Hakuhodo DY : Presentation Material (Revisions to the Medium-Term Business Plan) for FY2021 (with Commentary)

Good afternoon. My name is Masayuki Mizushima, and I am the Representative Director & President of Hakuhodo DY Holdings Inc. Please allow me to explain the details of the revisions we have made to the Hakuhodo DY Group's Medium-Term Business Plan (MTBP).

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We have been moving forward with a variety of initiatives in accordance with the MTBP, which runs through to the end of FY2023. Due to the COVID-19 pandemic's impact on the economy and advertising market, however, we announced that we had withdrawn the numerical targets for the current MTBP when we released our financial results for the first half of FY2020.

Although we continue to face a situation where the outlook for the economy and the advertising market is unclear, we decided to revise the MTBP, including updating our strategies and announcing numerical targets.

From the next slide on, I will explain the progress we have made under the MTBP thus far both from strategic and business performance perspectives. After that, I will provide details of the revisions to the plan.

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First, let me explain the progress we have made from a strategic perspective.

As you can see in this slide, we have achieved a certain level of progress in terms of the plan's Three Fundamentals for Growth, which are "Establish a leading position in the broader digital domain," "Strengthen response capabilities for borderless corporate activities," and "Accelerate innovation through external collaboration." Amid the rapid changes occurring in the external environment, however, we recognize that there are new issues that we must tackle.

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Next, I will explain our profit and loss situation, including our forecasts for FY2021.

In FY2020, adjusted gross profit and adjusted operating income before amortization of goodwill both declined due to the impact of the COVID-19 pandemic. In FY2021, however, we forecast that both of these will recover to above the level that they were before the pandemic started.

Compared with FY2019, we expect significant growth both in adjusted gross profit and in adjusted operating income before amortization of goodwill, up 14.5% and 31.1%, respectively.

Please note that these forecasts include temporary positive factors, such as work related specifically to the COVID-19 pandemic and activity expenses unspent due to the pandemic.

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I will now explain the details of our revisions to the MTBP, in light of the preceding review.

First, I will talk about our understanding of the external environment.

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