Dentsu Inc. Announces First December-Ended Fiscal Year Results Following Change in Fiscal Year End

■Financial Report-Based Performance (Domestic Operations: April–December2015;OverseasOperations:January–December2015)

Revenue: ¥706,469 million

  Gross Profit: ¥669,489 million

  Adjusted Operating Profit: ¥133,328 million

  Operating profit: ¥107,265 million

  Net Income (Attributable to Owners of the Parent) 72,653 million yen

 

■ Calendar Year Performance (Domestic and OverseasBusinesses:January–December2015)

  Revenue: ¥818,566 million (12.8% increase year-on-year)

  Gross Profit: ¥761,996 million (up 12.6% YoY)

  Adjusted Operating Income: ¥160,438 million (Up 20.3% YoY)

  Operating profit: ¥128,212 million (down 6.8% YoY)

  Net income attributable to owners of the parent: ¥83,090 million (up 2.1% year-on-year)

  Adjusted net income attributable to owners of the parent: ¥113,388 million (up 27.1% year-on-year)

 

Dentsu Inc. announced its consolidated financial results for the fiscal year ended December 2015 (hereinafter "the current period") on February 15.

<Change in Fiscal Year-End>

Starting this period, the company and its subsidiaries with fiscal years ending on dates other than December 31 changed their fiscal year-end to December 31. This change aligns the fiscal year-end with the company's overseas consolidated subsidiaries, aiming to streamline and strengthen the integrated domestic and international accounting and management systems.

Consequently, the company changed its consolidated fiscal year-end from March 31 to December 31. The current period covers the nine-month period from April 1, 2015, to December 31, 2015.

Furthermore, Dentsu Inc. Aegis Network Inc., the operating entity for the Group's overseas advertising business, and its subsidiaries have always had a fiscal year-end of December 31. The current period covers the 12-month period from January 1, 2015, to December 31, 2015. Therefore, the percentage change in consolidated performance compared to the previous period is not stated on a financial reporting basis.

For reference, the profit and loss situation on a calendar year basis is presented assuming the Group's accounting period for both the previous and current fiscal years was 12 months from January to December.

＜Financial Results Overview＞

In fiscal 2015, the Japanese economy followed a pattern of gradual recovery, supported by robust corporate earnings against the backdrop of government economic policies and Bank of Japan monetary policy. However, personal consumption continued to lack some vigor. Meanwhile, the global outlook remained uncertain due to fiscal issues and political instability in Europe, moves toward normalizing monetary policy in the United States, and slowing growth in emerging Asian economies, particularly China.

Carat, the company's overseas media communications agency, announced in September 2015 that global advertising expenditure for the 2015 calendar year grew by 4.0% year-on-year. By region, Japan saw a 1.4% increase, Europe, the Middle East, and Africa (EMEA) at 1.9%, the Americas at 5.0%, and Asia-Pacific (excluding Japan; APAC) at 5.2%.

1.Financial Reporting Basis Performance (Domestic Business:April–December2015;OverseasBusiness:January–December2015)

Due to the change in the fiscal year-end, consolidated figures have a different accounting period, so year-on-year percentage changes are not shown. However, year-on-year comparisons are possible for domestic operations (including non-consolidated, April 1, 2015 to December 31, 2015) and overseas operations (January 1, 2015 to December 31, 2015), so year-on-year percentage changes are shown for each.

◇Consolidated Performance

Under the aforementioned environment, the Group's domestic operations for the current period (April 1, 2015 to December 31, 2015) saw gross profit increase by 6.7% compared to the same period last year. This was driven by contributions from the 15th IAAF World Championships in Athletics in Beijing, the 44th Tokyo Motor Show 2015, and sponsorship sales for the Tokyo 2020 Olympic and Paralympic Games.

Furthermore, the organic growth rate of gross profit for the overseas business during the current period (January 1, 2015 to December 31, 2015) continued to show strong growth, increasing by 9.4%, partly due to contributions from new clients. By region, this growth was 12.2% in EMEA, 4.9% in the Americas, and 11.4% in APAC.

As a result, revenue for the period (Domestic Business: April 1, 2015 to December 31, 2015; Overseas Business: January 1, 2015 to December 31, 2015) was ¥706,469 million, gross profit was ¥669,489 million, adjusted operating profit was ¥133,328 million, operating profit was ¥107,265 million, and net income attributable to owners of the parent was ¥72,653 million.

Adjusted operating income is a profit indicator measuring the performance of recurring business operations, derived by excluding from operating income non-recurring items such as amortization of intangible assets related to acquisitions, impairment losses, gains or losses on sales of fixed assets, and acquisition-related costs.

The performance of the reporting segments for the current period is as follows.

a. Domestic Business (April 1, 2015 to December 31, 2015)

Gross profit for Domestic Operations was ¥255,746 million (up 6.7% year-on-year), and adjusted operating profit was

¥63,293 million (up 21.7% year-on-year).

b. Overseas Business (January 1, 2015 to December 31, 2015)

Gross profit for overseas operations was ¥414,066 million (up 20.6% from the previous fiscal year), and adjusted operating profit was ¥70,105 million (up 33.3% from the previous fiscal year).

56 million yen (up 33.3% year-on-year).

◇Non-consolidated Performance

The Company's Non-Consolidated Performance (Japanese GAAP; April 1, 2015 - December 31, 2015) recorded net sales of ¥1,156,186 million (up 2.2% year-on-year), gross profit of ¥165,368 million (up 2.1%), operating profit of ¥39,637 million (up 10.3%), ordinary profit of ¥63,826 million (up 11.1%), and net profit of ¥53,565 million (down 5.4%).

2.Calendar Year Performance (DomesticandOverseas Businesses:JanuarytoDecember2015)

The profit and loss situation on a calendar year basis, assuming the Group's accounting period for both the previous and current fiscal years was 12 months from January to December, is as follows.

◇Consolidated Performance

For the 2015 calendar year, consolidated revenue was ¥818,566 million (up 12.8% year-on-year), gross profit was ¥761,996 million (up 12.6%), adjusted operating profit was ¥160,438 million (up 20.3%), Operating profit was ¥128,212 million (down 6.8% YoY). Net income attributable to owners of the parent was ¥83,090 million (up 2.1% YoY). Adjusted net income attributable to owners of the parent was ¥113,388 million (up 27.1% YoY).

◇Non-consolidated Results

For the calendar year 2015, non-consolidated results were as follows: Net sales of ¥1,560,136 million (up 1.4% year-on-year), gross profit of ¥226,622 million (up 0.7%), operating profit of ¥56,133 million (up 3.9%), ordinary profit was ¥82,826 million (up 6.9% year-on-year), and net profit was ¥60,903 million (down 8.5% year-on-year).

(Reference: Scope of Consolidated Financial Statements)

The scope of consolidated financial statements includes 760 "consolidated subsidiaries" and 58 "equity-method affiliates." The breakdown by reporting segment is as follows: "Consolidated subsidiaries" comprise 82 domestic businesses and 678 overseas businesses; "Equity-method affiliates" comprise 31 domestic businesses and 27 overseas businesses.

For detailed results for the current period, see: http://www.dentsu.co.jp/ir/

<President's Message: NaoIshii, President and Representative Director, Executive Officer >

It has been nearly three years since the Aegis Group joined Dentsu Inc.'s family and Dentsu Aegis Network was established. During this period, the integration has been successful, generating significant synergies. Our group's solutions, delivered with a commitment to client growth, have been highly regarded worldwide, resulting in superior growth compared to competitors.

We have now reached the midpoint of our current five-year mid-term management plan, "Dentsu 2017 and Beyond," and progress to date has been steady. Moving forward, we aim to contribute to the growth of all our client companies—local, regional, and global—by further expanding our business in the Japanese market, which remains the core of our group, while maximizing the potential of our extensive global network.

Dentsu Inc. News Releasehttp://www.dentsu.co.jp/news/release/2016/0215-008671.html

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