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, 2015 [Japanese GAAP]
February 15, 2016
Company Name
Securities Code
Representative
Contact Person

ASATSU-DK INC.
Exchange : Tokyo Stock Exchange First Section
9747
URL :http://www.adk.jp/en/
Shinichi Ueno, President and Group CEO
Fuminori Unosawa, Department Director, Finance Department, Finance Division

Tel:+81-3-6830-3867

Inquiries in English

Kaori Nakajima, Office of Corporate Communications

Tel:+81-3-6830-3855

Supplementary information for financial results : Available
Organization of financial results briefing : Available (for institutional investors and analysts)(Unit: millions of yen, Rounded down under 1 million yen)

1. Fiscal year 2015 Consolidated Results (January 1, 2015 to December 31, 2015)(1) Consolidated Operating Results(％ : year-on-year changes)
Gross Billings
Operating Income
Ordinary Income
Net Income
FY 2015
FY 2014millions of yen％

millions of yen％

millions of yen％

millions of yen％

351,956
352,984

(0.3)
3.0

4,901
4,097

19.6
196.2

8,590
7,251

18.5
67.6

5,362
3,696

45.1
7.8

(Note) Comprehensive income: at December 31, 2015 : 12,950 million yen (27.1%) , at December 31, 2014 : 10,189 million yen (-62.5%)

Fully Diluted
Net Income
per Share

Net Income
per Share
FY 2015
FY 2014Return on
Shareholders'EquityRatio of
Ordinary Income
to Total Assets

Ratio of
Operating Income
to Gross Billings

Yen

Yen

％

％

％

127.7288.32

127.63
88.22

4.2
2.8

3.6
3.1

1.4
1.2

(Reference) Equity in earnings of affiliated companies: FY 2015 : 292 million yen FY 2014 : 220 million yen(2) Consolidated Financial Position
Total Assets
Net Assets

Shareholder's Equity Ratio

millions of yen

millions of yen％

235,205
243,317

125,488
134,99952.7
55.1

FY 2015
FY 2014Net Assets per Share
2,947.40
3,204.87(Reference) Shareholders' equity: December 31, 2015 : 124,004 million yen December 31, 2014 : 134,184 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

10,192
8,169

5,046
(177)

(23,803)(6,640)25,92435,082

FY 2015
FY 2014

2. Dividend Information
Annual Dividend per Share

Fiscal 2014(Actual)
Fiscal 2015(Actual)
Fiscal 2016(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
10.00

－
－
－

561.00238.00－571.00248.00－23,906
10,433

646.5
194.2
－

18.1
8.1

Total

(Notes) 1. The year-end dividend for FY 2014 consists of the ordinary dividend of 35 yen and extraordinary dividend of 526 yen.
2. The year-end dividend for FY 2015 consists of the ordinary dividend of 23 yen and extraordinary dividend of 215 yen.
3. The sum of the year-end dividend for FY 2016 is undecided (But it is10 yen or more per share)

3. Forecast of Consolidated results Fiscal 2016 (January 1, 2016 to December 31, 2016)(％ : year-on-year changes)
Net Income
Gross Billings
Operating Income Ordinary Income
Net Income
per share
Full-year

millions of yen％

millions of yen％

millions of yen％

millions of yen％

Yen

354,000

0.6

5,400

10.2

8,550

(0.5)

5,500

2.6

131.55

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.

* 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.
：Yes.
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, 2015
at December 31, 2015
at December 31, 2015

42,155,400 at December 31, 2014
shares82,923 at December 31, 2014
shares41,982,754 at December 31, 2014
shares42,155,400
shares286,576
shares41,848,271
shares(Note) The Company had been introduced an "ESOP Trust Utilizing Employee Shareholding Association," and the shares
owned by this ESOP had been reported as "treasury stock" in the consolidated financial statements. Consequently,
206,000 shares owned by this ESOP are included in the number of shares of treasury stock outstanding at theperiod ended December, 2014 as illustrated above. The ESOP program, however, was terminated in April 2015.
Thus the number of treasury stock outstanding at the end of December 2015 does not include any shares owned by
the now-defunct "ESOP Trust Utilizing Employee Shareholding Association".

(Reference) Fiscal Year 2015 Non-Consolidated Outline (January 1 to December 31, 2015)
1. Fiscal Year 2015 Non-Consolidated Results (January 1 to December 31, 2015)(％ : 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％

306,801
306,718

0.0
3.6

2,983
3,130

(4.7)
168.3

11,112
5,950

86.8
54.0

9,577
3,484

174.9
8.6

FY 2015
FY 2014Net Income per ShareFY 2015
FY 2014

Fully Diluted
Net Income per Share

Yen

Yen

228.1483.26

227.9883.16(2) Financial Position
Total Assets
FY 2015
FY 2014(Reference)※

Shareholder's equity:

Net Assets

Net Assets
per Share

Net Assets Ratio

millions of yen

millions of yen％

Yen

214,017
214,429

111,013
116,41651.9
54.3

2,638.07
2,779.54

at December 31, 2015: 110,989 million yen,at December 31, 2014: 116,376 million yen

Implementation status of audit proceduresThis consolidated financial results summary report is not subject to audit procedures in accordance with
the Financial Instruments and Exchange Act. At the time of disclosure of this consolidated financial resultssummary report, the audit procedures in respect of the consolidated financial statements have not been
completed.

※

Appropriate use of business forecasts and other special matters
The business forecasts and future prospects in this document are made based on information currently
available and contain potential risks and uncertainties. As such, actual business results may significantly
differ from those expressed or implied in the forecasts due to changes in various factors.
Refer to "1. Operating Results and Financial State Analysis for the Fiscal 2015 (1) Performance Analysis "on page 2～5 for the suppositions that form the assumptions for the business forecasts and cautions
concerning the use thereof.

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 2015 ················· 2(1) Performance Analysis ············································································ 2(2) Financial Position ················································································· 5(3) Basic Policy for Profit Distribution and Dividends for FY2015 and FY2016 ···· 6(4) Risks··································································································· 72.

Status quo of the corporate group ······························································ 123.

Management Policies ············································································· 13(1) Basic Policy on Management ·································································· 13(2) Medium-Term Business Plan ·································································· 13(3) Management Indices ············································································· 14(4) Medium- and Long-Term Business Strategies; Issues to be Addressed ·········· 14(5) Other Important Business Issues ··························································· 16

4．Basic principle in terms of a choice of an accounting standards ······················ 16
5．Consolidated Financial Statements ···························································· 17(1) Consolidated Balance Sheets ·································································· 17(2) Consolidated Income Statements andConsolidated Comprehensive Income Statements ···································· 19(3) Consolidated Statements of Changes in Net Assets ···································· 22(4) Consolidated Statements of Cash Flows ··················································· 24(5) Notes to Consolidated Financial Statements, Segment Information ·············· 26(Items related to going concern assumption) ··············································· 26(Change in accounting policy) ··································································· 26(Segment Information, etc.) ······································································ 26(Per share information) ··········································································· 28(Material Subsequent Events) ·································································· 28
6．Non-consolidated Financial Statements ······················································· 29(1) Non-consolidated Balance Sheets ···························································· 29(2) Non-consolidated Income Statements ······················································· 31(3) Statements of Changes in Net Assets ······················································· 32(4) Notes to Non-consolidated financial statements ········································· 36(Items related to going concern assumption) ··············································· 36―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 2015
(1) Performance Analysis① Overview
During the current period (from January 1, 2015 to December 31, 2015), the Japanese economy made amoderate improvement in corporate earnings backed up by the government-and the Bank of Japan-initiatedeconomic measures and monetary policies despite unsettling factors the world economy faces such as crude oil
price drop and financial market volatility triggered by concerns over slowdown in Chinese economy. While at thesame time, more companies stepped up efforts to improve employment situation and increase wages, that
helped consumer spending pick up. Yet, the higher consumption tax and concerns over potential price hike gave
a new slant to consumers so that they now likely to buy products selectively by checking special functions or
benefits attached to them.
According to the “Current Survey of Selected Service Industries” by the Ministry of Economy, Trade andIndustry, total gross billings in the advertising industry in 2015 are almost steadily performing with theaccumulated billings up to November exceeding that of the corresponding period of previous year.
Under these circumstances, with “VISION 2020” that ADK declared in 2013, aiming to transform itself to the“Consumer Activation Company”, which not only delivers messages via advertisements but encourages
consumers to take specific actions, thereby contributing to clients’ business performance, the Company has set
the stage of the foundation establishment and structural reform scheduled to be completed by the end of 2016,
and the stage of the accelerated growth for the period from 2017 to 2020. To make those objectives come true, inthis fiscal year, ADK, the parent company of the group, continued to improve the solution base and the income
management structure while each group company stepped up its efforts to contribute to building the group
foundation and promote structural reform, prompting in-house production, infra-sharing and cost-control.
As a result of those efforts, the Group reported gross billings of ¥351,956 million, down 0.3% from theprevious corresponding period. Gross profit was up 0.5% to ¥48,824 million, while operating income increased
19.6% to ¥4,901 million. Ordinary income grew 18.5% to ¥8,590 million with the addition of ¥3,898 million nonoperating income from dividend received, etc., and ¥209 million non-operating expenses. Income before income
taxes and minority interests for this fiscal year increased 42.8% to ¥9,189 million with extraordinary profit of¥1,293 million and extraordinary loss shrinking to ¥695 million as a result of decreased office relocation cost
while the net income for the previous fiscal year, expanded 45.1% to ¥5,362 million.
Performance by Business Segment(Advertising Business)
Gross billings to customers amounted to ¥347,522 million during this fiscal year, down 0.2% from theprevious corresponding period, and segment income increased 12.4% to ¥5,018 million.
Overall domestic business registered a decrease in revenue but with an increase in operating income.
Although it saw parent company’s once-improved gross profit ratio returning to the FY 2014 level and aslowdown in the medical advertising subsidiary, an increase in advertisement placements at the parent
company, particularly in TV, efforts to control selling, general and administrative expenses, an improvement ingross profit ratio by the production subsidiary and a boost by the digital subsidiary and a newly consolidated
content affiliate all contributed to the results.
While overseas business is undertaking structural reforms to break away from tough situations in offices in
the West and China, subsidiaries in Asia, particularly those in Thai and Singapore continued to perform
healthily, resulted in a rise both in revenue and profit.

All overseas billings are generated from advertisingbusiness, which represents 9.3% (as opposed to 8.4% in 2014) of the consolidated billings during the period
under review.

―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.
Performance by ADK-Tokyo, the core competence of the Group business, was as follows.
The parent company generated gross billings of ¥306,801 million yen, almost flat compared to the previous
fiscal year. Gross profit was down 5.0% to ¥32,925 and operating income was also down 4.7% to ¥2,983 million.
On a more specific note, an increase in advertisement placements in TV and Digital Media made up for a
decline in Marketing & Promotion, resulting in a slight increase in gross billings. A decrease in operating
income was attributed to a drop in gross profit ratio which was not offset by further controlled selling andgeneral administrative expenses including office rent and payroll.
Broken down by industry, we reported increased gross billings to clients in the Information/Communication,
Beverage/Tobacco, Apparel/Jewelry, Real Estate/Housing, Food, although gross billings to clients in
Finance/Insurance, Cosmetics/Toiletry, Distribution/Retail, Hobbies/Sport Goods, Restaurants/Other service
declined.
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

3,792

1.2

32.4

Food

26,1228.5

4.0

Beverage/Tobacco

24,7358.1

9.8

Pharma/Medical supplies

15,8185.2

0.3

Cosmetics/Toiletry

30,1379.8(7.8)

Apparel/Jewelry

14,236

4.6

8.8

Precision machinery/Office supplies

2,635

0.9

8.2

Home appliances/AV equipment

2,789

0.9

(3.1)

Automobile/Automobile-related Products

18,140

5.9(1.2)

Household Goods

1,368

0.4

6.2

Hobbies/Sport Goods

18,501

6.0(7.5)

Real Estate/Housing

9,374

3.1

12.5

Publishing

2,624

0.9

(9.6)

Information/Communication

35,027

11.4

21.9

Distribution/Retail25,7268.4(7.8)

Finance/Insurance

25,845

8.4(12.6)

Transportation/Leisure

8,568

2.8

5.0

Restaurants/Other service

8,709

2.8

(13.2)

Government/Organizations

14,362

4.7(4.5)

Education/Medical Service/Religion

5,625

1.8

(2.8)

Signage/Other

12,6594.1(4.1)

306,801

100.0

0.0

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, TV Advertising, Digital Media, OOH Media and Magazine reported
increased gross billings, while Marketing/Promotion, Creative, Radio, Others, and Newspaper posted a decline
in gross billings on a year-over-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

13,2614.3

0.4

Newspaper

19,0766.2(0.4)

Cosmetics/Toiletry, Hobbies/Sport Goods, Apparel/Jewelry
Beverage/Tobacco, Government/Organizations, Information/Communication
Transportation/Leisure, Distribution/Retail, Food
Cosmetics/Toiletry,

Information/Communication,

Automobile/Automobile-related

Products

147,424

48.1

3.1

Information/Communication, Food, Real Estate/Housing

Program

55,63418.1

1.9

Information/Communication, Finance/Insurance, Real Estate/Housing

Spot

77,991

25.4

3.7

Information/Communication, Food, Apparel/JewelryContent

13,7984.5

4.9

Distribution/Retail, Food, Government/Organizations

Radio

3,059

1.0

(3.6)

DigitalMedia17,195

5.6

7.1

OOH Media

8,333

2.7

11.0

TV

Media

Finance/Insurance, Cosmetics/Toiletry, Hobbies/Sport Goods

Government/Organizations, Home appliances/AV equipment, Food

Finance/Insurance, Hobbies/Sport Goods, Cosmetics/Toiletry

Energy/Material/Machinery, Transportation/Leisure, Pharma/Medical supplies
Real Estate/Housing, Cosmetics/Toiletry, Information/Communication
Finance/Insurance, Beverage/Tobacco, Transportation/Leisure
Apparel/Jewelry, Information/Communication, Pharma/Medical supplies
Finance/Insurance, Restaurants/Other service, Transportation/Leisure
Information/Communication, Publishing, Cosmetics/Toiletry
Restaurants/Other

service,

Pharma/Medical

supplies,Homeappliances/AV

equipment

Sub-total

208,351

67.9

3.1

Marketingand Promotion

59,623

19.4

(5.7)

Creative

34,792

11.3

(3.5)

Others

4,034

1.3(25.3)

Sub-total

98,450

32.1

(5.9)

Total

306,801

100.0

0.0

NonMedia

Information/Communication, Food, Real Estate/Housing
Finance/Insurance, Cosmetics/Toiletry, Hobbies/Sport Goods
Beverage/Tobacco, Energy/Material/Machinery, Education/Medical Service/Religion
Distribution/Retail, Finance/Insurance, Cosmetics/Toiletry
Information/Communication, Beverage/Tobacco, Home appliances/AV equipment
Food, Automobile/Automobile-related Products, Hobbies/Sport Goods
Cosmetics/Toiletry, Finance/Insurance, Energy/Material/Machinery
Government/Organizations Information/Communication, Pharma/Medical supplies
Beverage/Tobacco, Energy/Material/Machinery, Home appliances/AV equipment
Distribution/Retail, Finance/Insurance, Food
Information/Communication, Beverage/Tobacco, Apparel/Jewelry
Finance/Insurance, Cosmetics/Toiletry, Distribution/Retail(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.

(Other Business)
In other business, gross billings to customers amounted to ¥4,433 million, down 5.9% year-on-year, and thesegment loss amounted to ¥118 million, compared with ¥368 million loss in the previous year.
In an environment where it is hard to generate a profit in its main business of publication and sales of books
and magazines with the overall publishing market contracting, the business posted operating loss. Yet the sizeof loss became smaller compared to the same period the previous year through efforts to cut the cost of goods
and optimize the volume of distribution as well as ongoing efforts to control SG&A expenses.
②Forecasts for Fiscal 2016
The consolidated business under review largely performed strongly. We expect that the Japanese economy
continues a mild recovery in the coming year backed by economic measures and monetary easing policies
advocated by the government and the Bank of Japan. Consequently, the advertising market is anticipated to
grow healthily in the medium-to-long run.
While on the other hand, there are concerns, for the short-term, including a possible recession of the world
economy triggered by a crude oil price drop and emerging markets slowdown. Concerning factors at homeinclude a slower recovery in the nominal GDP and consumer spending which are thought to be highly
correlated with the advertising market, and a yen’s appreciated-led imported goods price rise. All remain to be
seen since each of them may well impact on our clients’ performance.
Under such an environment, we will drive the business in line with what we mention in “3. Management
Policies (page 13)”, to deliver consolidated gross billings of ¥354,000 million, operating income of ¥5,400 million,
ordinary income of ¥8,550 million, and net income of ¥5,500 million. This means that net income per share is
projected to be ¥131.55.

(2) Financial Position① Analysis of Assets, Liabilities and Cash Flow Status
At the end of fiscal 2015, the Group had total assets of ¥235,205 million, down ¥8,111 million from a year
earlier. The Company had an increased amount of investment securities due to an increase in the market valueof foreign-currency-denominated investment securities while compressing excessive cash by selling part ofinvestment securities and paying dividends.
Total liabilities amounted to ¥109,716 million, up ¥1,398 million from a year earlier. This was due mainly to
an increase in notes payable and accounts payable, and also deferred tax assets arising from higher market
value of investment securities.
At fiscal year-end, net assets totaled ¥125,488 million, down ¥9,510 million from a year earlier. Contributing
factors included a reduction in earned surplus associated with dividend payment which was larger than anincrease in unrealized gain on available-for-sale securities. The net assets ratio (excluding minority interests)
was 52.7%, down 2.4 points from a year earlier.
In fiscal 2015, sum of net cash provided by operating and investing activities fell below net cash used infinancing activities. After foreign currency translation adjustments, cash and cash equivalents stood at ¥25,924
million, down ¥9,158 million from a year earlier.

(Cash flows from operating activities)
Net cash provided by operating activities amounted to ¥10,192 million, compared with ¥8,169 million in theprevious year. Major factors included ¥9,189 million in income before income taxes and minority interests after
paying income tax of ¥3,028 million, and a decrease in account receivables of ¥2,046 million for an increase inaccounts payable of ¥1,870 million.

―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.

(Cash flows from investing activities)
Net cash provided by investing activities totaled ¥5,046 million, compared with ¥177 million used in fiscal
2014. The main factors include term-deposit refund of ¥6,658 million and proceeds from sales of investment insecurities of ¥1,833 million, proceeds from the collection of guarantee deposits of ¥1,496 million while making
term-deposit of ¥3,668 million.

(Cash flows from financing activities)
Net cash used in financing activities was ¥23,803 million, compared with ¥6,640 million in the previous year.
This was due mainly to ¥23,909 million in dividends paid.
The major indices of consolidated financial conditions are as follows:

②

Term

FY2012FY2013

FY2014FY2015Equity Ratio

55.6%

56.9%

55.1%

52.7%

44.4%

45.2%

50.0%

52.6%

0.2

0.1

0.0

0.0

130.4

293.9

983.8

325.1

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)(3) Basic Policy for Profit Distribution and Dividends for FY2015 and FY2016
ADK defines in its article of incorporation that the Board of Executive Directors is fully responsible for
deciding a way of using the surplus by means of a dividend and such. The board determines a dividend amountbased on a total shareholder return policy, that includes buy-back, of 50% of the current term’s net income while
making long-lasting stability by, in principle, setting the minimum dividend per share of ¥20. An interim
dividend, in principle, should be ¥10 per share as it has been, and a final dividend should be the higher of ¥10
per share or an amount which would make the annual total return ratio satisfy the guideline of 50%.
In addition to that policy, the management positions shareholder value enhancement and cash return as highpriority issues, and hence recognizes return of equity (ROE) is one of the key indices in the endeavor to improveshareholder value. ROE shall be improved through growth of existing business and investment in growing areas
as well as capital efficiency improvement. During the period under review, we made a certain level ofinvestment in growing sectors while at the same time continuing our efforts to streamline capital. As a result of
all that, we generated surplus to pay back to our shareholders. The board therefore decided to pay a special
dividend in addition to an ordinary dividend and repurchase of own shares based on the above-mentioned policy.
Pursuant to the policy and reasons described above, we paid an interim dividend of ¥10 per share. The
company will pay a year-end dividend of ¥238 per share (an ordinary dividend of ¥23 and a special dividend of¥215) after the board passes a resolution at the meeting scheduled to be on February 23, 2016. This means thatthe annual dividend per share will be ¥248.
In 2016, we also plan to pay an interim dividend of ¥10 per share, yet we are unable to forecast the amount ofa year-end dividend. Please be advised that it is guaranteed ¥10 or over.

―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.

(4)Risks
This report may contain forward-looking statements based on ADK management’s view and assumptions of
future developments as of the date of such statements (February 12, 2016). The foregoing statements herein are
inherently subject to risks, including, but not limited to, those shown below (under Tokyo Stock Exchange
guidance), and uncertainties that could lead to material differences between such statements and actual
outcomes. Therefore, ADK does not warrant any certainty and accuracy thereto. ADK also expressly disclaims
any obligation to update or revise its forward-looking statements.
Domestic Economy①

In general, Japanese national advertising spending is directly influenced by corporate advertisers’ budgets
and, therefore, is closely correlated with nominal consumer spending and GDP.

The Group generates much ofits gross billings from the Japanese domestic market. In the event that the domestic economy deteriorates
seriously, the ADK Group’s performance and financial condition could be negatively affected.
Response to Diversification and Digitalization of Media and Changing Consumers’ Media Consumption②

Advertising media continues to diversify with further penetration of new devices such as smartphones, andtablet-type PCs. At the same time, people’s media consumption and behaviors are changing with the rapid
diffusion of social networks. As a consequence of that, markets of traditional mass media, especially print media,
are shrinking, whereas the Internet business has grown to be the largest medium second to television.
Advertisers expect their advertising agencies to offer advanced solutions utilizing digital media, thereby
allowing them to gather and analyze data of people’s media consumption and purchasing behavior more
effectively.
The traditional mass media remain an important income source for us, but we are now expanding ourbusiness domain by riding a wave of the Internet advertising market and taking agile responses to changes inadvertising marketing methods such as consumer behaviors analysis and subsequent planning. However, if theGroup fails to adapt to changes in the advertising media, its performance and financial condition could be
adversely affected.
③ Risks Arising from Trading Customsa)Relationship with Advertisers
In Japan, traditionally advertisers do not strictly require an exclusive relationship with their agencies, which

may have business with competitors when planning and proposals are well accepted. However, there is no
assurance that this practice will continue in the future. In the event that ADK fails to adapt to such changes in
the advertising market, its performance and financial condition could be adversely affected. Furthermore,transactions with clients are made by individual project and there is no guarantee that the business willcontinue in the future.
Advertising companies in Japan do not always have documented contracts with media and clients, so as tomaximize their flexibility to adapt to sudden changes. However, ADK works to ensure that it has written
contracts with more media and more clients. When this is the rule, not the exception, the Company believes
accountability by both parties will minimize disputes. Until that time, however, there remains the possibility ofdisputes with the media and clients.
An advertising agency buys media time or space and materials on behalf of its clients on its own account. By
custom, an agency makes transactions with media companies at its own risk. Sometimes a purchase is madethrough another agency. Therefore, even if a client and/or such other agency defaults, the advertising company
is still liable for the media and/or materials toward a media owner and/or a subcontracting production company.

―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.
b)

Media Inventories
In Japan, advertising agencies seeking to nurture high-quality content or secure valuable advertising spacesometimes purchase media inventories at fixed prices in advance. In such cases, the agency is obligated to pay
advertising fees to the media company, regardless of the ultimate sales appeal of the inventories purchased. If
the sales appeal is inadequate, this could have an adverse effect on the Group’s performance and financial
condition.
c)Credit Risks of Subcontractors
Advertising companies work hard to enhance the quality of products and services provided by its

subcontractors. However, there are risks associated with a subcontractor’s ability to fulfill an order or maintainits business as a going concern, and it is difficult to transfer such risks to the advertising client. Moreover,services offered by the advertising industry are delineated, so there are cases where the subcontractor may
outsource work to a sub-subcontractor, or where another agency is included in the arrangement between the
ADK Group, its subcontractors, and the media company. Given such multilayered arrangements, the Group mayneed to provide small and specialty subcontractors with financial backup. In international business, meanwhile,sometimes partial or full payment is required in advance as custom. In the event that a subcontractor is unable
to stay in business until an order is fulfilled, or the subcontractor is unable to accept responsibility for losses
related to defective products that do not fully satisfy the advertising client’s scrutiny, the advertising agency
may not be able to recover funds paid in advance, or may be obligated to accept responsibility for losses related
to such defective products.
Competitive Risk④

The ADK Group, as Japan’s third-largest advertising group, competes against other large companies.
Advertising clients select their products to spend their advertising budgets and tend to appoint a small numberof agencies to reduce their costs. This further accelerates price competitiveness among agencies. Competition
gets even more fierce by the integration of brands in the wake of clients’ globalization and industry reorganization, leading to consolidation of procurement. In addition, competition is accelerated by the entry of
foreign mega-agency groups into the Japanese market, as well as many new and rapidly growing entrants in theInternet and other nontraditional mass media advertising market. Non-industry players such as retailers andtrading houses have entered into advertising market, in particular, non-mass media sectors, which will maketough competition even tougher.
In the event that ADK is unable to respond appropriately to client needs and changes in the advertisingindustry, and loses its competitiveness as a result, there is significant risk that its market share could decline
and profits could deteriorate. This would have a serious impact on its performance and financial condition.
⑤ Risks Arising from Operationsa)

Client Portfolio
To achieve business stability and growth, the ADK Group has for many years maintained relationships withnumerous advertising clients in various industries, and will continue striving to make proposals that meet theirneeds. However, it is possible that the Group’s client portfolio will change, and diversity across sectors will beinadequate. The parent company’s largest 10 and 20 clients accounted for around 20% and 30%, respectively.
b)

Relationship with the MediaThe ADK Group buys and resells various media, including mass media and rapidly growing digital media,

such as mobile and Internet. In fiscal 2015, the parent company (ADK) generated 67.9% of its gross billings byhandling the four major mass media, as well as the Internet, digital advertising, and OOH media. Gross billings―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.
from television represented 48.1% of ADK’s non-consolidated gross billings. ADK continues to strive to secureadvertising time and/or space in these media. However, in the event of a decrease in advertising volume and/orchanges in business terms and conditions and advertising methods, and/or the emergence of new advertisingformats, and the ADK Group does not respond to these changes appropriately, there is a significant possibility
that its performance and financial condition could be adversely affected.
c)Relationship with Subcontractors
Although the ADK Group carries out planning for advertising and sales promotion campaigns, the executionof these activities is mostly outsourced to qualified subcontractors. In the case of a change in trading
relationships with these subcontracted companies, and in the event that ADK is unable to respond appropriately,
this could have a negative impact on its performance and financial condition.
d)Securing & training proper persons and cost control
Advertising is a people business, and human talents are critical assets in the advertising industry. For thisreason, the ADK Group works constantly to secure exceptional human resources, assign them to appropriate
locations, train them so they can respond changing market environments agilely and facilitate smooth internal
communications. A series of new laws were enacted in April 2013, including the revised Labor Contract Act, therevised Worker Dispatch Act, and the Law Concerning Stabilization of Employment of Older Persons. In
response, the Group is now working on the current personnel policies to be compliance with them and alsoestablishing a new employee training framework to match its new business policies. In the event that ADK isunable to secure and train its talented staff adequately, there could be a negative impact on its performance andfinancial condition. In addition, most of its staff costs are fixed costs and represent the largest portion of its
selling, general and administrative expenses. On a consolidated basis, staff expenses represented as much as
60.5% of gross profit in fiscal 2015.
e)Overseas Operations
The ADK Group has been striving to develop overseas revenues. In fiscal 2015, the ADK Group generated

9.3% of its gross billings from overseas sources. In overseas markets, because of differences in culture, society,law, and commercial customs, a variety of problems may arise. In addition, both country risk and currency risk
are inherent in conducting international business. In the event that the ADK Group is unable to expand its
overseas operations as planned, its performance and financial condition could be significantly affected.
f)Content Business
The ADK Group has been successful in the animation content business, as well as in sports and cultural event

marketing, which enables ADK to differentiate itself from competitors. ADK continues to develop new content
under existing and new business models. However, the demography of Japan is aging and people’s preferences
and media consumption are changing. Accordingly, the content business is getting more complicated, andcompetition is becoming tougher. The typical amount of content development investment is increasing, volatility
is growing, and the time to recoup investments is increasing. In sum, the content business is getting riskier but
less profitable. There is no guarantee that this content or its derivatives will continue to succeed. Continued
resale income from existing content is not guaranteed either. Accordingly, in the case that the ADK Group is notable to generate income as it expects, it could experience a significant impact on its performance and financial
conditions.

―9―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.
g)

Investment in CompetitivenessTo enhance its competitiveness in the changing advertising market, ADK invests in the digital businessdomain. Moreover, ADK invests in data collection and R&D, which would be critical in offering crosscommunications program ideas, and invests in IT to enhance operational efficiency. However, in the event that
the ADK Group is unable to realize benefits from its investments as planned, its performance and financial
condition could be significantly affected.
h)Management of Group Companies
The ADK Group consists of the parent company, 47 subsidiaries, 12 affiliates, and one related company, andoperates in the advertising and publications businesses. Although the ADK Group strives hard to realize
synergies among these companies, in the event that it is unable to do so as planned, its performance andfinancial condition could be affected.
i)

Relationship with WPP plc
ADK has maintained strategic operating and equity ties with WPP plc since August 1998, holding a 2.41%

equity stake in WPP (as of December 31, 2015). WPP is the largest shareowner of ADK, holding 24.50% of thevoting rights. By way of operating alliances with WPP Group operating companies including JWT, ADK has
formed joint ventures, collaborated in media buying and cultivating new advertisers. WPP plc has sent a nonexecutive director to the ADK’s board.
Although ADK plans to continue and expand its capital and business alliance with WPP Group, in the eventthat the ADK Group is unable to realize the benefits from this relationship or if the relationship should
negatively change in any way, there could be an impact on the ADK Group’s performance and financial conditionin the future.
The yen-translated market value of the equity stake in WPP was ¥87,450 million (at a stock price of £15.63
per share) as of the end of December 2015, compared with the acquisition cost factored in loss on valuation of
investment securities of ¥22,262 million (at a stock price of £3.6517 per share under the lower-of-cost-or-market
method), however, in the event of a major deterioration in the Group’s sterling-based stock price, there is apossibility that ADK would have to account for valuation losses on this holding.
j)Marketable Securities and Investment Securities
The ADK Group’s holdings of marketable and investment securities (including the aforementioned stake in

WPP) totaled ¥101,516 million, representing 43.2% of its ¥235,205 million in total assets as of December 31,
2015. Of this amount, ¥97,346 million consisted of publicly traded equity securities, mostly the equity alliancewith WPP plc and cross-shareholdings in advertising clients and other trading partners. The balance of
unrealized gains on available-for-sale securities was ¥48,188 million after deducting deferred tax liabilities onsuch gains (compared with ¥40,118 million as of December 31, 2014). However, in the event of a major decline in
the market prices of these holdings, ADK would be forced to account for valuation losses.
k)Retirement Benefits and Pension Plans
ADK and some of its Group companies adopt combinations of defined contribution and defined benefits

pension plans, as well as lump-sum retirement allowances. In the event of deterioration in pension asset
management performance, and a significant change in actuarial assumptions, the ADK Group could face anegative impact on its performance and financial condition.

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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.
l)

Contingent Litigation Risks
The ADK Group cannot disregard the possibility of becoming involved in future lawsuits or disputes, either

directly or indirectly, due to various circumstances. If the Group does become involved in a lawsuit or dispute,its business results and financial position could be affected depending on the nature, progress and outcome ofsaid lawsuit or dispute.
m) Risk Related to Legal Restrictions, etc.
The advertising activities of an advertiser are subject to legal restrictions under various laws—such as the
Act against Unjustifiable Premiums and Misleading Representation, the Copyright Act, the Trademark Act,
Law for Ensuring the Quality, Efficacy, and Safety of Drugs and Medical Devices, and the Specified Commercial
Transactions Law—as well as to various self-imposed restrictions regarding advertisement criteria defined byadvertisement media such as newspaper and television companies, evaluation criteria, and so on. In the eventthat tightening or new establishment of such legal restrictions, or self-imposed control restrains the advertising
activities of an advertiser or our client, this may sometimes influence business results and financial status of
the Group.
In addition, although there are no laws or regulations specific to the advertising business itself or the Group’s
core competence, the accompanying businesses are subject to restrictions under various laws, such as theConstruction Industry Act and the Security Services Act. The Group is also subject to the Act on Prohibition ofPrivate Monopolization and Maintenance of Fair Trade, the Law on the Prevention of Delay in the Payment of
Subcontracting Charges and Related Matters, the Law Concerning the Protection of Personal Information heldby administrative organs, and other laws regulating business activities in general. Moreover, the Group isrequired to strictly observe the Internal Control Reporting System stipulated in the Financial Instruments andExchange Act. Although we believe that none of the above can severely impact the Group at the time when thisdocument is being prepared, in the event that we are unable to appropriately respond to changes in these legal
restrictions in the future, such inability could affect the business results and financial status of the Group, suchas an increase in expenses required to cope with the situation.

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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.

Status quo of the corporate group
The ADK Group consists of ADK-Tokyo, 47 subsidiaries, 12 affiliates and one related company (including theirsubsidiaries. The same shall apply hereafter). The major businesses are (1) planning and buying of advertisingin such media as magazine, newspaper, TV, radio, digital and OOH, (2) planning and creating advertising
expressions and content, (3) offering all advertising-related services such as sales promotion, marketing, public
relations. It is also engaged in publishing and selling magazines and books as other business.
The Group companies are engaged in advertising business and other business as below:
ADK-Tokyo, 44 subsidiaries, 12 affiliates and other related company are engaged in advertising business.
Nihon Bungeisha. ADK’s subsidiary, and other two subsidiaries are engaged in other business.
The following illustrates how the Group is built from:Clients

Ad salesAd salesPublishing and sellingbooks/magazinesASATSU-DK INC.

(Advertising business)○ Consolidated subsidiaries※ Equity method affiliates※ 持分法適用会社

Ad salesOther related company
WPP plc(including WPP International
Holding B.V. and other 7
subsidiaries)

Ad buying(Other business)

Capital & business tie-up

Ad salesAd buying

Subsidiaries○ Nihonbungeisha Co.,Ltd.
○ Bio-Medice International Inc.
○ ADK Insurance Services Inc.

Subsidiaries○ Kyowa Kikaku Ltd.
○ ADK International Inc.
○ ADK Arts Inc.
○ ADK Dialog Inc.
○ Eiken Co.,Ltd.
○ ADK Digital Communications Inc.
○ d-rights Inc.
○ ADK America Inc.
○ Asatsu Europe Holding BV○ Asatsu Europe BV○ Asatsu (Deutschland) GmbH
○ ASATSU-DK HONG KONG Ltd.
○ DK ADVERTISING(HK) Ltd.
○ ASATSU Century (Shanghai) Advertising Co.,Ltd.
○ Shanghai Asatsu Advertising Co.,Ltd.
○ UNITED-ASATSU INTERNATIONAL Ltd.
○ DIK-OCEAN Advertising Co.,Ltd.
○ ASATSU-DK SINGAPORE Pte.Ltd.
○ ADK Thai Holding Ltd.
○ ASATSU (Thailand) Co.,Ltd.
○ ASDIK Ltd.
○ DAI-ICHI KIKAKU (THAILAND) Co.,Ltd.
○ ASATSU-DK (Malaysia) Sdn.Bhd.
Other 21 firms
Affiliates※ Guangdong Guang Xu (ADK) Integrated Marketing
Communication Co., Ltd.
※ DA Search&link Inc.
※ ASP Co.,Ltd.
※ Drill Inc.
Other 8 firms(Advertising business)― 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.

3. Management Policies(1) Basic Policy on Management
The mission of the ADK Group is to contribute to the business performances of its advertising clients byconstantly offering optimal solutions through integration of both internal and external expertise and functions.
In these efforts, we follow our “Management by All” philosophy, which has been in place since the Company’s
foundation.
Communications environments, including advertising, are changing dramatically due to such factors as rapid
development of digital technology and the spread of social media. In this context, the ADK Group will monitor
the ever-changing media interaction and purchasing patterns of consumers, and following changes in the needsof advertisers. Specifically, we will provide our clients with solutions and programs with a strong emphasis on
return on investment (ROI) aimed at maximizing the effectiveness of advertisers’ communications investments.
This will entail integrating the various media surrounding consumers’ touchpoints, including mass media, mass
personal media—such as Internet and mobile—and out-of-home (OOH) media, including in-store media. In
addition, we will strengthen our focus on overseas markets earmarked for growth and on expanding our content
businesses.
The ADK Group will strengthen collaboration among its member companies and increase corporate value
through sustainable growth suited to the changing business environment. At the same time, we will emphasize
shareholder value by enhancing capital efficiency while preserving financial soundness and stability. Our aim isto ensure proper returns to shareholders while striking a good balance among all stakeholders.
In addition, we will strive to enhance internal control and otherwise strengthen our corporate structure.

(2) Medium-Term Business Plan
In light of growth prospects for the Japanese economy and the advertising market, as well as changing
communication environments and evolution of the global economy, in August 2013 the ADK Group announced
its new medium-term business plan. The plan focuses on strategies to lead the company to transform into the“Consumer Activation Company”.
The advertising market, as previously described, has been undergoing the structural shifts for the past
several years while clients increasingly demand cost-effectiveness in advertisements. Facing these harshconditions, the ADK Group is determined to expand business domains and diversify profit sources. To complete
its ambition, first of all, the Group places “Consumer Activation (CA)” in the center of its growth strategy, thatplays a vital role to help resolve clients’ challenges and spur their sales by providing in-house developed
marketing measures to inspire consumers to take actions. To help clients achieve their marketing objectives, we
facilitates investment initiatives revolving around content business and promote innovative businesses, working
collaboratively with media and client companies without minimizing conventional business activities.
The business term ending December 2016 is the final year set in the mid-term business plan which includes
the target of consolidated operating income of ¥7.0 billion as the most important numerical indicator. To hit thedeclared target, ADK pressed forward with the reform to improve income strength and CA business foundation.
As a result of that, it grew consolidated operating income to ¥4.9 billion in the period ended December 2015
from ¥1.3 billion in 2013. Yet, we are high on the road to shifting to CA business and developing services togenerate added values. It is required further investment and time in human asset development, knowledge
development, infrastructure improvement, etc. Thus the consolidated operating income of ¥7.0 billion isassumed to be achieved in the next term or later.
To realize “VISION 2020”, released alongside the mid-term business plan, ADK aims at growing consolidated
operating income at around 10% annually on an organic growth basis. We also continue its efforts on improving
income strength while investing in human resources and business opportunities to enhance its competitivenessand develop business/services, taking a brave attitude for successfully shifting to CA business.

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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) Management Indices
The ADK Group has been working hard to achieve the following management targets. The achievement of thelast four years is as follows:FY

FY2012FY2013

FY2014FY2015FY2016(Original target)

Consolidated
Operating Income

3,175
million

1,383
million

4,097
million

4,901
Million5,400 million(7,000 million)

Consolidated
Gross Profit Growth

0.7%(2.3%)

7.7%

0.5%

10.8%
(15.0% (2013-2016))

Consolidated
Operating Margin(*)

6.9%

3.1%

8.4%

10.0%

10.8%
(13.0% over)* (Operating Margin) = (Operating Income) ÷ (Gross Profit)
In fiscal 2015, operating margin was 10.0% and operating income was ¥4,901 million on a consolidated basis,
exceeding the original forecasts released in February 2015.
ADK-Tokyo saw a 5.0% drop in gross profit as a consequence of lower gross profit ratio of TV, Marketing andPromotion. Further efforts to control selling and general administrative expenses fell short of ensuring
operating profit, resulted in a 4.7% drop. While ordinary income saw a sharp increase of 86.8 % due to dividends
paid by domestic and overseas consolidated subsidiaries.
Consolidated subsidiaries at home and abroad made a 12.7% growth in gross profit, pushing consolidated
gross profit up albeit marginally while consolidated operating margin increased 19.6%. The ADK group
continues to enhance operational efficiency further through carrying out measures included in the business plan
in a steady and agile manner.
Consolidated EPS and ROE
FY

FY2012FY2013

FY2014FY2015EPS(Yen)

65.83

81.79

88.32

127.72

ROE(%)

2.7

2.9

2.8

4.2

(4) Medium- and Long-Term Business Strategies; Issues to be Addressed
The domestic advertising market, which centers on traditional mass media, has already matured. Here,advertisers are demanding sophisticated, ROI-driven communications programs that reflect the changing media
interaction and purchasing patterns of consumers, caused by the advancement of digital media and theemergence of high-performance digital devices.
While the domestic market has matured and little hope to expand significantly with a lower birth rate in an
rapidly-aging society, overseas markets are growing with more needs from advertisers with a look at theSoutheast markets where a solid growth is expected. Yet, smoldering concerns over weakening domestic demandin China and potential inflation in the ASEAN need to be watched.
Given such rapidly changing business conditions, the ADK Group will address its difficult businessenvironment by concentrating on the following themes. To achieve our ambition, the evolution into “Consumer
Activation Company” as the core of the growth strategy, that will allow us to contribute to advertisers’ businessresults by providing them with in-house developed marketing tools to inspire customers to take actions, will be
the key.
①Develop and establish Consumer Activation Business (hereinafter called CAB)
To realize “VISION 2020”, we are promoting CAB as a marketing support arm to resolve clients’ challenges.

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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.
Axival Inc., launched in May 2014 as a joint business of Intage Inc. and ADK, is working on
infrastructure development by building “3-D Database”, combining with ADK’s unique consumer attitude
data, Intage-owned purchase behavior and media contact information.
We set the KPI that are closely linked to activating consumers. We are optimizing advertising budget,
developing a planning method to create channels & campaign plans to fully achieve the KPI, andreinforcing our ability to implement “online & offline combined” campaigns.
We are extending our cooperation with specialty firms to further diversify our services, exploiting digitaltechnology. To name but a few; “Noiman”, a co-project with 1-10 design, Inc. which specializes in developing
progressing ideas fused with technology and creative, “textus”, another joint project with adflex
communications, inc. which offers a new type of O2O communication in the field of the direct marketing.
“Sticki”, a global network which offers optimal solutions in the field of video marketing, has also been added
to the list. Leveraging all these assets, we are further promoting CAB business which help resolve clients’challenges and provide “solutions directly tied to their results”.
②

Expand Content Business
The animation content business has been a traditional strength of the ADK Group and made a good trackrecord. We have developed new products and proactively evolved businesses in multiple scenes. It hascontributed to our profit immensely through producing and investing in television programs and movies,
organizing events and musicals, using characters in sales promotions.
We are now proactively expanding know-hows and business models we have developed at home tooverseas, taking on a challenge to cultivate and build new markets. In November 2014, ADK co-founded
Anime Consortium Japan, Inc. that distributes officially-qualified Japanese animation content to overseas
markets and operates an e-commerce site to sell anime-related goods. In February 2015, we acquired sharesin d-rights, inc. that has an important advantage over producing content and strong overseas networks.
We continue to step up our efforts to grow the business in the fields of broadcasting, distribution andmerchandising as well as developing and acquiring new intellectual properties (IPs) both at home andabroad to enhance the presence of ADK content business.

③

Global strategy
The Group made a bold structural reform in January this year to steadily expand its international
business. We are departing from the traditional business model which applies the Japanese way tooutbound global businesses, and rebuilding the structure and operation, and hiring international-mind
people to become a multi-national network agency. We are now more actively engaged in developing
solutions in the fields of activation and digital in a way to directly help our clients drive their sales of
products and services, integrating and reinforcing creative and planning capabilities across the board, andalso making strategic investment in important nations and regions.

④

Enhance profitability further
In 2014, we introduced an inter-company transaction system with the aim of enhancing profitability, which
helped us reap some benefit in a form of a gross profit improvement. In 2015, however, we experienced adecline in gross profit ratio in consequence of a drop in individual promotion businesses and media
transaction. Thus we will reshape and improve the system this year to enhance profitability while drasticallychanging the organization structure with the five business units under the sector layer and profit
management system by sector. Each sector is responsible for creating added values and profit management,with the aim of generating larger profit as the entire group.

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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.
Personnel Training⑤

Recognizing that human resources are the most valuable assets of all for the Group, we hire right persons
and give them right training so that they will be capable of tackling management challenges. We will
optimize staff deployment across the Group to inject talent into growth opportunities more flexibly.
Reinforce the Group management⑥

The ADK Group will further reinforce cooperation and collaboration among group companies, promoting
in-house production and moving the existing operational base to a common architecture, aiming to enhance
profitability. We will also extend functions and develop the business through tie-ups and M&A.
In addition to the aforementioned initiatives, the ADK Group will strive to secure stable growth by promoting
risk management policies including facilitating information security, internal structure in relation tocompliances and internal control related to financial reporting. Furthermore, we will drive forward with anunderstanding of corporate social responsibility such as environment protection.

(5) Other Important Business Issues
Not applicable.

4. 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.

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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．Consolidated Financial Statements(1) Consolidated Balance Sheets (Unaudited and before reclassifications and rearrangements)(Millions of yen)
December 31, 2014

December 31, 2015

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade32,73887,112

25,79084,326

Short-term investment securities
Inventories

7,534
8,088

2,172
7,048

Deferred tax assets
Other

976
1,443

568
2,033

Allowance for doubtful accounts

(687)

(568)

137,205

121,370

Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures

4,255

4,299

Accumulated depreciation(1,664)(1,720)

Buildings and structures, net

2,591

2,579

1,011
3,549

1,004
3,509

Accumulated depreciation(2,313)(2,294)

Other, net

1,236

1,215

4,839

4,800

1,642

1,536

29

650

1,672

2,186

Investment securities
Long-term loans receivable

93,185
73

101,51654

Net defined benefit asset
Deferred tax assets

－
448

697
246

Other
Allowance for doubtful accounts

6,649
(756)

5,151
(819)

Total investments and other assets

99,601

106,847

Land
Other

Total property, plant and equipment
Intangible assets
Software
Other
Total intangible assets
Investments and other assets

Total noncurrent assets
Total assets― 17 ―

106,112

113,834

243,317

235,205

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, 2014

December 31, 2015

Liabilities
Current liabilities
Notes and accounts payable-trade

71,574

74,130

46
82

96
－

1,561
1,013

1,269
355

3
493

4
471

Other

9,078

8,228

Total current liabilities

83,85384,556

Deferred tax liabilities
Provision for directors' retirement benefits

21,57874

22,96642

Net defined benefit liability
Other

1,605
1,206

935
1,215

Total noncurrent liabilities

24,46425,160108,317

109,716

Shareholders' equity
Capital stock

37,581

37,581

Capital surplus
Retained earnings

11,98242,265

11,982
24,336

Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for bonuses
Provision for directors' bonuses
Provision for sales returns

Noncurrent liabilities

Total liabilities
Net assets

Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

(569)

(210)

91,26073,69040,11848,1885(0)Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeSubscription rights to shares
Minority interests

2,819
(20)

1,859
266

42,92350,314

40
775

23
1,461

Total net assets

134,999

125,488

243,317

235,205

Total liabilities and net assets― 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.

(2) Consolidated Income Statements and Consolidated Comprehensive Income Statements
Consolidated Income Statements (Unaudited and before reclassifications and rearrangements)

Gross billings

Year Ended
December 31, 2014
(From January 1
to December 31, 2014)
352,984

Cost of sales

304,416(Millions of yen)
Year Ended
December 31, 2015
(From January 1
to December 31, 2015)
351,956
303,131

Gross profit

48,56848,824

Salaries and allowances
Provision for bonuses

22,916918

23,353Retirement benefit expenses
Provision for directors’ retirement benefits
Provision for directors' bonuses

2,062
18
－

Welfare expenses

3,427

Rent expenses
Provision of allowance for doubtful accounts

3,467
184

Depreciation
Other

692
10,782

10,744

Total selling, general and administrative expenses

44,47043,923

4,097

4,901

Selling, general and administrative expenses

Operating income

333
1,649
2
4
3,637
3,103
279
814

Non-operating income
Interest income
Dividends income

261
2,156

207
2,704
292

Equity in earnings of affiliates
Dividends income of life insurance

220
107

Real estate rent
Other

54
555

595

3,355

3,898

8

31

－
22

24
2

28
40

35
59

101

56

Total non-operating income

1781

Non-operating expenses
Interest expenses
Loss on sales of securities
Provision of allowance for doubtful accounts
Expenses of real estate rent
Loss on insurance cancellation
Other
Total non-operating expenses
Ordinary income― 19 ―

201

209

7,251

8,590

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, 2014
(From January 1
to December 31, 2014)(Millions of Yen)
Year Ended
December 31, 2015
(From January 1
to December 31, 2015)

13
－

64
146

1,222
8

1,077
1

Extraordinary income
Gain on sales of non-current assets
Gain on liquidation of subsidiaries and associates
Gain on sales of investment securities
Reversal of allowance for doubtful accounts
Other
Total extraordinary income
Extraordinary loss
Loss on sales of non-current assets
Loss on retirement of non-current assets
Loss on valuation of investment securities
Special retirement expenses
Loss on liquidation of business
Office transfer expenses
Other

39

2

1,284

1,293

0
142

2
16

78
535

51
285

－
1,080

128
117

266

91

2,102

695

Income before income taxes

6,433

9,189

Income taxes-current
Income taxes-deferred

2,669
(69)

2,861
718

Total income taxes

2,599

3,579

Income before minority interests

3,833

5,609

Total extraordinary losses

Minority interests in income
Net income― 20 ―

137

246

3,696

5,362

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.

Consolidated Comprehensive Income Statements (Unaudited and before reclassifications and rearrangements)
Year Ended December 31, 2015

Income before minority interests

Year Ended
December 31, 2014
(From January 1
to December 31, 2014)
3,833(Millions of Yen)
Year Ended
December 31, 2015
(From January 1
to December 31, 2015)
5,609

4,975

8,069

4

(6)

1,361

(1,002)

－

287

13

(6)

6,355

7,341

10,18912,9509,982

12,752

206

198

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 of tax
Share of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable toowners of the parent
Comprehensive income attributable tominority interests― 21 ―

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 Net Assets (Unaudited and before reclassifications and rearrangements)
Year Ended December 31, 2014

SHAREHOLDERS' EQUITY
Commonstock
Balance as of January 1,2014
Cumulative effects of changes inaccounting policies
Balance as of January 1,2014,reflecting changes in accounting
policies
Changes during the consolidated
fiscal year
Dividend payments
Net income

CapitalsurplusRetainedearnings

Treasurystock-at cost

Total
shareholders' equity

37,581

11,98244,303(651)

93,21637,581

11,98244,303(651)

93,216(5,932)(5,932)

3,696

3,696

Change of scope of consolidation

154

Purchase of treasury shares
Disposal of treasury shares
Other
Net changes of items other thanshareholders' equity
Total changes of items during
period

154
(6)
87

0

(6)
87

43

Balance as of December 31,2014

43

－

0

(2,037)81(1,956)37,581

11,98242,265(569)

91,260ACCUMULATED OTHER COMPREHENSIVE INCOME

Balance as of January
1,2014
Cumulative effects ofchanges in accounting
policies
Balance as of January
1,2014, reflecting changes
in accounting policies
Changes during theconsolidated fiscal year
Dividend payments
Net income
Change of scope of
consolidation
Purchase of treasury
shares
Disposal of treasury
sharesOther
Net changes of items
other thanshareholders' equity
Total changes of items
during period
Balance as of December
31,2014

Unrealized
gain onavailablefor-salesecurities

Deferredgain onderivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Remeasurements ofdefinedbenefit plans

35,142

1

1,513

－

35,142

1

1,513

－

SUBSCRIPTIONRIGHTS TOSHARESMINORITY
INTERESTSTOTAL NETASSETS

36,65721

1,077

130,972

36,65721

1,077

130,972

Total(5,932)
3,696
154
(6)
87
43
4,975

4

1,306

(20)

6,266

19

(302)

5,982

4,975

4

1,306

(20)

6,266

19

(302)

4,026

40,118

5

2,819

(20)

42,92340775

134,999― 22 ―

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, 2015

SHAREHOLDERS' EQUITY
Commonstock
Balance as of January 1,2015

Capitalsurplus37,581

Cumulative effects of changes
in accounting policies
Balance as of January 1,2015,reflecting changes in accounting
policies
Changes during the consolidated
fiscal year
Dividend payments
Net income
Change of scope of
consolidation
Purchase of treasury shares
Disposal of treasury shares
Other
Net changes of items otherthan shareholders' equity
Total changes of items during
periodBalance as of December 31,2015

11,982Retainedearnings

Treasurystock-at cost

Total
shareholders' equity

42,265(569)

91,260678
37,581

11,982

42,944678(569)

91,939(24,024)
5,362(24,024)
5,362

62

62

0

(7)
366

(7)
366
(7)

(7)

－

0

(18,607)358(18,248)

37,581

11,982

24,336(210)

73,690ACCUMULATED OTHER COMPREHENSIVE INCOME

Balance as of January
1,2015
Cumulative effects ofchanges in accounting
policies
Balance as of January
1,2015, reflecting changes
in accounting policies
Changes during theconsolidated fiscal year
Dividend payments
Net income
Change of scope of
consolidation
Purchase of treasury
shares
Disposal of treasury
sharesOther
Net changes of items
other thanshareholders' equity
Total changes of items
during period
Balance as of December
31,2015

Unrealized
gain onavailable-forsale
securities

Deferredgain onderivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Remeasurements ofdefinedbenefit plans

40,118

5

2,819

(20)

Total

42,923

SUBSCRIPTI
ON RIGHTS
TO SHARESMINORITY
INTERESTS

TOTAL
NET
ASSETS40

775

134,999
678

40,118

5

2,819

(20)

42,92340775

135,678(24,024)
5,362
62
(7)
366
(7)
8,069

(6)

(960)

287

7,390

(17)

686

8,059

8,069

(6)

(960)

287

7,390

(17)

686

(10,189)

48,188

(0)

1,859

266

50,31423

1,461

125,488― 23 ―

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, 2014
(From January 1
to December 31, 2014)(Millions of yen)
Year Ended
December 31, 2015
(From January 1
to December 31, 2015)

6,433

9,189

1,384
78

1,544
51

142

282

581

(655)

3

1

4

(22)

－

28

283

4

(365)

(9)

(2,417)(2,911)

8
(4)

31
(43)

(220)
(1,220)(292)(1,077)129(44)(5,081)

2,046

533

927

4,849

1,870

－

(146)

90
763

(47)
321

535
－

285
128

Office transfer expenses
Other, net

1,080
2,881

117
(1,066)

Subtotal

10,474

10,511

Interest and dividends income received

2,427
(8)

2,955
(30)

(478)
(1,080)(94)(81)(3,164)－(3,028)
(39)

8,169

10,192

Net cash provided by (used in) operating activities
Income (loss) before income taxes
Depreciation and amortization
Loss (gain) on valuation of investment securities
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors'
bonuses
Increase (decrease) in provision for sales returns
Increase (decrease) in provision for retirement
benefits
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for directors'
retirement benefits
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 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
Loss (gain) on liquidation of subsidiaries andassociates
Decrease (increase) in accounts receivable-other
Increase (decrease) in accounts payable-otherSpecial retirement expenses
Loss on liquidation of business

Interest expenses paid
Payments for extra retirement payments
Payments for office transfer expenses
Income taxes (paid) refund
Other
Net cash provided by (used in) operating activities― 24 ―

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, 2014
(From January 1
to December 31, 2014)(Millions of yen)
Year Ended
December 31, 2015
(From January 1
to December 31, 2015)(9,173)(3,668)9,161(2,049)

6,658
(673)

38

79

(374)
(1,660)

(499)
(70)

1,745

1,833

－

412

(91)

(127)

103
141

136
194

(318)
2,654

(364)
1,496

－

(276)

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
Proceeds from liquidation of subsidiaries andassociates
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
Other, net
Net cash provided by (used in) investing activities

(353)

(83)

(177)

5,046

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Net decrease (increase) in treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Other, net

4

53

(164)
(367)

(82)
358

(5,816)(109)(23,909)
(42)

(187)

(182)

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(6,640)(23,803)

846

(651)

2,197

(9,214)

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

32,41035,082

502

56

(28)

－

35,08225,924― 25 ―

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.
(Change in accounting policy)
Effective from the first quarter of the fiscal year ending December 31, 2015, the Group has adopted
Article 35 of the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26 of May 17, 2012;
the “Accounting Standard for Retirement Benefits”) and Article 67 of “Guidance on Accounting Standard
for Retirement Benefits” (ASBJ Guidance No. 25 of March 26, 2015; the “Guidance on Retirement
Benefits”). Therefore, the Group has changed the calculation methods for retirement benefit obligations
and current service costs, and has changed the method of attributing estimated retirement benefits toperiods from the straight-line basis to the benefit formula basis. In addition, the Group has changed themethod of determining the discount rate from using the bond rate determined by reference to the terms
closely related to average remaining working lives of the employees, to using a single weighted average
discount rate that reflects the estimated timing and amount of benefit payments.
With regard to the application of the Accounting Standard for Retirement Benefits, in accordance withthe transitional accounting treatments as stated in Article 37 of the Accounting Standard for Retirement
Benefits, the Group has reflected the effect of changing the determination of retirement benefit
obligations and current service costs in retained earnings at the beginning of the FY 2015.
As a result, net defined benefit asset has increased by ¥423 million and net defined benefit liability has
decreased by ¥631 million for the beginning of the FY 2015, while retained earnings have increased by¥678 million. Operating income, ordinary income and income before income taxes and minority interests
have had minimal impact for FY 2015.
(Segment Information, etc.)【Segment Information】
1. Description of Reportable Segments
The Group’s reportable segments are those for which separate financial information is available andregular evaluation by the Company’s management is performed in order to decide how resources areallocated among the Group. Therefore, the Group’s reportable segments are “Advertising” and “Other
business.”
The Group’s advertising segment covers various advertising activities that include planning andexecution of advertisements in various media such as magazines, newspapers, TV, radio, digital media, andOOH media. The advertising activities also include planning and production for ad expressions and content,
and service activities such as sales promotion, marketing, and public relations. The Group’s other businesssegment includes publication and sales of magazines and books.
2. Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets, and Other Items for Each
Reportable Segment
The accounting policies of each reportable segment are consistent with the principle and procedures ofaccounting processing to generate consolidated financial statements.
Segment profit (loss) is based on operating income of the consolidated statements of income andcomprehensive income.
The pricing of inter segment sales or transfers is on an arm’s length basis.

― 26 ―

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. Information related to the amounts of gross billings, profit (loss), assets (liabilities) and other items byreporting segment
Year Ended December 31, 2014
Reportable segments(Millions of Yen)
Amount on
Adjustment
Consolidated
Income Statements(*Note1)

Advertising

Nonadvertising

GROSS BILLINGS
Billings to customers
Inter-segment billings

348,273
27

4,710
52

352,98480－(80)

352,984－

Total billings
Segment income (loss)

348,301
4,465

4,763
(368)

353,064
4,097

(80)
0

352,984
4,097

Segment assets
237,959
6,533
Other:
Depreciation/amortization(*Note3)
1,345
38
Investment for entities accounted
847－
for using equity method
Increase in property, plant and2,487
17equipment and intangible assets(Notes) 1
The details of the adjustments are as follows.

244,492(1,175)

243,317

1,384

－

1,384

847

－

847

2,505

－

2,505

(1)

Total

(*Note2)

Adjustment of segment income (loss) is mainly due to the deduction of the transaction between thesegments and unrealized income.

(2)

Adjustment to segment assets consist of elimination for inter-segment transactions.

2

Segment income (loss) has been adjusted to equal the operating income on the consolidated income statements.

3

Depreciation/amortization includes amortization of software capitalized on the balance sheets.

Year Ended December 31, 2015
Reportable segments(Millions of Yen)
Amount on
Adjustment
Consolidated(*Note1)
Income Statements

Advertising

Nonadvertising

Total

Billings to customers

347,522

4,433

351,956－

351,956

Inter-segment billings

21

132

153

(153)

－

Total billings

347,5444,566

352,110(153)

351,956(*Note2)

GROSS BILLINGS

5,018

(118)

4,899

1

4,901

230,226

6,141

236,367(1,162)

235,205

Depreciation/amortization(*Note3)

1,508

35

1,544

－

1,544

Investment for entities accounted
for using equity method

1,110

－

1,110

－

1,110

15

1,223

－

1,223

Segment income (loss)
Segment assets
Other:

Increase in property, plant and1,208
equipment and intangible assets(Notes) 1
The details of the adjustments are as follows.
(1)

Adjustment of segment income (loss) is mainly due to the deduction of the transaction between thesegments and unrealized income.

(2)

Adjustment to segment assets consist of elimination for inter-segment transactions.

2

Segment income (loss) has been adjusted to equal the operating income on the consolidated income statements.

3

Depreciation/amortization includes amortization of software capitalized on the balance sheets.

― 27 ―

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)
Net assets per share (yen)Fiscal year ended
December 31, 2014
3,204.87

Fiscal year ended
December 31, 2015
2,947.40

88.32

127.72

Basic earnings per share (yen)Diluted earnings per share (yen)88.22
127.63(Notes) 1 The basis for the calculation of net income per share and diluted net income per share are as
follows.
Fiscal year ended
December 31, 2014

Item

Fiscal year ended
December 31, 2015

Basic earnings per share (yen)Net income (¥ millions)
Amounts not attributable to common stockholders(¥ millions)
Net income related to common shares (¥ millions)Average number of common shares during term
(shares)
Diluted earnings per share (yen)

3,696

5,362

－

－

3,696

5,362

41,848,271

41,982,754

28,54147,977(28,541)(Subscription rights) (shares)(47,977)
Outline of dilutive shares that were not included in the－calculation of “diluted earnings per share” because they
do not have dilutive effect.
The Company has introduced an Employee Stock Ownership Plan (ESOP) Trust and the shares of
the Company held in the ESOP Trust Account are recorded as treasury stock in the consolidated
financial statements. Accordingly, in calculating basic net income per share and diluted net income
per share the number of these shares is included in treasury stock for the calculation of “average
number of common shares during term.”
Increase in number of shares (shares)

2

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

December 31, 2014

December 31, 2015

134,999

125,488

Amounts excluded from net assets (¥ millions)

815

1,484

(Subscription rights) (¥ millions)

(40)

(23)

Total net assets (¥ millions)(1,461)(Minority interests) (¥ millions)(775)
Net income as of fiscal year-end related to124,004
134,184
common shares (¥ millions)
Common shares as of fiscal year-end used to42,072,477
41,868,824
calculate net assets per share
The Company has introduced an ESOP Trust and the shares of the Company held in the ESOP
Trust Account are recorded as treasury stock in the consolidated financial statements. Accordingly, in
calculating net assets per share the number of these shares is included in treasury stock for the
calculation of “common shares as of fiscal year-end.”
3. As described in “Change in Accounting Policy”, the Group applies the Accounting Standard for
Retirement Benefits, etc., and practices the transitional accounting treatments as stated in Article
37 of the Accounting Standard for Retirement Benefits. As a result, net asset per share in the period
ended December 2015 was up ¥16.13. It had minimal impact on net income per share and diluted
net income per share for FY2015.

(Material Subsequent Events)
Not Applicable.

― 28 ―

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.

6. Non-consolidated Financial Statements(1) Non-consolidated Balance sheets(Millions of yen)
December 31, 2014

December 31, 2015

AssetsCurrent assets
Cash and deposits

16,606

14,683

Notes receivable-trade
Accounts receivable-trade

6,219
69,853

4,697
69,724

Short-term investment securities
Inventories

7,026
5,515

－
4,591

Deferred tax assets
Accounts receivable-other

734
157

356
3,137

Other
Allowance for doubtful accounts

757
(571)

1,205
(440)

106,299

97,955

1,677
21

1,738
22

477
321

538
314

Total current assets
Noncurrent assets
Property, plant and equipment
Buildings
VehiclesTools, furniture and fixtures
Land
Lease assets
Total property, plant and equipment
Intangible assets
Leasehold right
Software
Other
Total intangible assets
Investments and other assets
Investment securities

52

6

2,550

2,620

1
1,515

1
1,424

0

0

1,517

1,426

11,868

11,29487,57997,500

1,099

858

52

－

105

171

1,747

557

Other

－
2,191

282
1,991

Allowance for doubtful accounts

(580)

(642)

Total investments and other assets

104,061

112,013108,130

116,061

214,429

214,017

Stocks of subsidiaries and affiliates
Investments in capital of subsidiaries
and affiliates
Long-term loans receivable fromsubsidiaries and affiliates
Claims provable in bankruptcy, claims
provable in rehabilitation and other
Guarantee deposits
Prepaid pension cost

Total noncurrent assets
Total assets― 29 ―

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, 2014

December 31, 2015

Liabilities
Current liabilities
Notes payable-trade
Accounts payable-trade
Current portion of long-term loans payable
Accounts payable-other
Income taxes payable
Provision for bonuses
Deposits received
Other
Total current liabilities
Noncurrent liabilities
Lease obligations
Deferred tax liabilities
Provision for retirement benefits
Other

9,051

8,950

56,16882

59,572
－

2,912
1,330

3,547
893

682
3,669

－
4,157

1,251

2,493

75,14879,614

4
21,582

4
22,757

631
645

－
627

22,864

23,38998,012103,004

37,581

37,581

Legal capital surplus
Other capital surplus

7,839

7,839

4,143

4,143

Total capital surpluses

11,982

11,982Retained earnings
Legal retained earnings

1,555

1,555

Other retained earnings
General reserve

22,019

1,519

3,770

10,502

27,345

13,577

Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus

Retained earnings brought forward
Total retained earnings
Treasury stock
Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Total valuation and translation adjustments
Subscription rights to shares
Total net assets
Total liabilities and net assets― 30 ―

(569)

(210)

76,34062,93140,03048,0595(0)40,03548,05840

23116,416

111,013214,429

214,017

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) Non-consolidated Income Statements(Millions of yen)
Year Ended
December 31, 2014

Year Ended
December 31, 2015

Cost of sales

306,718
272,055

306,801
273,875

Gross profit

34,662

32,925

Salaries and allowances
Provision for bonuses

15,456682

15,074－Retirement benefit expenses
Provision of allowance for doubtful accounts

1,685
197

1,388
267

Depreciation
Computer expenses

391
1,740

442
1,942

11,378

10,826

31,531

29,942

3,130

2,983

33

21

5
2,495

1
7,829

160
268

125
330

2,964

8,307

5

33

9
58

12
11

Gross billings

Selling, general and administrative expenses

Other
Total selling, general and administrative
expenses
Operating income
Non-operating income
Interest income
Interest on securities
Dividends income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses on real estates
Loss on investments in partnership
Other
Total non-operating expenses
Ordinary income

71

120

145

178

5,950

11,112

－

146

1,043
302

1,008
24

Extraordinary income
Gain on liquidation of subsidiaries and associates
Gain on sales of investment securities
Gain on sales of subsidiaries and affiliates' stocks
Other
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets

51

73

1,397

1,253

83

7

Special retirement expenses
Office transfer expenses

478
969

－
115

Other

207

118

1,738

241

Income before income taxes

5,609

12,124

Income taxes-current
Income taxes-deferred

2,165
(39)

2,170
377

Total income taxes

2,125

2,547

Net income

3,484

9,577

Total extraordinary losses― 31 ―

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) Statements of Changes in Net Assets
Year Ended December 31, 2014
(Millions of yen)
Shareholders' equity
Capital surplus

Balance as of January 1,2014

Capital stock

Legal capitalsurplus

Other capitalsurplus

Total capitalsurplus37,581

7,839

4,143

11,98237,581

7,839

4,143

11,9820

0

Cumulative effects of changes in accounting policies
Balance as of January 1,2014, reflecting changes inaccounting policies
Changes during the non-consolidated fiscal year
Dividend payments
Net income
Purchase of treasury shares
Disposal of treasury shares
Reversal of general reserve
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance as of December 31,2014

－

－

0

0

37,581

7,839

4,143

11,982

Shareholders' equity
Retained earnings
Other retained earnings

Total
Treasuryshareholders'stockequityLegalretainedearnings

General reserve

Balance as of January 1,2014

1,555

25,0193,219

29,794(651)

78,707

Cumulative effects of changes
in accounting policies
Balance as of January 1,2014,reflecting changes in accounting
policies
Changes during the nonconsolidated fiscal year

1,555

25,0193,219

29,794(651)

78,707

Dividend payments(5,932)(5,932)(5,932)

Net income

3,484

3,484

3,484

Total retained
Retained earnings
earnings
brought forward

Purchase of treasury shares

(6)

(6)

Disposal of treasury shares

87

87

Reversal of general reserve
Net changes of items otherthan shareholders' equity
Total changes of items during theperiodBalance as of December 31,2014(3,000)3,000－(3,000)551(2,448)81(2,367)

1,555

22,0193,770

27,345(569)

76,340― 32 ―－

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.

Valuation and translation adjustments
Valuation difference Deferred gains Total valuation
on available-for-sale or losses on and translation
securities
hedgesadjustments
Balance as of January 1,2014
Cumulative effects of changes in accounting
policies
Balance as of January 1,2014, reflecting changes
in accounting policies

Subscription
rights tosharesTotal net
assets35,0061

35,007

21

113,736

35,0061

35,007

21

113,736

Changes during the non-consolidated fiscal year
Dividend payments(5,932)

Net income

3,484

Purchase of treasury shares(6)

Disposal of treasury shares

87

Reversal of general reserve－

Net changes of items other than shareholders'equity

5,023

4

5,028

19

5,047

Total changes of items during the period

5,023

4

5,028

19

2,680

Balance as of December 31,2014

40,0305

40,03540

116,416― 33 ―

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, 2015
(Millions of yen)
Shareholders' equity
Capital surplus

Balance as of January 1,2015

Capital stock

Legal capitalsurplus

Other capitalsurplus

Total capitalsurplus37,581

7,839

4,143

11,98237,581

7,839

4,143

11,9820

0

Cumulative effects of changes in accounting policies
Balance as of January 1,2015, reflecting changes inaccounting policies
Changes during the non-consolidated fiscal year
Dividend payments
Net income
Purchase of treasury shares
Disposal of treasury shares
Reversal of general reserve
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance as of December 31,2015

－

－

0

0

37,581

7,839

4,143

11,982

Shareholders' equity
Retained earnings
Other retained earnings
Legal retained
Retained earnings
earnings
General reserve
brought forward
Balance as of January 1,2015
Cumulative effects of changes
in accounting policies
Balance as of January 1,2015,reflecting changes in accounting
policies
Changes during the nonconsolidated fiscal year

1,555

1,555

22,01922,019Dividend payments
Net income

Total retained
earnings

Balance as of December 31,2015(569)

76,34027,345

678

678

4,449

28,024(24,024)(24,024)(24,024)

9,577

9,577

9,577

Disposal of treasury shares

Net changes of items other thanshareholders' equity
Total changes of items during theperiodTotal
shareholders'equity3,770

Purchase of treasury shares

Reversal of general reserve

Treasuryshares678(569)

77,019

(7)

(7)

366

366

(20,500)

20,500－(20,500)

6,053(14,446)358(14,088)

1,555

1,519

10,502

13,577(210)

62,931― 34 ―－

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.

Valuation and translation adjustments
Valuation
Total valuation Subscription
Deferred gains
rights todifference on
andor losses onsharesavailable-fortranslation
hedgessale securities
adjustments
Balance as of January 1,2015
Cumulative effects of changes in accounting
policies
Balance as of January 1,2015, reflecting changes inaccounting policies

40,0305

40,03540

Total net
assets

116,416678

40,0305

40,03540

117,095

Changes during the non-consolidated fiscal year
Dividend payments(24,024)

Net income

9,577

Purchase of treasury shares(7)

Disposal of treasury shares

366

Reversal of general reserve－

Net changes of items other than shareholders'equity

8,029

(6)

8,023

(17)

8,006

Total changes of items during the period

8,029

(6)

8,023

(17)

(6,082)

Balance as of December 31,2015

48,059(0)

48,05823

111,013(4) Notes to Non-consolidated financial statements(Items related to going concern assumption)
Not applicable.

― 35 ―