The English translation is for reference purpose only. If there is any discrepancy between this English
translation and the Japanese original version, the Japanese original version shall prevail.

Summary of Financial Statements for the Year Ended December 31, 2017 [Japanese GAAP]
February 13, 2018

Company NameASATSU-DK INC.
Exchange : Tokyo Stock Exchange First Section
Securities Code9747
URL :http://www.adk.jp/en/
Representative
Shinichi Ueno, President and Group CEO
Contact Person
Kaori Nakajima, Office of Corporate Communications
Tel:+81-3-6830-3855
Date of Shareholders’ meeting
TBD
Start date of dividend payment －Filing date of Securities report TBD
Supplementary information for financial results : Available
Organization of financial results briefing : N/A(Unit: millions of yen, Rounded down under 1 million yen)

1. Fiscal year 2017 Consolidated Results (January 1, 2017 to December 31, 2017)(1) Consolidated Operating Results(％ : year-on-year changes)
Profit attributable toGross Billings
Operating Income
Ordinary Income
owners of parent
FY 2017
FY 2016

millions of yen％

millions of yen％

millions of yen％

millions of yen％

352,851
352,671

0.1
0.2

7,140
5,569

28.2
13.6

6,836
8,688

(21.3)
1.1

5,358
2,376

125.4
(55.7)(Note) Comprehensive income: at December 31, 2017 : (4,659) million yen (－%), at December 31, 2016 : (747) million yen (－%)

Fully Diluted
Net Income
per Share

Net Income
per Share
FY 2017
FY 2016

Return on
Shareholders'EquityRatio of
Ordinary Income
to Total Assets

Ratio of
Operating Income
to Gross Billings

Yen

Yen

％

％

％

129.3856.96

129.20
56.93

5.0
2.0

3.0
3.8

2.0
1.6

(Reference) Equity in earnings of affiliated companies: FY 2017 : 226 million yen, FY 2016 : 249 million yen(2) Consolidated Financial Position
Total Assets
Net Assets

Shareholder's Equity Ratio

Net Assets per Sharemillions of yen

millions of yen％

222,367
227,260

103,016
113,22545.7
49.1

FY 2017
FY 2016

2,451.50
2,674.92(Reference) Shareholders' equity: December 31, 2017 : 101,622 million yen, December 31, 2016 : 111,605 million yen(3) Summary of Consolidated Cash Flows

Cash Flow from
Cash Flow fromOperating Activities Investing Activities

Cash Flow from
Financing Activities

Cash and Cash Equivalents
at the End of Term

millions of yen

millions of yen

millions of yen

millions of yen

6,270
11,637

1,175(4,475)(3,739)(11,912)25,09421,027FY 2017
FY 2016

2. Dividend Information
Annual Dividend per Share

Fiscal 2016(Actual)
Fiscal 2017(Actual)
Fiscal 2018(Forecast)

Total Amount

Dividendof dividends

Payout Ratio

Dividends on
Equity ratio(Annual)(Consolidated)(Consolidated)

1st quarterend

2nd quarterend

3rd quarter
end

Fiscal year
end

Yen

Yen

Yen

Yen

Yen

millions of yen

%

%

－
－
－

10.00
10.00
－

－
－
－

90.00
0.00
－

100.00
10.00
－

4,172
413

175.6
7.7
－

3.6
0.4

Total

(Notes) Revisions to dividend forecasts published most recently: No.

3. Forecast of Consolidated results Fiscal 2018 (January 1, 2018 to December 31, 2018)(％ : year-on-year changes)
Profit attributable to
Net Income
Gross Billings
Operating Income Ordinary Income
owners of parent
per share
Full-year

millions of yen％

millions of yen％

millions of yen％

millions of yen

％

Yen

－

－

－

－

－

－

－

－

－

As announced on January 30, 2018 titled “Notice regarding Share Consolidation, and the Abolition of Provisions on Share Units
and Partial Amendment to the Articles of Incorporation”, the Company is on route to becoming a wholly owned subsidiary of

The English translation is for reference purpose only. If there is any discrepancy between this English
translation and the Japanese original version, the Japanese original version shall prevail.
BCPE Madison Cayman, L.P., subsequently to be delisted from the Tokyo Stock Exchange on March 16, 2018. For that reason,
we do not state forecasts for the period ending December 2018.

* Notes(1) Changes in the Scope of Consolidation and Application of the Equity Method：No.
New ─ Companies (Company Name)
Except ─ Companies (Company Name)(2) Changes to accounting policy, changes to accounting estimates, or restatements
1. Changes due to revisions to accounting standards, etc.
：No.
2. Changes other than 1:：No.
3. Changes in accounting estimates：No.
4. Restatements：No.
(3) Number of outstanding stocks
1. Number of outstanding stocks (including
treasury stock) issued, end of term
2. Number of treasury stock, end of term
3. Avg. number of shares (consolidated)
outstanding during the terms ended

at December 31, 2017at December 31, 2017at December 31, 2017

41,755,400 at December 31, 2016
shares302,359 at December 31, 2016
shares41,412,566 at December 31, 2016
shares42,155,400
shares432,400
shares41,726,562
shares(Reference) Non-Consolidated Outline
1. Fiscal Year 2017 Non-Consolidated Results (January 1 to December 31, 2017)(％ : year-on-year changes)(1) Operating Results
Gross Billings

Operating Income

Ordinary Income

Net Income

millions of yen％

millions of yen％

millions of yen％

millions of yen％

312,673
314,389

(0.5)
2.5

5,133
3,982

28.9
33.5

5,801
7,987

(27.4)(28.1)

5,181
5,440

(4.8)
(43.2)FY 2017
FY 2016Net Income per ShareFY 2017
FY 2016

Fully Diluted
Net Income per Share

Yen

Yen

125.11130.38124.94130.33(2) Financial Position
Total Assets
FY 2017
FY 2016(Reference)※※

Shareholder's equity:

Net Assets

Net Assets
per Share

Net Assets Ratio

millions of yen

millions of yen％

Yen

204,605
202,641

91,328102,21144.6
50.4

2,203.18
2,449.19

at December 31, 2017: 91,328 million yen, at December 31, 2016: 102,187 million yen

This financial summary is not subject to the audit procedures
Appropriate use of business forecasts and other special matters
As announced on January 30, 2018 titled “Notice regarding Share Consolidation, and the Abolition ofProvisions on Share Units and Partial Amendment to the Articles of Incorporation”, the Company is onroute to becoming a wholly owned subsidiary of BCPE Madison Cayman, L.P., subsequently to be delistedfrom the Tokyo Stock Exchange on March 16, 2018. For that reason, we do not state forecasts for the period
ending December 2018.

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

Contents

Page
1．Operating Results and Financial State Analysis for the Fiscal 2017 ················· 2(1) Performance Analysis ············································································ 2(2) Financial Position ················································································· 5(3) Consolidated Statements of Cash Flows ···································· ·············· 5(4) Future Outlook ····················································································· 62.

Basic principle in terms of a choice of an accounting standards ······················ 6

3．Consolidated Financial Statements ···························································· 7(1) Consolidated Balance Sheets ·································································· 7(2) Consolidated Income Statements andConsolidated Comprehensive Income Statements ···································· 9(3) Consolidated Statements of Changes in equity ·········································· 12(4) Consolidated Statements of Cash Flows ··················································· 14(5) Notes to Consolidated Financial Statements, Segment Information ·············· 16(Items related to going concern assumption) ··············································· 16(Additional Information) ·········································································· 16(Segment Information) ············································································ 16(Per share information) ··········································································· 17(Material Subsequent Events) ·································································· 18―1―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

1. Operating Results and Financial State Analysis for the Fiscal 2017
(1) Performance Analysis
During the period under review (from January 1, 2017 to December 31 2017), the Japanese economy treaded
on a mild recovery path, showing a steady improvement of corporate earnings backed up by the continued
economic measures and monetary policies steered by the government and the Bank of Japan. On the other hand,consumer spending remained inactive in consequences of the lower-than-expected rise in real wages and otherfactors despite improvements in the employment environment. On a global scale, the economy was on the
upswing albeit mild, however, uncertainty about the future persisted with the political management of thecurrent US administration as well as emerging geopolitical risks.
According to the “Current Survey of Selected Service Industries” by the Ministry of Economy, Trade andIndustry, the advertising industry has seen a sign of stagnation with the total gross billings up to November
this year eclipsing that of the previous year.
Under these circumstances, ADK continues to work hard to transform itself to a “Consumer Activation
Company” holding out “VISION 2020”, as declared in 2013, aiming not only to deliver messages via
advertisements but inspire consumers to take actions, thereby contributing to clients’ results. To realize that, weare pressing forward structural reform to strengthen infrastructure and improve profitability to advance further
growth. During the period under review, we reached a conclusion that it is vital to accomplish a bold and crosssectorial reform and transform itself to an “open network” group that allows for more flexible cooperation withdiverse business partners depending on each attribute. We are determined to accomplish it over the short-term
run while becoming an unlisted company. To ensure that, we made a strategic decision to accelerate drastic
reform measures with support of Bain Capital, who has become the major shareholder upon a successful
takeover bid, and, more to the point, to terminate the 20-year-old capital and business alignment with WPPGroup. For the details, please refer to a series of announcements such ones as titled “Notice Regarding Opinion
on Tender Offer for Shares of the Company by Bain Capital” and “Notice of Termination of Capital and Business
Alliance with WPP Group” released on October 2, 2017.
Domestic business as a whole saw a growth in both revenue and profit as a result of increased billings intelevision and digital media ads handled at ADK and stable performance in a production and digital company.
Overseas business also experienced a growth in revenue and profit with offices in China, Europe and US
advancing structural reform in addition to stable performance in the Asian region. The entire overseas billings
accounted for 8.9% in the total billings generated during the period under review as opposed to 8.3% in 2016.
As a result of all that, gross billings on a consolidated basis during this fiscal year resulted in ¥352,851
million, up 0.1% from the previous fiscal year with gross profit amounting to ¥54,255 million, up 6.0%,
operating income to ¥7,140 million, up 28.2%.
Although the Group reported ordinary income of ¥6,836 million, down 21.3% from the previous year, reflectedby increased expenses associated with takeover bid, net income before tax and others increased to ¥7,938
million, up 26.8%, and profit attributable to owners of parent to ¥5,358 million, up 125.4%, as extraordinary
loss posted in the previous year no longer has an impact on profit.
ADK-parent, the core competence of the Group business, generated gross billings of ¥312,673million, down
0.5% from the previous fiscal year. Gross profit was up 5.2% to ¥38,100 million and operating income was up
28.9% to ¥5,133 million from the same period last year.
A decline in billings was attributed to weakened Marketing & Promotion and creative. While gross profit grew
as a result of increased billings in digital media and television ads and also improved gross profit margin backed―2―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.
up by the more rigid income management framework. Operating income grew substantially although selling,
general and administrative expenses, including staff cost and commission paid, increased.
Broken down by client business, ADK posted increases in gross billings from clients in such industries as
Information/Communication, Restaurants/Other service, Hobbies/Sports Goods. However, gross billings declined
from clients in such industries as Automobile/Automobile-related products, Pharma/Medical supplies,
Education/Medical Service/Religion sectors.
Non-consolidated gross billings by industry (clients business) and composition ratio on a year-on-yearcomparison:

Breakdown by Clients business

Gross Billings(Millions of Yen)

Composition(%)

Y-o-Y change(%)

Energy/Material/ machinery

4,149

1.3

2.9

Food

32,17610.3

2.8

Beverage/Tobacco

18,2085.8(7.1)

Pharma/Medical supplies

16,620

5.3(13.1)

Cosmetics/Toiletry

28,542

9.1(4.3)

Apparel/Jewelry

13,7704.4

1.0

Precision machinery/Office supplies

2,147

0.7

(23.0)

Home appliances/AV equipment

4,076

1.3

28.8

Automobile/Automobile-related Products

11,585

3.7(33.6)

Household Goods

1,377

0.4

35.4

Hobbies/Sport Goods

20,932

6.7

5.4

Real Estate/Housing

11,382

3.6

9.6

Publishing

2,227

0.7

(10.8)

Information/Communication

40,031

12.8

10.2

Distribution/Retail26,4398.5

0.6

Finance/Insurance

25,1468.0

3.0

Transportation/Leisure

9,182

2.9

(1.8)

Restaurants/Other service

13,691

4.4

9.1

Government/Organizations

10,423

3.3(5.4)

Education/Medical Service/Religion

4,646

1.5

(24.2)

Signage/Other

15,914

5.1

16.6

312,673

100.0

(0.5)

Total

―3―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.
Broken down by business discipline, gross billings in Digital Media, TV ads, Other experienced an increaseover the previous year but in segments such as Marketing & Promotion, Creative, Magazine, Radio, Newspaper,
OOH, billings declined on a year-on-year basis.
Non-consolidated gross profit by business discipline and composition ratio on a year-on-year comparison:
Breakdown by Discipline

Gross Billings Composition Y-o-Y change

Main clients business industries(%)(Top: increased industries, Bottom: decreased industries)(Millions of Yen)(%)

Magazine

11,223

3.6(7.3)

Hobbies/Sport Goods, Real Estate/Housing,Home appliances/AV equipment
Cosmetics/Toiletry, Apparel/Jewelry, Finance/Insurance

Newspaper

18,6996.0(1.7)

Distribution/Retail, Transportation/Leisure, Household Goods
Publishing, Restaurant/Other service, Food

155,94449.9

2.9

Program

55,583

17.8

1.7

Spot

82,44726.4

1.4

Content

17,913

5.7

15.1

Food, Restaurant/Other services, Finance/Insurance
Transportation/Leisure, Distribution/Retail, Hobbies/Sport Good

Radio

3,094

1.0

(11.9)

Transportation/Leisure, Distribution/Retail, Beverage/Tobacco
Information/Communication, Finance/Insurance,
Pharma/Medical supplies

DigitalMedia

25,5408.2

24.4

OOH Media

9,604

3.1

(1.8)

224,106

71.7

3.5

TV

Media

Sub-total
Marketingand Promotion

52,41416.8(12.5)Creative

33,508

10.7

(5.7)

Others

2,644

0.8

6.8

Sub-total

88,567

28.3

(9.6)

NonMedia

Information/Communication, Distribution/Retail,
Restaurant/Other services

Total

312,673

100.0

(0.5)

Automobile/Automobile-related Products, Pharma/Medical supplies,
Education/Medical Service/Religion
Finance/Insurance, Food, Restaurant/Other services
Cosmetics/Toiletry, Automobile/Automobile-related Products,
Distribution/Retail
Information/Communication, Distribution/Retail, Cosmetics/Toiletry
Pharma/Medical supplies, Automobile/Automobile-related Products, Food

Information/Communication, Cosmetics/Toiletry, Finance/Insurance
Education/Medical Service/Religion, Restaurant/Other service, Publishing
Food, Information/Communication, Hobbies/Sport Goods
Beverage/Tobacco, Distribution/Retail, Education/Medical Service/Religion
Information/Communication, Distribution/Retail, Finance/Insurance
Automobile/Automobile-related Products, Pharma/Medical supplies,
Education/Medical Service/Religion
Hobbies/Sport Goods, Energy/Material/ Machinery,
Information/Communication
Automobile/Automobile-related Products, Distribution/Retail,
Beverage/Tobacco
Food, Home appliances/AV equipment, Apparel/Jewelry
Cosmetics/Toiletry, Transportation/Leisure, Beverage/Tobacco
Information/Communication, Cosmetics/Toiletry,
Restaurant/Other service
Food, Automobile/Automobile-related Products,
Energy/Material/Machinery
Home appliances/AV equipment, Apparel/Jewelry,
Information/Communication
Automobile/Automobile-related Products, Distribution/Retail,
Beverage/Tobacco
Information/Communication, Restaurant/Other service,
Hobbies/Sport Goods
Automobile/Automobile-related Products, Pharma/Medical supplies,
Education/Medical service/Religion(Notes)1.

Because we offer cross-media programs, data may not represent gross billings exactly by media.

2.

Content includes Animation, Culture and Sports Marketing, etc.

3.

Digital Media includes Internet and Mobile-related media.
(Digital Solutions, such as Website Creation and System Development are included in“Marketing and Promotion”.)

4.

OOH (Out of Home) Media includes transportation and outdoor advertising and insertions.

5.

Marketing and Promotion includes Marketing, Communication Planning, Promotion, Events,
PR, Exposition events and Digital Solutions, etc.

―4―The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

(2) Financial Position
The consolidated financial position as of the end of the fiscal year in comparison with that of the previous
accounting year (ended December 31, 2016) is as follows.
Total assets amounted to ¥222,367 million, down ¥4,893 million from the previous consolidated fiscal yearend due mainly to a decrease in the value of investment securities stemming from a drop of their market value
despite an increase in cash and deposits. Total liabilities were, on the other hand, up ¥5,315 million to ¥119,350
million due mainly to an increase in short-term loan payable, which outstripped a decline in deferred tax
liability. Total net asset amounted to ¥103,016 million and the shareholders’ equity ratio was 45.7% whenexcluding non-controlling interest.

(3) Consolidated Statements of Cash Flows
In fiscal 2017, sum of net cash provided by operating activities and investing activities fell below net cashused in financing activities. After foreign currency translation adjustments, cash and cash equivalents stood at¥25,094 million, up ¥4,067 million from a year earlier.
(Cash flows from operating activities)
Net cash provided by operating activities amounted to ¥6,270 million, compared with ¥11,637 million in theprevious year, reflected by ¥7,938 million in income before income taxes and minority interests posted.
(Cash flows from investing activities)
Net cash provided by investing activities this year totaled ¥1,175 million, compared with ¥4,475 million
used in fiscal 2016. This was mainly reflected by expenditure of ¥1,509 million to deposit fixed-term deposits
while having gain of ¥1,034 million on proceeds from sales of investment securities, also income of ¥2,219
million on withdrawal of fixed-term deposits.
(Cash flows from financing activities)
Net cash used in financing activities was ¥3,739 million, compared with ¥11,912 million in the previous year.
This was due mainly to ¥4,168 million in dividends paid.
The major indices of consolidated financial conditions are as follows:Term

FY2013

FY2014FY2016FY2017

Equity Ratio

55.1%

52.7%

49.1%

45.7%

50.0%

52.6%

51.9%

67.8%

0.0

0.0

0.2

0.7

983.8

325.1

286.1

94.6

Market Cap. To
Book Total Assets
Years to redeem
debtsInterest Coverage
Ratio (times)(Equity Ratio) = (Equity*)÷(Total Assets)*Equity is computed as below:
Total Assets at the end of the period - Minority at the end of the period – Equity warrant at the end of the period(Market Cap. to Book Total Assets) = (Market Capitalization) ÷(Book Total Assets)(Years to redeem debts) = (Interest-bearing debts)÷(Net cash provided by operating activities)(Interest Coverage Ratio) = (Net cash provided by operating activities) ÷(Interest paid)―5―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

(4) Future Outlook
The Japanese advertising industry has been in the midst of a mature phase. The business environment
surrounding the industry has continued changing at a rapid pace. Communication including advertisements
shall no longer be contended with the means of merely promoting the recognition of a product or service. It
has made a paradigm shift to the means of solving a challenge of “how to inspire consumers” in the context ofbuying a product or using a service.
Under these circumstances, the Company is, once again, determined to transform itself into a “Consumer
Activation Company”, which requires a wide range of product developments, investment in acquisition andbusiness alignment, more investment in infrastructure including people and systems, making sure to offer
clients marketing supports to solve their challenges beyond the traditional business model including further
selection and concentration while inspiring consumers to take action. To realize all these without fail, theCompany has reached a conclusion that it is indispensable to undertake a bald and cross-sectorial reformover a short-term run through once-delisting.
With such policy, we do not state forecasts for the period ending December 2018 since the Company will
become a wholly owned subsidiary of BCPE Madison Cayman, L.P., subsequently to be unlisted from theTokyo Stock Exchange on March 16, 2018 as announced on January 30, 2018 titled “Notice regarding Share
Consolidation, and the Abolition of Provisions on Share Units and Partial Amendment to the Articles ofIncorporation”.

2. Basic principle in terms of a choice of an accounting standards
The ADK Group applies Japanese accounting standards in consideration of comparability of financial
statements over time and such. We may introduce the International Financial Reporting Standards after
exploring an approximately timing in the light of various situations at home and abroad.

Performance forecasts and other future-oriented statements contained in this report reflect the views of ADK
management based on information available at the time of the report’s release, and thus include inherent risks
and uncertainties. Due to various changing factors, therefore, actual results may differ significantly from future
predictions.

―6―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

3．Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of yen)
December 31, 2016

December 31, 2017

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade

19,042
81,712

24,587
84,948

Short-term investment securities
Inventories

3,678
5,319

1,533
4,768

Deferred tax assets
Other

1,419
3,048

1,759
2,909

Allowance for doubtful accounts(1,103)(498)

Total current assets

113,118

120,008

3,625

3,380

Accumulated depreciation(1,402)(1,447)

Buildings and structures, net

2,223

1,932

Noncurrent assets
Property, plant and equipment
Buildings and structures

Land
Other
Accumulated depreciation
Other, net

396

396

3,662
(2,509)3,673(2,819)

1,153

853

3,773

3,182

Goodwill
Software

7,538
1,350

6,820
1,293

Other

1,230

1,106

Total property, plant and equipment
Intangible assets

Total intangible assets

10,1189,220

Investments and other assets
Investment securities

95,313

79,974Long-term loans receivable
Net defined benefit asset

133
974

371
1,404

Deferred tax assets
Other

233
4,345

243
9,085

Allowance for doubtful accounts(751)(1,123)

Total investments and other assets

100,250

89,955

114,142

102,358

227,260

222,367

Total noncurrent assets
Total assets―7―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

(Millions of yen)
December 31, 2016

December 31, 2017

Liabilities
Current liabilities
Notes and accounts payable-trade
Electronically recorded obligations operating
Short-term loans payable
Current portion of long-term loans payable

69,34960,593

6,339

15,319

459
1,553

4,095
－

Income taxes payable
Provision for bonuses

2,273
2,343

844
2,842

Provision for directors' bonuses
Other

38
9,261

412
10,056

Total current liabilities

91,618

94,16460
20,60860
15,914

15

15

20

35

510

525

Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for directors' retirement benefits
Provision for loss on business of
subsidiaries and associates
Net defined benefit liability
Other

1,202

8,635

Total noncurrent liabilities

22,41625,186

114,034

119,350

Capital stock
Capital surplus

37,581
11,97737,581
10,721Retained earnings
Treasury stock

16,260(1,205)

17,372(875)

Total shareholders' equity

64,61364,80045,34435,162

20
1,155

(715)
1,668

Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeSubscription rights to shares

471

707

46,99236,82124－

Non-controlling interests

1,595

1,394

113,225

103,016

227,260

222,367

Total net assets
Total liabilities and net assets―8―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

(2) Consolidated Income Statements and Consolidated Comprehensive Income Statements
Consolidated Income Statements

Cost of sales

Year Ended
December 31, 2016
(From January 1
to December 31, 2016)
352,671
301,488(Millions of yen)
Year Ended
December 31, 2017
(From January 1
to December 31, 2017)352,851
298,596

Gross profit

51,182

54,255

22,581

22,733

2,310
1,275

2,789
1,147

38
4,082

412
4,173

2,909
242

3,068
(96)

Gross billings

Selling, general and administrative expenses
Salaries and allowances
Provision for bonuses
Retirement benefit expenses
Provision for directors' bonuses
Welfare expenses
Rent expenses
Provision of allowance for doubtful accounts
Depreciation
Amortization of goodwill
Other

749
268

827
717

11,155

11,341

Total selling, general and administrative expenses

45,613

47,115

5,569

7,140

112

109

2,380
249

3,069
226

33
61

36
54

－
452

15
195

3,290

3,707

Interest expenses
Expenditures for takeover bid

40
－

66
1,106

Loss on valuation of derivatives
Provision of allowance for doubtful accounts

－
7

2,363
－

Expenses of real estate rent
Loss on insurance cancellation

26
27

20
6

Other

67

448

Operating income
Non-operating income
Interest income
Dividends income
Equity in earnings of affiliates
Dividends income of life insurance
Real estate rent
Reversal of allowance for doubtful accounts
Other
Total non-operating income
Non-operating expenses

Total non-operating expenses
Ordinary income

―9―

170

4,011

8,688

6,836

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

Year Ended
December 31, 2016
(From January 1
to December 31, 2016)(Millions of Yen)
Year Ended
December 31, 2017
(From January 1
to December 31, 2017)

－
136

250
451

Other

65
28

456
176

Total extraordinary income

230

1,334

24

13

4
438

－
44

129
1,994

116
－

26
6

－
11

33

45

Extraordinary income
Settlement received
Gain on sales of non-current assets
Gain on sales of investment securities

Extraordinary loss
Loss on retirement of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Special retirement expenses
Loss on liquidation of business
Office transfer expenses
Provision of allowance for doubtful accounts
Other

2,658

232

Income before income taxes

6,260

7,938

Income taxes-current
Income taxes-deferred

4,323
(671)

2,793
(333)

Total income taxes

3,652

2,459

Profit

2,608

5,478

Total extraordinary losses

Profit attributable to non-controlling interests
Profit attributable to owners of parent― 10 ―

231

120

2,376

5,358

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

Statement of comprehensive income

Income before minority interests

Year Ended
December 31, 2016
(From January 1
to December 31, 2016)
2,608(Millions of Yen)
Year Ended
December 31, 2017
(From January 1
to December 31, 2017)
5,478(2,858)(10,182)

20
(704)

(735)
536

204

235

(18)

9

(3,355)(10,137)(747)(4,659)(944)(4,812)

197

153

Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable to owners of
the parent
Comprehensive income attributable to noncontrolling interests― 11 ―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

(3) Consolidated Statements of changes in equity
Year Ended December 31, 2016

SHAREHOLDERS' EQUITY
Commonstock
Balance as of January 1,2016

Capitalsurplus37,581

11,982Retainedearnings

TreasurysharesTotalshareholders'equity24,336(210)

73,690Changes during the consolidated fiscal
year
Dividend payments
Profit attributable to owners ofparentChange of scope of consolidation
Purchase of treasury shares
Disposal of treasury shares
Retirement of treasury shares(10,430)(10,430)

2,376

2,376

(27)

(27)
(1,003)3－(1,003)
8

(5)

Other
Net changes of items other thanshareholders' equity

3

Total changes of items during period
Balance as of December 31,2016

3

－

(5)

(8,076)(995)(9,077)37,581

11,977

16,260(1,205)64,613

ACCUMULATED OTHER COMPREHENSIVE INCOME

Balance as of January
1,2016
Changes during theconsolidated fiscal year
Dividend payments
Profit attributable toowners of parent
Change of scope of
consolidation
Purchase of treasury
shares
Disposal of treasury
sharesRetirement of treasury
sharesOther
Net changes of items otherthan shareholders' equity
Total changes of items
during period
Balance as of December
31,2016

Unrealized
gain onavailablefor-salesecurities

Deferredgain onderivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Remeasurements ofdefinedbenefit plans

48,188

(0)

1,859

266

Total

50,314

Subscription
rights toshares

Noncontrollinginterests

Total net
assets23

1,461

125,488(10,430)2,376(27)(1,003)3－
3(2,843)

20

(703)

204

(3,321)1

134(3,186)(2,843)

20

(703)

204

(3,321)

1

134(12,263)

45,344

20

1,155

471

46,992

24

1,595

113,225― 12 ―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.
Year Ended December 31, 2017

SHAREHOLDERS' EQUITY
Commonstock
Balance as of January 1,2017

Capitalsurplus37,581

Changes during the consolidated
fiscal year
Dividend payments
Profit attributable to owners ofparentChange of scope of consolidation
Purchase of treasury shares
Disposal of treasury shares
Retirement of treasury shares
Other
Net changes of items other thanshareholders' equity
Total changes of items during period
Balance as of December 31,2017

11,977Retainedearnings

TreasurysharesTotalshareholders'equity16,260(1,205)64,613(4,168)(4,168)

5,358

5,358

(76)
(102)
(1,152)(1,255)
10,721－
37,581

1,112
17,372(1,051)229(1,152)(76)(1,051)
126
－
－

330
(875)

187
64,800ACCUMULATED OTHER COMPREHENSIVE INCOME

Balance as of January
1,2017
Changes during theconsolidated fiscal year
Dividend payments
Profit attributable toowners of parent
Change of scope of
consolidation
Purchase of treasury
shares
Disposal of treasury
sharesRetirement of treasury
shares

Unrealized
gain onavailable-forsale
securities

Deferredgain onderivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Remeasurements ofdefinedbenefit plans

45,344

20

1,155

471

Total

46,992

Subscription
rights toshares

Noncontrollinginterests

Total net
assets24

1,595

113,225(4,168)5,358(76)(1,051)
126
－

Other
Net changes of items otherthan shareholders' equity
Total changes of items
during period
Balance as of December
31,2017－(10,182)

(735)

512

235

(10,170)

(24)

(201)

(10,396)(10,182)

(735)

512

235

(10,170)

(24)

(201)

(10,209)35,162

(715)

1,668

707

36,821－

1,394

103,016― 13 ―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

(4) Consolidated Statements of Cash Flows
Year Ended
December 31, 2016
(From January 1
to December 31, 2016)(Millions of yen)
Year Ended
December 31, 2017
(From January 1
to December 31, 2017)

6,260

7,938

1,476
268

1,314
717

2,019

490

34

374

(4)

(89)

(18)

(6)

(34)

－

150

(272)

(84)
(2,492)－(3,178)

40
(154)

66
136

(249)
(61)

(226)
(456)

438

44

(111)

(437)

684

(2,637)

1,248

595

1,853

294

(172)
450

(182)
(768)

－
－

1,106
2,363

－
129

(250)
116

1,994
26

－
－

(726)

99

Subtotal

12,9687,151Interest and dividends income received
Interest expenses paid

2,643

3,068

(40)
(293)

(46)
(18)

(12)
(3,601)－(4,282)

－
(26)

250
148

11,637

6,270

Net cash provided by (used in) operating activities
Income (loss) before income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors'
bonuses
Increase (decrease) in provision for retirement
benefits
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for directors'
retirement benefits
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for sales returns
Interest and dividends income
Interest expenses
Foreign exchange losses (gains)
Equity in (earnings) losses of affiliates
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on sales and retirement of non-current
assetsDecrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payabletrade
Decrease (increase) in accounts receivable-other
Increase (decrease) in accounts payable-other
Expenditures for takeover bid
Loss (gain) on valuation of derivatives
Settlement received
Special retirement expenses
Loss on liquidation of business
Office transfer expenses
Other, net

Payments for extra retirement payments
Payments for office transfer expenses
Income taxes (paid) refund
Settlement package received
Other
Net cash provided by (used in) operating activities― 14 ―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

Year Ended
December 31, 2016
(From January 1
to December 31, 2016)(Millions of yen)
Year Ended
December 31, 2017
(From January 1
to December 31, 2017)(1,428)(1,509)

1,454
(432)

2,219
(301)

158

557

(525)
(42)

(479)
(137)

191
(463)

1,034
(310)

161
554

290
(69)

(268)
286

(862)
338

(5,266)

－

(150)

－

(71)

－

1,266

－

Net cash provided by (used in) investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments of loans receivableCollection of loans receivable
Decrease (increase) in insurance funds
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Purchase of shares of subsidiaries resulting inchange in scope of consolidation
Payments for establishment of subsidiaries
Payments for sales of shares of subsidiaries
resulting in change in scope of consolidation
Proceeds from sales of shares of subsidiaries
resulting in change in scope of consolidation
Other, net
Net cash provided by (used in) investing activities

100

404

(4,475)

1,175

(185)

3,634

25
(0)

－
(1,553)(1,003)(10,430)(1,047)(4,168)

(78)

(125)

－

(229)

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Net decrease (increase) in treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Payments from changes in ownership interests in
subsidiaries that do not result in change in scope of
consolidation
Payments for take-over-bid

－

(214)

(240)

(35)

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents(11,912)(3,739)

(302)

295

(5,053)

4,002

Cash and cash equivalents, beginning of the period
Increase in cash and cash equivalents from newly
consolidated subsidiary
Increase in cash and cash equivalents resulting frommerger with unconsolidated subsidiaries
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Cash and cash equivalents, end of the period

25,92421,027

136

140

20

－

－

(76)

21,02725,094

Other, net― 15 ―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.

(5) Notes to Consolidated Financial Statements, Segment Information(Items related to going concern assumption)
Not Applicable.

(Additional Information)
The Company has applied the Revised Implementation Guidance on Recoverability of Deferred Tax
Assets (ASBJ Guidance No. 26 of March 28, 2016) from the beginning of the first quarter of 2017.

(Segment Information)
The previous fiscal year (From January 1, 2016 to December 31, 2016)
The Group’s reporting segment comprises an advertising business alone. Disclosure of segment
information is omitted since it holds a marginal position as disclosed information.
The current fiscal year (From January 1, 2017 to December 31, 2017)
The Group’s reporting segment comprises an advertising business alone. Disclosure of segment
information is omitted since it holds a marginal position as disclosed information.

― 16 ―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.
(Per share information)
Fiscal year ended
December 31, 2016
2,674.92

Net assets per share (yen)Fiscal year ended
December 31, 2017
2,451.50

129.3856.96
129.20
Diluted earnings per share (yen)56.93(Notes) 1 The basis for the calculation of net income per share and diluted net income per share are as
follows.
Basic earnings per share (yen)Fiscal year ended
December 31, 2016

Item

Fiscal year ended
December 31, 2017

Basic earnings per share (yen)Profit attributable to owners of parent (¥ millions)
Amounts not attributable to common shareholders(¥ millions)
Profit attributable to owners of parent related tocommon shares (¥ millions)Average number of common shares during term
(shares)
Diluted earnings per share (yen)Increase in number of shares (shares)(Subscription rights to shares) (shares)
Outline of dilutive shares that were not included in thecalculation of “diluted earnings per share” because they
do not have dilutive effect.
(Notes)

2,376

5,358

－

－

2,376

5,358

41,726,562

41,412,566

17,99858,638(17,998)(58,638)－

2 Basis for calculating net assets per share is as follows.
Item

December 31, 2016

Total net assets (¥ millions)
Amounts excluded from net assets (¥ millions)(Subscription rights to shares) (¥ millions)(Non-controlling interests) (¥ millions)
Net income as of fiscal year-end related tocommon shares (¥ millions)
Common shares as of fiscal year-end used to
calculate net assets per share― 17 ―

December 31, 2017

113,225

103,016

1,620

1,394

(24)

(－)

(1,595)(1,394)

111,605

101,62241,723,000

41,453,041

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.
(Material Subsequent Events)
Share consolidation
The Company has resolved at the board of directors meeting held on January 30, 2018 to submit a proposal
to the extraordinary shareholders’ meeting to be held on February 20, 2018 (the “Extraordinary Shareholders’Meeting”) to approve a share consolidation.
As a result of Share consolidation, it is expected the Company’s Common Shares will be delisted inaccordance with the stock delisting criteria of the TSE, through prescribed procedures.
(1) Purpose of the share consolidation
As announced in the Company’s press release dated December 7, 2017 titled “Notice Regarding theResult of the Tender Offer for Shares of the Company by BCPE Madison Cayman, L.P. and Change to
the Parent Companies, the Other Affiliated Company, and the Largest Shareholder which is a Major
Shareholder,” BCPE Madison Cayman, L.P. (the “Offeror”) conducted the tender offer (the “Tender
Offer”) for the Company’s common shares (including the Company’s common shares to be delivered
upon the exercise of the Series 2 Stock Acquisition Rights, Series 3 Stock Acquisition Rights, Series 4
Stock Acquisition Rights, Series 5 Stock Acquisition Rights, Series 6 Stock Acquisition Rights, Series 7
Stock Acquisition Rights, Series 8 Stock Acquisition Rights, Series 9 Stock Acquisition Rights, Series
10 Stock Acquisition Rights, and Series 11 Stock Acquisition Rights (collectively, the “Stock Acquisition
Rights”)) and the Stock Acquisition Rights with an acquisition period of 44 business days from October
3, 2017 until December 6, 2017. As a result, as of December 13, 2017, which is the settlement
commencement date, the Offeror has come to own 36,233,120 shares of the Company’s Common Shares(voting rights holding ratio to the number of voting rights of all shareholders of the Company: 87.53%(rounded to two decimal places)).

Further, the voting rights holding ratio is calculated by using thenumber of voting rights (413,953 voting rights) pertaining to the total issued shares as of September 30,
2017 described in the Third Quarterly Securities Report (63rd term) submitted by the Company on
November 13, 2017 (41,755,400 shares) minus the number of treasury shares owned by the Company
as of September 30, 2017 (360,005 shares) as specified in the “Summary of Consolidated Financial
Statements for the Third Quarter of the term ending December 2017 [Japanese GAAP]” disclosed by
the Company on November 13, 2017 (resulting in 41,395,395 shares) as the divisor.
As detailed above, the Tender Offer was completed, but as announced in the Company's press release
dated December 14, 2017 titled “Notice Regarding Receipt of Request by BCPE Madison Cayman, L.P.
to Convene Extraordinary Shareholders’ Meeting to Approve the Consolidation of the Company’s
Shares and to Amend the Company’s Articles of Incorporation to Delete the Provisions Concerning Less
than One Unit Shares,” the Offeror could not acquire 90% or more of the voting rights of allshareholders of the Company, so on December 14, 2017, the Company received a request from theOfferor to hold an extraordinary shareholders’ meeting to submit the proposal (i) to carry out theconsolidation of the Company’s Common Shares by determining the consolidation ratio so that the
number of shares of the Company’s Common Shares owned by the Company’s shareholders (excluding
the Offeror and the Company) who did not tender to the Tender Offer will be a fraction that is less than
one share, and therefore the Offeror will own all of the shares of the Company’s Common Shares(excluding the treasury shares owned by the Company), and (ii) to amend the Company’s Articles ofIncorporation to delete the provisions on share units conditional upon the share consolidation
becoming effective. Upon receiving that request, the Company passed a resolution at the board of― 18 ―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.
directors’ meeting held on January 30, 2018 to submit a proposal to the extraordinary shareholders’meeting to carry out the share consolidation (“Share Consolidation”) in which 5,921,000 commonshares of the Company will be consolidated into one share so that the Offer will become the only
shareholder of the Company on the condition that the approval of the shareholders is obtained at theextraordinary shareholders’ meeting. As a result of Share consolidation, it is expected the Company’s
Common Shares will be delisted in accordance with the stock delisting criteria of the TSE, throughprescribed procedures.
Further, all of the Stock Acquisition Rights were exercised or waived by this day, and have beencanceled. It is also expected that as a result of the Share Consolidation, the Company’s Common
Shares held by shareholders other than the Offeror will become a fraction that is less than one share.
(2)

Details of the share consolidation① Class of shares to be consolidated: Common shares② Consolidation method and ratio:
5,921,000 shares of the Company’s Common Shares will be consolidated into one share.
③ Total number of issued shares after the Share Consolidation takes effect: 7 shares(3)

Details of cash settlement of fractional shares less than one share
With respect to fractions that are less than one share that arise as a result of the Share Consolidation,

the number of shares equivalent to the total sum of those fractions (if there is a fraction that is less than
one share in the total sum of those fractions, that fraction will be rounded down in accordance with theprovisions of Article 235, paragraph (1) of the Companies Act (Act No. 86 of 2005, as revised)) will be sold,and the proceeds from that sale will be delivered to the shareholders in proportion to their respective
fractions.
(4)

Schedule of the share consolidation
Date of resolution of the board of directors meeting

January 30, 2018

Date on which the Extraordinary Shareholders’ Meeting is

February 20, 2018 (tentative)

to be held
Effective date of the share consolidation(5)

March 22, 2018 (tentative)

Possible subsequent impact on per-share information
If the Share Consolidation had been implemented at the beginning of the previous consolidated fiscal

year, the information per share in the current consolidated fiscal year would have been as below;

Net asset per share
Net income per share

Previous fiscal year

Current fiscal year

(From January 1, 2016 to December 31, 2016)(From January 1, 2017 to December 31, 2017)15,943,650,885.57

14,517,447,621.57

339,530,724.57

765,450,820.00(Note) Diluted net income per share is not presented since there are no dilutive shares existed after allof the Stock Acquisition Rights were exercised or waived by this day, and have been canceled .

― 19 ―

The English translation is for reference purpose only. If there is any discrepancy between thisEnglish translation and the Japanese original version, the Japanese original version shallprevail.
Cancellation of Treasury Shares
In January 30, 2018, the Company resolved to cancel treasury shares in accordance with the provisionsof Article 178 of the Corporate Law.
1.

Reason of cancellation
The company intend to minimize the amount of cash-out associated with the Consolidation of theCompany’s shares while addressing a need to cancel own shares prior to the effective date of theConsolidation of the Company’s shares.

2.

Details of cancellation(1)

Method of cancellation
From Other capital surplus(2)

Type of shares to be cancelled
Common shares(3)

Number of shares to be cancelled
302,486 shares(Representing 0.72% of issued shares prior to cancellation)(4)

Planned cancellation date
March 20, 2018― 20 ―