Septeni Holdings Co., Ltd.
Financial Results Briefing for Q2 FY2024/12
August 6, 2024

Event Summary[Company Name]

Septeni Holdings Co., Ltd.

[Listed Market]

TSE[Stock Code]4293[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]FY2024 2nd Quarter Financial Results Briefing[Date]

August 6, 2024

[Number of Pages]

34[Venue]Webcast[Number of Speakers]

4
Yuichi Kouno

Representative Director,
Group President and Chief Executive Officer

Yusuke Shimizu

Director, Group Executive Vice President andExecutive Officer

Kei Hatano

Group Senior Executive Officer

Tei GoGroup Senior Executive Officer

Contact Information
IR Department, CEO Office
Email: ir＠septeni-holdings.co.jp
1

Presentation
Moderator: It is now time to begin the presentation of the financial results briefing of Septeni
Holdings Co., Ltd. for Q2 FY2024/12.
Thank you very much for taking time out of your busy schedule to participate in our financial results
briefing.
At today’s meeting, Mr. Kouno, Group President and Chief Executive Officer, will first explain an
overview of the financial results, and business topics. We will have a question-and-answer session
after that. Please allow up to one hour. If there are any problems during the briefing, please contact
the IR department address shown on the slide.
Let me now introduce our attendees. Mr. Yuichi Kouno, Representative Director, Group President
and Chief Executive Officer. Mr. Yusuke Shimizu, Director, Group Executive Vice President andExecutive Officer. Mr. Kei Hatano, Group Senior Executive Officer. Mr. Tei Go, Group Senior
Executive Officer.

Now, Group President and Chief Executive Officer, Kouno, will explain. Please refer to the financial
results briefing materials posted on our corporate website. In addition, a fact sheet is available in
the IR Library of the corporate website as a supplemental material to the presentation materials.
Please go ahead.
Kouno: I am Kouno, Representative Director, Group President and Chief Executive Officer, Septeni
Holdings Co., Ltd. I will explain the financial results for Q2 FY2024.

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The second page is the agenda for today. First of all, I will explain the interim results for H1 FY2024
and the quarterly results for Q2. Next, I will explain the status of each segment.
Today, along with the announcement of the financial results, we have also disclosed information
regarding the change in our shareholder return policy and the revision to our year-end dividend
forecast. I will explain this in more detail later in the presentation.

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Email: ir＠septeni-holdings.co.jp
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Page 3 is the executive summary of this financial results briefing. There are three major points, andthe first is the financial highlights. In H1, we achieved an increase in revenue, but experienced adecline in profit. However, in Q2 alone, we have been able to turn the momentum around with bothrevenue and profit growth.
The second point is the recording of gain on sale of shares. Although it was actually recorded in
Q1, it has also contributed significantly to boosting net profit and EPS on a cumulative basis.
Finally, the third point is the change in our shareholder return policy. This is particularly important
this time. With regard to the dividend policy for the current fiscal year and the dividend policy forthe next fiscal year and beyond, we have decided to raise the dividend payout ratio from the current
level. Accordingly, as announced earlier in timely disclosure, the dividend forecast has beensignificantly increased. I will explain the details again later.

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Email: ir＠septeni-holdings.co.jp
4This is the first of the agenda, and I will begin with the interim results for H1 FY2024.
Page 5 shows consolidated financial highlight of H1 FY2024.
In H1, revenue increased by 3% to approximately ¥13.99 billion and regrettably, Non-GAAP
operating profit decreased to approximately ¥1.77 billion. As a result, consolidated results showeda YoY increase in revenue but a decrease in profit. On the other hand, net sales amounted to ¥73.6
billion, continuing the double-digit growth from Q1, and achieving a record high in H1.
The profit attributable to owners of parent was ¥4 billion, which includes a boost of approximately¥2.2 billion from the gain on sale of shares associated with the partial share transfer of
COMICSMART INC., which closed in March of this year. As a result, EPS rose to ¥19.32, up ¥12.38
from the previous fiscal year.

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5Next, page 6 shows a financial highlight by segment of H1.
In the Digital Marketing Business as a whole, revenue increased by 3.8% year on year to ¥13.1 billion
and Non-GAAP operating profit remained almost unchanged from the previous fiscal year at ¥3.2
billion. Since this segment has been divided into three areas from the current fiscal year, conditions
for each area are described in detail in the segment part. The results of the Digital Marketing
Business were mainly driven by the Marketing Communication Area, which focuses on theoperations of digital advertising.
In the Media Platform Business, revenue decreased to ¥900 million and Non-GAAP operating loss
was ¥20 million. The operating loss unfortunately expanded. In the Media Platform Business, weare currently optimizing costs, as our performance is somewhat weak. We are also preparing torevise our business portfolio in H2 and beyond.

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6Page 7 is the consolidated income statements of H1. While I have already explained that revenue
increased and profit declined in the earlier highlights, I would also like to provide additional details
on items below operating profit.
Equity in earnings of affiliates totaled approximately ¥770 million, a significant increase of
approximately 1.9 times compared with the previous fiscal year. In addition, with regard to the gainon sale of shares related to the partial share transfer of COMICSMART INC., which was recorded in
Q1, we have recorded ¥2.2 billion as profit from discontinued operations. As a result, the profit
attributable to owners of parent was ¥4 billion, about 2.8 times that of the previous fiscal year.

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Next, page 8 is a slide showing the changes in the H1 performance.
We achieved double-digit growth in net sales, which grew 10.5% compared to the previous fiscal
year, thanks to the expansion of the Marketing Communication Area. As mentioned earlier,revenue increased and Non-GAAP operating profit decreased.

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Next, I move on to the second item on the agenda, a summary of the financial results for Q2
alone.
Page 10 is an overview of the consolidated results from April to June.
Revenue was ¥6.7 billion, an increase of 3% YoY, and Non-GAAP operating profit was ¥490
million, an increase of 30% YoY. The impact of the base pay increase implemented in April 2023
has subsided in this quarter, and the increase in expenses is mainly due to an increase inpersonnel expenses for the 121 new graduates who joined the Company this April. In the current
fiscal year, profit declined in Q1, but in Q2 we were able to return to the momentum of increased
profit.

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9Page 11 is the quarterly performance by segment.
Compared to the busy season of the January-March period, this April-June is the lowest in theindustry trend. However, we have successfully onboarded new graduate employees and achieved
a turnaround in profit growth.

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10Page 12 shows the breakdown to profit before tax and a trend of equity in earnings of affiliates
on a cumulative basis.
First, the graph on the left shows a breakdown to profit before tax. Profit before tax wasapproximately four times higher compared to the previous fiscal year, mainly due to an increase in
IFRS operating profit and a turnaround to profit in equity in earnings of affiliates.
The graph on the right shows the cumulative trend of equity in earnings of affiliates. DENTSU
DIGITAL INC. became our equity-method affiliate in January 2022, and we have been promoting
stronger support from our Group. Last year, as rebound effects from COVID-19, the market
sentiment was challenging, centered on brand advertising budgets, but in the current fiscal year,
the market is trending very favorably. Thanks in part to this, equity in earnings of affiliates in H1
FY2024 has also surpassed the results of the previous fiscal year and two years ago.

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11Page 13 shows changes in consolidated costs and SG&A expenses.
Due to seasonality, other costs related to the Media Platform Business increased from Q1, but
overall costs increased at a cruising speed.

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Page 14 shows the changes in the number of employees.
As mentioned earlier, 121 new graduates joined the Group in April. Also, employee retention rate
has recently improved significantly due to the effects of the base pay increase implemented lastyear.
The complexity and difficulty of recent comprehensive mass and digital (integrated online-offline)
proposals, alliances with a wide variety of partners, and marketing methods that are not limited toadvertising have been increasing. Accordingly, we recognize the importance of securing highly
skilled members and focusing on retention rates. Therefore, we implemented base pay increases
last year and have already seen positive results in terms of improved retention rates. Under thesecircumstances, we intend to thoroughly consider the policy of hiring new graduates in April fromthe next fiscal year onward and the number of new graduates hired in the future.

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Next, I move on to the third agenda item. The following pages provide an overview of ourperformance by business segment. First is the Digital Marketing Business.
Page 16 is an overview of the results of the Digital Marketing Business.
Revenue increased 4.3% YoY to ¥6.23 billion and Non-GAAP operating profit increased 14% to¥1.2 billion. Net sales for Q2 was ¥34.3 billion, an increase of approximately 8% from the previous
fiscal year. Take rates improved by 0.2 of a percentage point from Q1, although it decreased by
0.6 of a percentage point compared to the previous year. As a result, OP margin (relative to net
sales) rose 0.2 percentage points YoY.

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Page 17 is the breakdown of the increase or decrease to convey an overview of conditions in eacharea of the Digital Marketing Business. This slide by area is a new document that has been added
this time. Due to certain internal transactions within the business areas not being fully reflected in
the aggregation of figures, we will refrain from disclosing actual amount by individual areas at thistime. However, we have included a waterfall graph illustrating the YoY changes in revenue.
The segment as a whole saw a 4.3% increase in revenue, while the Marketing Communication
Area, our core business, grew by 9% YoY, marking a strong quarter. In the Direct Business Area,
there was a decrease in advertising placements from certain industries, resulting in a slightly
underperforming result with a 10% decline compared to the previous year.
From H2, we will focus our resources on priority industries and work to strengthen our integrated
online and offline proposals, which we are currently focusing on, with the aim of achieving ourearnings estimates.

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Page 18 shows the quarterly performance of the Digital Marketing Business.
The impact of the base pay increase implemented in April 2023 has subsided in this quarter, andthe top-line growth has resulted in increased revenue and profit. In terms of the operating profit
margin, the period from April to June tends to experience a cool-off effect from the strong
performance in the period from January to March, according to industry trends. However, for Q2,
the operating profit margin improved by 1.7 percentage points YoY, indicating a positive trend.

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Page 19 is the progress of business alliance the Dentsu Group.
In Q2, while organic sales achieved a YoY growth rate of +9%, Dentsu alliance showed a slightly
subdued performance with a growth rate of +3.9% due to not fully expanding existing projects.
This quarter has been characterized by strong growth in organic sales.
In addition, this graph shows data on collaborative sales among clients at which Dentsu Group
companies are in charge of the front function. The alliance has progressed considerably over the
past six years, and the provision of services and products of Dentsu Group companies to clientswhere the Company is in charge of the front have also progressed in parallel. This is the sixth year
since the two Groups began collaborating, and we are steadily expanding our collaboration.

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I move on to the fourth agenda item. This is an explanation of the Media Platform Business.
Page 21 is an overview of the results of the Media Platform Business.
Revenue was ¥520 million, and operating loss was ¥11 million. From April to June, although theChildcare Platform Business could not grow despite a busy season, and revenue declined. Also,
despite curbing SG&A expenses, segment profit declined.

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Page 22 shows the quarterly performance of the Media Platform Business.
Although revenue and profit declined in Q2, we plan to optimize costs in order to improve
profitability in line with the scale of the business from the present time to H2. At the same time,
we will review our business portfolio in line with our business continuity criteria, reorganizing andpreparing for the next fiscal year of this domain.

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Email: ir＠septeni-holdings.co.jp
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Next is the fifth agenda item. This is the important explanation for today’s presentation. As
announced in the timely disclosure released at the same time as today's financial results, I will
explain the update of the shareholder return policy.
We have shifted to a new management system since this fiscal year, and six months have now
passed. On page 24, before explaining the update on our shareholder return policy, I would liketo review our changes in our management structure over the past few years. Following the start of
the new structure in April of this year, we have been discussing medium-to long-term businessgrowth strategies and capital policies. As a result, we have decided to update the capital
allocation approach.

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IR Department, CEO Office
Email: ir＠septeni-holdings.co.jp20

First of all, I would like to take a look back at the changes we have made in our business over the
past few years to the current policy update, from page 25.
Until 2018, there was a series of launches of advertising products from mega-platforms, primarily
focused on smartphone devices. We took this tailwind firmly and have expanded our businessbeyond market growth. We then began a capital and business alliance with the Dentsu Group in
2019. After confirming the results of the three-year collaboration from 2019, we deepened thealliance in January 2022, thereby entering the Dentsu Group. At the same time, we conducted athird-party allotment of shares to Dentsu Group as the underwriter, and with the inclusion ofDentsu Direct into our Group and Dentsu Digital as an equity-method affiliate, we have beenstrengthening our management structure and financial foundation.

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On page 26, as I mentioned on page 25, we have strengthened our management structure
foundation, and we have established a new system in FY2024. This is the mid-term theme andfocus points that we have listed from this term.
We have communicated that our medium-term theme is “focus & synergy” and our aim to further
deepen the Digital Marketing Business and create synergies among our business segments andareas. Focus points include the “reorganization and strengthening of the Digital Marketing
Business,” “group synergies utilizing the Digital Marketing Business assets,” and “creation ofbusinesses from within each area.”

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Page 27 shows the vision we want to achieve over the long term after the medium-term plan thatstarted this fiscal year.
Until last year, each of the more than 30 group companies operated their own business, centeredon the Digital Marketing Business and the Media Platform Business. From FY2024, however, theDigital Marketing Business has been divided into three areas and synergies within the areas havebeen strengthened as an area management based on the policy of “focus & synergy.”
Furthermore, we are strengthening the group-wide synergy of cross-area client assets and talent
assets, and the utilization of AI, which has become increasingly crucial in the industry. To
strengthen the capabilities of our Group, in addition to our existing three areas, we intend toaggressively pursue M&A in the Consulting Area and Content Area. Our policy is to create abusiness portfolio that can provide comprehensive support from strategic planning to execution,centered on digital marketing, in response to the issues faced by our Group's clients.
Regarding our current market perception, we believe that Japan's advertising market still has alower digital ratio compared to the global average. In the advertising market in 2023, digital ratio
accounted for about 45% of the total. We believe that this will expand to about 60% in the latter
half of the 2020s or the first half of 2030 and become a market that will form the majority of theadvertising market. In this context, we intend to form a high-growth and high-profit portfolio byfirmly securing the growth rate of our Group in the Marketing Communications Area, and bystrengthening our investment, including organizational strengthening and aggressive M&A, in thefour other areas with high profitability.
Based on this medium-to long-term aggressive business investment policy, I would like to discuss
the update of our shareholder return policy on the next page and beyond.

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On page 28, I would first like to review the changes over the past few years in terms of capital andfinancial aspects.
Until 2018, we prioritized business growth within the Company, invested in all of our businesses,
including areas other than the digital advertising industry, and continued our policy of a dividend
payout ratio of 15%. Since 2019, we have strengthened our management structure and financial
foundation through the Dentsu alliance. In 2023, we raised the dividend payout ratio from 15% to25%, and implemented a shareholder return measure through the acquisition of treasury share of
approximately ¥750 million. We have internally discussed capital allocation and decided to update
our shareholder return policy, which we are announcing today, as a way to move this forward.

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Page 29 explains the changes in our P/L and cash flow since deepening the Dentsu alliance in
2022, which is a prerequisite for the update of our shareholder return policy.
First of all, through organic growth and Dentsu alliance, we aim to continuously increase revenue
and profit in our core Digital Marketing Business and continue to aim to maximize operating cash
flow by accumulating Non-GAAP operating profit.
In addition, DENTSU DIGITAL INC., which is 25% owned by the Company, has achieved steady
growth in part through business collaboration with the Company, and equity in earnings ofaffiliates, the item below operating profit, have expanded. As it is expected to continue growing
steadily in the future, it will contribute as a factor to boost net profit and EPS.
As a result of these factors, we are stabilizing our ability to generate free cash flow. Based on thisjudgment that we are now able to achieve high and sustainable shareholder returns, we havedecided to update our shareholder return policy.

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On page 30, I will explain the update of the capital allocation approach.
As a capital allocation approach, the Board of Directors has decided to aim at both high growthand high return in the future.
Firstly, we position FY2024 as a preparatory period in order to make strategic growth investments
for the medium-to long-term in the coming years. From the perspective of growth investment, we
intend to invest in organic growth and new business creation, or actively pursuing M&A in eacharea of the Digital Marketing Business. However, as we do not anticipate large-scale specificinvestment projects at this time, we have decided to increase the weight of shareholder returns inthis fiscal year and to return all of the net profit forecasts that we have announced as year-end
dividends.

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Page 31 shows the details.
As explained on page 30, in order to realize medium-to long-term business growth, we havepositioned the current fiscal year as a preparatory period for strategic growth investment. In
addition, in the current fiscal year, the gain on sale of investments in subsidiaries was recorded,
which helped to boost net profit.
For these reasons, in order to promote appropriate balance sheet management, we have decided
to return the entire profit attributable to owners of parent of 6.5 billion yen, which is currently
announced, to shareholders as year-end dividends at a dividend payout ratio of 100%. In
accordance with this change in policy, we have revised the year-end dividend forecast upward, as
announced in the timely disclosure today. The revised dividend per share is ¥31.35, a significant
increase from the previous forecast.

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Page 32 is our shareholder return policy from the next fiscal year onward.
With regard to our shareholder return policy for 2025 and beyond, we have decided to increase
our base dividend payout ratio from the current 25% to 50% or more, which is double the current
level. As I explained earlier, we have decided to temporarily increase the weight of shareholder
returns in FY2024, because it is a preparatory period for growth investment. From the next fiscal
year onwards, we plan to allocate a certain amount of cash to growth investment, such as organic
growth investment and M&A investment. We have raised the basis for the dividend payout ratio
based on our desire to firmly secure stable dividends while realizing high growth andstrengthening our commitment to increasing EPS.

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On page 33, I would like to explain our future policy.
We are currently listed on the Tokyo Stock Exchange Standard Market. I would like to inform youthat we will make preparations, such as strengthening corporate governance and improving
internal controls, so that we can apply for a market segment change to the Tokyo Stock Exchange
Prime Market with appropriate timing from the next fiscal year onward. At the present time, wehave cleared all of the requirements for prime listing as described, but by continuing to evolve ourgovernance system at a higher level as a listed company and further broadening our shareholder
base centered on individual shareholders, we intend to realize a sustainable increase in corporate
value.
At this time, the application date for the change has yet to be determined, but we will disclose
information promptly through timely disclosure and other means when preparations for theapplication have progressed and matters to be notified have occurred.

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Email: ir＠septeni-holdings.co.jp29

I move on to the sixth agenda items. I would like to explain the progress made in relation to theestimates for the current fiscal year.
On page 35, we have re-listed the three-year plan in our medium-term business policies. There isno particular change at this time.

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Page 36 is also re-listed, but we intend to expand our EPS in the medium term. EPS at the time of
the collaboration in 2021, when we announced the deepening alliance with the Dentsu Group,was 20 yen, and we intend to firmly double this to grow our EPS.

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Page 37 re-lists the earnings estimates for FY2024 and shows the revised dividend forecasts
explained today. Earnings forecasts remain unchanged.
As for the dividend per share, due to the change in the shareholder return policy explained today,
the dividend per share has increased approximately four times from previous forecasts of 7.9 yen
to 31.35 yen.

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Page 38 shows the earnings estimates for each segment. We plan to achieve double-digit growthin both revenue and operating profit compared with the previous year.

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This is the final page, and page 39 shows the current progress toward the earnings estimates.
The initial forecast is also based on a budget that is inclined toward H2 from July to December
compared to H1. We are making progress online in terms of revenue. Operating profit is slightly
lower than the internal plan. However, in H2, we intend to recover Non-GAAP operating profit inparticular by steadily increasing the top line by concentrating resources in priority sectors andstrengthening sales.
This concludes all for the explanation of H1 FY2024. I would like to ask for your continued support
for our Group. Thank you very much for today.

[END]

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