the third 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)
Q3 FY2020(ii)

FY201924,566,447 shares

FY20191,109,564 shares

Q3 FY201923,506,884 shares

Number of treasury stock at end of period
Q3 FY2020(iii)

24,566,447 shares
1,102,626 shares

Average number of issued shares
Q3 FY2020

23,461,018 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. (Q3 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 publicaccounting 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.

Attachments
1. Qualitative Information on Results in the Third 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) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern)(Notes in the event of significant changes in shareholders’ equity)

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1. Qualitative Information on Results in the Third Quarter(1) Discussion of operating results
Any forward-looking statements below are based on AOI TYO Group judgments as of the end of the third quarter of thecurrent consolidated fiscal year.
During the cumulative consolidated third quarter, concerns about the spread of COVID-19 remained, while business
confidence began improving and the economy showed signs of recovery amid the gradual resumption of economic
activity in Japan and overseas. However, the base of recovery under the new normal has been modest, and any additional
waves of infections could result in stronger calls for activity restraints and deteriorating consumer confidence. Thesefactors could lead to persisting fears of a slow recovery. Amid these circumstances, the Japanese advertising market,
severely impacted by COVID-19, has continued to underperform the previous year.
After the lifting of the state of emergency declaration in Japan, the AOI TYO Group resumed filming and editing work
under advertising video production measures to prevent the spread of COVID-19. We continue to engage in steadyproduction operations in the with-COVID-19 era. However, net sales for the cumulative consolidated third quarterdecreased year on year. This decrease was due to factors including the impact of significantly declines in order backlog
during the cumulative consolidated second quarter, which resulted in lower sales to major advertising agencies in ourVideo Advertising Business. Our Advertisement-Related Business experienced continued cancellations andpostponements of various events, while our Solutions Business, which had been performing level year on year throughthe second quarter, reported lower results due to voluntary restraints on in-person sales activities during the state ofemergency. On the other hand, order backlog for the cumulative consolidated third quarter rose ¥930 million comparedwith the end of the cumulative consolidated second quarter, amounting to ¥15,399 million.
Although the group recorded another operating loss for the cumulative consolidated third quarter, we reduced the size ofthe loss compared to the cumulative consolidated second quarter. This result was mainly due to strict reductions inadvertising expenses, entertainment/travel/meeting expenses, and other expenses to reduce costs up to ¥2.0 billion aheadof the schedule announced in our August 24, 2020 medium-term plan. The group also improved effective profit marginand other factors which had declined due to the impact of cost billings for projects that had been canceled or postponeddue to the impact of COVID-19. We also recorded ¥311 million in business restructuring expenses related to seven officerelocations and reduced floor space.
As a result, the AOI TYO Group recorded net sales of ¥34,450 million for the consolidated third quarter, representing a
26.4% decrease compared to year-ago quarter. Operating loss amounted to ¥1,260 million (¥1,153 million of operating
profit in the same period of prior fiscal year), while ordinary loss amounted to ¥1,325 million (¥921 million of ordinary
profit in the same period of prior fiscal year), and loss attributable to owners of parent amounted to ¥1,368 million (¥348
million of profit attributable to owners of parent in the same period of prior fiscal year). Selling, general andadministrative expenses included ¥246 million in amortization of goodwill associated with M&A activity.

(2) Discussion of financial position
Total assets as of the end of the consolidated third quarter amounted to ¥49,438 million, a ¥3,913 million decrease
compared to the end of the prior consolidated fiscal year. This decrease was mainly due to a decrease in cash and depositsof ¥5,127 million, notes and accounts receivable of ¥8,028 million and electronically recorded monetary claims of ¥2,091million.
Liabilities decreased by ¥2,128 million compared with the end of the prior fiscal year to ¥27,859 million. Although longterm loans payable increased ¥3,190 million, short-term loans payable and accounts payable decreased ¥3,200 millionand ¥3,159 million, respectively.
Net assets amounted to ¥21,578 million, a decrease of ¥1,784 million compared to the end of the prior consolidated fiscal―2―

year, mainly due to decrease in retained earnings of ¥1,368 million by the net loss attributable to shareholders of theparent company and ¥286 million by dividend payments.

(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, while continuing to encourage ouremployees to work from home.
However, concerns persist about additional waves of COVID-19 infections and the pace of recovery continues to bemodest. As a result, it is difficult to imagine a dramatic improvement corporate demand for advertising.
Meanwhile, 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 also present a business expansion opportunity for
AOI TYO Holdings.
In response to these circumstances, we formulated and announced on August 24 our group medium-term plan for thefive years from fiscal 2021 to 2025. We formulated this medium-term plan under the theme, update of production
functions. To respond to this era of change, we intend to change our traditional business structure, which relied heavily
on advertising video production. We plan to transition to a two-business structure consisting of the Content Production
Business, which will continue to receive orders from advertising companies as we pursue greater efficiencies and scopein the video production business, and the Communication Design Business, which consists of direct transactions withadvertisers in providing services from communications design to execution to respond to the changing needs ofadvertisers. As we pursue this change in structure, we will also engage in further group management in consolidatedoffices, pursuing operational efficiencies, and engaging in other ways to reduce costs by up to ¥2.0 billion (FY2019
through FY2022). In accordance with this medium-term plan, we plan to conduct a major reorganization of the group inJanuary 2021, while we also accelerate our efforts to reduce costs.
As of the end of September 2020, AOI TYO Holdings maintains a high level of consolidated cash and deposits, at¥14,238 million, and a high current ratio of 246.6%. Further, we have concluded commitment lines with a number offinancial institutions for a combined ¥12 billion (¥0 billion outstanding as of September 2020). We have also secured
long-term loans of ¥7,200 million to ensure sufficient liquidity.
② Future Outlook
Order backlog, which decreased significantly during the consolidated second quarter, rose during the consolidated
third quarter. We expect net sales for the consolidated fourth quarter to increase as well. Given these developments, wewill not revise the results forecast for the year ending December 2020 as announced on August 24, 2020.

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

Q3 FY2020(September 30, 2020)

AssetsCurrent assets
Cash and deposits

9,111,122

14,238,684

Notes and accounts receivable - trade16,873,9788,845,691

Electronically recorded monetary claims - operating

4,413,564

2,322,137

7,301

7,090

Work in process

4,510,288

5,887,872

Other

1,125,296

1,276,621

Allowance for doubtful accounts(37,727)(30,551)

36,003,823

32,547,546

Land

3,606,822

3,593,652

Other

3,477,826

2,869,049

Total property, plant and equipment

7,084,649

6,462,702

Software161,589

252,044

Goodwill

4,010,215

3,635,961

103,479

15,9944,275,284

3,903,999

Investment securities

1,787,051

1,547,884

Deferred tax assets

1,328,3031,854,892

Lease and guarantee deposits

1,522,658

1,628,345

Other

2,125,874

2,259,790

Allowance for doubtful accounts(775,409)(766,274)

5,988,478

6,524,638

Total non-current assets

17,348,413

16,891,341

Total assets

53,352,237

49,438,888

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―4―

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

Q3 FY2020(September 30, 2020)

Liabilities
Current liabilities
Accounts payable - trade

8,697,200

5,537,583

Short-term loans payable

3,200,000

Current portion of long-term loans payable

3,073,876

4,409,220

Advances received

899,779

1,705,107

Income taxes payable

428,710

104,602

Provision for bonuses

72,660101,901

Other

1,970,931

1,337,773

Total current liabilities

18,343,158

13,196,189

Long-term loans payable

6,672,675

9,863,674

Long-term deposits received

3,501,199

3,501,199

Provision for directors' retirement benefits261,883

256,456

Provision for management board incentive plan trust

254,811241,000

Net defined benefit liability

267,504

325,714

Asset retirement obligations

491,279

327,451

Other

195,809148,222

Total non-current liabilities

11,645,165

14,663,720

Total liabilities

29,988,323

27,859,910

Capital stock

5,000,000

5,000,000

Capital surplus

12,172,896

12,173,895

Retained earnings

7,056,711

5,401,802

Treasury shares(1,259,085)(1,249,912)

Total shareholders' equity

22,970,523

21,325,785

Valuation difference on available-for-sale securities

10,693(65,006)

Foreign currency translation adjustment(44,141)(62,113)

Remeasurements of defined benefit plans(1,945)(984)

Total accumulated other comprehensive income(35,393)(128,105)

Share acquisition rights

86,27485,338Non-controlling interests

342,508

295,959

Total net assets

23,363,913

21,578,978

Total liabilities and net assets

53,352,237

49,438,888-

Non-current liabilities

Net assets
Shareholders' equity

Accumulated other comprehensive income―5―(2) Quarterly consolidated statements of income and statements of comprehensive income
Quarterly consolidated statements of income
Consolidated third quarter(Unit: thousand yen)
Q3 FY 2019
(January 1, 2019 –September 30, 2019)

Q3 FY2020(January 1, 2020 –September 30, 2020)

Net sales

46,804,296

34,450,117

Cost of sales

38,458,276

29,764,114

Gross profit

8,346,020

4,686,002

Selling, general and administrative expenses

7,192,968

5,946,832

Operating profit

1,153,052(1,260,829)

Interest income

5,577

1,952

Dividend income

17,633

10,035

Subsidy Income-211,745

Insurance return

29,60034,706

Other103,705

101,682

Total non-operating income

156,517360,122

Interest expenses

56,83363,875

Commission fee

132,892

123,248

Share of loss of entities accounted for using equity method

98,389138,295

Other

100,296

99,356

Total non-operating expenses

388,410424,774

921,158(1.325.481)

-

6,270

323,073

3,299-

35,3193,024

936

326,097

45,82534,146--116,673

279,462--

311,11365,374--24,011

Total extraordinary losses

378,983

451,798

Profit (loss)before income taxes

868,271(1,731,455)

Income taxes - current

623,595

177,545

Income taxes - deferred(72,982)(511,393)

Total income taxes

550,613(333,847)

Non-operating income

Non-operating expenses

Ordinary profit (loss)
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Other
Total extraordinary income
Extraordinary losses
Loss on sales of shares of subsidiaries and associates
Impairment loss
Loss on liquidation of subsidiaries and associates
Business restructuring expenses
Loss on sales of investment securities
Other―6―

(Unit: thousand yen)
Q3 FY 2019
(January 1, 2019 –September 30, 2019)

Q3 FY2020(January 1, 2020 –September 30, 2020)

Profit (loss)

317,658(1,397,607)

Loss attributable to non-controlling interests(30,546)(29,207)

Profit (loss) attributable to owners of parent

348,205(1,368,400)―7―

Quarterly consolidated comprehensive statements of income
Consolidated third quarter(Unit: thousand yen)
Q3 FY 2019
(January 1, 2019 –September 30, 2019)

Profit (loss)

Q3 FY2020(January 1, 2020 –September 30, 2020)

317,658(1,397,607)

Valuation difference on available-for-sale securities(181,466)(75,700)

Foreign currency translation adjustment(34,615)(36,771)

856

960

4,088

(5,983)

Total other comprehensive income(211,136)(117,494)

Comprehensive income

106,521(1,515,102)

Comprehensive income attributable to owners of parent

138,489(1,480,858)

Comprehensive income attributable to non-controllinginterests(31,967)(34,244)

Other comprehensive income

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted
for using equity method

Comprehensive income attributable to(3) 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.

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