Breaking News

Tweet TWEET

Dentsu Reports Consolidated Financial Results for the Six Months Ended September 30, 2013 (Japanese GAAP)

  Dentsu Reports Consolidated Financial Results for the Six Months Ended
  September 30, 2013 (Japanese GAAP)

   -- Posts 1082.3 Billion Yen in Consolidated Billings (Net Sales) (17.5%
 year-on-year increase), 269.1 Billion Yen in Gross Profit (65.5% increase),
  19.2 Billion Yen in Operating Income (12.8% decrease), 24.0 Billion Yen in
  Ordinary Income (21.6% increase) and 10.1 Billion Yen in Net Income (8.4%
                                 increase) --

Business Wire

TOKYO -- November 13, 2013

Dentsu Inc. (TOKYO:4324) (ISIN:JP3551520004) (President & CEO: Tadashi Ishii;
Head Office: Tokyo; Capital: 74,609.81 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 six months
ended September 30, 2013 (April 1–September 30, 2013).

Summary of financial results for the period

During the six-month period ended September 30, 2013, although a gradual
recovery is continuing in the United States, the global economy remained
uncertain due to concerns about the protracted financial problems in Europe as
well as the growth slowdown in the emerging economies. Meanwhile, against a
backdrop of bold economic policies and monetary easing measures aimed at
overcoming deflation, the Japanese economy is slowly recovering, with signs of
an upturn in capital investment and improved corporate performance,
particularly in export-oriented enterprises.

The completion of the acquisition of Aegis Group plc (hereinafter “Aegis”) and
the establishment of Dentsu Aegis Network Ltd. on March 26, 2013 marked a new
beginning for the expanded Dentsu Group as a truly global player operating in
110 countries around the world. Through its new medium-term management plan
“Dentsu 2017 and Beyond” which starts from FY2013 and goes through to FY2017,
the Group aims to become a next-generation agency network that provides
unparalleled value through its unique capabilities, creating new marketing
communications that go beyond the framework of existing advertising business.
In addition to building a network that supports its clients’ businesses
worldwide, the Group 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.

From the first quarter of the fiscal year ending March 31, 2014, Aegis’s
results have been included in the Dentsu Group’s Consolidated Statements of
Income. As a result, for the six months ended September 30, 2013, the Group
posted consolidated billings (net sales) of 1,082,360 million yen, an increase
of 17.5% compared with the same period of the previous fiscal year, and gross
profit of 269,193 million yen, an increase of 65.5%. Amortization of goodwill
and other intangible assets incurred through acquisitions (including the
acquisition of Aegis) was calculated as 13,406 million yen for goodwill and
7,420 million yen for other intangible assets. As a result, the Group posted
operating income of 19,284 million yen, a decrease of 12.8%. Due to factors
including the absence of foreign exchange loss, ordinary income of 24,049
million yen, an increase of 21.6%, and net income of 10,134 million yen, an
increase of 8.4%, were posted for the six months ended September 30, 2013.
Operating income before amortization of goodwill and other intangible assets
came to 40,111 million yen, an increase of 65.5%. Operating income before
amortization of goodwill and other intangible assets comprises the operating
income figure to which has been added the amortization of goodwill and other
intangible assets incurred through acquisitions (including the acquisition of
Aegis).

Looking at the results by business segment, in the Advertising segment net
sales of 1,052,901 million yen, an increase of 18.1% compared with the same
period of the previous fiscal year; gross profit of 258,339 million yen, an
increase of 70.5%; and segment income of 17,286 million yen, a decrease of
12.5%, were posted. In the Information Services segment, net sales of 34,291
million yen, an increase of 2.9%; gross profit of 10,384 million yen, a
decrease of 0.9%; and segment income of 727 million yen, a decrease of 28.3%,
were posted. All of the companies in the group headed by Information Services
International-Dentsu, Ltd. fall into this segment. In the Other Business
segment, net sales of 7,954 million yen, a decrease of 4.6%; gross profit of
1,777 million yen, a decrease of 2.2%; and segment income of 420 million yen,
a decrease of 9.0%, were posted.

By geographic area, gross profit of 143,252 million yen, an increase of 6.3%
compared with the same period of the previous fiscal year, and operating
income before amortization of goodwill and other intangible assets of 26,414
million yen, an increase of 29.7%, were posted in Japan. In other countries,
gross profit of 126,498 million yen, an increase of 348.0%, and operating
income before amortization of goodwill and other intangible assets of 13,734
million yen, an increase of 266.4%, were posted.

From the 2013 fiscal year onward, gross profit has been specified as one of
the Group’s business management indicators. Accordingly, gross profit figures
will be used in its disclosures of results by business segment and geographic
area from the first quarter onward.

Regarding Group companies with a December 31 closing date, including
subsidiaries in countries other than Japan, their financial results for the
six months from January 1 to June 30, 2013 are, as a general rule,
incorporated in the consolidated financial results for the six months ended
September 30, 2013.

Dentsu’s non-consolidated financial results had a significant impact on the
Group’s consolidated financial results. For the six months ended September 30,
2013, the Company posted non-consolidated billings (net sales) of 717,583
million yen, an increase of 6.1% compared with the same period of the previous
fiscal year; gross profit of 100,653 million yen, an increase of 7.8%;
operating income of 18,390 million yen, an increase of 30.6%; ordinary income
of 29,727 million yen, an increase of 101.8%; and net income of 23,137 million
yen, an increase of 185.3%.

For more details regarding the consolidated and non-consolidated results,
please see the presentation slides that will be uploaded to the Presentation
Materials section of the company website on November 15 at:
http://www.dentsu.com/ir/data/setsumeikai/index.html

Reference: Scope of Consolidated Financial Results

As of September 30, 2013, the Dentsu Group includes 676 consolidated
subsidiary companies and 56 affiliated companies accounted for by the equity
method. 94 of these companies are located in Japan and 638 in countries other
than Japan. By business segment, 709 of these companies fall into the
Advertising segment, 16 into the Information Services segment, and 7 into the
Other Business segment.

Outlook for the fiscal year ending March 31, 2014

The Dentsu Group’s consolidated financial results for the first six months
(from April 1 to September 30, 2013) were better than expected, due mainly to
the strong performance in Japan. Since the advertising market in Japan is
expected to remain strong, the forecast of consolidated financial results for
the fiscal year ending March 31, 2014 which was announced on May 14, 2013, was
therefore amended on November 11. These amendments are shown in the following
charts.

Millions of yen
            Three                Three                Six                  FY2013*     FY2013*
            months      YoY      months      YoY      months      YoY      forecast    forecast    YoY
          ended      change  ended      change  ended      change  announced  amended    change
            June 30,    (%)      Sept. 30,   (%)      Sept. 30,   (%)      on May      on Nov      (%)
            2013                 2013                 2013                 14,         11,
            (Apr–Jun)            (Jul–Sep)            (Apr–Sep)            2013        2013
Net sales   514,229     14.9     568,130     20.0     1,082,360   17.5     2,283,400   2,292,000   18.1
Gross       122,882     60.7     146,311     69.8     269,193     65.5     571,800     578,500     67.2
profit
Operating
income      (717)       –        20,001      59.5     19,284      (12.8)   58,500      65,600      12.2
(loss)
Ordinary    1,450       (87.4)   22,599      172.7    24,049      21.6     58,700      72,400      22.7
income
Net
income     (3,698)    –       13,833     299.5   10,134     8.4     19,100     33,100     (8.9)
(loss)
* FY2013: April 1, 2013 to March 31, 2014


Millions of yen
               Three                Three                Six                  FY2013*     FY2013*
               months      YoY      months      YoY      months      YoY      forecast    forecast   YoY
             ended      change  ended      change  ended      change  announced  amended   change
               June 30,    (%)      Sept. 30,   (%)      Sept. 30,   (%)      on May      on Nov     (%)
               2013                 2013                 2013                 14,         11,
               (Apr–Jun)            (Jul–Sep)            (Apr–Sep)            2013        2013
Operating
income
before
amortization
of            10,032     (4.9)   30,079     119.9   40,111     65.5    100,100    107,800   71.5
goodwill and
other
intangible
assets
* FY2013: April 1, 2013 to March 31, 2014


Dentsu’s forecast of non-consolidated financial results for the fiscal year
ending March 31, 2014 that was released on May 14, 2013 has been amended as
follows:

  *Net sales: 1,500.0 billion yen (6.2% year-on-year increase)
  *Operating income: 45.4 billion yen (26.9% year-on-year increase)
  *Ordinary income: 57.9 billion yen (48.1% year-on-year increase)
  *Net income: 37.4 billion yen (32.7% year-on-year increase)

Dividends

The interim dividend per share of common stock will be 16.0 yen, and the total
annual dividend is expected to be 32.0 yen, as was announced on May 14, 2013.

Since Dentsu considers a “sustainable and stable” dividend to be the basis of
its shareholder returns policy, it will continue to make utmost efforts to
maximize shareholder returns through medium- to long-term growth of the
business while sustaining financial stability and soundness and securing the
investments needed for further growth mainly in its digital and global
operations.

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 Six Months Ended September 30, 2013
(From April 1 to September 30, 2013)
                                                             
1.Summary of Consolidated Balance Sheets

                             (Millions of yen: Rounded down to the nearest one
                             million yen)
                             As of               As of
                             March 31,           September 30,      % Change
                             2013                2013
ASSETS                                                              
Current assets               1,122,602           1,089,308             (3.0)
Noncurrent assets            1,082,966           1,203,874             11.2
Total assets                 2,205,569           2,293,182             4.0
                                                                       
LIABILITIES
Current liabilities          1,317,554           1,017,348             (22.8)
Noncurrent liabilities       279,377             459,345               64.4
Total liabilities            1,596,931           1,476,693             (7.5)
                                                                       
NET ASSETS
Shareholders’ equity         570,419             696,862               22.2
Accumulated other
                             14,076              96,593                586.2
comprehensive income
Minority interests           24,141              23,033                (4.6)
Total net assets             608,637             816,489               34.2
Total liabilities and net    2,205,569           2,293,182             4.0
assets

                                                               
2.Summary of Consolidated Statements of Income
                                                                      
                             (Millions of yen: Rounded down to the nearest one
                             million yen)
                             Six months           Six months
                             ended                ended              % Change
                             September 30,        September 30,
                             2012                 2013
Net sales                    921,036              1,082,360           17.5
Gross profit                 162,654              269,193             65.5
Operating income             22,110               19,284              (12.8)
Non-operating income         4,723                11,458              142.6
Non-operating expenses       7,050                6,694               (5.1)
Ordinary income              19,784               24,049              21.6
Extraordinary income         192                  3,224               1573.2
Extraordinary loss           2,249                3,325               47.8
Income before income taxes
and                          17,727               23,948              35.1
minority interests
Net income                   9,349                10,134              8.4

                                                                      
3.Summary of Consolidated Statements of Comprehensive Income
                                                                      
                            (Millions of yen: Rounded down to the nearest one
                             million yen)
                             Six months            Six months
                             ended               ended            % Change
                             September 30,         September 30,
                             2012                  2013
Income before minority       10,278                10,700             4.1
interests
Other comprehensive income   (1,171)               83,328             –
Comprehensive income         9,106                 94,028             932.5
                                                                      

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 more than 37,000
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 Network: www.dentsunetwork.com

Contact:

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