Earnings PresentationFYE December 2020
March 3, 2021

AOI TYO Holdings Inc.

Contents
1.
2.
3.
4.

Summary of Consolidated Financial Results
Medium-Term Plan Initiatives
Consolidated Earnings Forecast
Appendix - Stock Information, etc1

1.

Summary of Consolidated Financial Results

2

Financial Highlights
 Cancellations and postponements of filming work and a decrease in advertising demand resulted
in a significant decline in net sales, and losses were recorded for each profit measure.
 However, sales recovered during Q4, financial results outperformed expectations, and secondhalf operating income swung to positive figures.

(million yen)

1H FY2020

2H FY2020

FY2020YoY Change

Vs.
Forecast*Announced 8/24

Net Sales

24,367

26,72051,087-14,142+1,087

Operating Income

-881

154

-727

-2,845+673

Ordinary Income-1,047-102-1,149-2,912+351

Profit Attributable to
Owners of Parent-956-1,596-2,552-1,272-1,052

EBITDA

-313

735

422

-3,184+652
3

Extraordinary Losses We recorded ¥946 million in business restructuring expenses as we made a major reduction inconsolidated subsidiaries and consolidated/reduced offices as part of our ongoing work-fromhome measures in line with our medium-term plan.
 We recorded impairment of goodwill in the amount of ¥300 million due for a consolidated
subsidiary whose performance has varied from the business plan at the time of investment due
to the spread of COVID-19.
(million yen)

FY2020Comments

Business restructuring expenses

946

Loss on disposal of fixed assets, expenses for restoration workand rent for the period in question, other expenses associatedwith office consolidation and reduction

Impairment loss

300

Goodwill impairment related to consolidated subsidiary

Loss on valuation of investment securities

86

Other

53

Total

1,386

Impairment loss on certain investment securities

4

Trend of Net Sales by Quarter After having fallen due to the impact of COVID-19, net sales recovered significantlyin Q4.

20,00019,424 18,425
15,521 15,470

15,00015,343 15,166

13,04916,637

16,168(million yen)

14,504

11,31810,083

10,000FY2018FY2019FY2020

5,000

0

Q1

Q2

Q3

Q4
5

Order Intake and Order Backlog by Quarter Orders began to increase in Q3 after the lifting of the state of emergency declaration;
continued to grow in Q4.
 Order backlog as of the end of the fiscal year amounted to ¥13,306 million (8.9% lower
year on year), maintaining a considerable balance, despite a year-on-year decrease.
20,000(million yen)
15,000Order intake FY2018
Order intake FY2019
Order intake FY2020

10,00014,98515,912

16,91014,33115,11914,029

14,46915,399
13,4665,000

014,606
13,306
13,191

Order backlog FY2018
Order backlog FY2019
Order backlog FY2020

16,87518,19115,353

15,06514,373 8,437

13,79515,51711,452

18,16718,56314,545

Q1

Q2

Q3

Q4
6

Trends of Operating Income by Quarter Q4 operating income swung to positive figures, mainly due to a recovery in net
sales, accelerated implementation of cost reduction measures, and improved
effective profit margin.
1,500
1,000

1,092

1,068

500
0
-500
-1,000-1,500

654

633

116

Q1

619

533

337

183

Q2

(million yen)965

FY2018

Q3

Q4
-379

FY2019FY2020-997

7

Net Sales by Business Segment
 Q4 sales for Advertisement-Related and Overseas businesses continued a patternof decline year on year due to the ongoing impact of COVID-19.
 On the other hand, Video Advertising and Solutions business sales for Q4 recovered
to nearly the same level as the year-ago period.
43,86011,593
10,832(million yen)

35,194
11,361
6,951

21,435

2019

16,882

2020

Video Advertising

■■ 1H

9,846
3,526
1,998
4,322
2019

6,488
2,313
1,300

8,145
2,452
2,308

■■ Q3

7,074
2,390
1,293

■
3,378

2,875

3,385

3,391

854
1,030
1,494

2020

2019

2020

2019

Advertisement-Related

Solutions

Q4

2,331
539
1,219

573

2020

Overseas8Overview of Business Segments
Business
Video Advertising

Overview
Planning and production of TV commercials, online video, and other video
advertising

Advertisement-Related

Planning and production of movies, TV dramas, and events; production of digitalcontent, promotional content, and music videos

Solutions

Solutions that answer customer issues(direct business with advertisers, video
content marketing, etc.)

Overseas

Business in Southeast Asia and other locations overseas; video production
orders received from overseas

9Video Advertising Business Net sales recovered in the second half, exceeding our revised plan.
 Effective profit margin improved, due in part to decreased cost billings for projects
that had been canceled or postponed due to the impact of COVID-19.
30,000

36.4%

34.6%

34.2%

33.5%

32.1%

20,00010,000019,491

20,921

1,018

906

1H

2H

FY201820,35921,941789
1H

FY2019

34.5%

31.4%

16,484

18,347
17,303(million yen)

35.0%

Production sales (left axis)

30.0%

474

312

443

2H

1H

2H Planned

2H Results

Print sales (left axis)
Effective profit margin

25.0%

705

FY2020

40.0%

20.0%

(right axis)* Effective profit margin: (net sales external expenditures)/net sales* Calculations for the TV commercial
production department only

10Solutions Business (1) - TYO Offering Management Business Unit Despite lower Q3 sales due to voluntary restraints on face-to-face sales activities
in Q2, sales recovered in Q4 significantly outperforming our revised plan.
Sales at the TYO Offering Management
Business Unit
*Excluding media placement purchases

4,723

5,000
4,000

3,717

3,000

976

2,000

922

1,000
0

1,484

4,242
3,400

1,166

1,819

2,073

FY2018FY2019(million yen)

1,398
894

■ 1H
■ Q3
■ Q4

1,950
FY2020 Planned

FY202011

Solutions Business (2) - Quark tokyo + Mediator Despite the negative impact of reduced budgets among advertisers, Q4 performancerose year on year, outperforming our revised plan.

Sales at Quark tokyo + Mediator

3,000

2,226
2,000

1,000

0

(million yen)

2,087

679

508

452

547

1,095

1,032

FY2018FY2019

1,400

1,626

■ 1H

516

■ Q3

308

■ Q4

802
FY2020 Planned

FY202012Advertisement-Related Business Despite the continuing impact of COVID-19 in the events business, sales recoveredin Q4 as hybrid online/live events are becoming a new mainstream format anddriving customer base expansion.
 Performance essentially in line with our revised plan.
(million yen)sales in Advertisement-Related Businesses
10,000
8,000
6,000
4,000
2,000
0

9,644

9,846

3,749

3,526

1,952

1,998

3,943

4,322

FY2018FY2019

6,500

6,488
2,313
1,300

■ 1H
■ Q3
■ Q4

2,875
FY2020 Planned

FY202013

Overseas Business The spread of COVID-19 has not resolved in certain areas of Southeast Asia,
resulting in a continued negative impact on sales.
 Performance essentially in line with our revised plan.
Scale of sales in Overseas Businesses(million yen)

* Including equity-method affiliates

6,000
4,000
2,000
0

5,824
1,504

5,679
1,658

4,200

4,150

1,713

1,532

1,324

2,607

2,489

1,881

FY2018FY2019945

FY2020 Planned

■ 1H
■ Q3
■ Q4

FY202014

Net Sales by Customer(million yen)

19.8%
FY201912,941

27.7%

20.1%

32.3%

18,08821,072

13,125* Net sales from Dentsu Inc. (non-consolidated) were 11,544 million yen, and net sales from Hakuhodo Inc.
(non-consolidated) were 13,830 million yen.

20.7%
FY2020

10,58325.6%
13,07431.8%
16,25921.9%
11,169Dentsu Group
Hakuhodo Group
Direct transactions
Other* Net sales from Dentsu Inc. (non-consolidated) were 9,607 million yen, and net sales from Hakuhodo Inc.
(non-consolidated) were 9,647 million yen.

15

Net Sales by Medium(million yen)

FY2019Component
Ratio

FY2020Component
Ratio

YoY
Change38,39958.2%

29,37956.8%-9,020TV commercial

36,79555.8%

28,39254.9%-8,403

Printed commercial materials

1,604

2.4%

987

1.9%

-616

Entertainment contents

2,579

3.9%

2,329

4.5%

-251

Digital contents

12,713

19.3%

11,878

23.0%

-835

Overseas

2,915

4.4%

2,119

4.1%

-796

Other

9,361

14.2%

5,981

11.6%

-3,381

Total

65,968100.0%

51,686100.0%-14,282

TV commercial production* The results are simple totals of the consolidated financial results of AOI Pro. Inc. and TYO Inc.
16

Summary of Consolidated Balance SheetCash and cash equivalents amounted to ¥10,813 million, as we maintained a high 223.9% liquidity ratio.
We closed commitment lines with a number of financial institutions for a combined ¥12 billion,
securing sufficient liquidity. (¥0.0 billion outstanding as of December 2020)

FY2019FY2020Current Assets

36,00333,014Non-current Assets

17,34815,66753,352

48,682Current Liabilities

18,343

14,743

Accounts payable (-1,552); short-term loans payable (-3,200)

Non-current Liabilities

11,645

13,707Long-term loans payable (+2,102)

Total Liabilities

29,98828,451

Total Net Assets

23,363

20,231

Total Liabilities and Net Assets

53,352

48,682(million yen)

Total Assets(percentage of total assets)(43.8%)(41.6%)

Major Components

Cash and deposits (+1,702); notes and accounts receivable (3,651); electronically recorded monetary claims (-850)

Retained earnings(-2,839)

17

Consolidated Statement of Cash Flow(million yen)

FY2020Major Components

2,892

Loss before income taxes (-2,457)
Depreciation (+826), impairment loss (+300)
Business restructuring expenses (+946)
Change in trade receivables (+4,484)
Change in trade payables (-1,532)-843

Purchases of PPE (-447)
Payments of leasehold and guarantee deposits (-283)
Investments in capital (-235)

Net cash provided by (used in) financing activities-397

Change in short-term loans payable (-3,200)
Proceeds from long-term loans payable (+7,200)
Repayments of long-term loans payable (-3,793)

Cash and cash equivalents at beginning of period

9,060

Cash and cash equivalents at end of period

10,703

Net cash provided by (used in) operating activities

Net cash provided by (used in) investing activities

18

2.

Medium-Term Plan Initiatives

19

Reorganization and New Business Reclassification (January 2021)
 In line with our medium-term plan, we reorganized into a two-business structure,
consisting of the Content Production Business and Communication Design Business.
Prior
Video
Advertising
AdvertisementRelated
Solutions
Overseas

New

Overview

Content Production

Production of various video content
for domestic and overseas
advertising, post-production
business and xR content
production

Communication
DesignMajor Group
CompaniesAOI Pro.
TYO

TREE Digital Studio

Providing omnidirectional execution
from video, to digital solutions, PR,
events, spatial design, and more in xpd
the advertising / marketing
solutions domain
20

Management Structure 2021（March 25, 2021~)
 We introduced an executive officer system to deepen and strengthen group management,
including executive directors and executive officers as members of our Management Council to
improve the efficiency of business execution.
 We plan to appoint a new female director.
appointment at the ordinary general meeting
Board Members forof shareholders, scheduled for March 24

Corporate Officers•Representative Director ＆ Group CEO Yasuhito Nakae•AOI Pro. Inc. Hajime Ushioda•Representative Director ＆ Group COO Hiroaki Uekubo•TYO Inc. Hiroshi Hayafune•Director ＆ Group CFO Satoshi Yuzurihara•xpd Inc. Kazuyoshi Hayakawa•Director Corporate Planning Department Ippei Matsuo•TREE Digital Studio Inc. Shinichi Adachi•Director Financial & Accounting Department Koiso Wada

•Business Management Department Takaki Kawamori•External Director * Yoshiharu Hagiwara•Human Resources Department Keiko Yoshida*Ippei Matsuo and Koiso Wada are scheduled•External Director * Kazuki Takada•External Director * Takashi Kokubo* Audit and Supervisory Committee Member

21Changes in the Business Environment
 Future outlook of the video advertising production market- Acceleration of shift to digital spurs roughly 20% annual growth- While high-priced brand videos are expected to grow, low- to medium-priced videos willgrow more Diversified advertiser needs- As advertisers continue to bring strategic advertising functions in-house, the need for directbusiness is growing

Order only the necessary functions(creative) to prevent inefficient
communications caused by advertising
company intervention

Desire for a production company toprovide support for overall
communications design and execution,
including PR, digital advertising, etc.

22

Direct Transaction, Digital Content Sales
 Direct business and digital content account for an increasing percentage of total
sales, and we expect this share to grow further in the future.
40.0%

30.0%

26.0%

29.9%

32.3%

31.8% *
Digital content

20.0%

10.0%

0.0%

16.0%

15.7%

FY2017FY201819.3%

FY201923.0%

Direct transaction

FY2020*The decrease for the fiscal year ended December 2020 was mainly caused by a decrease in event sales due to COVID-19

23

New Business Streams
 As an execution* partner responding to advertiser needs, we are receiving an
increasing number of direct business orders for online, events, PR, and otherplanning and production beyond commercials.

*implementation

Planning and Production Orders

Advertiser

AOI TYO Group

Proposals
Planning and
Production Orders
Proposals

Advertising
Company

Production
OrdersNew BusinessStream

Traditional BusinessStream24

Case study

Mercari
TV commercial /OOH/Web/PR

Amazon Amazon Prime Video
TV commercial

LOTTE Painomi × Uber Eats
Tie-in/EventBMW
Web/Event/Graphic/SNS

25

Response to COVID-19
FY2020Under the declaration of a state of emergency, we temporarily suspended
operations at filming/editing studios, and requested postponements fromadvertising companies/advertisers involved in filming projects.
After the declaration of the state of emergency was lifted, we moved to resume
operations, taking a number of measures to prevent the spread of infection, after
signing an advisory contract with a medical coordination company to resume
operations and creating our own work guidelines.

FY2021

Although a second state of emergency was declared, we continued with filming
and editing under the measures we had already put in place. Almost no projects
were canceled or postponed.

We believe that we have finished putting
measures in place for responding to COVID-19
26

Action Plan for the Next Fiscal Year
Content Production BusinessCommunication Design Business Secure stable orders from Dentsu andHakuhodo

 Initiatives to strengthen coordination
among departments

 Expand customer base

 Enhance functions in lacking areas

・Expand targets for approach・Strengthen sales capacity

・ADK, foreign advertising companies, online
advertising companies, consulting firms, etc.
・Direct orders from platform providers

・Build management system
・Establish HR evaluation and pay systems

・Collaborate and engage in secondmentswith PR firms and planning companies
・Hire new strategic planners

 Prepare for full launch of low- to
medium-priced video production (2022~)
27

Cost Reduction Initiatives (1) Office-Related
 Between Q3 and Q4 (FY2020), we reduced the number of consolidated subsidiaries
and continued to encourage employees to work from home, making the decision to
reduce 17 offices*(including relocations to reduce floor space and partial returns of space) Aim to achieve rent expense reduction of ¥490 million (FY2022 vs. FY2019)(million yen)

Land rent
Consumables expense, utilities
expenseFY2019Results

FY2020Results

FY2021
Forecast

Vs. FY2019

1,978

1,964

1,630*

-348

501

445

430

-71

*Includes ¥140 million in duplicate rent payments during move-out

28

Cost Reduction Initiatives (2) In FY2021, in addition to a decrease in personnel expenses (linked strongly toperformance), we will maintain the reduced levels of entertainment and travel
expenses from the prior year; we also intend to reduce outsourcing, commissions
expenses, and other.
(million yen)

FY2019Results

FY2020Results

FY2021
Forecast

Vs. FY2019

Personnel expense

13,32013,07812,470-850

Outsourcing and commission
expenses

1,343

1,269

1,150

-193

Entertainment and travel
expenses

1,140

802

860

-280

Goodwill, depreciation expense

1,488

1,122

990

-498

*Includes internal labor costs and internal business expenses.
29

3.

Consolidated Earnings Forecast

30Consolidated Earnings Forecast
 Despite expectations for recovery in the domestic advertising market, the recovery is
likely to be gradual.
 Although we experienced almost no cancellations or postponements during the second
declaration of a state of emergency, the advertising market may be slow in recovering.
 We forecast the following financial results for FY2021, based on a gradual recovery in net
sales and steady cost reductions.
YoY
ChangeFY2020 Results

FY2021 Forecast

Net Sales

51,08753,000+1,913Operating Income

-727

900

+1,627

Ordinary Income-1,149800+1,949Profit Attributable to Owners of Parent-2,552400+2,952422

1,900+1,478(million yen)

EBITDA

31

Net Sales Plan by Business Segment
 We expect the Content Production Business to see a gradual recovery in theadvertising market, but plan for performance to be essentially level with the prioryear as we shift certain production staff to the Communication Design Business.
 We expect the Communication Design Business to record higher sales as the newly
established xpd responds to changes in advertiser needs.

(million yen)

80,00060,00016,663
11,82840,00020,0000

14,000Communication Design Business
Content Production Business

48,566FY201939,25839,000

FY2020

FY2021 Planned32

Net Sales, Operating Income, and EBITDA Trends(million yen)
75,00055,00064,792

4,777

3,606

3,433

35,0006,000

65,22953,00051,087

4,000

2,118

1,900

15,000

422

2,000

900
0

Net sales(left axis)
Operating income(right axis)
EBITDA(right axis)-727-2,000FY2018FY2019FY2020

FY2021Results

Results

Results

Planned33

Shareholder Return
Basic policy : consolidated dividend payout ratio of 30% or more FY2020- Although we expect to record a net loss, we plan to pay a ¥12 per share year-end dividend (equivalent
to FY2019), reflecting our desire to maintain stable dividend levels to the greatest extent possible.

 FY2021- Taking our earnings forecasts into account, we forecast a FY2021 dividend of ¥12 per share, which willbe the same amount as our FY2020 dividend.

End of Q2

8 yen

FY2019(results)

End of FY

Total

Dividend Payout Ratio

12 yen20 yen-FY2020(plan)-

12 yen20 yen-FY2021(forecast)-

12 yen20 yen

73.7%
34

4.

Appendix - Stock Information, etc

35

AOI TYO Group
Consolidated subsidiaries: 23 total

Content Production Business*As of Jan. 4, 2021.
* () : Company/business unit namebefore reorganization

Communication Design Business(TCA HQ)

C3Filmtko+9 overseas firms(Digital Garden)(Media Garden)(TTR)(Ludens)(Quark tokyo)(ZEO)(Pep Planning)(Jigowatt)(TYO Digital Works)(TYO Public Relations)(dwarf)Mediator

K&L

MAZRI

+4 overseas firms, 1 investment partnership
36

Status of Stock and Shareholders (as of Dec. 31, 2020)
Number of Shares and Shareholders

Status of Large Shareholders

Total number of shares issued

24,566,447

Total number of shareholders

13,646

Shareholder Composition byType of Shareholder

2.8%

Individuals, etc.

7.7%

Financial institutions

14.8%
1.6%
21.1%

52.0%

Financial instruments
business operator
Other corporations

Shareholder Name

Number of
Shares Held

Shareholding
Ratio

1

The Master Trust Bank of Japan, Ltd. (Trust Account)

1,357,900

5.68%

2

Cosmo Channel

1,153,740

4.83%

3

IMAGICA GROUP Inc.

1,018,000

4.26%

4

Custody Bank of Japan, Ltd. (Trust Account)

849,500

3.56%

5

Yoshihiro Takebayashi

515,100

2.16%

6

Fields Corporation

479,660

2.01%

7Sumitomo Realty & Development Co., Ltd.

452,600

1.89%

8

Custody Bank of Japan, Ltd. (Trust Account E)

411,200

1.72%

Foreign corporations,etc.

9Hitoshi Hara

400,000

1.67%

10

Employees’ Stockholding

367,035

1.54%

Treasury shares* The shareholding ratios are calculated by subtracting treasury shares (677,098).

37

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:Contact (http://aoityo.com/en/contact.html)
38