Dentsu Reports Consolidated Financial Results for the Fiscal Year Ended March 31, 2013 (Japanese GAAP)

  Dentsu Reports Consolidated Financial Results for the Fiscal Year Ended
  March 31, 2013 (Japanese GAAP)

    —Posts 1,941.2 Billion Yen in Consolidated Billings (Net Sales) (2.5%
year-on-year increase), 58.4 Billion Yen in Operating Income (12.5% increase),
 59.0 Billion Yen in Ordinary Income (6.1% decrease) and 36.3 Billion Yen in
                         Net Income (22.9% increase)—

Business Wire

TOKYO -- May 14, 2013

Dentsu Inc. (TOKYO: 4324) (ISIN: JP3551520004) (President & CEO: Tadashi
Ishii; Head Office: Tokyo; Capital: 58,967.1 million yen) today convened a
meeting of its Board of Directors at its Head Office in Tokyo at which it
finalized its consolidated and non-consolidated financial results for the
fiscal year ended March 31, 2013 (April 1, 2012–March 31, 2013; hereinafter
"the fiscal year under review").

Summary of financial results for the fiscal year ended March 31, 2013

During the fiscal year under review, the Japanese economy showed a gradual
recovery due to demand from reconstruction in the wake of the Great East Japan
Earthquake and the effects of policies such as Japan's eco-car subsidy
program. However, the situation remained uncertain due to concerns about the
prolonged European government debt crisis as well as the slowdown in economic
growth seen in China and other emerging economies. Thanks to economic measures
implemented at the end of last year which led to a rapid weakening of the yen
and higher stock prices, expectations for the future have been growing. The
actual situation, however, is likely to remain unpredictable.

Meanwhile, demand for advertising, mainly television spots, showed a strong
upturn in the April-June quarter as the market rebounded from the effects of
the devastating earthquake and tsunami which had affected the advertising
industry during the same period a year earlier. However, against the
background of increasing uncertainty about the future of the global economy,
advertising demand started to slow in the summer.

Dentsu's estimate for advertising expenditures in Japan for the 2012 calendar
year was 5,891.3 billion yen, an increase of 3.2% compared with the 2011
calendar year. This marked the first increase in five years. Looking at the
breakdown of advertising expenditures by medium, spending in the Traditional
Media category rose 2.9%, and advertising in Promotional Media was up 1.4%.
Satellite Media-Related advertising expenditures posted double-digit growth
(up 13.7%) for the third consecutive year, and Internet advertising also
showed strong growth (up 7.7%). A quarterly breakdown of advertising
expenditures for the traditional media in the 2012 calendar year showed that
spending rose steadily during the first half of the year, but fell slightly
below previous-year levels during the second half.

Under such circumstances, the Dentsu Group (hereinafter "the Group") leveraged
its comprehensive resources and proactively pursued a diverse array of
business opportunities by offering "Integrated Communication Design"
solutions. Furthermore, events such as the London 2012 Olympic Games, TOYOTA
Presents FIFA Club World Cup Japan 2012, and the 2013 World Baseball Classic
provided the Group with opportunities for multi-faceted business development.

In the fiscal year under review, the Group posted consolidated billings (net
sales) of 1,941,223 million yen, an increase of 2.5% compared with the fiscal
year ended March 31, 2012. The Group recorded gross profit of 345,940 million
yen, an increase of 3.9%; operating income of 58,466 million yen, an increase
of 12.5%; ordinary income of 59,027 million yen, a decrease of 6.1%; and net
income of 36,336 million yen, an increase of 22.9%.

Looking at the results by business segment, net sales of 1,878,846 million
yen, an increase of 2.5% compared with the previous fiscal year, and segment
income of 52,853 million yen, an increase of 13.4%, were posted in the
Advertising segment. In the Information Services segment, net sales of 71,094
million yen, an increase of 11.3%, and segment income of 3,053 million yen, an
increase of 72.0%, were posted. Net sales in the Other Business segment
totaled 16,547 million yen, a decrease of 8.3%, with segment income of 924
million yen, an increase of 48.6%.

By geographic area, net sales of 1,667,679 million yen, an increase of 1.6%
compared with the previous fiscal year, and operating income of 53,431 million
yen, an increase of 11.4%, were posted in Japan. In other countries, net sales
of 282,442 million yen, an increase of 8.0%, and operating income of 4,789
million yen, an increase of 23.5%, were posted.

Regarding Dentsu Group companies with a December 31 closing date, including
subsidiaries in countries other than Japan, their financial results for the
twelve months from January 1 to December 31, 2012 are, as a general rule,
incorporated in the consolidated financial results for the fiscal year ended
March 31, 2013.

Dentsu posted non-consolidated billings (net sales) of 1,412,376 million yen,
an increase of 0.5% compared with the previous fiscal year; gross profit of
197,867 million yen, an increase of 1.7%; operating income of 35,766 million
yen, an increase of 12.9%; ordinary income of 39,091 million yen, a decrease
of 3.8%; and net income of 28,189 million yen, a decrease of 33.2%.

For more details regarding the consolidated and non-consolidated results,
please see the presentation slides (will be uploaded on May 17, 2013) in the
Presentation Materials section of the company website at:
http://www.dentsu.com/ir/

Reference: Scope of Consolidated Financial Results

As of March 31, 2013, the Dentsu Group includes 656 consolidated subsidiary
companies and 56 affiliated companies accounted for by the equity method. 87
of these companies are located in Japan and 625 in countries other than Japan.
By business segment, 692 of these companies fall into the Advertising segment,
15 into the Information Services segment, and 5 into the Other Business
segment.

Outlook for the fiscal year ending March 31, 2014

Uncertainty about the future of the European debt crisis remains, but economic
recovery is progressing in the United States as well as in emerging countries.
Since the Japanese economy is also expected to grow due to the effects of
recent economic stimulus measures, the global economy is expected to recover
gradually in the coming year.

Against this backdrop, Dentsu has drawn up a new medium-term management plan.
In order to become a next-generation agency network which provides
unparalleled value through the Group's unique capabilities, it will create new
marketing communications that go beyond the framework of existing advertising
business. In addition to building a network that supports its clients'
businesses worldwide, it will develop and provide integrated solutions that
lead the digital age, as well as achieve sustainable growth and increase
profitability in the Japanese market, the Group's strongest base.

For the fiscal year ending March 31, 2014, on a consolidated basis, Dentsu
forecasts billings (net sales) of 2,283.4 billion yen, an increase of 17.6%
year on year; gross profit of 571.8 billion yen, an increase of 65.3%;
operating income before amortization of goodwill and intangible assets of
100.1 billion yen; operating income of 58.5 billion yen, an increase of 0.1%;
ordinary income of 58.7 billion yen, a decrease of 0.6%; and net income of
19.1 billion yen, a decrease of 47.4%.

In March 2013, Dentsu completed proceedings for the acquisition of global
media and digital communications group Aegis Group plc (hereinafter "Aegis"),
and established a new global operating unit, Dentsu Aegis Network Ltd.
(hereinafter "DAN") in London. DAN's financial results will be included in
Dentsu's report of financial results from the first quarter of the fiscal year
ending March 31, 2014. Accordingly, goodwill amortization of 24.5 billion yen
and other intangible assets of 11.4 billion yen have been included as selling,
general and administrative expenses in this forecast. Both these amounts are
tentative figures at the present time, and may be subject to change after
further careful examination. In any event, all examination procedures are
expected to be completed by the end of the first quarter. Calculations were
made using the exchange rate of GBP 1 = JPY 143.16, the rate that was in
effect for the January–March 2013 period.

The billings (net sales) figure includes the revenue figures provided by DAN
that were calculated using IFRS. Since it is generally thought that gross
profit figures are the most useful when making comparisons with competitors
worldwide, Dentsu has positioned growth rate in gross profit as one of the
management plan objectives in its new medium-term management plan.

Going forward, Dentsu is considering the voluntary adoption of IFRS for the
fiscal year ending March 2015 in order to increase comparability in
international capital markets. Adopting IFRS will eliminate the need for
annual straight-line amortization of goodwill as well as the difficulty of
estimating in advance the amount of goodwill that must be amortized whenever a
company is acquired. Operating margin before amortization of goodwill and
intangible assets has been included as another management plan objective in
Dentsu's new medium-term management plan. The operating income before
amortization of goodwill and intangible assets forecast of 100.1 billion yen
comprises the operating income figure to which has been added 29.2 billion yen
as amortization of goodwill incurred through acquisitions (including the
acquisition of Aegis) and 12.4 billion yen as other intangible assets.

Cash dividends applicable to the fiscal year ended March 31, 2013

Based on a comprehensive view of such factors as business results for the
fiscal year under review, the medium- to long-term results outlook and the
Group's funding situation, cash dividends per share of common stock are
expected to be 32.00 yen, including an interim dividend of 16.00 yen and a
year-end dividend of 16.00 yen.

Cash dividends per share of common stock applicable to the fiscal year ending
March 31, 2014, are expected to be 32.00 yen, including an interim dividend of
16.00 yen and a year-end dividend of 16.00 yen.

Overview of New Medium-Term Management Plan "Dentsu 2017 and Beyond"

The establishment of the Dentsu Aegis Network marks a new beginning for the
Dentsu Group as a truly global player who operates in 110 countries. In line
with the acquisition of Aegis, the Group will operate under its new
medium-term management plan, "Dentsu 2017 and Beyond," which starts from
FY2013 and goes through to FY2017. With regard to "Dentsu Innovation 2013,"
the Group's current medium-term plan, the Group will review its overall
activities and accomplishments, and will incorporate agendas that further need
to be addressed into the new management plan.

     
●   Medium-Term Management Plan Objectives (FY2017)
    -   Annual organic growth rate in gross profit: 3–5%
    -   Ratio of gross profit generated from markets outside of Japan: 55% or
        higher
    -   Ratio of gross profit generated from digital businesses: 35% or higher
    -   Operating margin before amortization of goodwill and intangible
        assets*: 20% or higher

              Operating margin before amortization of goodwill and intangible
     *  assets = Operating income before amortization of goodwill and
              intangible assets÷ gross profit
              Operating margin before amortization of goodwill and intangible
              assets stands for operating income that excludes amortization of
              goodwill and intangible assets as the result of an acquisition
              

      
●   Corporate Strategy
    1.   To establish a comprehensive global network that supports clients'
         businesses around the globe
    2.   To reinforce competitive strengths in the digital space that plays a
         central role in all client solutions
    3.   To make further innovations in the area of business process
         management so as to enhance profitability
    4.   To reinforce the business platform in Japan, the Group's largest
         operating market
    5.   To actively participate in CSR activities
         

Cautionary statement with respect to forward-looking statements

These business results forecasts have been made by Dentsu on the basis of
currently available information, and hence involve potential risks and
uncertainties. Consequently, actual business results may differ from the
forecasts due to changes in various factors.


Consolidated Financial Results

for the Fiscal Year Ended March 31, 2013

1.Summary of Consolidated Balance Sheets

                            (Millions of yen: Rounded down to the nearest one
                             million yen)
                             As of                  As of
                                                                 % Change
                             March 31, 2012         March 31,
                                                    2013
ASSETS                                                               
Current assets               722,223                1,122,602        55.4
Noncurrent assets            479,671                1,082,966        125.8
Total assets                 1,201,894              2,205,569        83.5
                                                                          
LIABILITIES
Current liabilities          525,181                1,317,554        150.9
Noncurrent liabilities       119,824                279,377          133.2
Total liabilities            645,005                1,596,931        147.6
                                                                          
NET ASSETS
Shareholders' equity         541,929                570,419          5.3
Accumulated other
                             (5,638)                14,076           –
comprehensive income
Minority interests           20,598                 24,141           17.2
Total net assets             556,889                608,637          9.3
Total liabilities and net    1,201,894              2,205,569        83.5
assets


2.Summary of Consolidated Statements of Income
                                                              
                             (Millions of yen: Rounded down to the nearest one
                             million yen)
                             Fiscal year          Fiscal year

                             ended                ended              % Change

                             March 31,            March 31,
                             2012                 2013
Net sales                    1,893,055            1,941,223          2.5
Gross profit                 332,807              345,940            3.9
Operating income             51,977               58,466             12.5
Non-operating income         15,880               10,016             (36.9)
Non-operating expenses       5,014                9,455              88.6
Ordinary income              62,843               59,027             (6.1)
Extraordinary income         7,194                13,854             92.6
Extraordinary loss           11,578               9,571              (17.3)
Income before income taxes   58,459               63,310             8.3
and minority interests
Net income                   29,573               36,336             22.9


3.Summary of Consolidated Statements of Comprehensive Income
                                                              
                             (Millions of yen: Rounded down to the nearest one
                             million yen)
                             Fiscal year          Fiscal year

                             ended                ended              % Change

                             March 31,            March 31,
                             2012                 2013
Income before minority       31,505               38,748             23.0
interests
Other comprehensive income   23,839               20,856             (12.5)
Comprehensive income         55,344               59,605             7.7


4.Summary of Consolidated Statements of Cash Flows
                                                    

                                 (Millions of yen: Rounded down to the nearest
                                 one million yen)
                                 Fiscal year                Fiscal year

                                 ended                     ended

                                 March 31, 2012             March 31, 2013
Net cash provided by operating   26,397                     83,295
activities
Net cash used in investing       45,941                     (51,236)
activities
Net cash used in financing       (27,331)                   (5,349)
activities
Effect of exchange rate change
on cash and                      (1,866)                    3,905

cash equivalents
Net increase in cash and cash    43,140                    30,616
equivalents
Cash and cash equivalents at     131,662                    175,956
beginning of period
Increase in cash and cash
equivalents from                 1,152                      1,006

newly consolidated subsidiary
Cash and cash equivalents at     175,956                    207,578
end of period


Non-Consolidated Financial Results

for the Fiscal Year Ended March 31, 2013

1.Summary of Non-Consolidated Balance Sheets
                                                             
                             (Millions of yen: Rounded down to the nearest one
                             million yen)
                             As of                 As of
                                                                   % Change
                             March 31, 2012        March 31,
                                                   2013
ASSETS                                                             
Current assets               593,069               538,121             (9.3)
Noncurrent assets            472,595               871,265         84.4
Total assets                 1,065,664             1,409,387       32.3
                                                                       
LIABILITIES
Current liabilities          512,175               819,679             60.0
Noncurrent liabilities       90,390                97,202          7.5
Total liabilities            602,566               916,881         52.2
                                                                       
NET ASSETS
Shareholders’ equity         458,266               478,475             4.4
Valuation and translation    4,831                 14,029          190.4
adjustments
Total net assets             463,098               492,505         6.4
Total liabilities and net    1,065,664             1,409,387       32.3
assets


2.Summary of Non-Consolidated Statements of Income
                                                          
                      (Millions of yen: Rounded down to the nearest one
                      million yen)
                      Fiscal year           Fiscal year
                                            ended
                      ended                                     % Change
                                            March 31, 2013
                      March 31, 2012
Net sales             1,404,663             1,412,376               0.5
Gross profit          194,636               197,867                 1.7
Operating income      31,693                35,766                  12.9
Non-operating income  13,634                12,549                  (8.0)
Non-operating         4,673                 9,224                   97.4
expenses
Ordinary income       40,654                39,091                  (3.8)
Extraordinary income  27,142                13,301                   (51.0)
Extraordinary loss    6,154                 9,903                   60.9
Income before income  61,642                42,489                  (31.1)
taxes
Net income            42,212                28,189                  (33.2)
                                                                     

About the Dentsu Group

Led by Dentsu Inc. (TOKYO: 4324) (ISIN: JP3551520004), the world's largest
advertising agency brand with a history of 112 years, the Dentsu Group offers
a comprehensive range of client-centric communications and media services in
110 countries across five continents. Its Japan-wide network and London-based
global operating unit Dentsu Aegis Network Ltd., which oversees the operations
of Aegis Media, a leading global media and digital communications specialist,
as well as those of the Dentsu Network, which manages all of Dentsu's other
global business operations outside Japan, together employ around 36,000
dedicated professionals. The Group is also active in the production and
marketing of sports and entertainment content on a global scale.

Dentsu Inc.: www.dentsu.com
Dentsu Aegis Network Ltd: www.dentsuaegisnetwork.com
Dentsu News: http://www.dentsu.com/news/index.html

Contact:

Dentsu Inc.
Shusaku Kannan, (813) 6216-8042
Senior Manager
Corporate Communications Division
s.kannan@dentsu.co.jp
 
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