Preparing for Spin-Off Listing
Accelerate unique initiatives of each business

　As we have communicated since last year, we are preparing for the "Spin-Off Listing" of AGEST, Inc. as a consolidated subsidiary of our company within 2025. As part of these initiatives, we shifted to a new management structure, for Spin-Off Listing, as of April 1, 2024, and we have been focusing on businesses management specializing in the respective expertise and growth-strategy of both DH Group and AGEST Group business. There are few cases of Spin-Off Listing in Japan, so this will be a new challenge for us. By listing two businesses with clearly different businesses value-creation strategies separately, we aim to increase our management focus, to maximize the potential of each with each optimal capitalization policy, and to achieve the best results for all our stakeholders, including shareholders, clients, and employees.

　During this first half, by strengthening collaboration between domestic and overseas group companies and alliance partners, we have been building a structure to provide one-stop services for global expansion of content such as translational & LQA, audio/voice recording, and marketing support. We also have tried to improve the recognition of "DIGITAL HEARTS" as a global brand by participating in the largest-scale game shows such as "ChinaJoy" (China) and "gamescom" (Germany). On the other hand, the AGEST Group business worked to acquire new projects and differentiate itself from competitors by continuing to strengthen recruitment of high-skill engineers and to provide high-value-added QA solutions responding to "Shift-Left" rather than merely acting as testing operator.

　Consequently, both sales and profit increased in both DH Group business and AGEST Group business, and net sales for this first half period were \19,906 million (YoY 106.6%), and operating income was \825 million (YoY 113.1%). On the other hand, although the DH Group business is progressing almost as planned, mainly due to the significant impact of the reschedule of a particular project by our client that occurred in Q1 FY2024 by the AGEST Group business, we have decided to revise the consolidated financial results forecast for full year FY2024. In the first half, due to an irregular project that is difficult to handle, we are very regrettable not to make achievements as initially planned in the AGEST Group business, but recently been acquiring large-scale and continuous projects from a major automobile manufacturer and a major distribution company. I believe that in the second half, AGEST Group business will be able to recover to the same level as planned at the beginning of the period.

　As for our actions for medium- to long-term growth, with the current independent management structure, each of DH and AGSET have started to promote respective unique growth strategy with a sense of speed than ever before. One of the symbolic examples is the utilization of AI for each business. DH Group has jointly developed with Rozetta Corp. an innovative and quite unique AI translation engine specializing in game, whose name is “ELLA,” to solve problems with the simultaneous worldwide releases of games titles by its clients. Customers who have already tried “ELLA” have been highly evaluated for translation quality reflecting the worldview of the game and the individuality of the characters. In the early period of 2025, we plan to implement European languages to “ELLA” following to already set Asian languages. On the other hand, AGEST Group has been developing its own AI testing tool called "TFACT" to perform highly accurate testing in a short period of time amid a shortage of engineers. This "TFACT" aims to overcome some issues and expectations such as “the resource shortage,” “the overwhelming speed,” and “the advanced QA” by having AI perform preliminary preparation, results-testing, and analyses, and other steps on behalf of engineers. These show the fact that both businesses approach to the theme of “how to utilize AI” from completely different angles and I realize that it makes it accelerate such new challenges by focusing on a single businesses for each.

　Going forward, both DH Group and AGEST Group will strive to improve their corporate value by vigorously promoting their unique growth-strategy leveraging their respective expertise and uniqueness. We sincerely hope that our shareholder will continue to expect us to do so in the future.

November 7, 2024
President & CEO
Toshiya Tsukushi