Toward the Spin-Off Listing, promoting different initiatives of DH Group and AGEST Group, specializing in each business characteristics and growth strategy, with fully independent both management structures starting from this year
As we announced last year, we have been preparing for the share-distribution-type spin-off and for listing the shares ("Spin-Off Listing") of AGEST, Inc., our consolidated subsidiary, within the year 2025. In this fiscal year as the juts prior to Spin-Off Listing, we have started to manage each group as a fully independent one as DH Group and AGEST Group.
By completely separating the two groups with different corporate cultures, business characteristics, and growth strategies, we have been able to make decisions more quickly and to accelerate the implementation of the investments and strategic actions necessary for each business growth. DH Group has executed initiatives to build a structure to provide one-stop solutions for the overseas expansion of entertainment content, including translation, LQA, marketing, and audio recording, by strengthening cooperation among group companies and alliance partners with the goal of becoming "the Global Quality Partner in the Entertainment Industry." In addition, the Group has been focusing on creating added value and improving productivity based on completely new ideas, such as promoting initiatives for the launch of game-specific AI translation engines developed jointly with Rozetta Corp. and investing in AI related companies with the aim of expanding business in new domains. As a result of these initiatives, the Group achieved increases in both sales and profits for the segment, and especially the global business, one of the growth drivers of DH Group Business, achieved double-digit sales growth. On the other hand, AGEST Group has worked to expand solutions and increase added value unique to a testing specialist with the aim of becoming "the leading QA solution provider in the global market with the leading-edge quality technology." Specifically, it promoted the use of advanced technologies in QA field, such as the launch of "AI Debugging for Enterprise" for reproduction testing and the identification of defective areas by AI, and the expansion of its own testing automation tools by strengthening collaboration with its foreign subsidiaries. In addition, this Group worked to revitalize the entire industry and acquire new business opportunities by participating in funds in which cybersecurity-related companies invest in security service providers. On the earnings front, we achieved higher sales, but on the other hand, profits declined due to factors such as a decline in the gross profit margin associated with clients' revisions for a certain project and the impact of costs to prepare for the Spin-Off Listing, which increased significantly since the previous fiscal year's Q2. Nevertheless, these factors are only temporary and we expect sales to grow steadily on the back of favorable market conditions in Q2 and later. We also believe that we can shift to an upward trend in profits from the end of the rise in preparatory expenses for the Spin-Off Listing.
Consolidated net sales for the FY2024 Q1 were \9,835 million (YoY 105.8%) and consolidated operating income was \295 million (YoY 73.2%), which is a slightly slow start compared to the full-year forecast. From Q2 onward, we will accelerate growth by focusing our specialist human resources on each business, and aim to achieve the full-year forecast, which will be a record high in net sales and operating income.
We hope that shareholder will continue to look forward to the challenges we face through our strategic organizational restructuring and will continue to support us.
August 8, 2024
President & CEO
Toshiya Tsukushi