Summary of Consolidated Financial Results (Japanese Accounting Standards)
for the Third Quarter of the Fiscal Year Ending December 31, 2018
November 14, 2018
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, 2018
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, 2018 to September 30, 2018)(1) Consolidated operating results(The percentages are year-on-year changes.)
Net sales

Operating income

Million yen%

Million yen

Profit attributable toowners of parent

Ordinary income%

Million yen

Q3 FY2018:
45,368-8.0
2,365-32.8
Q3 FY2017:49,339‒3,519‒(Note) Comprehensive income
Q3 FY2018: 1,424 million yen (-30.5%)%

Million yen%

2,374-29.6
1,520
3,372‒
1,897Q3 FY2017: 2,048 million yen (‒%)

-19.9
‒

Diluted net incomeper share

Net income per share
YenYenQ3 FY2018:64.15
63.32
Q3 FY2017:
79.88
78.80
(Note) No year-on-year change is stated for Q3 FY2017, as AOI TYO Holdings was established on January 4, 2017.

(2) Consolidated financial position
Total assets

Net assets

Million yen

Q3 FY2018:
FY2017(For reference) Shareholders’ equity

55,26059,737

Equity ratio

Million yen

25,79825,706Q3 FY2018: 24,853 million yen%

45.0
41.3
FY2017:24,675 million yen

2. DividendsDividends per share
End of Q1
FY2017FY2018FY2018 (forecast)End of Q2

End of Q3

Year end

AnnualYenYenYenYenYen‒‒8.00
8.00

‒‒‒

22.00

30.00

22.00

30.00

(Note) Revisions to dividends forecast published most recently: No

3. Consolidated Financial Results Forecast for FY2018 (from January 1, 2018 to December 31, 2018)
Net sales
Full year

Operating income(Percentages represent year-on-year change)
Profit attributable toNet income per shareowners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

Yen64,000-9.2

3,800

-17.7

3,700

-15.8

2,300

-17.3

97.04

(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 FY2018(ii)

FY2017

24,566,447 shares

FY2017

745,627 shares

Number of treasury stock at end of period
Q3 FY2018(iii)

24,566,447 shares
1,053,813 shares

Average number of issued sharesQ3 FY2018
23,701,594 shares
Q3 FY2017
23,757,656 shares(Note) The number of treasury stock includes the shares that Trust & Custody Services Bank, Ltd. (trust account E)
holds as trust property related to a Board Benefit Trust system (274,500 shares as of FYE December 2017;418,900 shares as of Q3, FYE December 2018).
* This summary of quarterly financial results is not included in the scope of the quarterly review.
* Appropriate use of earnings forecasts and other notes to financial statements- Earnings forecasts and other forward-looking statements in this document are based on information available andjudgments deemed rational at the time of publication. Forward-looking statements are not a guarantee of futureperformance. Actual earnings may differ materially due to a variety factors. For more about assumptions underlying
earnings forecasts and cautions regarding the use of earnings forecasts, see 1. Qualitative Information on Quarterly
Financial Results (3) Description of Information on Outlook on P.3 of Attachments.

Attachments
1. Qualitative Information on Quarterly Financial Results2(1) Description of Results of Operations

2(2) Description of Financial Position

3(3) Description of Information on Outlook

3

2. Quarterly Consolidated Financial Statements and 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―1―

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 consolidated third quarter of thecurrent fiscal year.
The AOI TYO Group consists of AOI TYO Holdings Inc. and consolidated subsidiaries. Our mission is to bridge the gap between
company and consumer through emotion, reaching across the barriers of media as we engage in our business activities. We are anemotion creation company that designs experiences which move people to emotion-based action through our mainstay business inadvertising video production.
Our growth drivers consist of customer solutions (via business directly with advertisers and online video content marketing) and ouroverseas business, through which we aim for sustainable growth and corporate value improvement.
The Japanese economy continued to recover moderately throughout the first nine months of the fiscal year ending December 2018,
driven by improved corporate earnings and employment. Recovering consumer spending was also a positive factor. At the same time,
concerns remain about trade issues and the potential negative impact of such risks on the global economy.
Within this environment, cumulative consolidated third quarter sales in our solutions business and other productions (events, PR, etc.)that provide services directly to advertisers were solid. Our Overseas Business outperformed the same quarter in the prior fiscal year,owing in part to the addition of a Malaysian advertising production agency as a consolidated subsidiary. On the other hand, ourmainstay Advertising Video Production Business recorded results lower year on year, mainly due to stricter order acceptance (greateremphasis on profitability from early stages of order acceptance and work-style reform) and a decline in print sales*. Advertising Video
Production Business sales in the second quarter and beyond have been nearly level with the same period in the prior fiscal year.
However, order backlog for the cumulative consolidated third quarter fell to ¥13,466 million (decrease of 22.3% year on year). Note,however, that order backlog at the end of the same period in the prior fiscal year included a large-scale movie project and major longterm contracts recognized in the subsequent fiscal year.
Despite an increase in expenses associated with the formation of a new company and an office relocation, our ongoing efforts to instill
management control of external expenditures related to our advertising video production business kept year-on-year profit declines
smaller in scope than sales declines for the first nine months of the current fiscal year.
As a result, the AOI TYO Group recorded net sales of ¥45,368 million for the nine-month period ending September 2018, representing
an 8.0% decrease year on year. Operating profit amounted to ¥2,365 million (32.8% decrease), while ordinary profit and profit
attributable to owners of parent amounted to ¥2,374 million and ¥1,520 million, representing decreases of 29.6% and 19.9%,respectively. Selling, general and administrative expenses included ¥250 million in amortization of goodwill associated with M&Aactivity.
*Historically, television commercial content had been copied to media (“printed”) and delivered to each broadcast station. The AOI
TYO Group recognized the sales and profits of this activity in our accounting records. As of October 2017, this content can bedelivered via online data transmission (printless format), leading us to expect a decline in related sales and profits over time.
AOI TYO Group reportable segments consist of our Advertising Business and our Video-Related Business. However, the VideoRelated Business accounts for only a small portion of overall results. As this segment does not represent a significant source ofmaterial information, we have omitted disclosure of reportable segments.

―2―(2) Discussion of financial position
Assets, Liabilities, and Net Assets
Total assets as of the end of the consolidated third quarter amounted to ¥55,260 million, a ¥4,477 million decrease compared to the endof the prior consolidated fiscal year. This decrease was mainly due to decreases in notes and accounts receivable and cash and depositsof ¥4,269 million and ¥2,159 million respectively, offset in part due to an increase in work in process of ¥1,900 million.
Liabilities decreased ¥4,570 million to ¥29,461 million. Although long-term loans payable increased ¥1,543 million, short-term loans
payable and accounts payable decreased ¥4,155 million and ¥1,543 million, respectively.
Net assets amounted to ¥25,798 million, an increase of ¥92 million compared to the end of the prior consolidated fiscal year. Whileretained earnings rose ¥1,520 million due to profit attributable to owners of parent, the AOI TYO Group paid ¥721 million in dividend
payments and recorded an increase of ¥526 million in treasury stock.

(3) Discussion of consolidated results forecasts
See Notice Concerning Revisions to Second Quarter and Full-Year Consolidated Earnings Forecasts for the Fiscal Year Ending
December 2018 , published on August 10, 2018 (Japanese only), for more about AOI TYO Group consolidated earnings forecasts forthe fiscal year ending December 2018.

―3―2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheets(Thousands of yen)
FY2017(December 31, 2017)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Electronically recorded monetary claims
Merchandise and finished goods
Work in process
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Land
Other
Total property, plant and equipment
Intangible assets
Software
Software in progress
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Lease and guarantee deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets―4―

Q3 FY2018(September 30, 2018)12,573,956
17,813,558
6,208,110
16,1283,629,657
1,297,266(35,271)
41,503,406

10,414,403
13,544,008
4,544,560
15,3805,529,725
1,425,447(37,176)
35,436,348

4,289,822
3,390,024
7,679,846

3,610,212
3,775,436
7,385,649

171,168
975,504
4,106,706
15,7235,269,103

178,6121,544,954
4,205,986
15,853
5,945,407

2,787,996
1,318,377
1,255,572(76,430)
5,285,515
18,234,466
59,737,872

3,465,388
1,623,902
1,478,600(74,991)
6,492,900
19,823,956
55,260,305

(Thousands of yen)
FY2017(December 31, 2017)

Liabilities
Current liabilities
Accounts payable
Short-term loans payable
Current portion of long-term loans payable
Advances received
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Long-term deposits receivedProvision for directors' retirement benefits
Provision for management board incentive plan trust
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interestsTotal net assets
Total liabilities and net assets―5―

Q3 FY2018(September 30, 2018)

7,341,915
10,443,335
2,329,624
758,125
1,175,623
82,2983,144,339
25,275,262

5,798,798
6,288,308
2,269,450
1,701,207
593,299
100,5822,450,002
19,201,648

3,465,280
3,501,199
285,345
105,832
248,570
355,935
794,392
8,756,557
34,031,819

5,008,805
3,501,199
251,932
173,109274,371404,597
646,071
10,260,087
29,461,736

5,000,000
12,074,353
7,823,773(711,360)
24,186,766

5,000,000
12,121,145
8,624,690(1,237,628)
24,508,208

444,466
42,391
1,884
488,742
140,824889,719
25,706,052
59,737,872

328,792
13,4862,540
344,819
115,631829,90925,798,568
55,260,305

(2) Quarterly consolidated statements of income and statements of comprehensive income
Quarterly consolidated statements of income
Cumulative consolidated third quarter
Q3 FY2017(January 1, 2017 －September 30, 2017)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend incomeShare of profit of entities accounted for using equity
methodGain on investments in partnership
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission fee
Share of loss of entities accounted for using equity
methodOther
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on step acquisitions
Other
Total extraordinary income
Extraordinary losses
Impairment loss
Business structure improvement expenses
Loss on cancellation of rental contracts
Other
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent―6―(Thousands of yen)
Q3 FY2018(January 1, 2018 －September 30, 2018)49,339,133
39,377,002
9,962,131
6,442,922
3,519,208

45,368,825
36,368,273
9,000,551
6,635,183
2,365,367

9,600
20,464

7,907
25,096

3,344
29,48273,819136,711－
168,567
79,557281,128

66,984
178,686

59,483
120,521－37,833
283,5033,372,416

54,11937,851
271,976
2,374,519－
18,142
11,732
3,722
33,597401,336
90,661－
288
492,285

23,58723,49819,091
21,696
87,873
3,318,140
1,287,303
60,824
1,348,128
1,970,012
72,1791,897,832－－－－－
2,866,805
1,284,424
7,952
1,292,376
1,574,428
53,8981,520,529

Quarterly consolidated comprehensive statements of income
Cumulative consolidated third quarter
Q3 FY2017(January 1, 2017 －September 30, 2017)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
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 toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests―7―(Thousands of yen)
Q3 FY2018(January 1, 2018 －September 30, 2018)

1,970,012

1,574,428

50,341
20,480(345)(115,673)(35,170)
655

8,346
78,822
2,048,834(12)(150,200)
1,424,227

1,972,757

1,375,469

76,07648,758

(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.

―8―