Hakuhodo DY : Presentation Material (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 progress we are making with the Hakuhodo DY Group's Medium-Term Business Plan (MTBP).

0

In May 2019, the Group announced the current MTBP, which runs through to the end of FY2023, and since then has been moving forward with a variety of initiatives in accordance with the plan. However, due to the dramatic changes in the business environment caused by the impact of the COVID-19 pandemic, we temporarily withdrew the numerical targets of the MTBP. In February 2022, we announced a revised MTBP that covers the three-year period starting from FY2021.

The COVID-19 pandemic has brought about significant change in the business environment, rapidly accelerating the shift toward digitalization. To respond to this change, we adopted

four new initiatives under the revised MTBP, while maintaining our Core Medium-Term Strategy. These new initiatives are transforming the services we provide in order to implement full-funnelSei-katsu-sha Data-Driven Marketing; strengthening cross-organizational functions to accelerate transformation; continuously pursuing transformation based on existing strategies ; and strengthening our foundation for sustainable business management.

In regard to the new MTBP targets, we aim to achieve operating income before amortization of goodwill of ¥65.0 billion, and this numerical target reflects our strategic investment in structural reforms geared toward maintaining and enhancing our growth potential and realizing continuous growth over the medium to long term. We have also established the various other targets you see on this slide, including annual growth rates that are based on our core businesses and exclude investment projects.

I will now explain the progress we have made with various initiatives during the first year of the revised MTBP.

1

First, I will explain our profit and loss situation for FY2021.

Gross profit after adjustments, which excludes the impact of investment projects, increased 23.8% year on year as a result of not only the recovery in advertising demand but also temporary positive factors, such as work related particularly to the COVID-19 pandemic.

Although we continued to promote strategic investment geared toward medium- to long-term growth, operating income after adjustments and before amortization of goodwill grew significantly, up 59.9%, while operating margin on the same basis rose above the 20% level. These increases were the result of such factors as growth in our top line, unspent activity expenses due to pandemic-related restrictions, and the impact of efforts to reform our cost structure.

2

Moving on, operating income before amortization of goodwill and including investment projects also saw a major increase, reaching a record high of ¥84.0 billion.

Return on equity (ROE) before amortization of goodwill reached the high level of 19.7% due in part to extraordinary profit such as the gain on sales of investment securities.

3

Next, I will explain in order the details of our efforts to strengthen our Group structure and response capabilities, focusing particularly on the four new initiatives adopted under the revised MTBP.

4