Summary of Financial Results for the Nine Months Ended December 31, 2011

Transcription

1 Summary of Financial Results for the Nine Months Ended December 31, Japanese GAAP, Consolidated Results- Name of Listed Company: Dentsu Inc. Code Number: 4324 Stock Exchange Listing: URL: Name of Representative: First Section of the Tokyo Stock Exchange Tadashi Ishii, President & CEO Scheduled date for filing of the Quarterly Consolidated Financial Statements: February 14, 2012 Scheduled start date of dividend payment: Undecided Supplementary briefing material on quarterly results: Available Quarterly results briefing: Not scheduled Contact: Shusaku Kannan Senior Manager Corporate Communications Division Telephone: (813) /19

2 Summary of Consolidated Financial Results for the Nine Months Ended December 31, 2011 [Japanese GAAP] 1. Summary of Financial Results for the Nine Months Ended December 31, 2011 (from April 1 to December 31, 2011) (Figures are rounded down to the nearest one million yen) (1) Consolidated Financial Results (Cumulative) (Percentages indicate the rate of increase or decrease compared with the same period of the previous fiscal year.) Net sales Operating income Ordinary income Net income December 31, 2011 December 31, ,357, % 30,723 (13.0)% 37, % 13, % 1,348, % 35, % 33, % 8,710 (55.3)% (Note) Comprehensive income December 31, 2011: 12,989 million yen; 175.5% December 31, 2010: 4,715 million yen; % (Yen) Net income per share (Basic) Net income per share (Diluted) December 31, 2011 December 31, (2) Consolidated Financial Position (Millions of yen, except percentages) Total assets Net assets Equity ratio As of December 31, 2011 As of March 31, ,142, , % 1,133, , % (Reference) Equity As of December 31, 2011: 498,783 million yen As of March 31, 2011: 492,933 million yen 2/19

3 2. Dividends (Yen) Dividend paid for the fiscal year ended March 31, 2011 Dividend paid for the fiscal year ending March 31, 2012 Dividend forecast of the fiscal year ending March 31, 2012 Annual cash dividend per share First Quarter Second Quarter Third Quarter Year-end Total (Note) Amendment to the dividend forecast from recently announced figures: None Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2012 (from April 1, 2011 to March 31, 2012) (Percentages indicate the rate of increase or decrease compared with the previous fiscal year.) Net sales Operating income Ordinary income Net income Net income per share (Yen) Fiscal year ending March 31, ,870, % 47,200 (7.3)% 57, % 22, % (Note) Amendment to the forecast of consolidated financial results from recently announced figures: Yes 4. Others (1) Changes in Significant Consolidated Subsidiaries during the Nine Months (change in specified subsidiaries involving changes in the scope of consolidation): None (2) Application of Specific Accounting Treatments for Preparing Quarterly Consolidated Financial Statements: None (3) Changes in Accounting Policies, Changes in Accounting Estimates and Corrections of Errors a. Changes in accounting policies due to revisions of accounting standards: None b. Changes in accounting policies due to other reasons: None c. Changes in accounting estimates: None d. Corrections of errors: None 3/19

4 (4) Number of issued shares (common stock) a. Total number of issued shares at the end of the period (including treasury stock) As of December 31, 2011 As of March 31, ,184,000 shares 278,184,000 shares b. Number of shares of treasury stock at the end of the period As of December 31, ,031,296 shares As of March 31, ,029,808 shares c. Average number of shares during the period (cumulative from the beginning of the fiscal year) As of December 31, 2011 As of December 31, ,153,431 shares 249,156,295 shares Notes Presentation regarding execution status of quarterly review procedures Although this summary of consolidated quarterly financial results is not subject to the quarterly review procedures provided for by the Japanese Financial Instruments and Exchange Law, the quarterly financial statement review procedures based on the Law have been completed at the time of the disclosure of these financial results. Disclaimer regarding appropriate use of forecasts and related points of note Since the forecast of financial results has been prepared based on certain conditions which Dentsu believes to be reasonable at this time, actual financial results may be substantially different from the forecast due to various factors. For information relating to the forecast on page 3, please refer to Forecast of Consolidated Financial Results on page 9. 4/19

5 1. Qualitative Information on Quarterly Financial Results (1) Consolidated Financial Results During the nine months ended December 31, 2011 (from April 1 to December 31, 2011), production in Japan continued to recover from the decline that resulted from the Great East Japan Earthquake. However, the Japanese economy remained uncertain due to concerns about the economic slowdown overseas, prolonged yen appreciation, and the effects of flooding in Thailand. The situation in the advertising industry was severe during the first quarter ended June 30, 2011 (from April 1 to June 30, 2011) due to the effects of the earthquake, but demand for advertising, mainly television spots, has shown signs of recovery since the summer as clients supply chains were restored. As a result, performance has been relatively strong for the third quarter ended December 31, 2011 (from October 1 to December 31, 2011). Under such circumstances, the Dentsu Group (hereinafter the Group ) implemented a broad range of specific measures under the Dentsu Innovation 2013 mediumterm management plan announced in July Furthermore, events such as the 13th IAAF World Championships, the 14th FINA World Championships, the 42nd Tokyo Motor Show 2011, and FIFA Club World Cup Japan 2011 presented by TOYOTA provided opportunities for multi-faceted business development. At the same time, the Group leveraged its comprehensive resources and pursued a diverse array of business activities by offering Integrated Communication Design solutions. As a result, for the nine months ended December 31, 2011, the Group posted billings (net sales) of 1,357,340 million yen, an increase of 0.6% compared with the same period of the previous fiscal year; gross profit of 234,774 million yen, an increase of 2.7%; operating income of 30,723 million yen, a decrease of 13.0%; and ordinary income of 37,309 million yen, an increase of 10.9%. Net income for the nine months ended December 31, 2011 was 13,274 million yen, an increase of 52.4%. This was mainly due to an increase in income taxes deferred resulting from a decrease in deferred tax assets accompanying promulgation of legislation concerning reduction of the corporate income tax rate as well as to a decrease in extraordinary loss. Since Publicis Groupe S.A., an affiliated company accounted for by the equity method, does not disclose its accounts on a quarterly basis, the financial results for the third quarter ended December 31, 2011 (from October 1 to December 31, 2011) do not take into account Dentsu s share of net income of Publicis Groupe S.A. and amortization of goodwill based on the third quarter financial results of Publicis Groupe S.A. (from July 1 to September 30, 2011). 5/19

6 Financial results by reportable segment for the nine months ended December 31, 2011 were as follows: a. Advertising In the Advertising segment, net sales of 1,315,869 million yen, an increase of 0.9% compared with the same period of the previous fiscal year, and segment income of 28,312 million yen, a decrease of 11.8%, were posted. b. Information Services In the Information Services segment, net sales of 43,846 million yen, an increase of 4.0% compared with the same period of the previous fiscal year, and segment loss of 461 million yen (segment loss of 307 million yen for the same period of the previous fiscal year) were posted. Each of the group companies of Information Services International-Dentsu, Ltd. belongs to this segment. c. Other Businesses In the Other Businesses segment, net sales of 13,722 million yen, a decrease of 28.6% compared with the same period of the previous fiscal year, and segment income of 439 million yen, a decrease of 63.7%, were posted. Financial results by geographic segment were as follows: a. Japan In Japan, net sales of 1,195,981 million yen, a decrease of 1.3% compared with the same period of the previous fiscal year, and operating income of 28,573 million yen, a decrease of 12.1%, were posted. b. Other Countries In other countries, net sales of 167,782 million yen, an increase of 17.0% compared with the same period of the previous fiscal year, and operating income of 1,848 million yen, a decrease of 36.4%, were posted. Regarding Dentsu 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, 2011 are, as a general rule, incorporated in the consolidated financial results for the nine months ended December 31, Consolidated financial results are greatly affected by the non-consolidated financial results of Dentsu Inc. (hereinafter Dentsu or the Company ). Non-consolidated financial results and net sales by business and industry categories for the nine months ended December 31, 2011 were as follows: 6/19

7 Dentsu posted non-consolidated billings (net sales) of 1,028,142 million yen, a decrease of 1.5% compared with the same period of the previous fiscal year; gross profit of 139,885 million yen, a decrease of 1.3%; operating income of 20,029 million yen, a decrease of 17.2%; and ordinary income of 28,066 million yen, a decrease of 0.0%. Net income for the nine months ended December 31, 2011 was 12,116 million yen, an increase of 9.9%. This was mainly due to an increase in income taxes deferred resulting from a decrease in deferred tax assets accompanying promulgation of legislation concerning reduction of the corporate income tax rate as well as to a decrease in extraordinary loss. 7/19 <By Business Category> Category Net sales Composition ratio (%) Change (%, compared with the same period of the previous year) Newspapers 81, (8.2) Magazines 26, (9.1) Radio 13, (6.3) Television 494, (1.0) Time 215, (1.6) Spot 278, (0.5) Interactive Media 35, OOH Media 34, Creative 131, Marketing/Promotion 129, (3.8) Content Services 60, (11.8) Others 20, Total 1,028, (1.5) (Notes) 1. Major business categories are as follows: Newspapers: Magazines: Radio: Television: Television (Time): Television (Spot): Interactive Media: OOH Media: Creative: Newspaper advertising Magazine advertising Radio advertising Television advertising Television time advertising (program sponsorship) Television spot advertising (in between programs) Internet and mobile-related media advertising Out of Home (transit, outdoor and flyers) media-related advertising Creative planning, production and related services Marketing/Promotion: Strategic planning and implementation of activities such as branding, marketing, communications, sales promotions, events, PR, e-promotions and direct marketing as well as management consulting

8 Content Services: Others: Licensing sales, planning and production in the sports marketing and entertainment fields and other content services Satellite and other media, including media planning 2. The composition ratio of each business category is rounded to the nearest tenth. The four mass media posted net sales of 615,693 million yen, a decrease of 2.5% compared with the same period of the previous fiscal year. For businesses other than the four mass media, net sales of 412,448 million yen, an increase of 0.1%, were posted, and the net sales composition ratio came to 40.1%. <By Industry Category> Category Net sales Composition ratio (%) Change (%, compared with the same period of the previous year) Information/Communications 139, (6.7) Beverages/Cigarettes 115, (1.8) Cosmetics/Toiletries 96, Distribution/Retailing 67, Finance/Insurance 66, (2.5) Foodstuffs 61, Home Electric Appliances/ AV Equipment Pharmaceuticals/ Medical Supplies Automobiles/ Related products 55, (14.4) 53, (6.8) 48, Food Services/Other Services 47, (12.0) Hobbies/Sporting Goods 45, (0.8) Government/Organizations 42, (7.1) Transportation/Leisure 40, (1.1) Real Estate/Housing Facilities 31, Apparel/Fashion, Accessories/Personal Items 30, Others 85, (4.8) Total 1,028, (1.5) (Note) The composition ratio of each industry category is rounded to the nearest tenth. 8/19

9 For the nine months ended December 31, 2011, among the Company s top fifteen contributing industry categories, net sales decreased in nine industry categories, including Information/Communications, with a decrease of 6.7% compared with the same period of the previous fiscal year, and Beverages/Cigarettes, with a decrease of 1.8%. Only six categories showed year-on-year increases, including Cosmetics/Toiletries, with an increase of 4.8%, and Distribution/Retailing, with an increase of 22.2%. (2) Forecast of Consolidated Financial Results Results for net sales, operating income, and ordinary income for the nine months ended December 31, 2011 were roughly as forecast; consequently, there are no revisions to the corresponding forecast of consolidated financial results for the fiscal year ending March 31, 2012 which was announced on November 9, However, due to the increase in income taxes deferred resulting from a decrease in deferred tax assets accompanying the promulgation of legislation concerning reduction of the corporate income tax rate, the net income forecast for the fiscal year ending March 31, 2012, announced on November 9, 2011, has been revised as shown on page 3. Meanwhile, non-consolidated financial results for the fiscal year ending March 31, 2012 are forecast as follows: net sales of 1,405,300 million yen, an increase of 0.6% compared with the previous fiscal year; operating income of 31,800 million yen, a decrease of 5.9%; ordinary income of 40,500 million yen, an increase of 0.5%; and net income of 16,600 million yen, a decrease of 5.0%. 9/19

10 2. Matters Related to Summary Information and Additional Information (1) Changes in Significant Consolidated Subsidiaries during the Nine Months No items to report (2) Application of Specific Accounting Treatments for Preparing Quarterly Consolidated Financial Statements No items to report (3) Changes in Accounting Policies, Changes in Accounting Estimates and Corrections of Errors No items to report (4) Additional Information 1. Revisions of accounting standards Starting from the beginning of the first quarter of fiscal 2011, the Accounting Standard for Accounting Changes and Error Corrections (Accounting Standards Board of Japan ( ASBJ ) Statement No. 24, December 4, 2009) and the Guidance on Accounting Standard for Accounting Changes and Error Corrections (ASBJ Guidance No. 24, December 4, 2009) have been applied for accounting changes and corrections of prior period errors. 2. Effects of changes in the corporate income tax rate Following the promulgation of the Act for Partial Amendment of the Income Tax Act, etc. for the Purpose of Creating a Taxation System Responding to Changes in Economic and Social Structures (Act No. 114, 2011) and the Act on Special Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction following the Great East Japan Earthquake (Act No. 117, 2011) on December 2, 2011, the corporate income tax rate will be lowered and a special restoration surtax will be imposed from the fiscal years beginning on and after April 1, In conjunction with these changes, the normal effective statutory tax rate of 41.0% used to measure deferred tax assets and deferred tax liabilities will change to 38.0% for temporary differences expected to be resolved during the three fiscal years starting from April 1, 2012, and to 36.0% for temporary differences expected to be resolved during the fiscal years beginning on and after April 1, As a result of this change in the tax rate, the amount of deferred 10/19

11 tax assets (less the amount of deferred tax liabilities) has decreased by 4,252 million yen and the amount of income taxes deferred has increased by 4,353 million yen. 3. Other Since Publicis Groupe S.A., an affiliated company accounted for by the equity method, does not disclose its accounts on a quarterly basis, the financial results for the third quarter ended December 31, 2011 do not take into account Dentsu s share of net income of Publicis Groupe S.A. and amortization of goodwill based on the third quarter financial results of Publicis Groupe S.A. (from July 1 to September 30, 2011). Dentsu's share of net income of Publicis Groupe S.A. and amortization of goodwill for the first half of its fiscal year 2011 (from January 1 to June 30, 2011) are included in the financial results for the nine months ended December 31, /19

12 3. Quarterly Consolidated Financial Statements (1) Quarterly Consolidated Balance Sheets As of March 31, 2011 As of December 31, 2011 Assets Current assets Cash and deposits 132, ,714 Notes and accounts receivable trade 430, ,099 Short-term investment securities 94 4 Inventories 9,458 19,996 Other 41,357 38,534 Allowance for doubtful accounts (2,262) (1,804) Total current assets 611, ,545 Noncurrent assets Property, plant and equipment Land 160, ,321 Other, net 83,197 81,806 Total property, plant and equipment 243, ,127 Intangible assets Goodwill 32,853 34,516 Other 20,327 18,578 Total intangible assets 53,180 53,095 Investments and other assets Investment securities 155, ,584 Other 73,045 67,801 Allowance for doubtful accounts (3,198) (4,357) Allowance for investment loss (106) (257) Total investments and other assets 224, ,771 Total noncurrent assets 521, ,994 Total assets 1,133,300 1,142,539 12/19

13 As of March 31, 2011 As of December 31, 2011 Liabilities Current liabilities Notes and accounts payable trade 379, ,192 Short-term loans payable 3,138 3,354 Income taxes payable 11,412 4,374 Provision Asset retirement obligations 53 3 Other 84, ,914 Total current liabilities 478, ,505 Noncurrent liabilities Long-term loans payable 78,961 55,797 Provision for retirement benefits 33,177 36,870 Other provision Asset retirement obligations Other 28,598 25,624 Total noncurrent liabilities 142, ,608 Total liabilities 621, ,114 Net assets Shareholders' equity Capital stock 58,967 58,967 Capital surplus 60,899 60,899 Retained earnings 468, ,650 Treasury stock (65,064) (65,068) Total shareholders' equity 523, ,448 Accumulated other comprehensive income Valuation difference on available-for-sale securities 1,930 3,853 Deferred gains or losses on hedges (2,823) (3,644) Revaluation reserve for land (7,187) (5,931) Foreign currency translation adjustment (22,634) (24,942) Total accumulated other comprehensive income (30,714) (30,665) Minority interests 19,208 19,641 Total net assets 512, ,425 Total liabilities and net assets 1,133,300 1,142,539 13/19

14 (2) Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statements of Income December 31, 2010 December 31, 2011 Net sales 1,348,644 1,357,340 Cost of sales 1,119,962 1,122,565 Gross profit 228, ,774 Selling, general and administrative expenses Salaries and allowances 104, ,976 Provision for directors' bonuses Provision for retirement benefits 8,186 8,393 Provision for directors' retirement benefits Welfare expenses 13,021 14,898 Depreciation 9,538 8,978 Amortization of goodwill 1,872 1,810 Provision of allowance for doubtful accounts 565 1,538 Other 55,629 59,110 Total selling, general and administrative expenses 193, ,051 Operating income 35,308 30,723 Non-operating income Interest income Dividends income 1,465 1,676 Equity in earnings of affiliates 876 4,019 Other 2,269 3,894 Total non-operating income 5,125 10,091 Non-operating expenses Interest expenses 1,625 1,414 Amortization of long-term prepaid expenses 1,018 1,108 Other 4, Total non-operating expenses 6,804 3,505 Ordinary income 33,629 37,309 14/19

15 December 31, 2010 December 31, 2011 Extraordinary income Gain on sales of noncurrent assets Gain on sales of investment securities 1, Dividends distribution from partnership Other Total extraordinary income 2, Extraordinary loss Loss on sales of noncurrent assets 3 20 Loss on retirement of noncurrent assets Impairment loss 3,595 1,028 Loss on revision of retirement benefit plan 1,172 Other 17,116 3,160 Total extraordinary losses 20,817 5,605 Income before income taxes and minority interests 15,592 32,203 Income taxes current 5,031 9,864 Income taxes deferred 1,822 8,187 Total income taxes 6,854 18,051 Income before minority interests 8,737 14,151 Minority interests in income Net income 8,710 13,274 15/19

16 Quarterly Consolidated Statements of Comprehensive Income December 31, 2010 December 31, 2011 Income before minority interests Deferred gains or losses on hedges (2,513) (826) (1,283 Foreign currency translation adjustment Share of other comprehensive income of (2,910) (3,686) associates accounted for using equity method (1, ,158 Total other comprehensive income (4,022) (1,162) Comprehensive income (1,139 4,715 12,989 Comprehensive income attributable to Owners of the parent 4,906 12,068 3,663 Minority interests (191) ,737 14,151 Other comprehensive income Valuation difference on available-for-sale securities 1,379 2,192 ( (565Income (loss) before minority interests 16/19

17 (3) Notes on Premise of Going Concern No items to report (4) Segment and Other Information <Segment Information> I. Nine Months Ended December 31, 2010 (from April 1 to December 31, 2010) 1. Net sales and income or loss by reportable segment Advertising Information Services Other Businesses Total Amount on quarterly Adjustment consolidated statements of income Net sales 1,303,687 42,179 19,212 1,365,079 (16,434) 1,348,644 Segment income (loss) 32,083 (307) 1,211 32,988 2,319 35,308 (Notes) 1. The difference between the total income or loss of reportable segments and the amount on the quarterly consolidated statements of income is due to the elimination of intersegment transactions and deduction of unrealized profits. 2. Segment income (loss) has been adjusted to equal the operating income on the quarterly consolidated statements of income. 2. Goodwill and impairment of noncurrent assets by reportable segment (Significant change in amount of goodwill) Starting from the first quarter of fiscal 2010, Dentsu Innovation Interactive, LLC became a consolidated subsidiary. As a result, Dentsu posted goodwill of 12,847 million yen for the nine months ended December 31, 2010, resulting in an increase in the Advertising segment. Dentsu amortized 8,177 million yen in the goodwill for cyber communications inc. and posted the charge as an extraordinary loss under the provision of Paragraph 32 of the Practical Guidelines on Accounting Standards for Capital Consolidation Procedures in Preparing Consolidated Financial Statements (Accounting Practice Committee Report No. 7, June 9, 2009). The amortization of the goodwill resulted in a decrease in the Advertising segment. 17/19

18 II. Nine Months Ended December 31, 2011 (from April 1 to December 31, 2011) 1. Net sales and income or loss by reportable segment Advertising Information Services Other Businesses Total Amount on quarterly Adjustment consolidated statements of income Net sales 1,315,869 43,846 13,722 1,373,438 (16,097) 1,357,340 Segment income (loss) 28,312 (461) ,290 2,432 30,723 (Notes) 1. The difference between the total income or loss of reportable segments and the amount on the quarterly consolidated statements of income is due to the elimination of intersegment transactions and deduction of unrealized profits. 2. Segment income (loss) has been adjusted to equal the operating income on the quarterly consolidated statements of income. 2. Goodwill and impairment of noncurrent assets by reportable segment No items to report (Reference Information) [By Geographic Segment] Nine Months Ended December 31, 2010 (from April 1 to December 31, 2010) Japan Other Countries Total Eliminations/ Corporate Consolidated Net sales 1,211, ,460 1,354,831 (6,186) 1,348,644 Operating income 32,508 2,907 35,415 (107) 35,308 Nine Months Ended December 31, 2011 (from April 1 to December 31, 2011) Japan Other Countries Total Eliminations/ Corporate Consolidated Net sales 1,195, ,782 1,363,764 (6,424) 1,357,340 Operating income 28,573 1,848 30, ,723 (Note) Other Countries consists substantially of the U.S. and China. 18/19

19 [Overseas Sales] Nine Months Ended December 31, 2010 (from April 1 to December 31, 2010) I. Overseas net sales: 139,695 million yen II. Consolidated net sales: 1,348,644 million yen III. Overseas net sales as a percentage of consolidated net sales: 10.4 % Nine Months Ended December 31, 2011 (from April 1 to December 31, 2011) I. Overseas net sales: 170,085 million yen II. Consolidated net sales: 1,357,340 million yen III. Overseas net sales as a percentage of consolidated net sales: 12.5 % (Notes) 1. Overseas net sales indicate net sales in countries or regions other than Japan by the Company and its consolidated subsidiaries. 2. Countries or regions other than Japan consists substantially of the U.S. and China. (5) Notes on Significant Changes in the Amount of Shareholders' Equity No items to report 19/19