Summary of Consolidated Financial Results (Japanese Accounting Standards)
for the Second Quarter of the Fiscal Year Ending December 31, 2018
August 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:
August 14, 2018
Scheduled date of commencement of dividend payment:
September 14, 2018
Supplementary documents for quarterly results:
Yes
Quarterly results briefing:
Yes (For institutional investors/analysts)(Rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter (from January 1, 2018 to June 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

Q2 FY2018:
30,864
-8.5
1,746
-26.0
Q2 FY2017:33,729‒2,358‒(Note) Comprehensive income
Q2 FY2018: 1,095 million yen (-9.5%)%

Million yen

%

1,680
-27.1
1,170
2,305
‒
1,189
Q2 FY2017: 1,211 million yen (‒%)

-1.6‒

Diluted net income
per share

Net income per share
Yen

Yen

Q2 FY2018:
49.22
48.57
Q2 FY2017:
50.15
49.40
(Note) No year-on-year change is stated for Q1 FY2017, as AOI TYO Holdings was established on January 4, 2017.

(2) Consolidated financial position
Total assets

Net assets

Million yen

Q2 FY2018:
FY2017(For reference) Shareholders’ equity

55,672
59,737

Equity ratio

Million yen

25,68025,706Q2 FY2018: 24,788 million yen

%

44.5
41.3
FY2017:24,675 million yen

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

End of Q3

Year end

Annual

Yen

Yen

Yen

Yen

Yen

‒
‒

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 to
Net income per shareowners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

Yen

64,000

-9.2

3,800

-17.7

3,700

-15.8

2,300

-17.3

96.70

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

* Notes(1) Important changes in subsidiaries for the first 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
Q2 FY2018(ii)

FY2017

24,566,447 shares

FY2017

745,627 shares

Number of treasury stock at end of period
Q2 FY2018(iii)

24,566,447 shares
1,066,767 shares

Average number of issued shares

Q2 FY201823,785,594 shares
Q2 FY2017
23,729,742 shares(Note) Treasury stock includes 418,900 shares held by Trust & Customer Services Bank, Ltd. (trust account E) as
trust property related to a board benefit trust system.
* This summary of quarterly financial results is not included in the scope of the quarterly review.
* 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 future
performance. 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.
- We will hold a financial results briefing with institutional investors and analysts on August 30, 2018. Materials
distributed during this meeting will be published later the same day. Video from this session will be published on our
corporate website as quickly as possible after the meeting. In addition to the above-mentioned briefing, we will hold asimilar session for our individual investors.

Attachments
1. Qualitative Information on Quarterly Financial Results

2(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) Consolidated Statements of Cash Flows

8(4) Notes to Quarterly Consolidated Financial Statements

10(Notes regarding assumptionof going concern)(Notes in the event of significant changes in shareholders’ equity)

―1―

10
10

1. Qualitative Information on Results in the Second 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 second quarter ofthe current 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 an
emotion 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 six 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 second quarter sales in our growth-oriented solutions business, particularly services directly toadvertisers, 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, our mainstay Advertising Video Production
Business recorded results lower year on year, mainly due to stricter order acceptance (greater emphasis on profitability from earlystages of order acceptance and work-style reform), a decline in print sales*, and a delay in recording sales for certain projects into thefollowing quarter. However, Advertising Video Production Business sales for this accounting period were level with the same period in
the prior fiscal year. Recent orders have been steady, reflected by an order backlog of ¥14,331 million

as of the end of cumulative

consolidated second quarter (increase of 2.3% year on year).
Despite incurring up-front costs associated with the formation of a new company, our ongoing efforts to instill management control ofexternal expenditures related to advertising video production kept year-on-year profit declines smaller in scope than sales declines.
As a result, the AOI TYO Group recorded net sales of ¥30,864 million for the six-month period ending June 2018, representing an
8.5% decrease year on year. Operating profit amounted to ¥1,746 million (26.0% decrease), while ordinary profit and profit
attributable to owners of parent amounted to ¥1,680 million and ¥1,170 million, representing decreases of 27.1% and 1.6%,
respectively. Selling, general and administrative expenses included ¥160 million in amortization of goodwill associated with M&A
activity.
*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 second quarter amounted to ¥55,672 million, a ¥4,065 million decrease compared to theend of the prior consolidated fiscal year. This decrease was mainly due to decreases in cash and deposits and notes and accounts
receivable - trade of ¥2,111 million and ¥3,725 million respectively, offset in part due to an increase in work in process of ¥1,453
million.
Liabilities decreased ¥4,040 million to ¥29,991 million. Although long-term loans payable increased ¥2,015 million, short-term loans
payable and accounts payable - trade decreased ¥4,620 million and ¥1,351 million, respectively.
Net assets amounted to ¥25,680 million, a decrease of ¥25 million compared to the end of the prior consolidated fiscal year. Whileretained earnings rose ¥1,170 million due to profit attributable to owners of parent, the AOI TYO Group paid ¥530 million in dividend
payments and recorded an increase of ¥541 million in treasury stock.
Summary of Cash Flows
Cash and cash equivalents amounted to ¥10,267 million as of the end of the consolidated second quarter, representing a year-on-year
decrease of ¥2,105 million.
The following paragraphs summarize cash flow activity for the six-month period ended June 2018.
Cash Flows From Operating Activities
Cash flows from operating activities amounted to ¥3,148 million, compared to cash used in operating activities of ¥325 million for thesame period in the prior fiscal year. This result was mainly due to profit before income taxes of ¥2,166 million and a decrease inaccounts receivable of ¥4,674 million. At the same time, we recorded an increase in inventories of ¥1,475 million and a decrease innotes and accounts payable-trade of ¥1,490 million.
Cash Flows From Investing Activities
Cash used in investing activities amounted to ¥1,309 million, compared to ¥944 million for the same period in the prior fiscal year.
This result was mainly due to ¥774 million in outlays for of property, plant, and equipment, ¥497 million in outlays for intangible
assets, and ¥679 million in outlays for investment securities. At the same time, we recorded ¥1,331 million in proceeds from the sale ofproperty, plant, and equipment.
Cash Flows From Financing Activities
Cash used in financing activities amounted to ¥3,895 million, compared to cash from financing activities of ¥433 million for the same
period in the prior fiscal year. This result was mainly due to a ¥4,600 million decrease in short-term loans payable, ¥1,578 million inoutlays for repayments of long-term loans payable, and ¥3,610 million in cash proceeds from long-term loans payable.

(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 - operating
Merchandise and finished goods
Work in process
Other
Allowance for doubtful accounts

Q2 FY2018(June 30, 2018)12,573,956
17,813,558
6,208,110
16,1283,629,657
1,297,266(35,271)

10,462,152
14,087,663
5,381,635
15,607
5,083,382
1,224,211(38,497)

41,503,406

36,216,155

4,289,822
3,390,024

3,610,315
3,681,559

7,679,846

7,291,874

Intangible assets
Software
Software in progress
Goodwill
Other

171,168
975,504
4,106,706
15,723

175,363
1,400,255
4,192,793
15,853

Total intangible assets

Total current assets
Non-current assets
Property, plant and equipment
Land
Other
Total property, plant and equipment

5,269,103

5,784,265

Investments and other assets
Investment securities
Lease and guarantee deposits
Other
Allowance for doubtful accounts

2,787,996
1,318,377
1,255,572(76,430)

3,359,593
1,615,210
1,480,119(75,202)

Total investments and other assets

5,285,515

6,379,720

18,234,466

19,455,859

59,737,872

55,672,015

Total non-current assets
Total assets―4―

(Thousands of yen)
FY2017(December 31, 2017)
Liabilities
Current liabilities
Accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Advances received
Income taxes payable
Provision for bonuses
Other

Q2 FY2018(June 30, 2018)

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

5,990,283
5,823,135
2,386,582
1,350,522
952,798
147,692
2,640,984

25,275,262

19,291,998

3,465,280
3,501,199
285,345
105,832
248,570
355,935
794,392

5,480,692
3,501,199
249,861
160,701
264,815
395,409646,599

8,756,557

10,699,278

Total liabilities

34,031,819

29,991,276

Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares

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

5,000,000
12,178,266
8,467,010(1,252,488)

24,186,766

24,392,788

444,466
42,391
1,884
488,742
140,824889,719

397,907(4,561)
2,345
395,692
117,071775,185

25,706,052

25,680,738

59,737,872

55,672,015

Total current liabilities
Non-current liabilities
Long-term loans payable
Long-term deposits received
Provision for directors' retirement benefits
Provision for management board incentive plan trust
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities

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 interests
Total net assets
Total liabilities and net assets―5―(2) Quarterly consolidated statements of income and statements of comprehensive income
Quarterly consolidated statements of income
Cumulative consolidated second quarter

Net sales
Cost of sales

Q2 FY2017(January 1, 2017 －June 30, 2017)33,729,059
26,885,548(Thousand of yen)
Q2 FY2018(January 1, 2018 －June 30, 2018)
30,864,424
24,713,361

Gross profit

6,843,510

6,151,063

Selling, general and administrative expenses

4,484,883

4,405,029

Operating profit

2,358,627

1,746,033

6,762
14,34630,781
55,3205,741
19,887

107,21191,544Non-operating income
Interest income
Dividend income
Gain on investments in partnership
Other
Total non-operating income
Non-operating expenses
Interest expenses－
65,91544,83340,312

Commission fee
Share of loss of entities accounted for using equity method
Other82,551
2,587
30,06278,5293,683
34,450Total non-operating expenses

160,034

156,976

2,305,804

1,680,601－
18,142
11,732
1,059

401,336
83,87530,934

485,500

23,587
12,97919,091
2,835

－
－
－
－

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
Loss on liquidation of subsidiaries and associates
Loss on cancellation of rental contracts
Other
Total extraordinary losses－
288

58,493－

Profit before income taxes

2,278,244

2,166,101

Income taxes - current

1,005,285

1,015,079

Income taxes - deferred

73,608(44,156)

Total income taxes

1,078,893

970,922

Profit1,199,351

1,195,178

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

―6―

9,354

24,3891,189,996

1,170,789

Quarterly consolidated comprehensive statements of income
Cumulative consolidated second quarter

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

Q2 FY2017(January 1, 2017 －June 30, 2017)
1,199,351(Thousand of yen)
Q2 FY2018(January 1, 2018 －June 30, 2018)
1,195,178

8,555
604
(238)

(46,558)(47,664)
461

2,914

(5,592)

11,835(99,354)

Comprehensive income

1,211,186

1,095,824

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

1,202,720

1,077,831

8,466

17,992―7―

(3) Consolidated statements of cash flows(Unit: thousand yen)
Q2 FY2018(January 1, 2018 －June 30, 2018)

Q2 FY2017(January 1, 2017 －June 30, 2017)
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors' retirement
benefits
Increase (decrease) in provision for management board
incentive plan trust
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Commission fee
Loss (gain) on sales of investment securities
Loss (gain) on sales of non-current assets
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in accounts payable - other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease (increase) in other assets
Increase (decrease) in other liabilities
Other, net

2,278,244
420,500
23,587
152,934
31,111
15,2402,166,101
450,968(67,328)(35,484)

19,89654,868(35,234)(21,109)44,83382,551(18,142)
1,020

16,557(25,628)
40,31278,529(83,875)(401,336)(2,782,786)

4,674,709(1,070,133)(878,742)(336,652)
284,637
1,354,951
178,737
336,308
87,028(1,475,939)(1,490,387)(231,749)(559,907)
595,923
41,554102,181
30,145

Subtotal

101,452

4,177,348

Interest and dividend income received
Proceeds from insurance income
Interest expenses paid
Income taxes paid

20,8994,797(45,314)(407,540)

25,733
7,095(35,407)(1,025,813)

Net cash provided by (used in) operating activities(325,706)

3,148,955(459,021)
3,658(275,632)(135,300)(119,694)(774,463)
1,331,515(497,111)(679,863)(324,939)－(319,161)

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Payments for lease and guarantee deposits
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Other, net
Net cash provided by (used in) investing activities―8―－
160,709
3,621
65,474

41,184(45,788)(944,805)(1,309,812)

Q2 FY2017(January 1, 2017 －June 30, 2017)
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments of lease obligations
Cash dividends paid
Proceeds from exercise of share options
Purchase of treasury shares
Payments from changes in ownership interests in
subsidiaries that do not result in change in scope of
consolidation
Commission fee paid
Other, net(Thousands of yen)
Q2 FY2018(January 1, 2018 －June 30, 2018)

1,896,641
20,000(976,512)(74,206)(274,617)
71,106(14,028)(4,600,975)
3,610,043(1,578,399)(45,038)(527,725)
60,860(537,764)(120,958)(183,225)(85,449)(8,301)(78,529)(14,275)

Net cash provided by (used in) financing activities

433,674(3,895,029)

Effect of exchange rate change on cash and cash equivalents(5,132)(49,328)

Net increase (decrease) in cash and cash equivalents(841,969)(2,105,215)

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from sharetransfer
Cash and cash equivalents at end of period

3,155,905

12,372,307

4,975,139－

7,289,075

10,267,091―9―

(4) 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.

―10―