Summary of Consolidated Financial Results (Japanese Accounting Standards)
for the Third Quarter of the Fiscal Year Ending December 31, 2019
November 14, 2019
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:
November 14, 2019
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 Second Quarter (from January 1, 2019 to September 30 2019)(1) Consolidated operating results
Net sales

Operating income

Million yen%

Million yen%

Million yen%

Million yen%

46,80445,368

3.2-8.0

1,153
2,365-51.3
-32.8

921
2,374

-61.2
-29.6

348
1,520

-77.1
-19.9

Q3 FY2019
Q3 FY2018(Note) Comprehensive income(The percentages are year-on-year changes.)
Profit attributable toOrdinary income
owners of parent

Q2 FY2019: 66 million yen (-94.0%)

Net income per share
Q3 FY2019
Q3 FY2018

Q2 FY2018: 1,095 million yen (-9.5%)

Diluted net incomeper share

YenYen

14.81
64.15

14.76
63.32

(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Million yen

Million yen%

Q3 FY2019
FY201854,61655,63125,01625,67944.7
45.1(For reference) Shareholders’ equity

Q3 FY2019: 24,437 million yen

FY2018 25,114 million yen

2. Dividends
Dividends per share
End of Q1

End of Q2

Yen

End of Q3

Yen

FY2018‒8.00
FY20198.00－FY2019 (forecast)(Note) Revisions to dividends forecast published most recently: NoYear endYen‒

AnnualYen

Yen

22.00

30.00

12.00

20.00

3. Consolidated Financial Forecast for FY2019 (January 1, 2019 to December 31, 2019)

Net sales
Full year(The percentages are year-on-year changes.)
Profit attributable to Net income perOrdinary income
owners of parent
share

Operating income

Million yen%

Million yen%

Million yen%

Million yen%

Yen

63,600

-1.8

2,300

-33.0

2,150

-35.3

1,050

-46.2

44.63

(Note) Revisions to earnings forecast published most recently: No* 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 FY2019(ii)

FY201824,566,447 shares

FY20181,013,157 shares

Number of treasury stock at end of period
Q3 FY2019(iii)

24,566,447 shares

1,109,246 shares

Average number of issued shares

Q3 FY201923,506,884 shares
Q3 FY2018
23,701,594 shares(Note) The number of treasury stock includes the 418,900 shares that Trust & Custody Services Bank, Ltd. (trustaccount E) holds as trust property related to a Board Benefit Trust system.
*This summary of quarterly financial results is not included in the scope of the quarterly review.
*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 the assumptions of results
forecasts and notes on the use of results forecasts, please refer to 1. Qualitative Information on Results in theThird Quarter, (3) Description of Information on Outlook on page -two of the Accompanying Materials..

Attachments
1. Qualitative Information on Results in the Third Quarter

2(1) Description of Results of Operations

2(2) Description of Financial Position

2(3) Description of Information on Outlook

3

2. Quarterly Consolidated Financial Statements and Major Notes

4(1) Quarterly consolidated balance sheets

4(2) Quarterly consolidated statements of income and statements of comprehensive income

6(3) Notes to Quarterly Consolidated Financial Statements

8(Notes regarding assumption of going concern)

8(Notes in the event of significant changes in shareholders’ equity)

8(Segment Information)

8(Supplementary Information)

8―1―

1. Qualitative Information on Results in the First Quarter(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.

The Japanese economy showed positive signs during the consolidated third quarter. Capital investment increased, mainly in nonmanufacturing industries, and internal demand experienced a gradual rise, even in the face of fluctuating consumer sentiment.
Meanwhile, sluggish external demand and concerns of a drop-off in Japanese consumption due to increased consumption taxes havebeen a weight on business sentiment, leading to an ongoing sense of stagnation in the economy.
Operating in this environment, the AOI TYO Group experienced strong orders from and sales to major advertising agencies, while
direct transactions with clients grew. In addition to online video and promotional event production, a growth area defined in ourmedium-term policies, sales of mainstay TV commercial production rose, resulting in a 3.2% increase in net sales year on year. Ourorder situation continues to be strong of recent, with order backlog up 7.4% year on year to ¥14,469 million as of the end of theconsolidated third quarter.
Meanwhile, operating profit, ordinary profit, and net profit all underperformed year on year. This result was due to several negativefactors, including our adoption of work-style reform, cost increases accompanying new enterprise systems implementations atsubsidiary companies, and lower print sales, which has been a high-margin business for the company. Further, the company saw adecline in margins associated with an increase in orders this year in our Video Advertising Business, which had experienced improving
margins to date. Looking to grow corporate value in the next period and beyond, we have been reorganizing the businesses of poorly
performing subsidiaries. Despite recording extraordinary losses for these reorganizations, we recorded an extraordinary gain due to thesale of strategic stock holdings.
As a result, the AOI TYO Group recorded net sales of ¥46,804 million for the consolidated third quarter, representing a 3.2% decrease
compared to year-ago quarter. Operating profit amounted to ¥1,153 million (51.3% decrease), while ordinary profit and profit
attributable to owners of parent amounted to ¥921 million and ¥348 million, representing decreases of 51.3% and 61.2%, respectively.
Selling, general and administrative expenses included ¥235 million in amortization of goodwill associated with M&A activity.
(Note) Historically, television commercial content had been copied to media (“printed”) and delivered to each broadcast station. TheAOI TYO Group recognizes the sales and profits of this activity in our accounting records. As of October 2017, this content
can be delivered via online data transmission (“printless” format), leading to a decline in related sales and profits.
As of the first quarter of the current fiscal year, the AOI TYO Group initiated disclosure as a single segment. Accordingly, we do notprovide data by individual segment herein.

(2) Discussion of financial position
Total assets as of the end of the consolidated third quarter amounted to ¥54,616 million, a ¥1,014 million increase compared to the endof the prior consolidated second year. This increase was mainly due to increases in cash and deposits of 1,118 million yen andelectronically recorded monetary claims of 1,424 million yen, compared to a decrease in notes and accounts receivable of 3,819
million yen.
Liabilities decreased by 351 million yen compared with the end of the prior fiscal year to 25,016million yen. Although long-term loans
payable increased ¥2,898 million, short-term loans payable and accounts payable decreased ¥2,277 million and ¥878 million,respectively.
Net assets amounted to ¥25,016 million, a decrease of ¥663 million compared to the end of the prior consolidated fiscal year. Whileretained earnings rose ¥348 million due to profit attributable to owners of parent, the AOI TYO Group paid ¥718 million in dividend
payments and recorded a decrease of ¥181 million in valuation differences on available-for-sale securities.

―2―(3) Discussion of consolidated results forecasts
See Revisions to Second Quarter and Full-Year Consolidated Performance Forecasts, published on August 9, 2019, for more about
AOI TYO Group consolidated earnings forecasts for the fiscal year ending December 2019.

―3―2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheets(Unit: thousand yen)
FY 2018(December 31, 2018)

Q3 FY2019(September 30, 2019)

AssetsCurrent assets
Cash and deposits

9,836,071

10,954,558

Notes and accounts receivable - trade

16,731,160

12,911,478

Electronically recorded monetary claims - operating

4,273,694

5,698,257

7,544

7,301

4,256,243

4,429,775

Other876,667

1,220,485

Allowance for doubtful accounts(43,407)35,937,974(40,666)

35,181,190

Land

3,615,121

3,606,822

Other

3,619,949

3,632,121

Total property, plant and equipment

7,235,071

7,238,944

Software1,590,986

1,367,954

Goodwill

4,117,710

4,087,111

64,172

94,6555,772,869

5,549,721

Investment securities

3,147,176

2,932,245

Lease and guarantee deposits

1,619,387

1,521,915

Other2,025,326

2,955,940

Allowance for doubtful accounts
Total investments and other assets(106,495)
6,685,395(763,366)

6,646,736

Total non-current assets

19,693,336

19,435,401

Total assets

55,631,310

54,616,592

Merchandise and finished goods
Work in process

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

Intangible assets

OtherTotal intangible assets
Investments and other assets―4―

(Unit: thousand yen)
FY 2018(December 31, 2018)

Q3 FY2019(September 30, 2019)

Liabilities
Current liabilities
Accounts payable - trade8,126,930

7,551,634

Short-term loans payable

5,777,154

3,500,000

Current portion of long-term loans payable

2,159,836

3,090,340

Advances received

1,136,482

1,062,623

Income taxes payable

1,055,553

176,869

Provision for bonuses

115,779

91,474

Other

1,742,279

1,552,075

Total current liabilities

20,114,017

17,025,017

Long-term loans payable

4,549,727

7,448,016

Long-term deposits received

3,501,199

3,501,199

Provision for directors' retirement benefits

253,770

263,175

Provision for management board incentive plan trust

197,115233,039

Net defined benefit liability

280,118

286,440

Asset retirement obligations

509,156

488,938

Other

546,278

353,888

Total non-current liabilities

9,837,367

12,574,698

Total liabilities

29,951,385

29,599,715

Capital stock

5,000,000

5,000,000

Capital surplus

12,106,819

12,098,923

Retained earnings

9,055,601

8,685,408

Treasury shares(1,190,097)(1,258,867)

Total shareholders' equity

24,972,324

24,525,465

Valuation difference on available-for-sale securities

167,873(13,592)

Foreign currency translation adjustment(23,287)(73,097)

Remeasurements of defined benefit plans(2,393)(1,536)

Total accumulated other comprehensive income

142,193(88,226)

Share acquisition rights

92,72386,922

Non-controlling interests

472,685492,715

Total net assets

25,679,925

25,016,876

Total liabilities and net assets

55,631,310

54,616,592

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 incomeConsolidated second quarter(Unit: thousand yen)
Q3 FY2018(January 1, 2018 September 30, 2018)

Q3 FY2019(January 1, 2019 September 30, 2019)

Net sales

45,368,825

46,804,296

Cost of sales

36,368,273

38,458,276

Gross profit

9,000,551

8,346,020

Selling, general and administrative expenses

6,635,183

7,192,968

Operating profit

2,365,367

1,153,052

Interest income

7,907

5,577

Dividend income

25,096

17,633Gain on investments in partnership

168,567－Insurance return

12,04529,600

Other67,512

103,705

Total non-operating income

281,128

156,517

Interest expenses

59,48356,833

Commission fee
Share of loss of entities accounted for using equity
method120,521

132,892

54,11998,389Other

37,851

100,296

Total non-operating expenses

271,976

388,4102,374,519

921,158

Gain on sales of non-current assets

401,336－

Gain on sales of investment securities

90,661

323,073

288

3,024

492,285

326,097

Loss on sales of shares of subsidiaries and associates－

34,146

Loss on liquidation of subsidiaries and associates－279,462

Loss on sales of investment securities－65,374

Total extraordinary losses－378,983

Profit before income taxes

2,866,805

868,271

Income taxes - current

1,284,424

623,595

Income taxes - deferred

7,952(72,982)

Non-operating income

Non-operating expenses

Ordinary profit
Extraordinary income

Other
Total extraordinary income
Extraordinary losses

Total income taxes

1,292,376

Profit

1,574,428

317,658

53,898(30,546)

Profit (loss) attributable to non-controlling interests

1,520,529

Profit attributable to owners of parent―6―

550,613348,205

Quarterly consolidated comprehensive statements of income
Consolidated second quarter(Unit: thousand yen)
Q3 FY2018(January 1, 2018 September 30, 2018)

Q3 FY2019(January 1, 2019 September 30, 2019)

Profit

1,574,428

317,658

Valuation difference on available-for-sale securities(115,673)(181,466)

Foreign currency translation adjustment(35,170)(34,615)

Remeasurements of defined benefit plans, net of tax

655

856

Share of other comprehensive income of entities
accounted for using equity method

(12)

4,088

Total other comprehensive income(150,200)(211,136)

Comprehensive income

1,424,227106,521

1,375,469

138,489

48,758(31,967)

Comprehensive income attributable to owners ofparent
Comprehensive income attributable to non-controllinginterests―7―(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(Segment Information)
Business Segment Information
I Q3 FY2018 (January 1, 2108 - September 30, 2018)
As disclosed under (Notes related to changes in reportable segments, etc.) for the third quarter of the current consolidated fiscalyear.
II Q3 FY2019 (January 1, 2019 - September 30, 2019)
As the AOI TYO Group consists of a single Advertising Business segment, we have omitted separate disclosure herein.
(Notes related to changes in reportable segments, etc.)
The AOI TYO Group had consisted of two reportable segments: Advertising Business and Video-Related Business. However, asof the first quarter of the current consolidated fiscal year, the group consists of a single business segment.
This change is due to the fact that sales and profits in the Video-Related Business have become of only minor importance to thegroup after the transfer of consolidated subsidiary Hollyhock Inc. shares, resulting in the removal of said company fromconsolidation. Further, after reconsidering the AOI TYO Group business, management asset allocation, the state of business
management systems, etc., we made the rational decision to manage our whole business under a single segment defined asAdvertising Business.
With this change, the AOI TYO Group now consists of a single Advertising Business segment. Accordingly, we have omitted
reporting of segment information for the third quarters of the prior and current consolidated fiscal years.
(Supplementary Information)
The company adopted Partial Amendment to Accounting Standard for Tax-Effect Accounting (ASBJ Statement No.28,February 16, 2018) at the beginning of the first quarter of the current consolidated fiscal year. Under this standard, thecompany presents deferred tax assets under investments and other assets and deferred tax liabilities under non-current
liabilities.

―8―