Hakuhodo DY : Presentation Material (Medium-Term Business Plan) for 1H of 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 provide an explanation of the progress we are making under the Hakuhodo DY Group's Medium-Term Business Plan.

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 Due to the COVID-19 pandemic's impact on the economy and advertising market, we announced that we had withdrawn the numerical targets for the current Medium-Term Business Plan when we released our financial results for the first half of FY2020.

We then continued to face a situation where the outlook for the economy and the advertising market was unclear. Now, however, the situation is starting to become more stable and, as such, we believe we are able to make assumptions about the future to a certain degree.

We are examining the details of the Medium-Term Business Plan, including its numerical targets, and intend to determine a range of revisions by February 2022. We therefore intend to disclose the details of these revisions, as well as new numerical targets, when we release our financial results for the third quarter.

Today, I will talk about the progress we are making with the various initiatives we are undertaking.

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First, let me discuss the details regarding revenue.

In the first half of FY2021, revenue after adjustments and excluding investment projects greatly surpassed revenue in the previous fiscal year and was up 7.9% compared to the level that it was at in FY2019, before the COVID-19 pandemic. In addition to capitalizing on the recovery in advertising demand, this increase in revenue resulted from our success in appropriately meeting various needs during the pandemic, which we achieved thanks to our ongoing efforts to establish a structure for marketing execution.

Next, adjusted operating income before amortization of goodwill saw massive growth, up 36.9% compared with FY2019, due to not only temporary positive factors but also the impacts of initiatives to curtail operating expenses and promote structural reforms.

In the second half, we expect to pursue strategic investments more aggressively with a view to realizing growth over the medium to long term.

Additionally, we will remain committed to pursuing structural reforms and, toward elevating our corporate functions and increasing their efficiency will, among other things, look into the establishment of a separate company.

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Continuing on, I will explain, in order, the main measures for strengthening structures and response capabilities centered on the Medium-Term Business Plan's Three Fundamentals for Growth.

Please see the next slide.

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I will begin by talking about the first Fundamental for Growth, "Establish a leading position in the broader digital domain."

In the first half, although there was still ongoing impact from the COVID-19 pandemic in industries where we boast strengths, billings from the internet media domain, which we use as an indicator of progress for this domain, saw an increase of over 30% year on year, and a 18.7% increase over FY2019, due in part to the significant growth achieved at our integrated advertising companies, primarily Hakuhodo Inc., and at the next-generation digital agency IREP Co., Ltd.

For details on specific measures in this domain, please see the items listed under the Topics section of this slide.

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