Dentsu Reports Consolidated Financial Results for the Nine Months Ended December 31, 2014 (Japanese GAAP)

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 nine months ended December 31, 2014 (April 1–December 31, 2014).

Summary of Financial Results for the Period
During the nine-month period ended December 31, 2014, the Japanese economy maintained a gradual recovery thanks to improved corporate earnings, higher wages and better employment opportunities against a background of positive economic and monetary policies implemented by the government and the Bank of Japan. Meanwhile, the U.S. economy is making steady progress, as are other major markets around the world. However, economic uncertainty remains in some regions, illustrated by slowing growth in a number of emerging economies and continuing political unrest in certain regions.

Under such circumstances, the Dentsu Group’s non-consolidated net sales in Japan showed a year-on-year increase of 2.1%. Despite the impact of the consumption tax increase, business opportunities created by the 2014 FIFA World Cup Brazil™ enabled the Group’s results to exceed those of the same period of the previous fiscal year. Moreover, the acquisition of new clients in markets outside of Japan allowed the Group’s global business headquarters Dentsu Aegis Network Ltd. to record year-on-year double-digit organic gross profit growth of 10.3%. By geographic region, the growth rate was 9.3% in the Europe, Middle East and Africa region, 7.7% in the Americas and 15.2% in the Asia-Pacific region.

As a result, for the nine months ended December 31, 2014, the Dentsu Group posted consolidated billings (net sales) of 1,743,593 million yen, an increase of 4.9% compared with the same period of the previous fiscal year; gross profit of 454,842 million yen, an increase of 9.8%; and operating income before amortization of goodwill and other intangible assets of 67,100 million yen, an increase of 1.2%. Due to factors including the increase in the amortization of goodwill and other intangible assets on a yen basis caused by the depreciation of the yen, operating income of 29,664 million yen, a decrease of 14.6%, and ordinary income of 37,845 million yen, a decrease of 12.0%, were posted. Net income of 25,619 million yen, an increase of 23.8% due to the recording of extraordinary income from sales of real estate, was posted for the period.

Looking at the results by business segment, in the Advertising segment net sales of 1,695,047 million yen, an increase of 4.7% compared with the same period of the previous fiscal year; gross profit of 439,644 million yen, an increase of 10.2%; and segment income of 27,012 million yen, a decrease of 16.5%, were posted.

In the Information Services segment, net sales of 54,397 million yen, an increase of 10.8%; gross profit of 14,621 million yen, a decrease of 0.4%; and segment income of 833 million yen, an increase of 143.1%, 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 11,636 million yen, a decrease of 1.3%; gross profit of 2,568 million yen, a decrease of 6.2%; and segment income of 640 million yen, a decrease of 10.7%, were posted.

Regarding Group companies with a December 31 closing date, including subsidiaries in countries other than Japan, their financial results for the nine months from January 1 to September 30, 2014 are, as a general rule, incorporated in the consolidated financial results for the nine months ended December 31, 2014.

Dentsu’s non-consolidated financial results had a significant impact on the Group’s consolidated financial results. For the nine months ended December 31, 2014, the Company posted non-consolidated billings (net sales) of 1,131,155 million yen, an increase of 2.1% compared with the same period of the previous fiscal year; gross profit of 161,911 million yen, an increase of 3.7%; operating income of 35,925 million yen, an increase of 10.6%; ordinary income of 57,460 million yen, an increase of 15.7%; and net income of 56,612 million yen, an increase of 53.1%.

For more details regarding the consolidated and non-consolidated results for the nine months ended December 31, 2014, please see the Presentation Materials section of the Company’s website at: http://www.dentsu.com/ir/.

Reference: Scope of Consolidated Financial Results
As of December 31, 2014, the Dentsu Group includes 700 consolidated subsidiary companies and 59 affiliated companies accounted for by the equity method. 94 of these companies are located in Japan and 665 in countries other than Japan. By business segment, 735 of these companies fall into the Advertising segment, 17 into the Information Services segment, and 7 into the Other Business segment.

Forecast for the Fiscal Year Ending March 31, 2015
The full-year forecast announced on November 12, 2014 has been revised after taking into account the consolidated results for the nine-month period ended December 31, 2014. Please refer to the separate announcement "Dentsu Announces Changes to the Forecast of Financial Results for the Fiscal Year Ending March 31, 2015” also made today.

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.

[About the Dentsu Group]

Dentsu is the world’s largest advertising agency brand. Led by Dentsu Inc. (Tokyo: 4324; ISIN: JP3551520004), a company with a history of 113 years of innovation, the Dentsu Group provides a comprehensive range of client-centric brand, integrated communications, media and digital services through its eight global network brands—Carat, Dentsu, Dentsu media, iProspect, Isobar, mcgarrybowen, Posterscope and Vizeum—as well as through its specialist/multi-market brands including Amnet, Amplifi, Data2Decisions, Mitchell Communications (PR), psLIVE and 360i.

The Dentsu Group has a strong presence in 124 countries across five continents, and employs around 40,000 dedicated professionals. Dentsu Aegis Network Ltd., its global business headquarters in London, oversees Dentsu’s agency operations outside of Japan. The Group is also active in the production and marketing of sports and entertainment content on a global scale.
www.dentsu.com