Consolidated Financial Results for the Third Quarterof the Fiscal Year Ending December 31, 2018
November 2018

AOI TYO Holdings Inc.

Contents
1. Summary of Consolidated Financial Results
2. Consolidated Earnings Forecast

11. Summary of Consolidated Financial Results

2

Financial Highlights
 Lower net sales year on year due to (1) Consistent profit management emphasizing profitabilityand (2) strict order acceptance associated with work-style reform. However, profit margin
improved, limiting the decline in operating income.
(million yen)

Q3 FY2016

Q3 FY2017

Q3 FY2018YoY ChangeNet Sales

47,73649,33945,368- 3,970

Operating Income

2,965

3,519

2,365

- 1,153

Ordinary Income

2,597

3,372

2,374

- 997

Profit Attributable toOwners of Parent

1,126

1,897

1,520

- 377

EBITDA

3,692

4,389

3,231

- 1,158* Operating profit: Sales - external expenditures* The results for 2016 are simple totals of the consolidated financial results of AOI Pro. Inc. and TYO Inc. for the calendar years (based on pro forma statementsfor the end of the fiscal year ending December 31).

3Trend of Net Sales by Quarter and Order Backlog
 While Q1 sales fell significantly year on year, sales for Q2 and beyond were levelwith the prior year.
 Order backlog as of the end of Q3 amounted to 13,466 million yen (22.3% lower year
on year).
However, prior year order backlog included about 2,300 million yen in large-scale movie projects and major, long-term
contracts recognized in the subsequent fiscal year.
25,00021,134(million yen)
20,00015,00018,472

15,521

18,023

15,257 15,343

15,61014,504

15,344

14,369FY2016

17,192FY2017FY2018

10,000Order Backlog FY2017

5,000
014,985

Order Backlog FY2018

13,466

14,331

14,261

14,016

17,322

13,631

Q1

Q2

Q3

Q4

* The results for 2016 are simple totals of the consolidated financial results of AOI Pro. Inc. and TYO Inc. for the calendar years (based on pro forma statements
for the end of the fiscal year ending December 31).

4

Trends of Operating Income by Quarter Q3 operating income fell year on year, due to lower sales and overhead expenses
mainly related to office relocation.
2,000

1,500

1,820(million yen)

1,367
1,160

1,092
916

1,000682
500

0

1,101

Q1539

Q2654

619

Q3

FY2016FY2017457

FY2018

Q4* The results for 2016 are simple totals of the consolidated financial results of AOI Pro. Inc. and TYO Inc. for the calendar years (based on pro forma statements
for the end of the fiscal year ending December 31).

5

Net Sales by Business Segment
 Advertising Video Production Business sales fell.
 Overseas Business sales rose, mainly due to the addition of a newly consolidated
advertising production subsidiary in Malaysia.
(million yen)

36,46435,79030,8896,048

Q3 FY2016

5,635 5,703

4,835 4,994
2,252

Advertising Video
Production

Other ProductionSolutions

Q3 FY2017

1,550 1,903

Q3 FY2018

2,881

Overseas

1,061 1,177 903
Video-related6

Overview of Business Segments
Business

Overview

Advertising Video
Production

Planning and production of advertising videos such as television commercials.
The core business of AOI Pro. and TYO, whose merger resulted in the largest
share in the industry of the business.

Other Production

Production of materials other than advertising videos, which includes theplanning and production of movies, TV dramas, events, digital contents
production and promotional materials.

Solutions

Delivers solutions that solve customer issues. Services include direct
engagement with advertisers and one-stop online video advertising solutions(planning, production, media distribution, data analysis). Experience design andmarketing support based on vital sign data collected during VR experiences.

Overseas

Offices in China and Southeast Asia working to grow business with Japan-based
and local companies. Promoting M&As in this segment.

Video-related

Projects other than advertising, including the operation of photo studios and theproduction of music videos.

* The Advertising Business Segment includes Advertising Video Production, Other Production, Solutions, and Overseas Business.
The Video-related Business Segment includes Video-related Businesses.
7

Net Sales by Customer
 Sales to advertising agencies declined.
 As with our Solution Business, direct business with advertisers rose, driven byother productions (events, PR, etc.).
24.5%
Q3 FY201712,09429.2%
14,42725.6%
12,611

20.7%

10,205* Net sales from Dentsu Inc. (non-consolidated) were 10,908 million yen, and net sales from Hakuhodo Inc.
(non-consolidated) were 11,595 million yen.

24.5%
Q3 FY2018

11,13426.6%
12,08029.7%
13,45619.2%(million yen)

Dentsu Group
Hakuhodo GroupDirect transactions
Others8,696* Net sales from Dentsu Inc. (non-consolidated) were 9,909 million yen, and net sales from Hakuhodo Inc.
(non-consolidated) were 9,575 million yen.

8

Net Sales by Medium(million yen)

Component
Ratio

Q3 FY2018

Component
Ratio

44,11963.2%

27,037

58.9%- 4,676

Original work

38,36054.2%

23,10950.3%- 4,323

Printed commercial materials

2,745

3.9%

1,467

3.2%

- 556

Other

3,014

4.3%

2,461

5.4%

203

Entertainment contents

3,865

5.5%

1,650

3.6%

- 281

Digital contents

11,312

16.0%

7,336

16.0%

- 792

Overseas

2,801

4.0%

3,097

6.7%

1,746

Other

8,727

12.3%

6,781

14.8%

774

Total

70,825100.0%

45,901100.0%- 3,228

MediumTV commercial production

FY2017

YoY
Change* The results are simple totals of the consolidated financial results of AOI Pro. Inc. and TYO Inc. We have made a partial revision to aggregation classifications beginning this period.

9Summary of Consolidated Balance Sheet
Major Components

FY2017Q3 FY2018

Current Assets

41,50335,436

Cash and deposits (-2,159); notes and accounts receivable (-4,269);
electronically recorded monetary claims (-1,663); work in process(+1,900)

Non-current Assets

18,234

19,823

Property, plant, and equipment (-294); intangible assets (+676);
investments and other assets (+1,207)

59,73755,260Current Liabilities

25,275

19,201

Accounts payable (-1,543); short-term loans payable (-4,155);
advances received (+943); income taxes payable (-582)

Non-current Liabilities

8,756

10,260Long-term loans payable (+1,543)

Total Liabilities

34,031

29,461

Total Net Assets(percentage of total assets)

25,706(43.0%)

25,798(46.7%)

Total Liabilities and Net Assets

59,73755,260(million yen)

Total Assets

Retained earnings (+800); treasury stock (-526)

10

Initiatives in the Advertising Video Production Business While net sales fell 27% due to the advancement of printless methods, profit margin
continues to improve with greater focus on cost control over external expenditures.
40,00030,000

35.9%
32.1%

33.5%

40.0%

(million yen)

35.0%
Production sales (left axis)

20,00033,18832,627

28,6922,195
Q3 FY2016

1,957

1,430

Q3 FY2017

Q3 FY2018

Print sales (left axis)
Profit margin (right axis)

25.0%

10,000
0

30.0%

20.0%

* Operating profit:
Sales - external expenditures* Calculations for the TV Commercial
Production Department only

*Printless: Historically, television commercial content had been copied to media (“printed”) and delivered to each broadcast station. The AOI TYOGroup recognized the sales and profits of this activity in our accounting records. As of October 2017, delivery of this content has been gradually shifting
to online data transmission, resulting in a decline in print sales.

11Initiatives in the Solutions Business (1)Sales at the TYO Offering
Management Business Unit *

8,000

5,577

6,000
4,000
2,0000(million yen)

1,780

2,674

FY2016

3,467

4,002
■■ Q3
■

FY2017Full-year

FY2018* Renamed from TYO General Business Division Headquarters
12

Initiatives in the Solutions Business (2) While Quark tokyo recorded higher online video advertising production revenuesyear on year, sales were lower overall, mainly due to a major planning andconsulting project in the same period of the prior fiscal year.
3,000

Sales at Quark tokyo

1,816

2,000
1,000
0372(million yen)

2,416
1,547

■■ Q3722

FY2016■FY2017

Full-year

FY2018Specialists from each discipline form teams to offer a one-stop PDCA solution, from strategic proposals and planning to production,
data analysis, and media distribution.
13

Initiatives in the Overseas Business Sales grew significantly, mainly due to converting the DTT Group (Malaysia) to asubsidiary.
※ DTT ：DIRECTORS THINK TANK
Scale of sales inOverseas Businesses

6,000

4,402
4,000

(million yen)

* Including equity-method affiliates

4,3202,825

■■ Q3
■

2,0000FY2017Full-year

FY201814

2. Consolidated Earnings Forecast

15

Progress in Consolidated Earnings Forecast
FY2018(million yen)

Q3 Result

FY2018
Fiscal Year
YoY
Forecast
ChangeQ4

FY2018Requirement

YoY
ChangeNet Sales

45,36864,000- 6,473

18,632- 2,502

Operating Income

2,365

3,800- 819

1,435335

Operating Margin

5.2%

5.9%

---Ordinary Income

2,374

3,700- 694

1,326304

Profit Attributable toOwners of Parent

1,520

2,300

- 481

780

- 104

EBITDA

3,231

5,230- 526-16

Shareholder Return Dividend: AOI TYO Holdings plans to pay a dividend of 30 yen per share (ordinarydividends) for the fiscal year ending December 31, 2018.
End ofQ2

FY 2017

8 yen

FY 2018

8 yen

End of FY

22 yenTotal

30 yen(incl. commemorative
dividend of 10 yen)(incl. commemorative
dividend of 10 yen)

22 yen30 yen(forecast)(forecast)

Dividend
Payout Ratio

DOE25.6%

2.9%

31.4%

2.8%

 Purchase of treasury shares: AOI TYO Holdings made the following decisions
concerning the purchase of treasury shares.
Period of Purchase

Type of Shares

FY 2017

May 16, 2017 - Feb. 27, 2018

Common Stock

261,400 shares

289,631,200 yen

FY 2018

Jun. 1, 2018 – May 31, 2019

Common Stock

400,000 shares

531,200,000 yen

Total Number of Shares Purchased

Total Value of Shares purchased

17Disclaimer
This document includes future forecasts that reflect the plans and outlook of AOITYO Holdings.
The future forecasts and related descriptions are based on information available tothe company at the time of the preparation of this document, and the forecasts areaffected by the economic environment of the company’s businesses, competition, theresults of new services provided, and other factors that involve uncertainties. Pleaseacknowledge, therefore, that the actual business results may deviate significantly
from the forecasts and related information provided in this document.
In addition, the company does not have any obligation to update and publish theinformation concerning future forecasts in this document after its publication.
Please contact the following for any questions:
Financial Planning & IR Department (+81 3-3779-8415)
18