HAKUHODO DY INCORPORATED : Consolidated Financial Highlights for FY2016

Consolidated Financial Highlights Fiscal Year Ended March 31, 2017 (FY2016)‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌

2017.5.15

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 facts, and other items associated with Hakuhodo DY Holdings and its group companies. These and other statements that are not historical facts represent forecasts, expectations, assumptions, plans, views, evaluations and other positions of management based on information available when this presentation was prepared.

To prepare figures used for forecasts and predictions, confirmed facts from past activities have been combined with certain assumptions that are essential to formulating forecasts and predictions. Due to the nature of these facts and assumptions, there is no guarantee of their accuracy from an objective viewpoint or any guarantee that future events will occur as presented in these forward-looking statements.

The following is a list of some, but not all, risks and uncertainties that may prevent these facts and assumptions from being accurate from an objective viewpoint or from becoming a reality in the future.

1. Risks associated with the advertising industry in general (changes in the advertising industry climate due to fluctuations in the economy, changes in business practices and other events)

2. Risks associated with revisions of laws and regulations

3. Risks associated with advertisers and media companies (the need to respond accurately to shifts in needs of customers and

   other entities the company does business with)

4. Risks associated with competition (competition with other advertising agencies, companies newly entering the industry and others)

5. Risks associated with the expansion of business domains resulting from structural changes in markets

6. Risks associated with conducting business on a global scale

7. Risks associated with lawsuits and similar actions

Billings by industry, billings by service area, and highlights of operating results at major subsidiaries were not audited by the Company's independent auditor.

May 15, 2017 Consolidated Financial Highlights Total of FY2016 1

Consolidated Financial Highlights for FY 2016

Consolidated Financial Highlights （1）

¥47.2 Billion: Fifth Consecutive Year of Record Operating Income

◎ Billings: ¥1,255.4 billion, up 3.3% year on year

・Growth through continued strength in domestic billings making up for poor 2H performance overseas.

》By client industry：Billings increased in Information / Communications, Cosmetics / Toiletries, and Household products.

：Billings decreased in Automobiles / Related products, Pharmaceuticals / Medical supplies, and

Restaurant / Services.

》By service area：Television experienced a downturn after a strong performance in the previous year. Newspapers,

Magazines, and Radio also performed sluggishly, leading to decreases in"Mass media services subtotal."

：Internet media and Creative performed strongly, leading to growth in "Other than mass media services

subtotal."

◎ Revenue: ¥248.6 billion, up 6.9%, or ¥16.1 billion year on year

◎ Gross margin: 19.8%, up 0.7 of a percentage point year on year

・Broad-based initiatives to improve profitability throughout the Group, from advertising to integrated media companies,

led to a higher gross margin.

・Overseas revenue grew as the result of initiatives, particularly in fee businesses, leading to an approximate gross margin

increase of only 0.1 point.

◎ SG&A expenses: ¥201.3 billion, up 7.4%, or ¥13.8 billion year on year

・SG&A expenses rose on investments including mergers and acquisitions to strengthen the organization and other

strategic investments, as well as retirement benefit expenses and amortization of goodwill. However, this increase was restricted by efforts to control SG&A expenses.

◎ Operating income: ¥47.2 billion, up 5.0%, or ¥2.2 billion year on year

・Increases in SG&A expenses were absorbed by revenue growth, resulting in a fifth consecutive year of record operating

income.

◎ Operating income before amortization of goodwill: ¥50.3 billion, up 6.5%, or ¥3.0 billion year on year ◎ Incremental effect of mergers and acquisitions (approximate): Revenue: +¥3.1 billion; SG&A (including amortization of goodwill): +¥4.2 billion; Operating income: -¥1.1 billion ◎ Net income: ¥25.8 billion, down 9.3%, or ¥2.6 billion year on year

・Net income declined in the absence of the previous year's temporary elements to reduce corporate income taxes.

◎ ＲＯＥ： 9.0%

May 15, 2017 Consolidated Financial Highlights Total of FY2016 3