Hakuhodo Dy Holdings Incorporated · TSE:2433

Hakuhodo Dy — 1H FY2014 Earnings Presentation

33 slides from Hakuhodo Dy's earnings presentation, Nov 10, 2014

1. Slide 1: Consolidated Financial Highlights 1H of Fiscal Year Ending March 31, 2015

   Consolidated Financial Highlights １Ｈ of Fiscal Year Ending March 31, 2015 (１Ｈ of FY2014) 2014.11.10

2. Slide 2: Cautionary statement concerning forward-looking statements, Note concerning audits

   Cautionary statement concerning forward-looking statements, Note concerning audits This presentation includes forward-looking statements concerning forecasts of operating results, business plans and policies, management strategies, goals, plans, numbers involving the future, views and evaluations of

3. Slide 3: Consolidated Financial Highlights for 1H of FY2014

   Consolidated Financial Highlights for １Ｈ of FY 2014

4. Slide 4: Consolidated Financial Highlights (1)

   Consolidated Financial Highlights （1） Billings and profit rose, with record 1H operating income ◎Billings:¥534.5 billion, up 5.8% year on year  Overall, absorbed falloff following extraordinary demand ahead of the consumption tax hike, and year-on-year growth at a broad range of industries.  Progr

5. Slide 5: Consolidated Financial Highlights (2)

   Consolidated Financial Highlights （2） (Millions of yen) 1Q of 2Q of 1H of YoY comparisons YoY comparisons YoY comparisons FY2013 FY2014 FY2013 FY2014 FY2013 FY2014 Change (%) Change (%) Change (%) Billings 246,437 259,705 13,268 5.4% 258,912 274,811 15,898 6.1% 505,350 534,516 29,166 5.8% Revenue 40

6. Slide 6: Consolidated Financial Highlights (3)

   Consolidated Financial Highlights （3） 【 Differences between actual results and 1H forecast announced on May 9, 2014】 (Millions of yen) １Ｈ of １Ｈ of １Ｈ Original Change between results YoY comparisons 'FY2014 YoY comparisons forecasts and forecasts as of May 9, '14 Change (%) （Result） Change (%) Change

7. Slide 7: Billings by Industry (1)

   Billings by Industry（1） (Millions of yen) (Millions of yen) 64,726 Automobiles/Related products Y o Y comparisons 62,336 １H of FY'14 FY'14 61,963 Beverages/Cigarettes/ Luxury foods Amount Change % Share 58,975 49,490 Automobiles/Related products 64,726 2,390 3.8% 14.2% Information/Communicatio ns 44

8. Slide 8: Billings by Industry (2)

   Billings by Industry（2） (Millions of yen) YoY comparisons YoY comparisons FY2013 FY2014 YoY comparisons １Ｑ of ２Ｑ of FY2014 Change （%) FY2014 Change （%) 1H Share 1H Share Change （%) Automobiles/Related products 27,353 (1,732) -6.0% 37,373 4,123 12.4% 62,336 14.3% 64,726 14.2% 2,390 3.8% Beverages/Cig

9. Slide 9: Billings by Industry (3)

   Billings by Industry（3） Quarterly YoY Changes(±) (1) Top 3 Largest First-half Changes by Industry（Millions of yen） Information/Communications Beverages/Cigarettes/Luxury foods Cosmetics/Toiletries +5,000 +4,764 +5,000 +5,000 +4,000 +4,000 +4,000 +2,936 +2,988 +3,000 +3,000 +3,000 +2,768 +2,000 +1,82

10. Slide 10: Billings by Industry (4)

    Billings by Industry（4） Quarterly YoY Changes(2) Other Major Industries（Millions of yen） Automobiles/Related products Foodstuffs Finance/Insurance +5,000 +5,000 +5,000 +4,123 +4,000 +4,000 +4,000 +3,000 +3,000 +3,000 +2,390 +2,000 +2,000 +1,752 +2,000 +1,537 +1,088 +902 +1,000 +1,000 +1,000 +635 0 0

11. Slide 11: Billings by Service Area

    Billings by Service Area (Millions of yen) １Ｑ of ２Ｑ of YoY comparisons YoY comparisons １Ｈ of FY2013 １Ｈ of FY2014 YoY comparisons FY2014 FY2014 Amount Change （%) Amount Change （%) Amount Share Amount Share Change （%) Newspapers 14,312 (529) -3.6% 13,816 (1,376) -9.1% 30,032 6.5% 28,127 5.8% (1,905) -

12. Slide 12: Changes in SG&A Expenses (1)

    Changes in SG&A Expenses（1） (Millions of yen) １Ｑ of YoY comparisons ２Ｑ of YoY comparisons 1Ｈ of YoY comparisons FY2013 FY2014 Change (%) FY2013 FY2014 Change (%) FY2013 FY2014 Change （%) Personnel costs 25,598 26,750 1,151 4.5% 25,808 27,767 1,958 7.6% 51,407 54,517 3,110 6.1% Other expenses (total)

13. Slide 13: Changes in SG&A Expenses (2)

    Changes in SG&A Expenses（2） (billions of yen) Change Factors in SG&A Expenses ↑1.6 ↑2.1 ↑0.2 ↓0.3 79.8 ↑1.8 74.3 71 FY2013 Changes in Retirement Amortization of Personnel costs Others FY2014 consolidation benefit costs goodwill (excl. factors at (excl. factors at left) left) November 10, 2014 Consol

14. Slide 14: Non-Operating Items and Extraordinary Gains and Losses

    Non-Operating Items and Extraordinary Gains and Losses (Millions of yen) １Ｑ of YoY comparisons ２Ｑ of YoY comparisons １Ｈ of YoY comparisons FY2013 FY2014 Change (%) FY2013 FY2014 Change （%） FY2013 FY2014 Change （%） Non-operating income 699 601 (97) -14.0% 516 460 (55) -10.8% 1,215 1,061 (153) -12.6%

15. Slide 15: Results by Region

    Results by Region〈Consolidated Financial Highlights〉 1H YoY comparisons FY2013 FY2014 （Millions of yen） Change (%) Billings 488,802 511,208 22,406 4.6% Japan Revenue 84,220 90,932 6,711 8.0% Operating Income 15,321 21,125 5,804 37.9% Billings 19,663 26,226 6,563 33.4% International Revenue 4,264 5,9

16. Slide 16: Consolidated Balance Sheets

    Consolidated Balance Sheets (Millions of yen) (Millions of yen) Mar. 31, 2014 Sep.30, 2014 Comparisons Sep. 30, 2013 Amount Share Amount Share Change (%) Amount Share Current assets 455,063 77.9% 409,660 75.5% (45,403) -10.0% 379,555 75.6% Fixed assets 128,907 22.1% 132,811 24.5% 3,904 3.0% 122,889

17. Slide 17: Consolidated Statements of Cash Flow

    Consolidated Statements of Cash Flow (Millions of yen) 1H of Y o Y comparisons FY2013 FY2014 Change Cash flow from operating activities (3,406) (916) 2,490 Cash flow from investing activities 2,150 (6,920) (9,070) Cash flow from financing activities (2,512) (9,264) (6,752) Effect of exchange rate ch

18. Slide 18: Highlights of Operating Results at Major Subsidiaries

    Highlights of Operating Results at Major Subsidiaries (Millions of yen) １Ｈ of YoY comparisons FY2013 FY2014 Change (%) ◎Billings were up ¥30.9 billion, or 8.5%, year on year. H akuhodo ( ＊) By client industry Increases: Information/Communications and Billings 362,104 393,054 30,949 8.5% Beverages/Ci

19. Slide 19: MEMO

    ＜MEMO＞ November 10, 2014 Consolidated Financial Highlights １Ｈ of FY2014 18

20. Slide 20: Business Outlook for Fiscal 2014

    Consolidated Business Outlook for Fiscal 2014

21. Slide 21: Business Outlook for Fiscal 2014 (1)

    Consolidated Business Outlook for Fiscal 2014（1） Despite the possibility of a shortfall from full-year billings forecast, profit forecasts remain unchanged ◎ With an increasingly uncertain macroeconomic outlook, the possibility of a shortfall from the initial 2H billings forecast has emerged. ◎ Neve

22. Slide 22: Business Outlook for Fiscal 2014 (2)

    Consolidated Business Outlook for Fiscal 2014（2） As of Nov. 7, 2014 （Millions of yen） 1H 2H Full Year FY2013 FY2014 YoY FY2013 FY2014 YoY FY2013 FY2014 YoY (Result) (Result) change （％） (Result) (Forecasts) change （％） (Result) (Forecasts) change （％） Billings 505,350 534,516 29,166 5.8% 590,559 616,48

23. Slide 23: Business Outlook for Fiscal 2014 (3)

    Consolidated Business Outlook for Fiscal 2014（3） [Reference] Announced May 9, 2014 Higher Billings and Earnings Projected in the First Year of the New Medium-term Business Plan ◎Macro environment: Growth in Japan’s advertising market of approximately +2-3% ・Against the backdrop of a recovery in the

24. Slide 24: Business Outlook for Fiscal 2014 (4)

    Consolidated Business Outlook for Fiscal 2014（4） [Reference] Announced May 9, 2014 As of May. 9, 2014 （Millions of yen） 1H 2H Full Year FY2013 FY2014 YoY FY2013 FY2014 YoY FY2013 FY2014 YoY (Result) (Forecasts) change （％） (Result) (Forecasts) change （％） (Result) (Forecasts) change （％） Billings 505,3

25. Slide 25: Update on progress under the Medium-term Business Plan

    Update on progress under the Medium-term Business Plan Note: Abbreviations on each page HC: Hakuhodo DY Holdings Inc. H: Hakuhodo Inc. D: Daiko Advertising Inc. Y: Yomiko Advertising Inc. MP: Hakuhodo DY Media Partners Inc. HP: Hakuhodo Product’s Inc.

26. Slide 26: Medium-Term Business Plan (FY2014-FY2018: 5-year plan)

    Medium-Term Business Plan（FY2014-FY2018: 5-year plan） With our mission of serving as the best marketing partner for each one of our clients, the Hakuhodo DY Group stands as one of the world’s top advertising Core Mid-Term Strategy and marketing services groups. Our cutting-edge creative ideas and in

27. Slide 27: Overview of Progress During 1H of FY2014

    Overview of Progress During 1H of FY2014 In addition to growth at existing operating companies, growth from M&As led to a large 9.5% YoY increase in revenue. Revenue Factors behind revenue growth(1) ※Base year = FY2013 (Billions of yen） Y o Y comparisons Domestic International +9.5％ 100.0 Difference

28. Slide 28: Overview of Progress During 1H of FY2014: Specific measures

    Overview of Progress During 1H of FY2014  Strengthened structure and capabilities, focusing on the three growth drivers outlined in the Medium-Term Business Plan. Specific measures Working with external partners, strengthened sei-katsu-sha data-driven marketing response capabilities Strengthened st

29. Slide 29: Working with external partners on data-driven marketing response capabilities

    Working with external partners, strengthened sei-katsu-sha data-driven marketing response capabilities Operational tie-up with i's FACTORY co., ltd. （MP/HC）  Strengthened data analysis capabilities and analysis business operational structure  Launched new m-Quad service to support decision making

30. Slide 30: Strengthened structure in Asia

    Strengthened structure in Asia  Total Asia revenue grew 20.1% YoY on large growth in greater China.  In addition to expanding network offices, also strengthened structure with acquisition of specialized marketing service companies. Asia Revenue Topics (Billions of yen） 5.0 Y o Y comparisons Estab

31. Slide 31: Acquired innovative and unique specialized marketing service companies

    Acquired innovative and unique specialized marketing service companies  Started full-scale operations of strategic operating unit kyu, which promotes specialization and innovation. • Michael Birkin named CEO of kyu and Senior Executive Corporate Officer of Hakuhodo DY holdings. CFO position also fi

32. Slide 32: Expanded domestic service lineup

    Expanded domestic service lineup  Expansion of the marketing services lineup is also an important strategic subject for the Japanese market.  With acquisition of D.Brain Co.,Ltd. , gained new capabilities in area of store interior decoration. Specialized advertising Creative Store Interior decorat

33. Slide 33: Note on Tsutawaru Font

    Text is this document is printed in “Tsutawaru Font,” an original font jointly developed by Hakuhodo Inc., TypeBank Co., Ltd., and Keio University. Developed based on the concept of universal design, the purpose of the font is to prevent reading errors and enhance the readability of the text.

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